What Nikola Vucevic’s $54 Million Extension Means For The Rest Of The NBA
Oct 10, 2014; Indianapolis, IN, USA; Orlando Magic center Nikola Vucevic (9) backs in on Indiana Pacers center Ian Mahinmi (28) in the third quarter of the game at Bankers Life Fieldhouse. The Orlando Magic beat the Indiana Pacers by the score of 96-93. Mandatory Credit: Trevor Ruszkowski-USA TODAY Sports
The NBA’s new television deal is set to have a tremendous effect on player salaries in the coming seasons. On Tuesday night, we caught a glimpse of why that might be the case after the Orlando Magic extended Nikola Vucevic on a four-year, $54 million deal.
Vucevic is not worth $13.5 million per-season. By all accounts, the new deal is an overpay. Vucevic is a young center who has benefitted from showing potential in a position that is bottom heavy. He is not a top-50 player in the NBA, and yet this season, only 31 players will make more than $13.5 million. On the flip side, by the time his deal expires in 2019, his contract could be a steal, because by then the cap could be a lot higher than it currently is.
That’s where this new TV deal comes into play for the Magic. The current contract, which runs through the 2015-2016 season, rakes in $930 million annually for the NBA from ESPN and Turner. As a result of their recent agreement, that number will now skyrocket to about $2.7 billion in 2016. For that reason, the salary cap is set explode in the near future.
How much that rise is remains to the seen. The NBA will fight to increase it incrementally rather than immediately for a number of reasons, and for both sides, that seems like the fairest way to go about it. Players, however, would rather see the cap make a huge leap in order to benefit the most from an increase as quickly as possible, and there’s been some indication that the NBA Player’s Union will fight for exactly that.
Nothing has been set and what that means for teams and players is that there’s still so much that remains unclear. The cap will increase, but by how much and how quickly we don’t yet know. There’s even been talk that the maximum salary could be abolished altogether.
That puts teams in a state of trepidation. There’s a lot of unknown, which makes it difficult when undergoing contract negotiations with players. With that in mind, there are two extremes that teams can go about retaining future free agents:
- Overpay. The salary will rise eventually, so what $15 million per-year costs teams now relative to the salary cap will be completely different by 2018.
- Remain cautious. By not knowing how much it will increase, teams may opt to tread water and not do anything now. They could guard themselves against doing something they might regret if the cap doesn’t rise as much as we expect it to within the first few years of the deal.
That’s why it was particularly interesting when Orlando signed Vucevic on Tuesday night. The Magic had the luxury of signing him to that type of contract because their core is under contract until the back end of this decade anyway. Vucevic’s deal won’t eat into their chances of retaining the trio of Victor Oladipo, Elfrid Payton and Aaron Gordon, and the majority of the rest of their team is built on short deals. Orlando will have a ton of cap space over the next four years to take the risk of overpaying players like Vucevic, and with the new TV deal looming, that’s exactly what they did.
For other teams, it might not be so easy. In the summer of 2015, the likes of Rajon Rondo, Al Jefferson, Monta Ellis, Roy Hibbert and Marc Gasol will be unrestricted free agents. They will all be highly courted, and their current teams teams will have to be careful in how much money they spend. They won’t have the capacity to overpay like the Magic did with Vucevic.
Far too much is up in the air right now in terms of future cap implications for teams and players to get comfortable when it comes to salary negotiations and extensions. If a player like Vucevic gets $48 million under the new TV deal, big time free agents will make a lot more. The issue is their respective teams might not have the space to make that happen, which is where this could all go haywire.
It’s good for the Magic that they were able to get this deal done, because it’s the first step in rounding out their long-term roster. But Vucevic’s deal is a larger commentary on how teams and players are both hoping things will work out in their favor while the implications of the new TV deal continues to muddy the impact of new deals.