BELT-TIGHTENING TIME
NBA BRACING FOR BUDGET PAIN, FROM COACHES’ SALARIES TO A SLASHED SALARY CAP
The days of someone such as Fred Hoiberg strolling into an NBA facility as a first-time head coach with five years on his contract and $25 million guaranteed in his bank account are likely over.
According to several NBA executives, the league is about to feel a historic economic crunch if the Orlando bubble holds and this season is able to wrap up, and it will start with the salaries of first-time NBA coaches.
One executive told the Chicago Sun-Times he expects yearly salaries to be cut in half for new head coaches, no matter how good their résumés look.
So while five-year, $25 million deals were the norm four or five years ago, expect deals more in the three-year, $7.5 million range going forward.
Which teams could benefit most from this? The Bulls might be at the top of the list.
With the remainder of Hoiberg’s offset salary coming off the books when the season ends, the Bulls still will have Jim Boylen’s salary to pay out the next two seasons, assuming Boylen is fired. Boylen is one of the lowest-paid coaches in the NBA at about $1.6 million per year, which means moving on from him and adding $2.5 million for the next head coach would cost the Bulls just more than $4 million each of the next two seasons.
To put that in perspective, the Spurs are paying Gregg Popovich $11 million per season, while Doc Rivers is getting $10 million per year from the Clippers.
Bulls chairman Jerry Reinsdorf allowed former general manager Gar Forman to throw a big investment Hoiberg’s way, no questions asked. So there’s a precedent there for Reinsdorf.
The problem is, these are unprecedented times.
Rockets general manager Daryl Morey’s controversial tweet last fall in support of Hong Kong, which created massive fallout for the NBA in China, is expected to cost the league $400 million in revenue, commissioner Adam Silver said. And that was before the coronavirus shut the league down in March.
Even if the NBA gets a finish to the season — and that’s still a big if as the restart moves forward in Orlando — experts are guessing that between China and the shutdown, the salary cap could drop by $8 million per team for the 2020-21 season. In the last 35 years, the NBA has seen the cap drop only twice, and both times were minor dips.
This would be a historic cut. The league set the cap at $109.1 million for this season and originally expected it to go up to at least $115 million next year. Instead, it could be around $101 million, with luxury-tax exceptions possible as teams scramble to figure out how to account for a $14 million swing.
The news won’t get any better next season — especially if it has to be played without fans in the arenas. Yes, television carries the day for NBA money, but gate receipts still average about $2 million per regular-season home game. Do the math over an 82-game season, and it’s possible the salary cap could drop below $100 million as the NBA brings in the highly touted 2021 free-agent class.
How does that hurt the Bulls? Not as much as most of the league. While the Bulls have been a bad product to watch through most of their rebuild, they also have been economically flexible. Their commitments are $106 million for next season, but they’ll shed at least $38.2 million next offseason with Otto Porter Jr., Cristiano Felicio and Luke Kornet coming off the books.
So while there’s going to be a lot of crying broke soon, the Bulls — valued at $3.2 billion at the start of this season — should be among those shedding the fewest tears. ✶