Saturday, July 30, 2005

CBA is signed, salary cap set

By Dan T. Rosenbaum

Apparently, in the wee hours this morning the league and union hammered out the final details of the new collective bargaining agreement. While I am still eager to find out what those details are, we have gotten word on what the salary cap, luxury tax threshold, and MLE will be.

2005-06

  • Salary cap: $49.5 million
  • Luxury tax threshold: $61.7 million
  • MLE: 5.0 million

2006-07 Estimates

  • Salary cap: $49.2 million
  • Luxury tax threshold: $59.7 million
  • MLE: $5.4 million

Except for the fact that 49.5% apparently was used to compute the salary cap (rather than 51% like will reportedly be used next season), the salary cap and luxury tax threshold are almost dead on what I predicted. This suggests that the formula for projected BRI was not changed substantially, which would mean that we should expect the salary cap to stay about the same in 2006-07 and for the luxury tax threshold to fall.

Now the MLE is a bit lower than I expected, so it appears that perhaps some changes were made to that formula. I am eager to see what they are.

Last updated: 8:00 AM, July 30, 2005

9 Comments:

Anonymous Anonymous said...

Aren't those Salary Cap & Luxury tax numbers for the 05/06 season not the 04/05 season? Espn is reporting the now known before the season not after as before.
-Micah

7/30/2005 5:34 PM  
Blogger Dan Rosenbaum said...

Yes, I will fix that.

7/30/2005 7:40 PM  
Anonymous Anonymous said...

Hey! I like your blog. It wish it had an RSS feed, though (I couldn't find one). It's hard to check back on so many sites all the time.

8/01/2005 7:14 PM  
Blogger Dan Rosenbaum said...

RSS feed added, if I did it right.

8/02/2005 5:23 AM  
Anonymous Storyteller said...

Haven't seen anything yet on a Team Escrow Limit for this year. Can we assume that teams avoided a luxury tax this summer (as you and others had speculated)?

8/03/2005 4:21 PM  
Blogger Dan Rosenbaum said...

Yws, it appears to me that the luxury tax was not triggered in 2004-05.

8/03/2005 10:11 PM  
Anonymous Anonymous said...

How did you figure the estimates for 06-07?

8/03/2005 11:02 PM  
Anonymous Anonymous said...

What does BRI stand for?

8/03/2005 11:14 PM  
Blogger Dan Rosenbaum said...

BRI is basketball related income and is the measure of total revenues that the NBA uses. The 2006-07 estimates require assumptions about BRI growth and the rules for computing these numbers. My estimates will change as the full details about BRI in 2004-05 and the new CBA become available.

The full detail of my methodology is beyond the scope of this blog, but you can see some of the details in the other blog posts that discuss calculating the salary cap, luxury tax threshold, and mid-level exception.

8/03/2005 11:36 PM  

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