# Dan Rosenbaum's NBA Blog



## Dan Rosenbaum (Jun 3, 2002)

I have started a new NBA blog, where I can include some of my thoughts on NBA financial or statistical issues. 

http://danrosenbaum.blogspot.com/ 

Here is the beginning of the first post. 

*What will the salary cap, luxury tax threshold, and mid-level exception be in 05-06 and 06-07?*

Every year during July it is a big mystery where the salary cap is going to be set. Now, according to reports about the new collective bargaining agreement (CBA), we will add to that mystery by having the luxury tax threshold also being set at this time. 

Under the rules in the previous CBA, along with the reported changes in the new CBA, here are my predictions of the salary cap, luxury tax threshold, and mid-level exception over the next two seasons. (I discuss the calculations more below.) 

2005-06 

Salary Cap - $51.0 million 
Luxury Tax Threshold - $61.9 million 
Mid-Level Exception - $5.18 million 

2006-07 

Salary Cap - $49.4 million 
Luxury Tax Threshold - $59.9 million 
Mid-Level Exception - $5.66 million 

Yes, you are reading this right. I am predicting the salary cap to be higher than the conventional wisdom of $48 to $50 million this season and then drop quite a bit in 2006-07. In fact, if basketball-related income (BRI) is low enough to generate a $48 to $50 million salary cap, then I expect there to be a luxury tax in 2004-05. 

That makes me think that revenues came in about as expected or better than expected, which would likely mean a salary cap of $51 million or higher. (But if revenues came in lower than expected, then a luxury tax in 2004-05 is a possibility.) 

The reason for these misforecasts of the salary cap is due to peculiarities in how the league computes projected BRI, which is a key component of salary cap calculations. These peculiarities are not well understood by many teams. Thus, last season several teams were surprised when the salary cap was barely changed, despite the fact that it was reasonably predictable beforehand. 

The higher-than-expected salary cap this season is likely to throw fuel on a red-hot free agent market this summer. Teams below the salary cap will have more money available to throw at more free agents. Also, maximum salaries for players like Michael Redd and possibly Larry Hughes, Joe Johnson, Samuel Dalembert, and Tyson Chandler are a given percentage of the salary cap and thus will be higher. 

The drop in the salary cap in 2006-07 will reward teams who keep their pocketbooks closed this season. There are likely to be fewer teams with less money below the salary cap next season. This may result in more bargains next summer with the caveat that there does not appear a lot of top free agents available. 

My guess is that overall this higher salary cap (and higher luxury tax threshold), along with the lack of free agents available next summer, will result in teams being very aggressive this summer. 

http://danrosenbaum.blogspot.com/2005/07/what-will-salary-cap-luxury-tax.html


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## Ron Cey (Dec 27, 2004)

I simply cannot believe that your blog fails to mention that you voted for me, Ron Cey, as the best new poster of 2004/2005 at bbb.net. :brokenhea


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## chifaninca (May 28, 2002)

I can't believe you have anything close to a life with your intricate knowlege of this.

It is truly appreciated by us who don't have the time, patience and knowledge to learn this important stuff that affects our teams' decisions.

Keep it up Dan!


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## T.Shock (Feb 11, 2003)

chifaninca said:


> I can't believe you have anything close to a life with your intricate knowlege of this.
> 
> It is truly appreciated by us who don't have the time, patience and knowledge to learn this important stuff that affects our teams' decisions.
> 
> Keep it up Dan!


Well most professors I know don't have much of a life. Of course I would kill to have a professor as knowledgeable about basketball as Mr. Dan.


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## DaBullz (Jul 15, 2002)

You'd think the bow tie would cut off circulation to the brain. Not in Dan's case!


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## ScottMay (Jun 15, 2002)

I'd like to point out that Dan bears more than a passing resemblance to David Remnick, the editor of The New Yorker.

Anyhoo, Dan, what is the $37 million payment from Fox Sports to the Lakers all about? Is that a down payment on a long-term local TV agreement?


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## Dan Rosenbaum (Jun 3, 2002)

ScottMay said:


> I'd like to point out that Dan bears more than a passing resemblance to David Remnick, the editor of The New Yorker.
> 
> Anyhoo, Dan, what is the $37 million payment from Fox Sports to the Lakers all about? Is that a down payment on a long-term local TV agreement?


Thanks again to all.

I looked up David Remnick in Google Images and saw a piece talking about his hair. Since I only run a comb through my hair about two or three times a year, I suspect we don't look too much alike.

(chifaninca, I use my extra hair care time researching the CBA.)

The $37 million is probably some form of a down payment on a long-term deal, but an arbitrator ruled that it all had to count as BRI in the year it was received. And the Knicks media BRI is estimated to be whatever the Lakers get (because the Knicks are owned by Cablevision it would be hard to price their media deal), so the "mistake" is doubled.

And to Ron, I figured I would try to help a Cubbie win something.


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## Anima (Jun 3, 2003)

Ron Cey said:


> I simply cannot believe that your blog fails to mention that you voted for me, Ron Cey, as the best new poster of 2004/2005 at bbb.net. :brokenhea


He didn't vote for me? But I thought I was everyones favorite new poster.


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## bullsville (Jan 23, 2005)

This Rosenbaum guy isn't bad, but where are the stats to back up his theories?


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## Ron Cey (Dec 27, 2004)

Dan Rosenbaum said:


> And to Ron, I figured I would try to help a Cubbie win something.


Its about time. Every penguin has its day, evidently. 

Joking aside, I look forward with much interest to reading your blog. Although I believe the use of statistics in basketball is often misleading and incomplete, I find a lot your theories practical in application and well-reasoned.

Keep it up.


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## Triple_Single (Mar 27, 2005)

So when are they going to finally confirm what the cap is and let all the teams know? There are several players with buyout options that must be exercised by July 15th. It's not like there is that much time. Will they extend the buyout deadline?


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## Dan Rosenbaum (Jun 3, 2002)

Triple_Single said:


> So when are they going to finally confirm what the cap is and let all the teams know? There are several players with buyout options that must be exercised by July 15th. It's not like there is that much time. Will they extend the buyout deadline?


I think teams will have to make their buyout decisions before the final numbers (and rules) are in. It is looking like it might be later than July 22nd.

BTW, I have a new post on the implications of the CBA on the free agent market.

http://danrosenbaum.blogspot.com/


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