Boston Celtics: Pros and cons to offering Jayson Tatum max extension
By Josh Wilson
Celtics con to extending Jayson Tatum: Salary cap uncertainty
Right now, the NBA is in a bit of a free fall.
Prior to the season starting China cut off its relationship with the league due to Daryl Morey’s political stance on social media siding with protestors in Hong Kong. China, the league’s longest-running global partner, accounts for a massive amount of revenue for the league that was suddenly struck from the books.
Then, the pandemic happened and the league has made no money from expected ticket sales or arena revenues since mid-March. The season return in Orlando in late July should give the league some revenue, but with the logistical challenges, it’s not clear how much of a profit the league really stands to gain just yet.
These things directly impact the salary cap, as the cap is set in part based on how much basketball-related income (BRI) the league generates. That number projects to, at the very least, level out next season. It’s possible — but not necessarily likely — that it decreases.
Experts agree that the salary cap is far from certain moving forward, and teams need to keep that in mind as they approach financial decisions. Signing up for another max contract with a player as the salary cap threatens to decline is like signing up for a mortgage on the fringes of your budget when you know you might get a demotion in the next year or two at work.
The good news about a max contract is that it’s based on a certain percentage of whatever the league’s salary cap is set at, so the Celtics know their commitment to Tatum will be proportional with the cap in whichever direction it goes.
Still, that percentage for max contract extensions is hefty (25 percent for Tatum is what he’s projected for, plus incentives). Committing that much to one player, no matter what the cap actually is, leaves little room to make the necessary moves to build a winning team without trending into the luxury tax.