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May 24, 2016

If Sixers get No. 1 pick right, the rookie contract will be a major steal

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The Sixers’ upcoming decision on who to take with the No. 1 pick — Brandon Ingram or Ben Simmons — is mostly important because it represents a golden opportunity to land an elite talent, but there is an even greater opportunity at stake: The Sixers have a chance to land an elite talent at a major bargain.  

As the new television money kicks in, the NBA salary cap is set to make a couple of major jumps over the next few years. Here are the league’s projected numbers from last month:

 SeasonSalary Cap
2015-16
$70 million
2016-17
$92 million
2017-18
$107 million
2018-19
$105 million

Since max salaries are a percentage of the cap, the stars of the world are about to receive big raises. That is why it’s rumored that Kevin Durant, who will also get an experience bump in salary for reaching his 10th year in the NBA, will essentially sign a one-year extension in Oklahoma City this summer. It would make all the sense in the world financially. Would you rather make 30 percent of $92 million or 35 percent of $107 million?

The middle class will benefit, as well. With all of the money that teams have to spend and only so many players in free agency, we are about to see some hilarious contracts handed out this offseason. 

Of course, there is a group who will essentially get screwed: players entering the league. The rookie contracts of first-round draft picks are set through 2020, and they don’t make a proportional rise with the cap. In the case of the 2016 No. 1 pick (who will likely be offered the maximum 120 percent of their contract), this is roughly what we’re looking at:

 SeasonNo. 1 Pick Salary
2016-17$5,903,160
2017-18
$6,168,840
2018-19
$6,434,520
2019-20
$8,113,929

Still seems like a lot of money, right? In the overall scheme of things, nope. If Simmons/Ingram turn out to be really good, Josh Harris will sign those contracts with a big fat smile on his face. That’s because the rookie deal will take up a significantly smaller percentage of the cap than it used to. Star players on their first contracts were already a major bargain; now they will be an insane one.

(A possible lockout after next season could change the rookie scale, but this will be after the 2016 No. 1 pick signs.)

A couple of weeks ago, Kevin Pelton (Insider only) took a look at the difference between Kyrie Irving’s contract and the No. 1 pick’s probable contract five years later:

All told, Irving's salary took up about 10 percent of the Cavaliers' salary cap during his rookie contract. Whoever is taken No. 1 this year will make an even lower 6.5 percent of his team's cap over the same period if the NBA's current estimates are correct.

When trying to lure star free agents in the future (which, if the player is good, you would assume the Sixers will try to do), 4.5 percent of the cap is a big deal, especially when the Sixers will hold the player’s Bird Rights after four years. 

So, you know, no pressure.

tl;dr: If the Sixers draft a star, it’s a big deal because for the first four years, he won’t be paid anything close to a star.


Follow Rich on Twitter: @rich_hofmann

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