The Portland Trail Blazers have been completely quiet in this summer’s NBA Free Agent market despite needing help at multiple positions on the roster. This has caused continued, low-level concern for Blazers fans, eager to see their team improve from a 21-win season.

Some of the reasons for Portland’s hand-sitting are peculiar to their situation, but many fans don’t understand the changing nature of free agency in the NBA. It’s no longer as simple as it was back in 2015, when teams developed cap space or parlayed cap exceptions into prized players. The goal remains the same, but the environment in which front offices operate has changed drastically.

Let’s take a look at the situation via this Blazer’s Edge Mailbag question.

Dave,

I’m not expecting Paul George or even Klay Thompson but can’t the Blazers do something with that midlevel they’re holding? Are they really telling us that no free agent in the whole NBA will help our team? Is there some master plan to waiting or am I just doing to sit all summer chewing my fingernails for nothing?

Brian

Let’s get down to brass tacks. It’s completely accurate to say free agency has been demoted to the least significant mechanism for improving your team, behind the NBA Draft and trades. It’s borderline accurate to say that, for most teams, free agency is dead.

You’re right, the Blazers haven’t made big moves during this year’s free agency period. Most other NBA franchises are in the same boat. Granted, Portland has a big asterisk because of the current situation. They’re not going to be competitive next year and no player from the free agent market would change that. They’d be paying extra money for little result. But even if they weren’t in that unfortunate spot, they’d probably find themselves among a large group of teams waiting and seeing.

To understand why, follow along.

Stars are Too Expensive

Stars are less available on the market now than ever before. DeMar DeRozan, Klay Thompson, and Paul George changed hands in free agency (or free-agency-related trades) this year, but neither one rises to the level of Kevin Durant, or even Damian Lillard, on the effect-o-meter. That’s about the max you’re going to see from here on out for a simple reason: superstars aren’t making $25 million per year anymore; they’re making $50 million. No matter how big the cap gets, teams aren’t going to get that far beneath it except once in a blue moon. The odds of a team having that much cap space AND a roster attractive to a superstar are small, much smaller than the odds of the star’s current team—who can use Bird Rights to exceed the cap—re-signing them.

More than ever, the only ways to get true superstars are drafting one or trading for one.

Operating Above the Cap

Trading for a star and/or re-signing one both involve above-the-cap maneuvering. Trades are, at best, a salary-neutral proposition, leaving the receiving team where they started on the cap scale. But superstars are often traded near the end of their contracts, requiring expensive extensions, so most trades come with added expenses. Meanwhile the leap between rookie contract and second contract, or second contract and max, for re-signing a home-grown superstar is vast.

This is the exact opposite of the classic free-agent scenario, where a team would fall below the cap enough to sign a player, after which they’d be at the cap line.

Bottom line: stars are eating more dollars and a bigger percentage of the cap than ever before and the teams that employ them are operating with higher budgets than ever too.

Enter the New CBA

The new Collective Bargaining Agreement harshly penalizes teams that accrue big salaries.

The league incentivizes its franchises to operate between the salary cap line and low luxury tax territory. Penalties are slight or non-existent as long as a team remains within that Cinderella zone.

Thanks to franchises like Golden State and the L.A. Clippers—whose billionaire owners shrugged off even the harshest financial burdens in their quest for super-teams under the old CBA—the league now goes above and beyond punishing teams who exceed the tax threshold past a certain amount. Penalties include not being able to sign players, not being able to execute sign-and-trade agreements, and having first-round picks demoted to the bottom of the draft automatically regardless of record. Violating teams, in essence, get told, “I hope you really, really like this roster, because you’re stuck with it until you fall back below an acceptable salary level. You can’t make any more moves, period.”

The Upshot So Far…

The main players on each team now earn exorbitant salaries. The penalties for maintaining an expensive roster are draconian.

Imagine Han, Luke, and Leia in the original Death Star trash compactor. That’s what owners and GM’s are experiencing the minute they start to build a contender as salaries grow, hard tax walls loom, and available space to maneuver shrinks. And C3PO up in the league office isn’t answering. In fact, he designed the whole system.

But wait. There’s more…

The Rest of the Roster

As Phoenix, the Clippers, et al have shown, it’s hard to win an NBA Championship with just two players. In today’s league, a complete roster matters. Front offices have to fit their third star, significant role players, and developing players into the ever-narrowing trash-compactor space. (Again, it’s ”ever-narrowing” because rosters get more expensive as players age, not less.)

It’s not enough to get the right player for your roster anymore. You have to get the right player at the right time for the right price. You can’t miss. You can’t overpay. And you can’t be off by two years, hoping to re-sign the player and keep momentum going. When you use your cap space matters almost as much as on whom.

That’s why, in this new environment, teams are going to hold onto mid-level exceptions, trade exceptions, and other acquisition mechanisms until they’re sure the players they’re acquiring are impactful and will Tetris into their future cap/tax structure. If not, it makes far more sense to sacrifice some utility today and sign a low-level, short-term veteran, preserving the ability to get the guy you really want when the time and price are right. If you fill that compactor with junk, you’re either going to get squished or have to dump it out before those walls close.

The Ticking Clock

The obvious effect of this is that more teams will hold the ability to offer mid-level contracts to role players than ever before as they wait for the opportune time to strike. This compounds the issue for the would-be contenders. As soon as they sign their prized role-player or third star, a clock starts ticking. Those contracts are nearing their end. As time progresses, paying the team’s own stars and picking up other players off the market will shrink the amount of total salary space available. By the time a role-player’s contract comes up again, the team he plays for will be experiencing serious financial pressure. The trash compactor will have narrowed so far that they might not be able to justify re-signing him at the current rate, let alone for a raise.

Meanwhile, most of their competitors will have kept their exceptions and signing power, as we just mentioned. Thus you see Kentavious Caldwell-Pope, who won a championship starting for the Denver Nuggets a little over a year ago, signing with the Orlando Magic instead of trying for another ring in the Mile-High City. Orlando is just beginning their contending journey and has money to spare. Denver has topped out financially and had to sacrifice talent to preserve fiscal sanity. They couldn’t keep their team together. But that’s ok. In another 3-5 years, Orlando will be feeling the same crunch and another up-and-coming team with unspent cap exceptions will be looking to pirate the Magic roster in the same way.

Portland’s Situation

Let’s move back to the Trail Blazers now. There’s no reason for them to step into the trash compactor or start the clock running until they absolutely have to. Technically they could use all or part of their mid-level exception this year to sign players that make them marginally better. But those players and their escalating contracts would fill up space, eating flexibility that the team will definitely need later. The benefit now would not equal the future cost.

Under this CBA, teams will only want to make significant signings when they lead to winning big and winning quick. Until Portland gets in that position, don’t expect them to open the franchise purse very wide. It just doesn’t make sense. They’d end up not contending, then losing those players to someone else who was ready to.

A Potential Out: New TV Deals

The only potential asterisk in all of this comes from the league’s new television rights deals, reportedly worth $76 billion dollars over the next 11 years in aggregate. Those agreements won’t change the terms of the CBA, but they will drastically increase the amount of money flowing through the system, as roughly half of the windfall goes to players via salaries.

Right now a mid-level exception for a non-tax-paying team sits around $12.5 million. (It’s $5 million for a tax-paying team and teams far enough above the tax threshold lose their exception altogether, demonstrating those stark penalties we talked about.) With the advent of the new broadcast rights deal, mid-level exceptions are expected to balloon to $20 million or more.

The big question is how, or whether, the league will “smooth” the influx of new money into the market. If the mid-level jumped from $12 million to $20 million in just one season, there’d be major incentive to lock a free agent in at the $12 million level before that rise. The overall tax threshold would lift far enough—creating more space in the trash compactor—to make up for the cost.

Presumably the league won’t let that happen. They’ll titrate the flow of dollars into the system so the increases are spread out over a few years. Watch for the terms under which that happens, though. There might be an opportunity to value-sign a free agent at a comparatively low level that Portland could take advantage of.

In the meantime, watch for the Blazers to try to home-grow a star or two, holding onto their cap exceptions and future dollars in order to use them to best effect before the luxury tax walls close in on them too.

Thanks for the question! You can send yours to blazersub@gmail.com and we’ll try to answer as many as possible!