What NBA’s 2026-27 Salary-Cap Surprise Means For Team-Building

Less than 30 minutes before NBA free agency began on June 30, ESPN’s Bobby Marks dropped a bombshell on the league. He reported that the 2026-27 salary cap is projected to increase only 7% rather than the full 10% that it’s allowed to rise year-over-year.

According to John Hollinger of The Athletic, teams “had budgeted for another 10% rise,” which meant they had to “change their projections downward for the luxury tax and aprons by roughly $5 million apiece.” That might not sound like a huge adjustment, but every dollar counts in the league’s new second-apron environment.

The 2025-26 salary cap landed at roughly $154.6 million. If it increased by the full 10% in 2026-27, it would land at around $170.1 million. If it rises by only 7%, it’ll be roughly $165.5 million instead.

Most teams figure to enter next offseason well over the salary cap, so that isn’t a big deal in and of itself. However, the luxury-tax line and aprons increase at the same percentage of the salary cap each year. That’s where teams could feel the pain of a smaller-than-expected rise.

Smaller Cap Projection Chilling Free-Agent Market

During an episode of the Hoop Collective podcast in early July, ESPN’s Brian Windhorst said he thought the updated projection “has chilled the [free-agent]

market a little bit.”

“As a front office, it’s typical to think in three-year increments,” he added. “As they’re negotiating these contracts, they were for a long time thinking that the cap was gonna go up 30% the next three years. 10 this year, 10 next year, and then 10 the year after that. And now they’re being told, maybe only 7 next year, and then when you think about that third year from now, what if it’s less?

“So I was talking to a team over this weekend that says they have revised all of their projections, and they are only assuming 5% growth the next two years just to protect themselves.”

The NBA is beginning its new 11-year, $76 billion national TV contracts this year with Disney (ABC/ESPN), Comcast (NBC and Peacock) and Amazon, which were expected to send the salary cap skyrocketing. However, ongoing disruption with regional sports networks have cut into the NBA’s overall TV revenue, which contributed to the smaller-than-expected projection of the 2026-27 cap.

“The media-rights deal is increasing by over two times,” Windhorst said. “And so there was this belief that the NBA salary cap was gonna go up by 10 percent for three straight years, just to fit this in. … The reason, from what I have been told, is the regional sports networks. All of those that are struggling.”

“It’s not uncertainty,” ESPN’s Tim Bontemps added. “The answer is the league has lost a ton of money because the regional sports networks have cratered across the board.”

That may be one of the factors contributing to the slow-moving restricted-free-agent market. Jonathan Kuminga, Josh Giddey, Quentin Grimes and Cam Thomas still have yet to agree to new deals with their incumbent teams or sign offer sheets with other teams, in part because the Brooklyn Nets are the only team that’s currently able to sign any of them for more than the $14.1 million non-taxpayer mid-level exception without a sign-and-trade.

When players re-sign with their own teams via full Bird or Early Bird rights, their contracts can increase by up to 8% annually. If the salary cap was projected to rise 10% per year, as originally expected, those contracts would take up a slightly smaller percentage of the cap every season. But if cap growth is instead limited to the 5-7% range, the raises in those contracts might outpace the salary cap.

How Teams Need To Plan For The Future

The national TV deals are locked in, which gives the NBA a solid financial floor moving forward. That’s a big piece of the overall basketball-related-income pie, but it’s not the only piece. Regional sports networks and ticket sales are far more unpredictable variables.

The NBA doesn’t officially set the salary cap for the following season until right before free agency begins. It will issue updated projections for the 2026-27 season throughout the 2025-26 campaign, but the figure likely won’t become official until June 30. Teams need to plan for a range of outcomes in the meantime.

It would make sense for teams to chart out multiple courses—one where the cap increases as projected (7%), one where it goes up by the full 10% that it’s allowed to increase, and one where it increases by even less than expected (4-5%). Each scenario would give them a sense of what they might be able to accomplish on the free-agent market and whether they’re going to run into trouble with the luxury tax or the aprons in future years.

Given that level of uncertainty, teams might be even more inclined to hand out shorter-term contracts and reluctant to ink long-term pacts with anyone short of a star. A one- or two-year deal can only do so much damage, but a three- or four-year agreement could quickly devolve into an albatross if the cap rises less than expected over the coming years.

Teams not only need to account for their own proximity to the luxury-tax line and the aprons when negotiating a new contract. They also must consider how that deal will be viewed leaguewide if they’re ever looking to trade that player.

Look no further than Utah Jazz forward Lauri Markkanen, who signed a four-year, $195.9 million extension after renegotiating his contract last August. The Jazz were widely praised for doing so at the time, but that was before Markkanen had a disappointing 2024-25 campaign. After averaging 23.2 points and 8.2 rebounds while shooting 48.0% overall and 39.9% from three-point range in 2023-24, he averaged only 19.0 points and 5.9 rebounds while shooting 42.3% overall and 34.6% from deep last year.

Earlier this year, Eric Pincus of Bleacher Report wrote that one Eastern Conference executive called Markkanen’s contract “the worst in the league.”

“He’s only turning 28 in May, but his contract takes him over the age bridge that frightens teams, Pincus wrote. “If he’s slowing down at 28, what will he be at 32? (That may sound crazy, but it’s how some teams think.)”

The new salary-cap projection could make some contracts look even worse in retrospect. There could be some major ripple effects down the road if that cap projection holds true.

Unless otherwise noted, all stats via NBA.com, PBPStats, Cleaning the Glass or Basketball Reference. All salary information via Spotrac and salary-cap information via RealGM. All odds via FanDuel Sportsbook.

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