The NBA announced Wednesday that it has set its salary cap to $57.7 million for 2009-10, down from last year.
The decision marks just the second time in history that it has been lowered from one year to another.
The new salary cap is about $1 million less than last season's cap of $58.68 million, even though league-wide revenue rose 2.5 percent. The number is expected to drop further next season when the full effect of the economic downturn hits.
The new salary cap went into effect at 12:01 a.m. ET on Wednesday, ending the NBA's moratorium period and allowing free agents to sign deals with teams.
Teams and players were able to begin negotiating on July 1. Ron Artest agreed to join the Los Angeles Lakers, and the Detroit Pistons reached agreements with Ben Gordon and Charlie Villanueva during the moratorium.
In addition, Hedo Turkoglu agreed to sign with the Toronto Raptors, spurning the Portland Trail Blazers, and Mike Bibby agreed in principle to return to the Atlanta Hawks.
The luxury tax level also dropped to $69.92 million. Any team whose salary exceeds that will have to pay $1 for every $1 it goes over. The tax level last season was $71.2 million. The midlevel exception will be $5.85 million.
The following teams have gone over the luxury tax and are expected to pay their fees before Friday's deadline:
Meanwhile, the remaining 23 teams that stayed below last season's tax threshold will each receive just over $2.9 million, which is taken from the combined tax pool paid by the seven aforementioned teams.
The lowered salary cap has a huge effect on next year’s free agency boom, which includes LeBron James, Dwyane Wade and Chris Bosh. Several teams have used this free agency to set themselves up for a spending splurge next year, but with the minimized salary cap, next year will be daunting.
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