The NBA is set to announce a new television contract with ESPN and TNT worth $24 billion over 9 years. That's almost three times the current television contract revenue and likely means we'll see a very large increase in the NBA's salary cap when the contract takes effect in the 2016-17 season (the first season the Kings will be in their new arena).
The Kings of course, have been working on extension talks with star forward Rudy Gay this summer but nothing has yet materialized. With news of this larger than expected deal, the Kings should have even more incentive to lock Gay down now rather than let him test the market next summer. NBA salaries are about to take a big leap and teams are going to have more space, so there will be serious competition for Rudy's services. That's why it could be wise for the Kings to overpay a bit now in the hope that in time, the deal looks better due to the rising cap and rising salaries elsewhere.
Of course, it will likely take a significant contract offer in order to get Gay to agree to an extension, given the benefits we listed above if he did test the market. While most Kings fans probably were looking to re-sign Rudy to somewhere around $10-12 million a year, his value to the team is probably around $14-15 million now, if not more given the incentive to lock him into a deal now.
Should Gay walk, the Kings will have significant money to go after free agents in the summer. Unfortunately for them, so will many others. That's why it's best to try to keep the known factor.
The Kings have until June 30th, 2015 to try to agree with an extension with Rudy Gay and his representatives, so there's no rush. Still, it'd be nice to have some security for the future with arguably one of the better players we've ever had.
(Editorial Note: This post was written before news of Kenneth Faried's 5 year, $60 million extension was announced. Keep in mind that Faried has far less leverage than Rudy Gay due to the fact that he would have been a restricted free agent.)