The NBA is looking to sign a new broadcasting contract, and it projects to be a big one. The new deal, which would start in 2025, could be worth over $75 billion total, and over $8 billion annually, according to Jabari Young of CNBC. This would represent an enormous increase over the league’s previous deal that started prior to the 2016-17 season and was worth a total of $24 billion.
Such a large jump in television revenue would obviously have a huge impact on the league’s salary cap, which is calculated based on total basketball-related income. As such, we could be seeing some seriously monster contracts down the road. We’ve already seen $200 million contracts handed out, but soon we could be seeing contracts worth over $300 million. From Morten Jensen of Forbes:
It wasn’t long ago we saw the first $200 million contract in NBA history. Stephen Curry signed one worth $201 million in 2017 and could be on the verge of signing another one soon. The 2025 cap spike will see $200 million contracts get normalized, and for the league’s elite, $300 million will become the new threshold.
Based off a cap that by 2025 sits at $171 million, a 35% max deal would start at $59.85 million and carry 8% annual raises. Over a five year period, that becomes $347.1 million with the final year being worth $79 million alone, which is $9 million more than the entire salary cap number in 2015. For NBA teams and NBA agents, it’s time to map out their financial futures.
With such a large spike in salary cap space potentially looming, don’t be surprised to see players look to avoid locking themselves into long-term contracts before 2025. This means that we could see some shorter deals with player options being handed out to top-tier players leading up to the new TV deal. Also, second-year players currently on rookie deals could look to capitalize on the fifth-year qualifying offer more than they have in the past. Players in line for a rookie extension in 2024 could opt to sign the qualifying offer and become unrestricted free agents in 2025.
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Also, there will be a discussion that has to be had about whether or not the NBPA will be willing to agree to cap smoothing rather than the significant one-time jump described above. In that scenario, Jensen reports that annual increases to the salary cap of roughly $15 million would be likely.
Obviously, a lot of things still need to be ironed out before any of this becomes official. First, the league needs to agree to a new TV deal, and then the resulting impact on the cap will have to be correctly calculated. Nonetheless, it’s certainly something to keep in mind as teams and players make financial decisions moving forward.