The NBA’s recent history includes a pivotal moment when the league’s off-court business decisions significantly impacted its on-court product. This was most evident in October 2014, when the NBA struck a $24 billion television rights deal with Disney and Turner. This deal, which nearly tripled the league’s previous national TV revenue, led to the most dramatic salary cap spike in NBA history. Between the 2015-16 and 2016-17 seasons, the salary cap surged by 32%, jumping from $70 million to $94.1 million. This sudden increase disrupted the league’s competitive balance for years.
The Golden State Warriors benefited immensely, acquiring Kevin Durant without breaking up their core of Stephen Curry, Klay Thompson, Draymond Green, and Andre Iguodala. However, other teams also had significant cap space, leading to overpriced contracts for less talented players, such as Timofey Mozgov’s $64 million deal and Chandler Parsons’ max contract with the Grizzlies.
Despite appearances, this spike was not beneficial for players overall. While 2016’s free agents secured lucrative deals, those in 2017 and 2018 were underpaid due to limited cap space. In 2016, 35 players signed deals worth $40 million or more, but by 2018, despite a $7 million cap increase, only 10 players did, with LeBron James being the sole player to switch teams. The 2016 cap spike was widely regarded as a disaster.
Recently, the NBA finalized a new television rights deal with Disney, Comcast, and Amazon, expected to nearly triple the annual national TV revenue once again. However, this time around, fans need not fear a repeat of 2016’s disruption. The new collective bargaining agreement (CBA) includes a crucial cap smoothing provision, limiting the salary cap’s annual increase to 10%. This measure, initially introduced during the COVID-19 pandemic, was permanently integrated into the 2023 CBA.
Typically, the salary cap is based on projected league revenue, with players and owners splitting basketball-related income nearly evenly. However, the previous formula didn’t account for sudden, massive revenue increases, leading to issues like the 2016 spike. The new CBA ensures that excess revenue will be distributed more evenly, preventing drastic short-term impacts on team rosters.
The new TV deal is expected to result in consistent 10% annual cap increases for the duration of the current CBA, starting in the 2025-26 season. Here’s a projection of where the salary cap could be heading:
| Year | Projected Salary Cap |
|---|---|
| 2024-25 | $140.588 million |
| 2025-26 | $154.647 million |
| 2026-27 | $170.111 million |
| 2027-28 | $187.123 million |
| 2028-29 | $205.835 million |
| 2029-30 | $226.418 million |
These projections indicate that the cap could increase by nearly $90 million by the end of the decade. Consequently, player salaries will also rise, with the highest-tier max contracts potentially reaching nearly $460 million over five years.
| Year | Salary |
|---|---|
| 2029-30 | $79.246 million |
| 2030-31 | $85.586 million |
| 2031-32 | $91.926 million |
| 2032-33 | $98.266 million |
| 2033-34 | $104.606 million |
| Total | $459.810 million |
We could soon see players earning $1 million per game or even $100 million per season. However, there is a potential factor that could affect the cap: expansion. NBA Commissioner Adam Silver has indicated that the league will consider expansion now that the new media deals are finalized. Adding new teams would mean dividing revenue among more franchises, which could lower the cap on a relative basis.
For now, fans and teams have until the end of the 2024-25 season to adjust to these new financial realities. The influx of new money will inevitably change how NBA rosters are constructed, but the structured cap increases should prevent the upheaval seen in 2016.
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