The last time NBA signed a new TV deal, the salary cap went up for $24 million in one year (from $70 to $94 million) – this opened up space for the Warriors to sign Kevin Durant. It happened because the Players’ Union refused cap smoothing, and the consequences of that horrible, unfair decision were felt for years. With a few years left on the deal, the NBA started negotiations about the new TV deal, which will start in 2025. What are the numbers?
To provide some context, the NFL recently signed the largest TV deal in their history – $113 billion for 11 years. This contract signals that live sports are still the most coveted programming on TV, despite the ratings drop all TV programming has seen in the past few years. So it’s no surprise that the number talked about for the new NBA contract is astronomical compared to the current one. The TV deal that opened the door for KD is $24 billion over 9 years. According to reports, the number the conversation will start around is three times larger – $75 billion. What does this mean?
If the NBPA (Players Union) were to again make the foolish decision and refuse cap smoothing, the cap would jump around $66 million IN ONE YEAR. We’ve heard very little about their position, but I hope they wouldn’t repeat their mistake and do that. In case the NBPA agrees to cap smoothing, the projections are that the cap would go up about $15 million per season – still a considerable amount. The new CBA negotiations will start next summer, and the decision on how to adress the projected increase in revenue will be the main topic of conversation for sure.
How does this translate to contracts? Superstars and max players will set themselves up to be free agents in 2025 and cash in on the significant increase (whatever the new CBA looks like). In 2017, Steph Curry signed the first $200 million contract in NBA history. In less than a decade, we could be seeing $300 million ones. Players drafted in ’19 and ’20 will get large extension offers – the teams may overpay them in the first few years of those deals (’23 and ’24), but once the new TV deal kicks in, they will become a great value in the latter part of those deals. For players drafted a few years later, the qualifying offer could become a thing for the first time in history.
Keep one thing in mind – the revenue is basically split in half between the players and owners. This means that team valuations will skyrocket once again, and the owners will be flushed with cash. It’s already absurd when teams with a legitimate title chance don’t want to pay the luxury tax – in 2025, it will be equivalent to spitting on your fanbase.
To all the owners – if your team has a chance to compete, pay up!