What the NBA’s MASSIVE TV deal means for the salary cap

From Zach Lowe at Grantland

Kevin Durant

This is a huge moment for the NBA and Adam Silver — perhaps an even bigger test than the Donald Sterling fiasco, though certainly not as viscerally interesting.
It’s a massive victory, of course. The NBA’s current national TV deal, signed at a relative low point in basketball’s popularity, pays the league about $930 million per season. The league has soared since then. Everyone knew the next deal, which picks up in 2016-17, would trump that figure in a landslide. Two years ago, smart teams began projecting a rising salary cap, and industry experts wondered if the new TV deal might crack $2 billion per year on average.

Ha, ha. The New York Times was the first to report last night that Disney and Turner will pay the NBA nearly $2.7 billion per year, on average, over nine years to retain exclusive broadcasting national broadcast rights. Holy f—ing crap. The sheer size of the number sent shockwaves through the league late on what had been a peaceful Sunday. Executives wondered what the TV cash bonanza might mean for the salary cap, for contract extension talks under way now, for the prospects of a lockout in 2017. The mood was a mix of excitement and, most of all, uncertainty. Planners don’t like uncertainty.

The importance of the league’s cap situation cannot be overstated. It has been the single biggest topic of conversation among team executives for the last year. The salary cap rises and falls hand in hand with league revenues, and this TV contract will be the largest injection of revenues in NBA history. It is a goddamned jolt.

The cap over the last 10 years jumped from $49.5 million to $63.2 million, a 28 percent increase. It stayed flat at around $58 million for a half decade before finally leaping about $5 million this season due to an uptick in revenue. This has been a period of cap tranquillity; an $8 million contract signed in 2007 was worth about the same, proportionally, as an $8 million contract signed in 2012.

The league right now projects a jump to $66.5 million for 2015-16, a modest rise pegged to the final year of that modest $930 million TV deal. If the new TV deal kicks in for the 2016-17 season just shy of $2 billion, the cap could exceed that same $14 million leap, all the way to around $80-plus million, in a single year. If for some reason the new TV deal starts north of $2 billion in the first year — meaning it would include smaller year-over-year jumps — the cap for 2016-17 could leap even higher. If it started at that exact $2.68 billion figure, it would break $90 million, according to my own math and some bleary-eyed late-Sunday projections from cap gurus around the league.

The plans as of now are to start at $2.1 billion in 2016-17, the first year of the deal, and escalate in even year-over-year increments to a peak of $3.1 billion in the final year, per sources who have reviewed a memo the league sent to teams today.

No one knows exactly how the league plans to infuse the money, and the solution could create fissures among the NBA’s 30 teams. Already, teams have started lobbying for scenarios that most benefit them. The league and players union would both seem to have some interest in avoiding any giant one-year leap in the cap number, a mega-jump that would most likely occur ahead of the 2016-17 season — just in time for free agency in July 2016, headlined by Kevin Durant.

This could have total chaos for the league.  Instead of one or two teams vying for Durant, you could have 30 teams with the cap room to sign him.  Heck, the L.A. Lakers would have enough room of three max deals.  This could turn the league upside down in a bad way if done poorly.

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