New T.V. Deal = More $

The NBA just signed a new T.V. deal with ESPN and TNT over the next 9 years for over $24 Billion… What this means, besides more money for everyone, is that the salary cap is expected to rise again. This will cause all sorts of excitement as new free agents will start to look for larger contracts, and teams will have the cap space to provide these contracts. The next few free agency periods are set up to be extremely exiting, with a lot of player movement, and outrageously large contracts.

What I find really interesting are the contracts that have already been signed. For example, LeBron James signed his new contract this last summer for 1 year, with a second year player-option (meaning he can choose whether he wants to opt in to the second year of his contract, or opt out and test the free agency market). I don’t think that it is a coincidence that he signed that deal just prior to the league signing this new crazy T.V. deal. I think this was a financially savvy move by LeBron and his people because he knew that this T.V. deal was going down, and that the maximum contract size would probably increase. This will allow him to re-negotiate his contract next summer to ensure that he is making as much as he should.

Another deal that was just signed was for Denver Nuggets’ Forward Kenneth Faried. In the last few days he signed he singed a 4 year $50 million extension. While this is a lot of money, I think the Nuggets felt like it was a bargain because they were able to get this contract on the books before the new salary cap rules take place. This means that compared to the current cap, Faried will be taking up a much smaller % of the cap when it is raised. The Nuggets are essentially receiving Faried at a bargain.

I could imagine players, like Faried, being very unhappy with this if they had already signed contracts that will carry over into the new salary cap. Faried will be watching players who are around his skill level, and value, sign contracts that are larger than the one he just signed due to the fact that there will be much more cap space for teams to spend.

This will presumably be a major point of discussion during the next collective bargaining agreement, and could potentially be a major discrepancy between the Players Union and the Owners, leading to another lockout. Hopefully this isn’t the case, but these are all things that will be interesting to keep an eye on in the next few years.

Happy NBA season!!

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