The Salary Cap in Sports: Part 2 (Basketball)

In our first post about the salary cap in sports, we learned about how unlimited the baseball cap was while higher revenue teams reap the benefits. In the second part of the three part series, we will be looking at the growing NBA salary cap as it looks to make a big leap in the next couple of years, increasing the player’s benefits.

The salary cap has slowly been moving up over the past three years, from nearly $59 million in the 2013-2014 season up to $70 million flat for the 2015-2016 season. For the five seasons before that, it was stagnant around $58 million, not allowing the players to see a lot of growth in out their contracts. This left teams with room for only one or two star players when their rookie contracts expired (The Miami Heat are the exception with three stars). You definitely needed to draft well to succeed, while also building depth.

Here we are at the end of the 2015-2016 season and teams may not have to follow that approach anymore. The cap is supposed to increase nearly $20 million for the 2016-2017 season and finally hit $108 million for the 2017-2018 season. This is nearly a $50 million increase from the cap three years ago. How is this happening?

More money for everybody! The NBA signed a 9-year deal worth $24 billion in October of 2014 and it simply means that there is more money to go around for the teams. ESPN and Turner were paying the NBA $930 million annually from a contract signed in 2007 but in the new deal that jumped up to $2.6 billion, a 180% increase. Why would ESPN and Turner want to pay that much money, you say? With ratings dropping across all shows, sports that are live have been one of the only things that has been either staying constant or increasing. This means the TV companies want to invest, and invest big time.

Now that teams will have gigantic amounts of cap room, free agents will be in high demand and their prices will go up. We will see stars paid a great amount, we will see good players paid more, we will see mediocre players paid more and we will see just plain bad players paid more!

Now the main concern with this salary cap increase is the teams that already have multiple stars would be able to spend even more to add another star or key players that could help them be a contender for a long time. This could create a large gap in which there would be bad teams and excellent teams, with not very many in between. This could be seen from these excellent teams taking good players from the mediocre teams and instead of everyone trying to compete, some teams could put together mega-rosters. Competitive balance would be a concern.

This is where another thought that Grantland (RIP Grantland) writer Zach Lowe brought up back in 2014 comes in. Do we even need a salary cap now? The majority of teams might not even reach it because of the lack of stars to go around for everyone, how else would they spend it? On the mediocre players I noted before? We will see. It’s an interesting story to follow.


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