http://grantland.com/the-triangle/nbas-new-tv-deal-blow-up-the-salary-cap/ 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. ... 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.
Three things jump to mind immediately: 1) Teams that aren't cap and LT averse are going to love the higher amounts. 2) Teams that have positioned themselves for cap flexibility are going to be pissed because they felt the pain while the teams in #1 did not. 3) Profit. Of course. The calculus really changes. Regarding #3, if the Bulls payroll stays the same, they will massively increase profit. But they surely will trade a little of that for a higher payroll, right? Even if the Bulls pay up to the new much higher LT, they should have a higher profit than now, thanks to the BRI split (Bulls keep ~50% of the bigger TV contract money).
No doubt, this is a big deal, but we need to do some math to see that it's not quite that earth-shaking to the larger-market teams like the Bulls. According to Forbes, the Bulls bring in revenue of about $200mil per season. The new national TV contract is expected to increase league revenue by about $1billion annually in the first year of the new deal. Divided 31 ways, that works out to about $32mil per team. However, as you point out, one way or another, the players are going to get about half of this so each team ought to net about $16mil. According to Forbes, fewer than half the teams in the NBA currently have operating income of $16mil or more. For the Bulls whose operating income is estimated at about $50mil, we're talking about a 32% spike in operating income...still pretty sweet. Assuming the numbers are right, spending this coming offseason is going to be like monopoly money.
The article says teams that are capped out with huge contracts now will be able to fit TWO additional MAX contracts over two seasons.
Not sure how that would work. If the cap goes up $15mil and you were at the cap, you can give someone a $15mil contract year 1, right? Assuming all the contracts continue in effect in year 2 and the cap goes up only modestly, I can't see where that second big contract comes from.
How much LT did the Nets pay last year? $200M? "The Nets, even with Deron Williams’s atrocious contract still on the books, could suddenly find themselves with two maximum cap slots — enough for Durant and a costar. The Knicks, with Carmelo Anthony locked into what today looks like a better deal, might be able to add two more max or near-max players over the next three summers." ... "A star-laden team that can’t quite open up cap room might have enough flexibility under the tax to work a mammoth sign-and-trade; that scenario might apply more readily to the Cavs. The tax is so far in the stratosphere, you can barely see it."
The bolded is a nice job of wordsmithing, but it's essentially saying that, if the only decent player on the Nets is Deron Williams, which means among other things that Brook Lopez exercises his option to leave, then they'll have a lot of cap space. Similarly, if the Bulls let everyone but Rose, Gibson, Mirotic and McDermott walk, and Gasol exercises his player option to leave, they'll have two max slots in 2016-17. I wonder what the new max contract numbers will be.
In light of the new TV deal, that unnamed GM who said he'd happily give Butler a max contract makes a little more sense. The current max for Butler's yeaers of service is about $14mil. If the salary cap goes to $89mil, that max becomes $20mil and the $14mil doesn't look so bad.
