NBA’s new TV contracts could increase salary cap by about $16 million

The NBA is negotiating new TV contracts with ESPN and Turner, and let’s just say it’s a good time to own an NBA team.

The Collective Bargaining Agreement, after the last lockout, is extremely favorable. And now, TV networks are happy to pile even more money upon the league.

To be fair the players will benefit, too. The salary cap is determined by league revenue.

And this is a big boost to league revenue.

John Lombardo and John Ourand of Sports Business Journal:

Talks have progressed so rapidly that details are emerging on a massive agreement that would see the league’s annual rights fee more than double, with ESPN and Turner combining to pay more than $2 billion per year on average. One source said ESPN already has committed to pay “well over” $1 billion per year, and Turner is not far behind for a media rights extension that would kick in with the 2016-17 season.

As part of the current eight-year deals that end in June 2016, ESPN pays $485 million per year and Turner pays $445 million per year on average, bringing the league’s total take at just less than $1 billion per year.

Using those figures – including a flat $2 billion for the new contracts – the salary cap, which is determined by the NBA’s Basketball Related Income, would rise by $15,960,833.

Of course, there are caveats.

For one, I’m using the average numbers. If both the current and new contracts escalate – meaning the league is drawing more than average in 2015-16 and less than average in 2016-17 – the salary-cap increase would be diminished at first. The NBA reportedly wants to smooth any large salary-cap spikes.

These deals don’t exist in a vacuum. Perhaps this contract will adversely affect other elements of Basketball Related Income. Maybe ESPN and Turner are projecting their contracts will be more valuable, because more people will opt to watch games on television rather than attending live.

But the report calls for contracts that pay more than $2 billion, and I just used an even $2 billion. So, there’s wiggle room in the other direction, too.

All in all, about $16 million is a decent guess for the average salary-cap increase due to the new TV contracts.