The NBA TV Deal/Salary Cap Explained

ABC and TNT just signed a 9-year, $24 billion dollar deal with the NBA guaranteeing exclusive broadcast rights to both networks which will go into effect at the start of the 2016–2017 season. If you’re wondering why this is such a big deal, read on…

Why is this deal so huge?

It is a shit-storm increase from the last deal, which was unfortunately signed in 2007 for $930 million, when the Spurs faced the Cavs in a Finals that experienced a 27% ratings dip from 2006 (12.97 million down from the previous year to 9.29 million viewers). Leave it to the Spurs to be so boringly successful.

The last few years, however, have been incredible for the NBA. An influx of stars and the further rise of LeBron James has translated into ratings success, with an average finals viewership of 16.4 million from 2008–2015 up from a pre-deal average of 13.8 million from 2002–2006.

What does this mean for salary caps?

The salary cap in the NBA fluctuates with total revenue, so the cap changes from year to year depending on how much money the league brings in. This TV deal is a serious injection of revenue, meaning that salary caps are slated for a steep increase.

To facilitate this steep increase and prevent outrageous bidding on players, the league has proposed a transition method called “smoothing” that would set the salary cap at a lower amount at the beginning of the 2016–2017 season. That motion was rejected outright by the players union.

What else is in the deal?

In 2007, TNT and ESPN received digital rights to start streaming NBA games over the internet. The 2014 deal expands TNT’s role as a digital production partner, in which the network will not only stream NBA games but produce enhanced content (stats/camera angles to optimize TV production) across multiple on Bleacher Report (a 2012 Turner acquisition). TNT has also announced a NBA Awards Show after each season and will also continue to manage the NBA’s online presence (NBA.com, NBA Mobile, etc.).

Bottom Line: The deal increases the NBA’s already-strong media presence while bringing optimized content to online platforms, but the salary cap increase is hook everyone is waiting for. With the crazy influx of money, a lot of teams become big players in the 2016 free agency period, which means that it will take a lot more than a max deal to lure a star. With the emergence of financial parity on this scale, the league is all but certain to see who has the best front office talent in the NBA.