The cap future

[PDX MM]

Was talking to a friend today about the Blazer's cap issues and an interesting question came from it that I hope someone here can answer. So as we all know thanks to the mega tv deal the cap jumped up quite a bit and I have heard will go up some again this summer. Lets say in the future when those tv deals expire and either they are not re upped or are signed at a much lower dollar amount would the cap number drop as fast as it has gone up? It seems unlikely since that would put pretty much every team well over the line but I have no clue how that all works.

[Smitty731]

Was talking to a friend today about the Blazer's cap issues and an interesting question came from it that I hope someone here can answer. So as we all know thanks to the mega tv deal the cap jumped up quite a bit and I have heard will go up some again this summer. Lets say in the future when those tv deals expire and either they are not re upped or are signed at a much lower dollar amount would the cap number drop as fast as it has gone up? It seems unlikely since that would put pretty much every team well over the line but I have no clue how that all works.

It could drop. TV is one of the bigger pieces of the money pie, but it isn't the only piece.

Essentially what happens (I'm over-simplifying for ease of understanding) is that all basketball related income (BRI) is split between the owners and players based on an agreed upon percentage. And the cap is created as a result of that split. So, if anything happens to cause BRI to be lower, the cap will also go down. And yes, that could mean that several, if not all, teams end up over the cap.

FWIW, things aren't expected to change all that much in the near future. The cap is project to rise, but at a slower, more normal rate for the next handful of years.

[DBoys]

This isn't exactly answering what you asked, but it's the real world answer:

TV revenues will not go down next time. That's how these things work.

[Smitty731]

This isn't exactly answering what you asked, but it's the real world answer:

TV revenues will not go down next time. That's how these things work.

This is especially true with sports being one of the last remaining premium TV events. There is a reason that sports and award shows draw such huge money. They are one of the few things that people still watch live.

[Bryant Reeves]

Latest projection was $101m and NBA warned of its drop early April. That was before the Warriors ended up going 12-0 and Cavs 12-1, and likely 4-0 Finals.

17-18 cap might end up $99m? Sucks to be the teams that are already over the cap.

[Smitty731]

Latest projection was $101m and NBA warned of its drop early April. That was before the Warriors ended up going 12-0 and Cavs 12-1, and likely 4-0 Finals.

17-18 cap might end up $99m? Sucks to be the teams that are already over the cap.

Albert Nahmad, who is as good at this stuff as anyone, said he thinks it could drop $1-$2 million, so you are in range. There is also some scuttlebutt that the $101 projection already priced in a shorter than desirable postseason. At this point it is just wait and see.

[BdeRegt]

Latest projection was $101m and NBA warned of its drop early April. That was before the Warriors ended up going 12-0 and Cavs 12-1, and likely 4-0 Finals.

17-18 cap might end up $99m? Sucks to be the teams that are already over the cap.

Albert Nahmad, who is as good at this stuff as anyone, said he thinks it could drop $1-$2 million, so you are in range. There is also some scuttlebutt that the $101 projection already priced in a shorter than desirable postseason. At this point it is just wait and see.

No one knows what projections are used for the estimate (at least not publicly that know) so I would guess if anything it drops from 101-100.7 or something like that. It won't be $2M in my mind. As a Warriors fan, I'm hoping for lowest cap possible as benefits them long term but I think it might come in a little higher like 102-103. I think revenue was actually pretty good for league this year.

[Smitty731]

Latest projection was $101m and NBA warned of its drop early April. That was before the Warriors ended up going 12-0 and Cavs 12-1, and likely 4-0 Finals.

17-18 cap might end up $99m? Sucks to be the teams that are already over the cap.

Albert Nahmad, who is as good at this stuff as anyone, said he thinks it could drop $1-$2 million, so you are in range. There is also some scuttlebutt that the $101 projection already priced in a shorter than desirable postseason. At this point it is just wait and see.

No one knows what projections are used for the estimate (at least not publicly that know) so I would guess if anything it drops from 101-100.7 or something like that. It won't be $2M in my mind. As a Warriors fan, I'm hoping for lowest cap possible as benefits them long term but I think it might come in a little higher like 102-103. I think revenue was actually pretty good for league this year.

Albert is rarely off on his projections by more than a few hundred thousand. I'd be shocked if it came in at $103. I'd welcome it though.

[Bryant Reeves]

Latest projection was $101m and NBA warned of its drop early April. That was before the Warriors ended up going 12-0 and Cavs 12-1, and likely 4-0 Finals.

17-18 cap might end up $99m? Sucks to be the teams that are already over the cap.

Albert Nahmad, who is as good at this stuff as anyone, said he thinks it could drop $1-$2 million, so you are in range. There is also some scuttlebutt that the $101 projection already priced in a shorter than desirable postseason. At this point it is just wait and see.

No one knows what projections are used for the estimate (at least not publicly that know) so I would guess if anything it drops from 101-100.7 or something like that. It won't be $2M in my mind. As a Warriors fan, I'm hoping for lowest cap possible as benefits them long term but I think it might come in a little higher like 102-103. I think revenue was actually pretty good for league this year.

I guess Silver's crystal ball wouldn't know 12-0 and 12-1 then 4-1 back in April. It's just common sense.

[Warriorfan]

Question is there any advantage to KD taking such a big pay discount of 25 vs 31.8

Luxury Cap is 16 above cap and apron 6 million above that.

Warriors stand to be at 127 if Iggy 48 and Livingston 24 are 15 and 7.5 per year.

[Smitty731]

Question is there any advantage to KD taking such a big pay discount of 25 vs 31.8

Luxury Cap is 16 above cap and apron 6 million above that.

Warriors stand to be at 127 if Iggy 48 and Livingston 24 are 15 and 7.5 per year.

Only to the owners' wallet.

[Warriorfan]

Question is there any advantage to KD taking such a big pay discount of 25 vs 31.8

Luxury Cap is 16 above cap and apron 6 million above that.

Warriors stand to be at 127 if Iggy 48 and Livingston 24 are 15 and 7.5 per year.

Only to the owners' wallet.

With a growing number of teams going over the luxury tax line and on Cavs Port GS case way over does it push the cap upwards as basketball related income.

[DBoys]

No.

As you note, cap is based on BRI (basketball related income). And payroll spending is not basketball related "income" or any other kind of income to the owners. It's spending.

[HeatFanLifer]

Was talking to a friend today about the Blazer's cap issues and an interesting question came from it that I hope someone here can answer. So as we all know thanks to the mega tv deal the cap jumped up quite a bit and I have heard will go up some again this summer. Lets say in the future when those tv deals expire and either they are not re upped or are signed at a much lower dollar amount would the cap number drop as fast as it has gone up? It seems unlikely since that would put pretty much every team well over the line but I have no clue how that all works.

It could drop. TV is one of the bigger pieces of the money pie, but it isn't the only piece.

Essentially what happens (I'm over-simplifying for ease of understanding) is that all basketball related income (BRI) is split between the owners and players based on an agreed upon percentage. And the cap is created as a result of that split. So, if anything happens to cause BRI to be lower, the cap will also go down. And yes, that could mean that several, if not all, teams end up over the cap.

FWIW, things aren't expected to change all that much in the near future. The cap is project to rise, but at a slower, more normal rate for the next handful of years.

https://www.usatoday.com/story/sports/columnist/nancy-armour/2017/07/13/why-recent-big-money-deals-sports-cant-sustained/477441001/

Interesting article on the future of tv contracts and professional sports. Due to all the cord cutting, the NBA, nfl, etc are going to have to find alternative revenue sources. Will it cause reduction in revenue? Perhaps not, but it could result in a long term plateau.

[winter_mute_13]

That's an argument against TV networks, ESPN and the like. The NBA is a content creator. People still want the NBA's content.

If anything, the increasing move to direct subscriptions via digital will probably increase the NBA's revenue, as they cut out the middleman networks.