Why does the cap keep rising so much?

[Deivork]

Teams used to rely almost entirely on locally generated revenue, mostly tickets and broadcasting. Today the national broadcast deals are increasingly more significant, as well as an explosion globally.

Teams have expanded their revenue opportunities. Streaming and video clips give the public access to games, highlights and interviews that didn't exist a decade ago. Teams are gaining more control over parking and hospitality surrounding NBA arenas. Naming rights and sponsor opportunities for arenas and practice facilities are more widespread. Arenas have become revenue generators with mall-like shopping and pricey food and beverage outlets. In game entertainment and promotions generate revenue, with sponsors for dance teams, drum groups, baby races, acrobats, dunk squads, t-shirt cannons, and more. Jumbotrons have evolved from highlight replay monitors to sponsor billboards that captivate spectators with non-stop content. Fans are attending games outside of arenas in festival-like atmospheres, replete with video screens, food and beverage concessions and live radio and TV broadcasts. Sports betting provides a new income category coming out of the shadows. Uniform patches add new revenue that is growing as the practice achieves wider acceptance. Every team has a half dozen or so uniform styles, some of which turn over after a few months. A broader acceptance of previously taboo sponsor categories like liquor and gambling have been added to evolving businesses like dot coms and crypto that expand sponsor lists. Summer League has been elevated from a minor off-season oddity to a nationally reported and televised event. The G-League promotes fringe players coming to an arena near you. The All-Star Game has expanded into a three day reality TV carnival that adds eyeballs and new gimmicky events featuring red carpet celebrities and bball legends. Broadcast interest and advertising opportunities explode with more focus on the draft lottery, the draft itself, free agency, the trade deadline and the buy out market. Hype sells. The NBA has its own streaming service, its own cable TV network and its own satellite radio station. The NBA and all 30 teams have their own app, all generating new income. The Play-In tournament keeps more fan bases engaged deeper into the season and generates added national TV games. More attention and hype is directed at individual accomplishments via player/rookie/coach of the week or month. Trophies and acclaim for All-Rookie, All-Defense, All-Star, Rising-Star, All-NBA, Coach of the Year, Exec of the Year and associated news events as voting updates are provided, nominees are announced and winners are congratulated and celebrated. Every team achieves some sort of special status: lottery team participant, play-in team, playoff team, conference finalist, Finals team, Champion - all tied to sponsorships and media rights. More revenue, higher salary cap.

Do you know the Enter key? Good points though.

[xdrta+]

The salary cap is not some arbitrary amount, there is a formula. The calculation takes 44.74% of projected Basketball Related Income (BRI), subtracts projected benefits, and divides by the number of teams in the league. The projected BRI is negotiated between the owners and Players Association, and if they don't agree by June 30, they use the set amount for national broadcast rights plus the BRI for the previous season (other than national broadcast rights), increased by 4.5%. There are some minor adjustments depending on whether the previous season's salaries were over or under the amount in escrow.

So, obviously, the cap goes up for because the BRI goes up, and has gone up dramatically over the last 15 years. The same reason team valuations have gone up.

[HotelVitale]

Looks like folks laid out a lot of good pieces to the puzzle, wondering if anyone knows the actual numbers. What the total amount is for local TV deals, what for national, what from ticket/gate receipts, what from international markets (unclear to me how much $ comes in from that or how). I think OP's question about what specifically has been increasing is interesting.

The numbers for budgets are usually surprising in my experience, some things you expect are major player end up being less relevant and vice versa.

[Dominator83]

TV viewership is a dying medium, and the NBA has been steadily growing in popularity for years, with significant gains in the US, and massive gains globally. The NBA has surpassed the MLB for the title of the second most popular major sports association in the US, and it dwarfs the NFL and MLB outside the US (I say this as a huge NFL fan).

In the 90s, the NBA pivoted away from trying to appeal to the older generation of fans and focused on growing their product with younger fans, the MTV/gen X generation, and also starting growing their business internationally. While many criticized that decision, the NBA held firm and pretty much doubled down, making the sport more and more accessible to younger and international fans. Now, here we are a little over two decades later and the NBA is reaping the rewards of those decisions. If you notice, the NFL has been trying to copy the NBA's model for some time, looking to appeal to younger and younger fans and trying to grow globally.

It honestly wouldn't surprise me if the cap could actually be raised higher to what it's being raised to, but last time the cap jumped too high too quickly it lead to the formation of a super duper team, and the NBA likely doesn't want that again.

TV is dying outside of sports and these deals are what keeps TV around and relevant, running the money through TV companies makes it more palatable somehow. If the NBA/players wanted the same BR income they get now by including every game on league pass, they’d have to charge like $100 per month minimum and everyone would squawk, but they run it through the TV companies so it looks like they’re not the bad guys.

I get that players deserve a fair split of the money, there’s just no reason for there to be so much damn money. We’re paying it, the money comes us right? How about I pay $50 per month for everything on LP and supermax guys make $25M per instead of $50M or $60M. Will that be enough to keep them in the US? Will the teams have enough money to keep the doors open? Will buying a team still be foolproof investment? I sure hope so!

Next complain about Amazon!

Sent from my SM-S9080 using RealGM mobile app

If you have been an Amazon share holder in the last few years, you know full well that Amazon wastes money hand over fist

[naabzor]

So that teams can stack their roster as much as they can.

[dhsilv2]

In 2012 the cap was $58M, 10 years later it doubled at $112M (2022). This year we're at $134M.

https://www.spotrac.com/nba/cba/

The cap keeps rising steadily.

However, viewership stats are so-so in the same period, LeBron is about to retire and major world economies just suffer(ed) recession recently. How is it that we keep hearing it will keep rising steadily? Why are TV/tech companies willing to pay more and more in the next CBA?

(Maybe i'm wrong hear, is the TV deal also attached to the CBA negotiations?)

I'm no expert in economy and I get that a steady minor increase due to inflation will always happen but this still feels odd to me. What is the explanation here? I get what Jordan brought to the product, but it doesn't feel to me like the NBA popularity has comparatively risen since he retired. Also in relation to other sports. For instance, Damian Lillard was a Top-20 paid athlete in the world last year. He wouldn't crack Top-50 just 10 or 15 years ago, would he?

https://www.foxsports.com.au/more-sports/over-a-billion-dollars-to-just-10-stars-highestpaid-athletes-of-2022-revealed/news-story/9c49693da001963b98889f7ea5a226de

It feels odd to me that the Fred Van Vleets and Jeramy Grants of the world could be making $30M a year as soon as next season. Where's the money coming from?

Revenue drives the salary cap. It goes up $1 for every $2 in increased revenue.

In the past decade inflation as increased prices (decreased the dollar) by 31%.

That's a BIT misleading. Most of that spike was in the last year and a half. My calculator vs your might be marginally off but 2011 to 2021 it was around 18-19%. You only get the 30% in the last year which hasn't driven the prior cap increases which is most of this discussion.

[Revived]

I’ve wondered this same thing. Is there really that many new viewers for basketball?

Imagine if all our salaries increased 40% or whatever every 3-4 years the way the NBA salary cap goes up….

[Pachinko_]

I don't think the NBA makes those numbers public, but if I had to guess I'd say their revenue growth is driven by
- TV companies getting in a bidding war over one of the last few prime TV products that can still get people to sign up
- Market penetration in foreign countries because of more international players than ever
- Good old fashioned inflation

[giannis and 1]

In 2012 the cap was $58M, 10 years later it doubled at $112M (2022). This year we're at $134M.

https://www.spotrac.com/nba/cba/

The cap keeps rising steadily.

However, viewership stats are so-so in the same period, LeBron is about to retire and major world economies just suffer(ed) recession recently. How is it that we keep hearing it will keep rising steadily? Why are TV/tech companies willing to pay more and more in the next CBA?

(Maybe i'm wrong hear, is the TV deal also attached to the CBA negotiations?)

I'm no expert in economy and I get that a steady minor increase due to inflation will always happen but this still feels odd to me. What is the explanation here? I get what Jordan brought to the product, but it doesn't feel to me like the NBA popularity has comparatively risen since he retired. Also in relation to other sports. For instance, Damian Lillard was a Top-20 paid athlete in the world last year. He wouldn't crack Top-50 just 10 or 15 years ago, would he?

https://www.foxsports.com.au/more-sports/over-a-billion-dollars-to-just-10-stars-highestpaid-athletes-of-2022-revealed/news-story/9c49693da001963b98889f7ea5a226de

It feels odd to me that the Fred Van Vleets and Jeramy Grants of the world could be making $30M a year as soon as next season. Where's the money coming from?

Because basketball is the best sport on the planet and ppl wanna watch it?

[TheGOATWill]

I’ve wondered this same thing. Is there really that many new viewers for basketball?

Imagine if all our salaries increased 40% or whatever every 3-4 years the way the NBA salary cap goes up….

The power of a well organized labor union. They have a voice in determining what they are worth. You and I take what we can get because we have to. There used to be a time in this country when labor unions wielded significant influence for the working stiff. But we allowed corporations to convince us that’s a bad thing.