For months, the prevailing wisdom was that a new national TV contract could net the NBA twice the current $930 million that ESPN and Turner Sports pay to carry nationally televised games.
Turns out that was being modest.
In news that will delight both players and owners alike, the new deal with ESPN and Turner will reportedly almost triple the current deal, according to a report from the New York Times' Richard Sandomir. Totaling $24 billion over nine years, it would pay the league approximately $2.66 billion per season--a prorated increase of almost $60 million per team if you want to think about it that way. How the new deal impacts the league in a broader sense is as of yet unclear, though it won't do anything to curb the already sensational growth in team valuations witnessed over the past year, nor will it diminish teams' willingness to spend lavishly on new player contracts. Translation: The mega-contracts that Gordon Hayward, Chandler Parsons and Eric Bledsoe landed this summer might end up looking like standard fare by as soon as next summer.
A bigger revenue pie would of course be a great thing for both teams and players, the Milwaukee Bucks included, though there's still plenty of uncertainty as to how the NBA's new financial landscape will affect team spending. Back in the good old days of thinking the new TV deal would be in range $2 billion annually (you know, way back in September), many had speculated that the TV cash alone could push the salary cap from its current $63 million level to upwards of $80 million by 2016. Needless to say, the richer TV deal will only boost that number further ($85 million? $95 million?), though the "how much?" question isn't entirely clear right now. The cap is the primary means by which the league guarantees players a minimum of 49% and maximum of 51% of basketball-related income (BRI), though the cap itself is based off 44.74% of the BRI figure. BRI itself was projected at around $4.75 billion last spring using the current $930 million, so the new TV deal will represent a substantial (though still less than 50%) share of BRI going forward.
Looking ahead, the expectation of a rich TV deal was already impacting how players were approaching negotiations this summer, and the higher-than-expected figure will no doubt play a huge role in how teams and agents approach rookie extensions and free agency over the next two summers. The TV deal expiration played no small part in LeBron James signing a deal that would allow him to become a free agent in 2016, and he's not the only player with an agent keenly aware of a possible sea change in league economics two years from now. With that in mind, Zach Lowe and others have alluded to the possibility of the league attempting to "smooth" the impending 2016 cap surge, a scenario intended to mitigate the likelihood of new contract figures skyrocketing overnight from 2015 to 2016. Toss in the likelihood of another work stoppage following the 16/17 season, and suddenly things become even murkier.
One thing that would seem to be clear: If you're looking to establish what "market" rates will be going forward, you can probably throw out contracts from more than a couple months ago as "fair" market benchmarks, and even those signed this summer might not be good barometers of where the market will move. In other words, if you're thinking about what Brandon Knight may eventually be worth, don't act like the deals that Steph Curry (four years, $44 million), Ty Lawson (four/$48 million), and Jrue Holiday (four/$41 million) signed in 2012 are still the relevant benchmarks for point guard extensions.
It's not to say Knight is guaranteed to be paid equal or more than his older, more accomplished peers on the open market, but you can bet his agent Arn Tellem will be asking for at least the same type of numbers when he and the Bucks talk extension over the next month. Whether the Bucks would be equally as enthusiastic about that sort of deal is decidedly less clear, though that also highlights all the variables that teams and agents must now figure into their negotiating plans. On the one hand, teams will now likely be more willing to "lock up" players on deals that exceed prior conventional wisdom, even if the cap doesn't see a big rise until 2016. For instance, did the Suns know something last week when they dramatically upped their offer to Bledsoe and also locked in the Morris twins? Whatever the case, the fundamental question teams should be asking about player contracts remains the same, even if the numbers will be going up. Do we want this guy on our team long term? Can we get him at a number that makes sense in the bigger picture of our cap going forward? And can we retain the flexibility to trade him if circumstances change?
Still, even with huge TV cash on the team, teams above the cap or near the projected tax will have to tread carefully in case a smoothing plan doesn't bring additional cap relief next summer, and many agents may be wary of rookie extensions if their expectations for cap increases exceed those of the teams with which they're negotiating. In short, everyone in the league stands to make more money going forward, but the split of who gets what? Well, that remains as unclear as ever.