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Last month, three different sports racked up big viewership numbers in the US—well, two put up big numbers and one put up big numbers for that sport—but I didn’t want to bury those big updates (and my takes/opinions on what they mean) behind the paywall in the Streaming Ratings Report’s bonus sections. Figuring out why something’s viewership actually popped is notoriously complicated.
Then, waiting to get this update out, two fun pieces of sports news came out, confirming two of my hypotheses, so I had to share that.
But as happens, I went long. (If you think this is long, wait until you read my Obsession/Backrooms analysis…it went very, very long.) So today, I’ll review the NBA’s salary cap NOT going up and how this will impact players, along with the big, no, HUGE NBA finals viewership, and how this indicts a certain 2010s-era superstar (and his media coverage). Next week, I’ll provide updates on UFC 250, Formula 1, the NHL and the World Cup.
Let’s dive right in!
The NBA Salary Cap Is Only Projected to Go Up by 5.5% Next Year
Two years ago, I poured cold water on the massive headlines that the NBA TRIPLED!!!!!! ITS MEDIA RIGHTS DEAL!!!!!!! pointing out that they had to add years, games, a third media partner, and global rights to get those headlines, and even with all of that, this deal’s annual increases were actually smaller than the last deal. (And much smaller if you pulled out the new partner’s revenue!)
Plus, you know, local media rights were dying, which would offset those gains.
Since then, many, many NBA pundits and fans pointed to this deal as a sign of the NBA’s league-wide health, and many/most people expected that the salary cap would go up by the max allowed in the collective bargaining agreement of 10% for several years in a row.
Just two weeks ago, the NBA announced the projections for the 2027-2028 season: 5.5%. Last summer, they projected that the 2026-2027 would grow by 7%, but actually came in at 6.7%. The league’s growth is actually slowing down. (I’m using Basketball-Reference’s salary cap table for the actual numbers.)
Let’s visualize this. First, if you look at just the totals, the numbers are very big:
(Note: This isn’t the NBA’s total revenue, but it’s a good proxy for it, since it’s roughly 51% of the NBA’s “basketball related income”.)
But the problem is that a business entity’s value is as much tied to growth as anything else. And comparing the deals, you can see how much slower growth has been since the NBA’s new media rights deal was signed:
Again, what matters is why. As much as the national media rights deal went up, it’s being offset by losses in local media rights, something I was very worried about two years ago. Making it worse, the new media rights deal didn’t actually increase, in percentage terms, as much as the previous media rights deal—the 2025 deal increases by 10% per year versus 11.7% for the 2016 deal—something almost no one mentioned at the time. If you factor in the extra packages, than the league only increased media rights around 5.5 to 6.7% per year.
I’m pretty unenthused with much NBA commentary and analysis, because I just didn’t hear much about this issue. Before last night, I only heard one person briefly mention the salary cap not going up, and between me and my editor/researcher, we listen to five NBA podcasts. This should have come up more often, but it didn’t.
But the NBA media seems to have finally realized the severity of this issue. Just last night, the don of NBA media, Bill Simmons, discussed it extensively in his podcast, saying, “I wish I had been more focused on it…I think [the cap] will be $25 million less than they thought [in future years].” Later in the podcast, his guest Joe House called it an incredible miss and they need to tell all their hoops head brethren about it. “Professor” Zach Lowe also made a similar case that most NBA teams weren’t ready for the salary cap growth to go down, not up.
But again, until last night, no one was talking about this, when this situation has been coming for two years. (Luckily, I put out some social content about it two weeks ago, the day the new salary cap info came out.)
Will This Hurt NBA Expansion in America?
Sorry to toot my own horn, but I’ve been warning about this for two years, and I wish more people had heeded my warnings. It also may have real world impacts on the NBA’s finances, and that may tamp down some of the buzz they’ve generated over the last few years.
Here’s one example: there’s a lot of chatter about how the NBA was going to expand by two teams in future years, with each expansion team paying $5 billion (which only goes to the owners and isn’t shared with players). Then, earlier this year, the NBA leaked (through sources) that, nah, that’s not happening anymore. After all, the media rights deal is too lucrative and the owners don’t want to split it with anyone else.
The declining revenue growth for the NBA below expectations is probably a better explanation for why the market for expansion teams dried up. If you’d invested in the S&P 500, you’d have a better return than the NBA’s revenue growth.
Also, consider the options facing a new expansion team, as mentioned in that Athletic article...
- …either the two new teams get a piece of that national media rights deal (lowering revenue for every team even more, which the owners don’t want)…
- …or the new teams don’t get a piece of the media rights deal for some amount of time, as happened during the ABA-NBA merger in the 70s. Since local media rights are basically evaporating, a new team would have to rely only on ticket sales and sponsorships for their first half a decade in the league.
Either way, someone loses! And in the scenario where a team can’t collect national media rights and local sports rights evaporate, a new team would have something like half of the revenue of other teams, and players’ salaries would take up most of that money. Running an expansion team would be virtually impossible.
That is likely why expansion in America is on hold.
Side Note: This is Impacting NBA Team Building
Okay, that’s the business strategy side of things, can you spare me a quick aside on how this is actively impacting NBA team building? If you don’t care about the NBA, go ahead and skip to the next section….
Recently, the Boston Celtics traded Jaylen Brown to the Philadelphia Sixers for, basically, a bag of beans. Why? Well, Jaylen Brown has a gigantic contract. And the no-longer-increasing salary cap is partially why.
After the media rights deal, most people assumed that the salary cap would grow by 10% per year (the max allowed under the NBA/players’ collective bargaining agreement). After all, everyone was saying how the deal tripled in size! This means that mega-deals would go down as a percentage of the salary cap. But as just got announced, the salary cap is now growing more slowly than salaries are increasing.
Which means that NBA salaries are taking an increasing amount of the salary. Here are some images. Let’s use Jaylen Brown’s contract as an example. I made the current scenario on the right, to show the actual increases, and the left is a scenario where the cap had increased by 10% per year.
(Yeah, I don’t normally like cutting off the Y-Axis, but in this case, the graph is based on percentages so it made sense.)
In the current scenario, if you have two max salary guys, they take up more and more of your cap as the salary cap doesn’t increase. In the “upside scenario” where the salary cap increased by 10% per year, those salaries get more affordable.
So if you work in an NBA front office, you should know the actual state of the NBA’s finances, since if the cap continues to not grow, that directly impacts how you should go about building your team.
Did the NBA Have a Star Problem in the 2010s?
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