NBA television deal could give Lakers massive spending power in 2016
The Lakers stand to have significant spending power in 2016-17 free agency, with the NBA announcing on Monday a lucrative extension of their national television deal with Turner Broadcasting System, Inc. (TNT) and the Walt Disney Company (ABC, ESPN).
The agreement, which will start for the 2016-17 season, run through 2024-25, will total approximately $24.2 billion or $2.6 billion per year. The current television agreement (over the next two seasons) brings in about $930 million to the league; clearly the extension represents a significant increase.
It’s premature for a concrete number, but the new broadcast deal will significantly raise the NBA’s salary cap.
The cap for the 2014-15 season is $63.1 million. The early projection for next season is $66.3 million. Each year the NBA computes a projection of Basketball Related Income (BRI). The players receive 49-51% of BRI, which will clearly climb with an influx of roughly $1.7 billion per year.
The league and the players’ union are already negotiating how to accommodate the significant rise in revenue, which may start at $2.1 billion in the first year of the deal.
With the salary cap jumping perhaps to $75-90 million for the 2016-17 season, the Lakers have only $4.3 million in guaranteed contracts that year -- $8.7 million, assuming they take the third-year option on Julius Randle’s contract.
The NBA may look to curtail a massive spike in the salary cap, working it in gradually. A lower estimate for the 2016-17 season might be $70 million.
The player are still entitled to receive up to 51% of BRI, but any shortfall may be distributed to the players union to allocate, instead of an initial jump in salary cap and player contracts.
If the Lakers brought back just Nick Young and Randle, the team could have in the neighborhood of $61-76 million in spending power. That would presumable shrink as the team adds additional talent next offseason, but the contracts of Kobe Bryant, Steve Nash, Carlos Boozer, Jeremy Lin, etc. all come off before the summer of 2016.
LeBron James of Cleveland Cavaliers and Kevin Durant of the Oklahoma City Thunder are both expected to be free agents before the 2016-17 season.
In addition to the salary cap climbing, so will maximum contracts. James will earn $20.6 million this season; Durant will make $19.0 million. The pair may earn nearly $30 million apiece under an elevated salary cap. In theory, the Lakers could afford both.
Bryant may retire after 20 seasons, but then he also considered calling it a career before accepting his two-year, $48.5 million extension that starts this season.
The exact numbers for the 2016-17 salary cap may not be available until July of 2016, but a more accurate projection will likely come well before then, as the league adjusts to the massive increase in revenue.
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