The NBA’s history of salary negotiations highlights the importance of considering long-term impacts rather than treating each deal as a standalone event. This was evident when the NBA’s lucrative 2016 television contract led to an influx of money and a spike in player salaries. The league’s $24 billion deal with ESPN and TNT nearly tripled its annual TV revenue, which caused the salary cap to jump by 32% in 2016. However, the NBA foresaw potential problems, such as pay inequities and top teams hoarding talent, so they proposed “smoothing” the salary cap increase over time. The players’ union rejected this idea, leading to a spending spree in 2016, where teams signed players to massive contracts, many of which turned out to be poor investments.
As a result, the following years saw reduced spending and a disconnect between player salaries and their actual performance. Dominant teams like the Golden State Warriors continued to thrive, raising concerns about the league’s competitiveness. With the next TV deal in 2025 expected to raise the salary cap even further, salary-cap smoothing has become a hot topic again. Given the lessons learned from the 2016 spending surge and the successful use of smoothing during the Covid-19 pandemic, there may be more openness to the idea in future negotiations between the league and the players’ union.
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