The NBA and its players union agreed on on a new collective bargaining agreement this month, preserving the league’s economic model that valued franchises in Phoenix and Milwaukee at $4 billion and $3.2 billion in recent transactions.
Players also picked up a few wins in the negotiations. Chief among those gains was an expansion of Basketball Related Income, which defines the revenue pie used to determine the share players receive. For the first time since the inception of the salary cap system 40 years ago, team and league licensing revenue will be included in the BRI calculation. This is expected to add roughly $160 million to BRI for the 2023-24 season and should grow annually.
BRI will be expanded further with respect to the treatment of complimentary tickets, team watch parties, barter expenses, plaza naming rights and equity transactions. These changes, plus built-in revenue gains, are expected to result in a $250 million increase in salaries and benefits next season, according to someone familiar with the CBA term sheet who was not authorized to speak publicly.
The previous CBA guaranteed players between 49% and 51% of BRI, and the players received 51% each season except for 2020-21 due to the impact of COVID-19. In the new CBA, players are expected to receive 51% of BRI throughout the agreement under the negotiated formula for “forecasted BRI.” The next NBA TV contract will greatly impact league revenue and player contracts, but players are currently projected to earn between a total of $45 billion and $50 billion in salaries and benefits during the seven-year term of the CBA. Teams received roughly $23 billion during the past six years of the CBA.
The NBA and NBPA declined to comment on specific terms of the new CBA.
The new in-season tournament that kicks off next season will also bump BRI, since it adds value to the national TV package. Prize money has tentatively been set for players on the top eight finishing teams starting at $50,000 and up to $500,000 for each player on the winning squad.
BRI will continue to exclude expansion proceeds, which could be an $8 billion windfall for current owners with expansion talks expected to ramp up after the next round of TV deals are completed. Revenue sharing and team sales are also excluded from BRI, along with 50% of the proceeds from arena signage, luxury suites and venue naming rights. Portions of those arena revenues are excluded due to the non-NBA events in those buildings.
The addition of a second “tax apron” in the new CBA has received much of the attention for its impact on roster construction and its impact on teams like the Golden State Warriors and Los Angeles Clippers that seemingly viewed the luxury tax threshold as a speed bump based on their nine-figure tax bills. It was a compromise players made to ward off owners’ demands for an upper spending limit or hard cap.
The players received a few tradeoffs for acquiescing to the second apron that should encourage certain teams to spend more freely. Starting in the 2025-26 season, the tax rates on the first two brackets above the luxury tax threshold will drop by more than 30% and reduces the penalty for each excessive dollar spent from $1.50 to $1 in the case of the first bracket. And for the first time since the brackets were installed in 2011, they will grow at the rate of the salary cap.
The proposed CBA is currently being reviewed by teams and players and still needs to be ratified by both sides.
(This story was updated in the third paragraph to clarify details about the expected gains.)