How The NBA’s Explosive Salary-Cap Growth Could Change Contract Structures

The NBA is reportedly in the process of finalizing its new national TV contracts, which should send the salary cap skyrocketing over the coming years.

Tom Friend of Sports Business Journal reported in late May that the NBA was on the verge of deals with Disney (ABC/ESPN), NBC and Amazon, which Joe Flint, Amol Sharma and Isabella Simonetti of the Wall Street Journal recently confirmed. The 11-year contracts are expected to be worth roughly $76 billion, according to the WSJ, which is nearly a threefold increase over the current nine-year, $24 billion deals with Disney and Warner Bros. Discovery (TNT).

The league’s latest projections for the 2024-25 salary cap held steady at $141 million, but the cap could climb above $200 million by the end of the decade. That should force teams, players and agents all to rethink how they structure contracts in the coming years.

As part of the NBA’s new collective bargaining agreement, the league and the National Basketball Players Association agreed to prevent a massive, one-time salary-cap spike like the one that enabled the Golden State Warriors to sign Kevin Durant as a free agent in 2016. The new CBA prohibits the salary cap from decreasing year-over-year, but the cap also can’t increase more than 10% annually.

Had the NBA and NBPA not agreed to cap-smoothing, Nick Thoreson of Ducking the Tax estimated that the cap would have jumped by nearly $68 million in 2025-26. Instead, those increases will be phased in over time. As a result, the cap very well could jump 10% annually from 2025-26 (when the new TV deals begin) through the end of the decade.

The CBA allows player salaries to increase by no more than 8% annually if a player re-signs with his own team or 5% annually if he signs with a new team as a free agent. And unlike the salary cap, those raises don’t compound. The exact amount of the raise from the first to the second year of that contract is applied for each of the following years, too.

Here’s a way to put it into perspective: If the cap rises the maximum 10% annually beginning in 2025-26, it’s projected to be roughly $206.4 million in 2028-29. A free agent who signs a five-year, 25% max deal with his own team this summer—say, Philadelphia 76ers point guard Tyrese Maxey—will be earning $46.5 million in 2028-29, which will be only 22.5% of the cap that year.

The drop-off gets even more stark with higher-value maxes. A player who signs a 30% max this summer—Indiana Pacers forward Pascal Siakam, perhaps?—will be earning $55.8 million in 2028-29. That’s projected to be only 27.0% of the cap that year. And a player who signs a 35% max will earn $65.1 million in 2028-29, which is projected to be only 31.6% of that year’s cap.

In essence, players signed to long-term deals this summer are projected to take up a slightly smaller percentage of the cap with each passing year thanks to the new national TV deals. It’ll be a few years before teams can begin to take advantage of that additional flexibility, but it could provide some much-needed relief to teams that currently find themselves in dire financial straits.

The explosive cap growth could also reduce the number of frontloaded contracts that teams hand out moving forward. Players on those deals might be increasingly harder to sign to extensions down the line.

The new CBA allows extensions to begin at 140% of the player’s last salary, which is an upgrade over the previous CBA’s 120% limit. Still, players on below-max frontloaded contracts might not earn enough in the final year of their deal to be realistic extension candidates. Just take Memphis Grizzlies big man Jaren Jackson Jr. and Brooklyn Nets forward Mikal Bridges, for example.

Jackson will earn $23.4 million in the final year of his contract in 2025-26, so his extension could begin no higher than roughly $32.8 million. If the cap jumps up to the maximum $170.6 million that it can in 2026-27, he would be eligible for a $51.2 million max salary in free agency. If Jackson wins Defensive Player of the Year or gets named to an All-NBA team in 2025-26, his max salary from the Grizzlies would jump above $59.7 million.

Bridges is in a nearly identical boat. He’s earning $24.9 million the final year of his contract in 2025-26, which means his extension could begin no higher than $38.9 million. He’d be eligible for the same $51.2 million max salary as Jackson in 2026 free agency, although he couldn’t qualify for a 35% max by making an All-NBA team since he got traded to the Nets after his rookie-scale deal expired.

The Washington Wizards have two possible examples of this in Kyle Kuzma and Deni Avdija. Kuzma will earn $19.4 million in the final year of his contract in 2026-27, which means his extension could begin no higher than $27.2 million. If the cap jumped to the maximum $187.7 million that it could, his max salary as a free agent would be nearly $65.7 million. (Not that any team would offer him anything close to that.)

Deni Avdija is an even more glaring example, as he’s signed through 2027-28 and is earning only $11.9 million in the final year of his contract. His max salary on an extension will be $16.6 million, while his max salary as a free agent could be as high as $61.9 million. (Again, he might not come close to fetching that.)

If the cap grows 10% annually with compounding raises, a contract that stays flat annually—such as Jarrett Allen’s five-year, $100 million with the Cleveland Cavaliers—will be a huge advantage until it’s time to sign that player to an extension. A frontloaded contract that decreases annually might effectively force certain players into free agency.

Incumbent teams can still offer their own free agents an extra year and higher annual raises (8% vs. 5%) than other teams, which might be enough of an advantage to re-sign them regardless. But teams that would prefer to eschew free agency with an extension down the road should be wary of offering descending contracts that will get out of whack with the projected salary cap later in the decade.

Unless otherwise noted, all stats via NBA.com, PBPStats, Cleaning the Glass or Basketball Reference. All salary information via Spotrac and salary-cap information via RealGM. All odds via FanDuel Sportsbook.