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What is NBA Salary Cap Percentage?

Basketball is a sport full of numbers. You have counting stats like points, assists and rebounds. Then you have percentages like Field Goal and 3 point, there’s how many fouls each player has done and how many timeouts a team has left to use, we haven’t even mentioned the actual score of the game. When it comes to numbers the NBA is an entirely different beast. You have lottery odds, player exceptions, trade exceptions, Basketball Related Income, player salaries. Then there’s the Salary Cap, this number, more than any other, defines how the NBA works and we at Basketball Noise think it’s time we started talking about the salary cap in a different way. Salary Cap Percentages.

What is NBA Salary Cap Percentage? NBA Salary Cap percentage is how much of a team’s salary cap a player takes up that year. If an NBA player was paid $10million in a season where the NBA Salary Cap was set as $100million, the Salary Cap Percentage of that player’s contract would be 10%.

With the NBA’s CBA about to be re-negotiated and a new mammoth Broadcast contract on the Horizon NBA player’s salaries are set to reach unprecedented heights. It’s going to be hard to know if the 5 year $200million deal your team just signed their 5th best player to is a good one or not. Salary Cap Percentage can help you understand it. We have created a handy tool to help you do just that.

What is the NBA Salary Cap?

The NBA salary cap is the amount each team has to spend on their player wages for any given year. Teams can exceed this, by going into the Luxury Tax, for more info on that click through here.

The cap for the current 2022-23 season is $123,655,000. This is expected to rise next year for the 2023-24 season to $133,000,000. The cap typically goes up by about 5% each year, however when a new broadcast deal is signed, the NBA’s revenue grows significantly and the amount available to spend on players wages can massively increase.

When the last broadcast deal kicked in for the 2016-17 season the NBA Salary Cap jumped by 35%. You may remember this led to Kevin Durrant being able to join the 73 win Warriors and other… less well thought out contracts.

That deal took the NBA’s broadcast rights from about $8billion to $24billion. That 9 year deal is set to expire at the end of the 2024-25 season, the new deal that starts for the 2025-26 season is projected to be worth around $75billion. This means that the 2025 NBA Salary Cap jump is going to be massive.

What does a big jump in NBA Salary Cap Mean?

A huge spike in the NBA Salary cap means a few things. Mainly it means that teams have a lot more money to spend on players. It also means that proportionally the maximum and minimum contracts teams can offer will increase in value.

Importantly, players already under contract will not see an increase in their salary until they are able to sign a new contract. This means that seemingly expensive multi-year contracts signed between this summer and 2025 when the cap increases could seem like bargains.

Let’s take the Miami Heats recent extension of Tyler Herro as an example.

Tyler Herro signed a 4 year $130million contract extension. This kicks in from the 2023-24 season and will pay him the following amounts:

  • 2023-24 $27,000,000
  • 2024-25 $29,000,000
  • 2025-26 $31,000,000
  • 2026-27 $33,000,000

Total $120million + $10million incentives = $130million.

If we assume based on the 2016 season that the NBA Salary Cap is going to jump 35% when the new broadcast deal kicks in for the 2025-26 season and 5% the year after that. Tyler Herro’s Salary Cap percentage will look like this.

As you can see, when the Salary Cap increases for the 2025-26 season, despite Tyler Herro’s salary actually increasing, the percentage of the Salary Cap he takes up is 5% less than the previous year.

Why do people use NBA Salary Cap Percentage?

With the ever expanding salaries in the NBA, it is hard to relate how much a player got paid with players from the past, or even, in the future.

What really matters is how much salary cap space that player is taking up for their team. If you add a role player who will do a good job off the bench for $10million a year in 2022, that will be a lot different to the same type of player having the same value contract in 2012, 2017 or even 2027.

$10million as a percentage of Salary cap:

  • 2012 – 17%
  • 2017 – 10%
  • 2022 – 8%
  • 2027 – 5% (projected)

 As you can see, looking at the change over 5 year periods (standard length of an NBA contract) can show us how it depreciates. In 2012 that $10mill would have been almost a 5th of the entire Salary Cap, by 2027 it could be as little as one 20th of the total cap. It’s a way of adjusting for inflation.

Let’s take a real world example. Kobe vs Lebron. Let’s look at the season they won their last NBA titles. In the 2009-10 Lakers title winning season Kobe was paid $23,034,375 vs a cap of $58,680,000. Lebron was paid $37,436,858 vs a cap of $109,140,000 when he won the title with the Lakers in 2020.

  • Kobe – 40% of Salary Cap
  • Lebron – 34% of Salary Cap

This matters, because we can see how much potential help the roster could have slotted around their main star. That 6% Lebron is spotting Kobe there could have been used to upgrade other parts of their roster. Although, in real terms that percentage is quite close for a title winning star player.

Interesting fact. The last season Jordan won an NBA title he was paid $33,140,000, which was a massive 123% of the 1997 NBA Salary Cap.

How was Michael Jordan paid so much between 1996-1998?

Despite being one of the wealthiest former athletes in history, Michael Jordan was probably criminally underpaid for most of his playing career, by the NBA itself.

As we mentioned above In the 1997-1998 season, his final season as a Bull, Jordan made $33.1m, this equated to 123% of the Bulls Salary Cap on its own.

At the time the salary cap was $26.9m, and the average NBA team payroll was just $32.7 million. Unlike today, there was no maximum salary rule,  as teams are allowed to go over the salary cap to re-sign their own free agents, this absence of a max salary allowed the Bulls to offer the 5x Champion a massive contract.

Before the start of the 1997-98 season Jordan signed his one-year, $33.1 million contract that would be impossible under today’s maximum salary rules. His salary alone was more than the entire payrolls of 19 out of 29 NBA teams that year. This was in line with his previous 1996-1997 single year contract of $30.1m.

Jordan was the victim of bad timing. Ahead of the 1995-1996 season the NBA Salary cap jumped by 44%. The single biggest percentage jump since the Cap was introduced in 1984. This was due to the league’s increased popularity and income that was in no small part down to Jordan himself. However Jordan had signed an 8 year contract in 1988 for just $25m, so had not been able to take advantage of the increased pay many of his contemporaries were enjoying. Even before the 1995 jump the Cap had doubled from its 1988 value of $7.5million to over $15million.

When Jordan returned to the league from Baseball to win the 1996 NBA title, the final year of his 1988 contract paid him just $3.8m. For context that same year Knicks Center Patrick Ewing earned $18.7m.

In his career Jordan earned $93.8m in salary. His last 2 seasons as a Bull paid him a massive $63.3m of this, money Jordan well deserved that no one could begrudge him. That said, there is only one GOAT and the following season in response to Jordan’s contract the Maximum Player salary was established.

This rule meant that Jordans 1997-98 Salary was the highest single season salary until the 2017-18 season when it was surpassed by Steph Curry ($34.7m) and Lebron James ($33.2m).