$200 million is a whole lot of money. A couple of decades ago, an NBA team could not possibly imagine even having that much as revenue for the whole year, but fast forward to 2023, and now that is a type of payday that one player gets to take home over a few years; and teams are happily paying for it!
Who has a $200 million contract in the NBA? As of the 2022/23 NBA season, there are 12 players who are on contracts with a value of $200 million or higher: Nikola Jokic, Bradley Beal, Giannis Antetokounmpo, Devin Booker, Karl-Anthony Towns, Stephen Curry, Luka Doncic, Zach Lavine, Trae Young, Joel Embiid, Russell Westbrook, and Rudy Gobert. Nikola Jokic has the biggest active contract in the NBA, which is also the biggest contract in NBA history, which is valued at $272,020,000.
2 x MVP Nicola Jokic and Wizards Guard Bradley Beal both hold contracts above $250m
List of biggest NBA Contracts
|Rank||Player||Contract Years||Contract Total||Yearly Average|
|20||Michael Porter Jr.||5||$179,299,750||$35,859,950|
How do NBA players have such large contracts?
With multiple players making north of $40 million a year (and soon to make over $50 million a year), it may be very confusing to fans as to how these players are signing such big contracts. The fact of the matter is that the money isn’t appearing out of thin air: NBA teams across the league are generating enough money for them to hand out these mega-sized contracts to their best players.
The core of the contract situation is what is known as the salary cap. While the salary cap is mostly used as a limit to how much teams can pay their players, it is also an indication of the financial health of the league. Every team generates revenue throughout the season from multiple sources: tickets, merchandise, sponsorships, and so on. These revenue streams are classed as BRI, short for basketball-related income. At the beginning of every season, the NBA determines how much BRI they will generate that season.
The BRI projection is the first part of the salary cap calculation. The second part of the salary cap calculation is the player percentage. Every few years, the NBA holds talks with the NBA players union, the NBA Players Association (NBAPA), in what is known as a collective bargaining agreement (CBA). Among many different clauses, one thing that the two parties agree upon is how much of the BRI, as a percentage, should go to the players in the form of salary. The percentage agreed upon in the current CBA is 44.7%.
So, to calculate the salary cap, the projected BRI is multiplied by the player percentage (44.7%), and then divided by 30 (the number of teams in the league) to determine the salary cap for each team (it is a uniform number for every team). For the 2022/23 season, the salary cap is $123,655,000, meaning that teams can spend up to that amount when paying salary for their total roster (as always, there are various exceptions that can lead to the salary cap being legally exceeded). An important sidenote: teams are not required to use 100% of the salary cap amount, but cannot go below 90% of the salary cap, ensuring that the players get their rightful pay of the total BRI.
So, as it stands, players are entitled to at least about 40% (minimum of 90% * 44.7% = 40.23%) of the total BRI revenue that NBA teams generate. This is before taking into account the luxury tax: in short, teams are allowed to go over the salary cap via exceptions (they have to pay a luxury tax penalty if they exceed by a certain amount). That means that player salaries can tap into a pool much larger than the salary cap limitation. Let’s take a look at the Golden State Warriors for example. In the 2022/23 season, the salary cap is set at $123,655,000, but the Warriors’ payroll is at over $193,374,102 million, well over the salary cap and the luxury tax threshold. That’s how they are able to pay Stephen Curry, the player with the highest salary in the NBA this season: $48,070,014.
As the league grows and reaches new heights, including financially, players will continue to receive big salaries. Let’s look at some salary cap projections, courtesy of RealGM: 5 years from now (the 2027/28 season), the salary cap is projected to be $162,878,000; fast forward another 5 years (the 2032/33 season) and the salary cap is projected to be $207,879,000. That means that, if these projections hold up, each team will have between $40 million and $80 million more to spend on player salary compared to now, and that’s before salary cap exceptions and luxury tax is taken into consideration! It could very well be that $200 million contracts become more of a norm rather than the rare occurrence it is now.
While future salary cap projections are potentially inaccurate and intangible, another angle to take is to look at the salaries NBA players would get in the past and how they have evolved as the NBA has evolved financially. The highest-paid player 30 years ago (the 1992/93 season) was David Robinson, who took home $5,720,000. 20 years ago (2002/03 season), Kevin Garnett took home $25,200,000, and 10 years ago (the 2012/13), Kobe Bryant took home $30,453,805. Now? The highest paid player, Stephen Curry, brings in $48,070,014, but he will lose his spot very soon as a new wave of players are signing contracts with annual salaries of $50+ million.
$200 million is a lot of money, and many will argue that basketball players don’t deserve that type of money. But here’s one way to think about it: the NBA and its teams are generating billions of dollars in revenues every year: they are doing an excellent job of selling the NBA, and fans around the world are buying it up. And at the core of it are the players, without who the NBA is nothing: shouldn’t they walk away with a big slice of the pie?