NBA Commits $1.4 Billion On First Day Of Free Agency

Players receive massive paydays under leagues' increasing salary cap

Everyone around the league knew that following the massive $24 billion NBA media deal, there would be an increase in the league’s salary cap and, subsequently, a massive increase in player salaries.

But it still comes a surprise that yesterday, within the first 24-hour period that NBA teams were able to reach out to players and begin contract negotiations, the 30 teams reportedly agreed in principle to spend a collective $1.4 billion. This number doesn’t even include the richest contract in NBA history, or several big name free agents, including Deandre Jordan, Lamarcus Aldridge, or Dwayne Wade – each of which will command max, or near-max salaries.

That staggering amount of money is in large part the reason why Lebron James is signing on a year-to-year basis, giving himself the flexibility to adapt to the changing NBA landscape, especially as the salary cap increases each year.

In a couple of highly circulated articles that have surfaced within the last few years, economists, financial professionals, and NBA experts calculated and discussed at length what a do-it-all player like Lebron James would deserve if he were truly paid for his value to the NBA, as well as his on-court contributions – if there were no salary cap. In 2010, as James was headlining a talented class of free agents, the Wall Street Journal pinned down a number, “Mr. James would earn $43 million next season, 159% more than the $16.6 million he’ll likely receive.” Deadspin, using another set of complicated metrics, determined that following the 2013-14 season, James production and value had remained exceptionally higher than his $19 million salary, and valued him at roughly $44 million.

In a major sports league without a salary cap, it would still be fairly unlikely that James would command that kind of salary, and in the NBA with it’s strict salary cap, luxury taxes, and contract provisions – it’s laughably impossible… or is it? Anthony Davis, a 22-year-old heir apparent to the James’ crown, just came to an agreement to sign the richest contract in NBA history – worth a reported $145 million over five years, or a yearly average of roughly $29 million per year. Davis’ deal is almost equal to Lebron James’ lifetime earnings in the NBA.

In a conversation with NPR, writer Bob Ryan talks about Lebron’s very special mixture of talent, business savvy, and power.

“…he’s someone that anyone would want to play with, and he also is a showman. He’s a pitch man. He’s a walking public relations advertisement for Northeast Ohio. He makes money for people. You know, they’re talking in terms of when the new NBA contract kicks in in a couple of years and a new TV deal takes hold, that his next contract – not this one; this is going to be a one-year bridge contract – would be for upwards of 40 – I said four zero – million a year. That’s how valuable he is.”

Just a few years ago the idea that James, or any NBA player, could earn $40+ million in  a season was tough to digest, now it seems like a bargain.

Hall of fame player and current analyst Reggie Miller, expressed his support for the players cashing in –

I LUV that the players are bank rolling, capitalize and seize the moment.. Trust me the owners and league are making money, so should you..

— Reggie Miller (@ReggieMillerTNT) July 1, 2015

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