All teams pool their qualified revenue to redistribute it from higher-earning teams to lower-earning teams. Each team is then paid an amount equal to the salary cap for that year. The more a team sells out its games, the more money they can collect.
The league also receives $750 million as part of its television contract with ESPN and TNT. This money is split up among all the teams, based on how many hours of programming they watch. The more hours of basketball that are played, the more money that will be received by the league.
Teams also have the ability to sell "promotional rights" to other companies. For example, a team could sell the right to use its logo on items such as T-shirts or coffee mugs. The money made from these products is then added into the team's income.
Finally, teams make money through advertising on their jerseys. If a company wants to market its product during a game, it pays the league for the opportunity.
Teams also receive revenue sharing payments from each other. These payments vary but can total over 50 percent of a team's income. The purpose of this system is so that smaller markets don't have no chance of making any money.
To begin with, and most obviously, how much above the salary cap a team's squad is: The tax rate is $1.50 for every dollar above the cap for clubs with a cap excess of $0 to $4,999,999. This level's incremental maximum is $7.5 million. For teams over the $25 million threshold, the tax rate increases to $3.75 for every dollar above the cap.
Secondly, there is the issue of what counts as income. The NBA defines five categories of income: ticket sales; advertising; television; national an international; and licensing. Each team receives a proportion of the league revenue based on their record the previous season. This is called its share of league revenues.
Teams that finish below.500 have their shares reduced, and those that finish above.500 have them increased. The exact percentages are determined by how far above or below.500 each team finishes. For example, if a team claims a first-place vote but comes in second, their voter reward is reduced from 100 percent to 80 percent of what it would have been. If a team claims a last place vote but wins the lottery, they receive an additional 20 percent bonus share.
The final factor in determining a team's tax bill is how much money it has allocated toward payroll during the year.
The simple answer is that in the United States and Canada, employees' salaries are decided by the amount of income they earn for their companies. The higher the pay, the bigger the revenue. The NBA consists of 30 clubs. Assuming total annual sales of $9 billion, the average revenue per team is $300 million. That means that on average, each team earns about $75 million a year.
There are three main ways players can make lots of money: through the use of performance-enhancing drugs (PEDs), through the ownership of a sports franchise, or through the sale of their own rights. All things being equal, the most lucrative option is likely to be selling your own rights. This can be done before you join a team or during the season when your contract is up for renewal. If another club wants to hire you away from your current team, they will have to offer you a deal worth more than what you're making now.
Players can also make big bucks without joining a team. Actors, athletes, and musicians can all make millions of dollars a year playing their instruments or acting. Some people believe that basketball's status as a "male-dominated" sport means there are not as many opportunities for women to make lots of money. But the truth is that most female athletes don't make very much money because the options are limited due to the small size of the market.
The salary cap is a component of the NBA's Collective Bargaining Agreement (CBA), which is signed by players and owners. The amount that teams are permitted to spend on player wages varies from year to year dependent on the league's total revenue generated during the season.
Teams can exceed the cap, but they cannot be more than 5% over the cap. If a team is more than 5% over the cap, then some of their highest-paid players will have their contracts reduced so that the team can stay within the limit.
Here is how the salary cap system works: Each team is given a budget based on how much money they put into the league pool. This pool is distributed among the teams based on their position in the standings at the end of the previous season. For example, if you were to pick up a newspaper today, you would see that the Boston Celtics had the most wins in the NBA this past season. That means the C's were assigned more dollars than other teams.
Next, the number of victories or losses during the season determines how much money each team will have available to spend on new players or extensions for existing players. For example, if the C's win 50 games, they will have $9 million available under the cap; if they finish with 40 wins, they will have $7.5 million left over.
According to the NBA section of this Investopedia article, each season there is a "playoff kitty" which is divvied up amongst the various teams dependent on performance, from which the teams can choose how to distribute amongst their players.
Revenue sharing from the sale of broadcast rights is the team's greatest single source of income. When a channel (for example, ESPN) pays hundreds of millions of dollars for the privilege to show a game, the money flows to the teams. Merchandising is another key source of cash for the club.
With the CBA passed, the NFLPA told players that their "Madden checks," which had been held in a work stoppage fund, would be released. The 2017 active player payment is $17,662, and the 2018 payment is $16,966, both of which will be paid out as soon as possible. P-squad men get $1000. Payments for 2019 will be made this fall.