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When Did Sports Salaries Explode? Part 3

By Danny Radical

Part three of this series moves to indoor sports, and specifically towards the NBA.

The NBA is the league that had maybe the most dramatic swing in television presence in the late 1980's through the 1990's, and it's really with the giant of Michael Jordan standing on the shoulders of Magic Johnson and Larry Bird.

As a kid in 1970's Long Island you could watch the American Basketball Association champions New York Nets play out of the Nassau Coliseum on channel 9. For free! What? There was another basketball league? Yes, yes there was. The American Basketball Association was a viable competitor to the NBA in the 1970's. They had star players, including the all time great Julius Erving. They had a colorful basketball. They had a slam dunk contest. They shot three pointers. Except for the ball, all of these ideas were adopted in the NBA.

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Why was the ABA a viable league? Because the NBA wasn't bulletproof. Look at NBA team names TODAY and you can figure that out. Lakes in Los Angeles? Jazz in Utah? Grizzlies in Memphis? Whatever happened to the Buffalo Braves? And more to the point, the NBA wasn't financially stable enough to populate the cities that it does today. In fact, there was a bit of fear on whether the NBA could survive in many different markets. The ABA itself failed in most of its markets, and in 1976 the financially surviving teams merged into the NBA.


Fear for survival? Impossible, you would say. Look at today's NBA- it's a money maker. Understand that the 1979 NBA finals we on tape delay. Understand that the 1980 New York Knicks were selling half of their TV rights (41 games) to USA Network for $1.5 million. That WGN Chicago- the TV home of the Bulls- could not show Bulls games out of market despite having a national cable television contract for the channel itself because it violated national TV rights. Players were flying coach among the fans.


Then came Magic and Larry.

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Larry and Magic created interest in the NBA. Anyone old enough to remember Sunday basketball on CBS saw a ton of Lakers and Celtics games, because everyone wanted to see Larry and Magic. Bird vs. Dr J One on One created the entire brand of EA Sports. Magic and Larry were sneaker endorsers before there ever was an Air Jordan.

The greatest game of one on one ever played.


That said, The NBA was still facing financial issues, which led to the NBA became the first major league to institute and stick to a salary cap in 1984- at $3.6 million per team, to maintain competitive balance and to help insure the survival of the NBA. Understand that $3.6 million in 1984 was less than twice what the top baseball player- Mike Schmidt- made by himself. That year, Magic Johnson made $2.5 million and Kareem Abdul Jabbar made $1.5 million, so that clearly wasn't a hard cap.


Where did the money come from?


Geography. Competitive balance. A solid product. The 1980's NBA for the most part used the draft lottery to make sure that every team had one star. Isiah Thomas in Detroit. Rolondo Blackmon in Dallas. Akeem Olajuwon in Houston. Clyde Drexler in Portland. Charles Barkley in Philadelphia. The NBA may have even rigged a draft lottery so that the Knicks got Patrick Ewing- its a legend regarding a frozen draft ticket that makes for a great story- because Madison Square Garden was often half empty for Knicks games.

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But the biggest game changer was Michael Jordan.


Be like Mike. Wear Air Jordans. Here's a story that is true, sad, and hilarious. When Danny Radical was in 8th grade, one of his classmates created some bad blood with their classmates. His comeuppance? While he was playing in gym class, someone broke into his locker and stuffed his brand new Air Jordans in the toilet. Why was a kid in gym NOT wearing sneakers is a fair question. However, as he came back from playing he stared into the toilet, heartbroken. All he could say was "My Air Jordans. Sixty five dollars." He said it like 12 times. In a row.

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Jordan was so good, he was compelling. As Larry was fading- a broken back will do that to you- Jordan wanted the Chicago Bulls to be the team to beat in the East. As did Indiana University/ Detroit Pistons point guard Isiah Thomas. The late 80's battles between the Pistons and Bulls were legendary. But Jordan saw the defeats as a way to get better, and did he. Undefeatable good.


Some people compare Lebron James to Michael Jordan. If those two ever met up in their primes, Jordan wins 10 games out of 10. Which is better than the 9 out of 10 that Magic and Larry and Dr. J would take. After all, did Jordan ever lose in the finals?

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The NBA's plan of giving every team a star created interest for teams in every market. The NBA used video games to spread appeal as well. Dr J vs Bird was followed by Bird vs Jordan. Apparently Larry Bird was the only marketable white player in the NBA for a decade. And by 1990, the NBA television rights were split between NBC, TNT and TBS at an annual value of $200 million a year. The league never looked back.


By 1997 that was $520 million per season for national television rights. In 2007 the NBA deal with ABC/ESPN/TNT was valued at $930 million a year. The current national rights are start at $2.1 billion a year, and escalates to $3.1 billion in the 2024-25 season. This year national TV rights create close to $67 million per team. Then there is local deals, ticket sales, and merchandising.

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A $3 billion franchise. That sucks.


Compared to 30 teams, there are still 12 players per team. So how does one spread out those bucks, especially if you aren't playing in Milwaukee?


The NBA today through unionism and collective bargaining has their formula as to how they distribute salaries to players called "basketball related income." This formula has a floor and a ceiling. Presently players get 44.7% of BRI, and owners MUST spend 90% of that number on their team. So if the average BRI was $100 million, $44.7m would go to players, and owners could only "skim" $4.47 million from that pot outside of their share. The current BRI pot? About $102 million. That means teams are pulling in over $220 million per year. PER YEAR.


And how do you share that among players? The top pay for a player helps determine such. There's a lot of equations here, but to keep it simple, a player that becomes a UFA 8 years into his career can eat up 30% of a teams cap. Teams can give veterans extensions for more, but that gets complicated. In short, there's not a lot of restriction just as long as you abide by minimum guidelines and avoid going over maximum numbers. Teams can have multiple $20 million dollar players and abide by guidelines. And in today's NBA, you need multiple $20 million players to win. This isn't the day of Larry's team, Magic's team, and Michael's team anymore. Maybe because the players aren't as good? That's a topic for a different blog.

"We can beat you too many different ways."

Won't the owners go broke if they have to absorb so many salary and operating costs? Not a chance. Ask the terrible Los Angeles Clippers, who have never won anything of merit EVER, and recently sold for a mere $2 billion.


How much money is in the NBA media deals? The local and national and international television rights if combined could just about pay every players salary, leaving owners to keep the money involved in every ticket, t- shirt, hot dog, parking spot, arena advertisement, and any other way a team makes money.

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The Porzingis Face tm


This explains why the NBA recently paid $500 million two the former owners of the Spirit of St. Louis, an ABA team that has been receiving partial television rights payments from the Nets, Spurs, Pacers, and Nuggets since the 1976 NBA ABA merger. Why a half billion buyout? Because it was CHEAPER than paying them. And that's a story for another day.


What ultimately made NBA salaries explode? Showtime, Larry Legend, the 3 point contest, the dunk contest, and when kids wanted to be like Mike. Add the Dream Team for good measure as that created an international intrigue and grew the game. Also- first dream team beats every other dream team ever. EVER.temp-post-image