NBA Ticket Sales Beating Forecasts, Could Impact 2010 Salary Cap

Attendance across all N.B.A. franchises has reportedly dropped far less dramatically than originally projected over the summer.

The league had initially expected a 6% to 7% drop in attendance but, according to the New York Times, there has only been a 1.7% drop to date. League-wide, arenas are filled to 89% of capacity on average. Attendance is flat or ahead of last season’s pace in the majority of N.B.A. arenas. The Nets and Pistons account for most of the small overall decline.

With attendance so far beating forecasts, the league’s salary cap projects to drop far less significantly less than first feared.

The salary cap is set by calculations based on projected amounts for revenue and benefits for the upcoming season. Barring any adjustments that are necessitated, they typically use the set amount for national broadcast rights (which is determined in advance), plus the revenues for the previous season (other than national broadcast rights), increased by 4.5%.

The cap calculation takes 51% of the league’s projected revenue, subtracts projected benefits, and divides by the difference by the number of teams in the league. Adjustments are then made if the previous season’s revenues were below initial projections.

Therefore, as gate receipts for this season increase, so too do salary cap projections for next season.

The N.B.A. sent a memo to teams last July warning of a potential decline in the salary cap to a figure between $50.4 million and $53.6 million for the 2010-11 season. But, given the unexpected over-performance in gate receipts thus far this season, league insiders are now projecting a cap between $53 million and $54 million.

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