The NBA today announced that the salary cap for the 2013-14 season will be $58.679 million.
The tax level for the 2013-14 season has been set at $71.748 million. Any team whose team salary exceeds $71.748 million will, for the first time ever, pay an incremental tax rate based on how far it exceeds this level. The tax rate is $1.50-per-dollar for the first $5 million over, rising to $1.75-per-dollar between $5 million and $10 million over, rising to $2.50 between $10 million and $15 million over, rising to $3.25 between $15 million and $20 million over, and rising a further $0.50 for every $5 million increment after that.
The new cap and tax level go into effect at 12:01 a.m. ET on Wednesday, July 10, when the league’s moratorium period ends and teams can begin signing free agents and making trades.
The amounts are considerably lower than initial projections provided last year at this time, but fall roughly in line with the latest estimates provided in early June. The league had initially forecasted a cap and tax of $60 million and $73 million, respectively, before revising downward to $58.5 million and $71.6 million, respectively.
The cap and tax levels are set by calculations based on projected amounts for Basketball Related Income (BRI) and benefits for the upcoming season. The projected BRI is negotiated by the league and players’ association. Each year the sides meet to agree on an amount.
The salary cap calculation takes 44.74% (53.51% for the tax level) of the league’s projected BRI, subtracts projected benefits and then divides the total by the number of teams in the league. Adjustments are then made if total salaries and benefits paid to the players in the season prior were significantly higher or lower, as a percentage of league-wide revenues, than was agreed in the CBA.
The math that underlies the finalized figures suggests that the league is now projecting BRI of $4.471 billion for 2013-14, a 4% growth over its all-time high revenues from last season. Those came in at $4.293 billion, a whopping 12% growth over 2010-11, the last full NBA season, but roughly $15 million short of initial forecasts.
Despite the slight revenue miss, the NBA is clearly a strong and expanding entity. Read more…