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| Source: http://1.bp.blogspot.com/ |
When it comes to sports you see all the great talent these professional athletes have, and you also see how much of a profit these athletes make now. When you compare athletes from other sports you see a wide range of contracts between the superstars of these sports. Hockey superstars make around eight million dollars a year, where an all-star basketball player will make 20-25 million dollars a year. Both athletes dominate their respective sports, but why is there such a pay differential. After a little research I learned all about the roles of TV contracts and have concluded that TV contracts play a big role in determining the salary cap and the player contracts.
The NBA is coming up on the end of their old TV contracts and this will result in a big pay day. When the old TV contract was signed the NBA wasn’t as popular, but now it’s one of the most popular sports in the world. The New York Times reported, “Disney (ESPN/ABC) and Turner (TNT/TBS) will pay the NBA nearly $2.7 billion per year, on average, over nine years to retain exclusive broadcasting national broadcast rights” http://grantland.com/the-triangle/nbas-new-tv-deal-blow-up-the-salary-cap/. This will be huge for the NBA because it will bring in more revenue and it will increase the salary cap. Analyst project, “If the new TV deal kicks in for the 2016-17 season just shy of $2 billion, the cap could exceed that same $14 million leap, all the way to around $80-plus million.” This means that the salary cap will go up and players will make more money. Recently, over the summer big name players like Anthony Davis and Jimmy Butler signed contracts worth more than 20 million dollars a year due to the anticipation of the new TV contract negotiations. More players will follow with big contracts and it will all be because of the new TV deal. Many players are signing short term contacts as a result of the upcoming negotiations. LeBron James only signed a two year deal so he can jump back into the free agent market once the TV deal is done so he can make more money. This move is smart, but LeBron is rolling the dice because if he gets hurt he will lose a lot of money. The NBA players are becoming rich, but other athletes, like hockey players, aren’t making as much.
The NHL isn’t as popular as basketball in America, but in Canada people live hockey and the same goes in Sweden, Russia, Finland and many more countries. A couple of years ago the NHL signed a record deal with Rogers Communication and NBC to televise the NHL deals. The NBC deal wasn’t worth as much, 200 million a year, but Roger Communications deal was worth five billion dollars over 12 years. That is in no way even close to what the NBA TV contract will be in 2016-2017. The salary caps in each sport are about the same, but hockey has 20 players where basketball has 11 players that are on the payroll. The NHL is more popular now, but they have to wait 10 years for a new contract that will be worth double what it is now. When that time comes the all-star players will make up to around 4 million dollars more per year, but until that time comes the NHL players will always make less than the NBA players. The salaries are limiting the pay, and that brings up the discussion of whether or not there should be a salary cap.
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