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NBA's soaring contracts result of fundamental economics

 

Twenty years ago, people put their hands to their faces in horror when it was revealed that Michael Jordan was seeking $18 million for one basketball season. It seemed ludicrous, too, until Chicago Bulls coach Phil Jackson reminded everyone that Sylvester Stallone was paid $20 million for a single movie.

Jordan actually ended up pocketing $30.1 million in 1996-97, giving him the highest salary in sports history. Adjusted for inflation, his one-year deal would be worth about $46 million today. After leading the Bulls to their fifth NBA title, he was given a 10 percent raise the following year and took them to a sixth.

The money in professional sports is so mind-numbing that we tend to disregard the figures and concentrate on individual players and their teams. The commas and zeroes are tough to comprehend. The average American makes $50,767, according to the U.S. Census, or one-hundredth of one percent of $30.1 million.

It’s a matter of perspective.

Jordan was the best player on the planet and the biggest star in sports when he signed his megadeal. The economic impact he made on the Bulls and the rest of the NBA was unprecedented when all the money from television rights and merchandise was added up. He generated more money than he earned, making him worth every penny.

Pop quiz: Name the backup center for the Raptors in 2015-16. Hint: He’s from the Democratic Republic of the Congo.

That would be Bismack Biyombo, who played for three teams in his first five seasons. Last season, he started 22 games and averaged 5.5 points and eight rebounds (both career highs) and 1.6 blocks per game. The Magic for the next four years will pay $18 million per season, an amount Magic Johnson made in his entire NBA career. Biyombo would be the 14th-highest paid quarterback in the NFL.

And if he’s worth $18 million, how much can Kevin Durant expect when he reaches an agreement as a free agent. He could make his decision as early as Monday.

NBA teams are shelling out more money than any time in its history after the league struck a nine-year, $24 billion contract with ESPN and Turner Sports. It caused the salary cap to soar from $70 million to $94.1 million in one year. NBA teams are forced to spend 51 percent of basketball-related revenue on player salaries.

If you weren’t paying attention over the weekend, Biyombo, who made $3 million last season, was hardly alone. Timofey Mozgov averaged 6.3 points and 4.4 rebounds per game while making $4.9 million with the Cavaliers last season. He signed a four-year deal worth $64 million with the Lakers.

Joakim Noah averaged 4.3 points and 8.8 rebounds per game last season with Chicago before he signed a four-year deal worth $72 million with the Knicks. Noah is a terrific defender but has been riddled with injuries. He has missed at least 15 games in seven straight seasons and played only 29 games last year.

Darrell Arthur, D.J. Augustin, E’Twaun Moore and Matthew Dellavedova are part of an 8-7 club – players who averaged fewer than eight points per game last season but will earn more than $7 million per season for at least the next three years.

Jeremy Lin, who has played for five teams in six years, averaged 11 points and three assists while coming off the bench last season for the Hornets. He signed a three-year deal worth $36 million with the Nets, bringing new meaning to “Linsanity” upon his return to New York.

And then there’s Solomon Hill, who started one season with the Pacers after Paul George was sidelined in 2014-15 with a broken leg. Hill averaged 8.9 points and 3.8 rebounds per game that season before heading back to the bench. He started three games last year and has career per games averages of six points and 3.1 rebounds.

Hill signed a four-year deal worth $52 million with the Pelicans, who clearly saw something in him that nobody else did. He’s making $13 million per year after averaging only 20.6 minutes per game in his first three seasons. He’ll be making more money than reigning two-time MVP Stephen Curry will make with the Warriors.

Mike Conley reached the richest deal in NBA history, reportedly five years for $153 million, to remain the Grizzlies’ starting point guard after averaging 15.3 points and 6.1 assists per game. His postseason honors include All-Defensive (second-team) and … that’s all. These days, it adds up to Jordan money.

Make sense in the real world? Good heavens, no. Make sense in the NBA? You bet your bottom dollar.

It comes down to basic economics, simple supply and demand, and the current climate in the NBA. The same rules that applied when Jordan was given a 750 percent raise 20 years ago still apply to the league today. Owners are getting exponentially richer than any single player while keeping 49 percent.

Television ratings, other media-driven offshoots, attendance and merchandise sales have never been stronger. Evidently, fans can’t get enough. With teams allowed to carry only 12 active players on the roster, demand greatly exceeds supply. When that happens, whether it’s a gallon of gasoline or an NBA player, the price skyrockets.

The list of players making $30 million per season will only grow longer and the salaries higher in the coming years. Curry and LeBron James are playing out their contracts and can position themselves for higher maximum deals in the years ahead. It’s a matter of time before top players make $40 million for one season.

And why not? Actor Robert Downey Jr. made $80 million in 2015.

 

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