Last week, Steph Curry agreed to a 5 year, $201M contract – the richest in NBA history. Lebron James saluted Curry by stating that the two-time MVP and world champion deserved twice as much. He also criticized the NBA salary cap by pointing out how much the Warriors franchise has increased in value during Curry’s tenure. Of course this argument plays into Lebron’s personal financial interest, which is fine, but I disagree. Eliminating the salary cap would exacerbate the NBA’s growing problem of becoming a league of “haves and have not’s” where a small handful of teams would have all the stars – making the NBA even more boring and predictable than it was in 2017. The increasing valuation of NBA franchises is directly tied to the competitiveness of the league and the passionate interest of its fans. As more fans lose confidence in the fairness and competitiveness of the league, expect ratings and advertising income to drop. While salary caps may not seem fair to superstars like Curry and Lebron, basketball fans will remain passionate about the league if more teams have a fighting chance to win, ironically creating more value for the league and more income for its stars.
The NFL markets its brand as well as any enterprise in the world. I heard a comedian once say that the NFL is so popular, it has its own day. NFL football is huge. Each NFL franchise brings in approximately $400M a year in revenue; almost double the annual revenue of NBA teams and 2 ½ times as much as MLB clubs.