NBA/NFL CBA Differences Part 2: Financial Differences

The NFL’s CBA is 439 pages. The NBA’s is 598. That's a lot of pages. Breaking down the financial differences in the CBA's won't be easy. But I'll try by explaining what percentage of the league’s revenue goes to the players, how the salary cap of each league is formed, how the league's wealth is spread throughout each league, and how the NBA's CBA lessens a fear that exists more in the NFL.

NBA Salary Cap Breakdown

Here is the worst kept secret in the NFL and the NBA: both leagues make a ton of money. Last season, the NFL made $14.48 billion. The NBA made $8.76 billion. Each league’s CBA explains how the money gets divided. Here is how the NBA splits revenue to make the salary cap for each team pulled directly from its CBA:

"For each Salary Cap Year during the term of this Agreement, there shall be a Salary Cap. Subject to the adjustments set forth in Section 2(d) below, the Salary Cap for each Salary Cap Year covered by the Term of this Agreement will equal forty-four and seventy-four one hundredths percent (44.74%) of Projected BRI (Basketball Related Income) for such Salary Cap Year, less Projected Benefits for such Salary Cap Year, divided by the number of Teams scheduled to play in the NBA during such Salary Cap Year, other than Expansion Teams during their first two (2) Salary Cap Years in the NBA."

Lawyer David Freeman breaks it down in this way: “The Salary Cap is calculated by multiplying projected Basketball-Related Income (or “BRI”) by 44.74%, less projected player benefits (like health and welfare benefits), and then dividing the result by 30.” For the 2020 NBA season, the salary cap is projected to be $115 million (we'll see how COVID will affect this moving forward). Further, teams must use 90% of the salary cap on their players.

NFL Salary Cap Breakdown

In the NFL, their new CBA splits revenue differently. ESPN’s Dan Graziano explains how the new CBA dictates revenue splits:

"(beginning in 2020) players will get 47% of all league revenue, in keeping with their number from the current CBA ... Starting in 2021, the players will get at least 48% of all league revenue, and that figure could get higher depending on how the league does in negotiating new TV deals ... if the league's TV revenues increase by 60%, the players' share of revenue increases to 48.5%. That share can climb as high as 48.8% if the league's TV revenues increase by 120% or more."

This change leads to a $198.2 million salary cap for the 2020 NFL season. Like in the NBA, teams must use 90% of their salary cap. However, this is the only major similarity.

Think about how dangerous football is compared to basketball. Sure, basketball players suffer serious injuries. But we know the NFL is more dangerous and likely to cause severe, long-term problems for players. Yet there are huge differences in how the players in the NBA and NFL are paid.

Differences Might Be An Understatement

NFL teams pay 58 players (a 53-man roster, with 5 practice squad spots) with the $198.2 million given in 2020. NBA teams pay 15 players. This means an NBA team has $115 million to give 15 players next season. If all NFL players were paid equally, each player would make roughly $3.4 million. If all NBA players were paid equally, each would make roughly $7.7 million, more than double the money of an NFL player.

But wait, there's more.

All players don't get paid equally. The better the player, the more he makes. We know this. So I looked at a list of the highest paid athletes in the NFL and the NBA. I found 29 out of all 1696 players in the NFL make at least $20 million. That's 0.017% of the league. The NBA has 51 players who make at least $20 million out of 450. That's 11.3%. Look y'all, I'm bad at math. But 11.3% is way more than 0.017%.

Besides this huge difference, the best NFL players get paid worse than some, let's just say, above average at best NBA players. This NBA season, Nicolas Batum and Chandler Parsons made $25 million. Myles Garrett and Khalil Mack made less than them. Sacramento King Kent Bazemore made $19.2 million. Von Miller and Odell Beckham Jr. made less than Kent Bazemore.

This proves how vastly different the NFL and NBA treat their stars. But two more aspects of each leagues’ CBA’s further support this point: 1) NFL contracts are not guaranteed; 2) The Supermax contract in the NBA.

No Guarantees in Life and the NFL

Kirk Cousins, yes that Kirk Cousins, got the first fully guaranteed contract in the history of the NFL. Daniel Chase wrote an article for medium.com titled Why Aren’t There Guaranteed Contracts in the NFL? It Doesn’t Matter. Chase explained why guaranteed contracts have such a high risk: “By guaranteeing a salary, owners are taking a bigger risk: They have no out if a player gets injured, and they’ll naturally expect to be compensated for that risk by discounting the price they pay that player to play.”

However, Graziano mentions how the new CBA may help make guaranteed contracts happen more often.

Prior CBAs have included something called the "fully funded rule." This rule, goes back to the early days of the NFL when there was doubt on teams' ability to pay players, forced teams to the amount of money equivalent to the amount of guaranteed money in a player's contract into an escrow account. Owners did not like doing this because they did not want to part with money until they had to.

Putting Cousins’s contract in context, Cousins’s contract was for $84 million, but a $2 million deductible occurs before putting the money into the escrow account. This means the Minnesota Vikings put $82 million into an escrow account.

But this was prior to the new CBA, which raises the deductible to $15 million from 2020-2028 and $17 million in 2029-2030. The escrow account doesn't go away. Owners still keep their out considering the high risk. But the NFL is forcing the owners' hand by raising the deductible and lessening the money a team could put into an escrow account.

Hopefully owners realize it's better to guarantee money with a higher deductible and players demand and receive more guaranteed money. Only time will tell if this seemingly small step helps NFL stars.

The Supermax

The 2017 NBA CBA is most known for the addition of the designated veteran player extension, a.k.a. 'The Supermax.' Article II § 7(a)(ii) of the CBA details what a Supermax contract is:

"A player who has eight (8) or nine (9) Years of Service at the time the Contract is executed and rendered such Years of Service for the Team with which he first executed a Player Contract … shall be eligible to enter into a Designated Veteran Player Contract pursuant to which he receives from his Prior Team up to thirty-five percent (35%) of the Salary Cap in effect at the time the Contract is executed."

To qualify for a Supermax, a player must have acquired various accolades such as MVP or an All-NBA selection to name a few. This reserves the Supermax for only the best of the best. NBA stars get paid, as long as they stay with the team they were drafted by and was on that team for at least 8 years.

The Supermax is meant to incentivize star players to stay on their team instead of leaving for bigger markets. Whether the Supermax has truly influenced NBA stars or whether the Supermax is "good" for the league is for a different post (hello John Wall). Nevertheless, the addition of the Supermax means the best of the NBA do not have to worry about money, while some NFL stars still do.

Of course Patrick Mahomes and Russell Wilson exist, and nobody's crying for them. But some of the best running backs, wide receivers, corner backs, defensive ends, and linebackers get paid like rotation players in the NBA. If you're a top-end NFL player, and you make less than Chandler Parsons, I'd be pissed. The way finances are handled in the NFL and NBA's CBA are why this dichotomy exists. But some non-financial differences highlight this as well.

Part 3 coming soon!