To recap, the NBA salary cap is calculated as follows:
Under the 2011 CBA, each team must spend 90% of the Salary Cap on its players’ salaries. This is to ensure that players receive their fair share of all basketball related income relative to the team and thus the league. (For reference, most of the basketball related income is derived from TV deals. This is why the salary cap skyrocketed for the 2016-2017 season, for the TV deal was much larger than anticipated).
To keep a balance on the salaries that the teams may pay their players, they enact a 10% deduction of salaries and benefits from each player’s paycheck into an “Escrow Account.” This amount is withheld from a player’s contract and is either distributed or eliminated at the end of the season.
At the end of the season, when BRI is calculated for the team during the course of the season, the apportioned money will be sorted as necessary. If the team does not distribute 50% of BRI to its players during the season, it can tap into the escrow accounts and write checks back to its players in order to ensure their 50% share of the BRI. This is called an underage. If the team ends up distributing more than 50% of BRI in what is called an overage, they will continue to withhold the 10% escrow payment and then they can deduct from the player benefits pool, which is 1% of BRI, to make up for the shortage. At this point, if the overage is still not accounted for, the players can no longer lose money and the onus is on the owners.
Keep in mind that an overage is very rare. In 2011, the NBA ended up paying players back a total of approximately $160 million at seasons’ end, for the salaries paid fell below the players’ share of BRI.
In basic form, the players follow this payment guide:
SALARY = $1,000,000
- STATE TAX (.05) = $50,000
- ESCROW (.1) = $100,000
+ BENEFITS = $50,000
PAID = $900,000
These are hypothetical numbers, but this would be the form that a player could expect.
I'm Jake, a recent graduate of Duke University pursuing a career in collegiate or professional basketball operations.
Cap #s 2018 - 2019
Salary Cap: $101.869M
Lux. Tax: $123.733M
Tax Apron: $129.827M
Tax Floor: $91.682M
Room MLE: $4.45M