NBA Payrolls from 1990 to 2024

For those of us who were not alive in 1990, allow me to set the scene. Frankfurters cost a nickel. The world was still mostly in black & white unless you found yourself among the privileged few who could afford a little bit of color. And the Cleveland Cavaliers were running the highest annual NBA payroll at $14.4 Million. Only one of these statements is entirely true.

Just shy of 35 years later, Stephen Curry is the highest paid player in the NBA, pulling in nearly $52 Million this year. That’s over $600,000 per game, and over 3.5 times that Cavs payroll from 1990. And Steph has already taken some PTO this season.

So yeah, NBA payrolls have gone up. They keep going up. And part of that is, you know, ‘inflation’. But another part of that is just the economics of running an NBA team. Salary caps are maintained as a factor of BRI, and BRI has been blowing up lately.

To get a better view of this salary explosion, I scraped together data on NBA team payrolls from 1990 to today and dumped it into the plot below. Yeah, it’s a bit of a tangle. But, you can hover on the data points to see the specific numbers, and overall, the graph speaks to some interesting trends regarding the evolution of the league.

If you’re interested in the hard data, you can find it in a PDF a little lower on the page. But here’s the graph…

What drives NBA salaries?

Through the CBA, salaries are closely linked to league income. That is, the salary cap is tied to how much money teams are bringing in. Currently, players are entitled to 51% of BRI (Basketball Related Income). So, as NBA income rises, so does the salary cap.

One of the larger chunks of BRI comes from media rights deals. Media corporations spend billions of dollars for the rights to NBA content. When these deals are up for renegotiation, we see payroll jumps. It’s no accident then that the biggest lull in the graph falls in the 2007-2016 range.

Following the iconic, ‘Roundball Rock’ era with NBC, ESPN and ABC swooped up NBA media rights in 2002, together with Turner Sports, at around $750 Million per year.

With Jordan’s retirement, interest in the league stagnated under the new media contracts, and ratings dropped. When the league renewed with the same broadcasting trio in 2007, the value of the contract took a small jump to around $900 Million per year. But in late 2014, the contract with ESPN, ABC and Turner was extended for once more, this time nearly tripling its annual value to $2.7 Billion.

That contract runs through the 2024-2025 season. Another step upwards is anticipated for the next deal as streaming becomes a more dominant factor. It’s not all that wild to imagine NBA payrolls pushing the $1 Billion mark in the not-so-distant future.

There are plenty of other factors at play. Interest in the sport and the league, as well as overall economic factors (in the US and worldwide), will also play into league revenue, but media rights would appear to be one of the strongest drivers.

What does NBA payroll data reveal?

Well, we’re trending upwards. It’s a basic observation, but it deserves to be mentioned. NBA players are making more money than ever before. In fact, for the most part, over the past 30 years, they’ve always made more money than ever before.

But there are some other interesting features in the graph that point to certain elements of league history.

The 2005-2006 Knicks were peak ridiculousness

The most prominent peak here is formed by the 2005-2006 New York Knicks. For Knicks fans, this has gotta bring back some bad memories.

The Knicks spent around $126 Million that year, against a salary cap of $49.5 Million. As a return on that investment, they came in dead last in the Eastern Conference.

This little data point neatly summarizes the ridiculousness of Knicks management in that era (not to underplay their ridiculousness in other eras). In the 2005 season, the highest paid Knickerbocker was Allan Houston, tied with Chris Webber for second highest salary in the league. Houston did not play in 2005. Houston’s 6-year $100 Million contract from 2001 is easily one of the worst NBA contracts in history.

And 2005 was the 3rd of 4 straight years where the Knicks led salary spending in the NBA. The Knicks have led NBA payroll spending 8 times since 1990, more than any other team.

Note: Some of this stuff is only visible in specific data points that don’t show up on the graph. If you want to get a closer look at the numbers, I’m providing a PDF below. Each season’s maximum payroll is highlighted in blue. Minimum payrolls are highlighted in yellow. Title team’s payroll is red text.

Does a high payroll guarantee you an NBA title?

Judging by the Knicks, you might lean towards the conclusion that aggressive spending is NOT a valid strategy in pursuing an NBA title. The numbers definitely support that.

In only 5 instances since 1990, has the team with the highest payroll won the NBA title. That works out to around a 15% probability that the biggest spender takes the chip.

The only teams to have won a title on a league-max payroll are the Jordan Bulls, the LeBron Cavs, the Curry Warriors, and the Kobe Lakers. Phil Jackson then, pulled 3 titles on the league-max payroll.

In contrast, the lowest spenders have won 0 titles since 1990. What’s more, in the past 34 seasons, only 2 teams have made the journey from lowest payroll in the league to NBA champions.

These two teams are the Raptors and the Mavericks. In both instances, it took over 15 years to recover from cheapest team in the league to league champion.

What this seems to suggest, and what I find incredibly interesting, is that bottoming out on your payroll virtually guarantees that you will not win a title, not only for that single season, but for very many seasons into the future. It’s the sign of a non-committal or financially struggling ownership, and those are issues that can take many years to overcome.

Takeaways 🥡

If you happen to own a team, or you’re involved in any way in roster building, don’t be cheap. But also, maybe don’t shell out either.

Winning teams are popular. Popular teams tend to make money. You can’t win without paying your players.

But you can’t just go out and buy a title. A lot of new owners could stand to internalize that wisdom. You have to build an organization that values winning at all levels. You have to make good decisions to navigate the salary and build a functional team that delivers cohesiveness and complementary skills.

And that points to what the salary cap is designed to do. It’s supposed to make it more difficult for management to max out spending in a title bid. It’s also supposed to make it tougher to hang onto the perfect combination of players when you’ve found them.

The NBA will tell you that they just want to keep the game competitive. A competitive league is good for the fans. But I would suggest that it’s also very important for them to disincentivize revenue tanking. A team that pushes spending too far over revenue is a bad look for the league, and negatively impacts the value of the league and the appeal of team ownership.