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NBA free agents sign deals as high as some nations' GDPs: How the league got that rich

Kevin Durant
J. Pat Carter | Getty Images
Kevin Durant

Kevin Durant is one of the NBA's best players and a recent league MVP. So while his decision to leave Oklahoma City for the Golden State Warriors may have come as a surprise, the fact that he signed a contract in which he will make him the maximum permissible next year under league rules was par for the course.

But when Mike Conley, a good player but no all-star, also received a maximum contract with the Memphis Grizzlies for an average of more than $30 million over the next five years, it raised many eyebrows.

This off-season has seen a flood spending hit the NBA's free agency market, the result of a 2014 television deal the league negotiated worth roughly $24 billion over nine years, which kicks in this upcoming season. The new deal means each NBA team will have a salary cap of $94 million this upcoming season, compared with last season's record-setting $70 million.

NBA free agents have already negotiated deals worth approximately $3 billion, nearly equal to the GDP of the Maldives. But while the Maldives has a population of about 400,000, fewer than 75 NBA players have completed deals, according to ESPN's free-agent tracker.

The booming amount of spending points to the economic health of the NBA, sports business experts say, but some of the surprising deals point to a few quirks in the market that are the result of the league's current Collective Bargaining Agreement. Both the league and players' association can opt out of the CBA this December, but either way experts largely expect the heavy spending to continue.

"This is the new norm in the NBA," said David Berri, a sports economist and professor at Southern Utah University. "You're seeing more and more players get these max contracts."

Conley is not the only player to get a surprisingly large deal this off-season. Hassan Whiteside, who was playing in the NBA development league less than two years ago, also received a head-scratching maximum contract this past week. Initial reports of Evan Turner's $70 million contract also perplexed some onlookers given that Turner spent the past season largely in a reserve role.

Experts said the increasing size of the deals is a byproduct of the league's CBA, which mandates teams spend a minimum on players every year. As revenue increases, so does the minimum.

"It's less an aberration and more it's what the contract requires," said Rick Burton, a professor of sports management at Syracuse University. "When the pie grows, everybody benefits."

However, some experts noted that aspects of the league's current CBA have created inefficiencies whereby top players' contracts are constrained by the maximum limits.

Todd McFall, who researches sports and economics at Wake Forest University, even said the cap on top salaries has led to a competitive imbalance as top players "compensate themselves by finding super teams" in place of taking larger contracts.

"These guys can't find contracts because there's no optioning process ... commensurate to their value," McFall said. "It seems to me like it's going to lessen the churn at the top of the NBA totem poll."

When the NBA and the league's players union negotiated a new collective bargaining agreement in 2011, it saw basketball players take a cut on their share of "Basketball Related Income," dropping from 57 percent to an approximate split. So as players see record deals, experts also said it is important to remember that means the owners are pocketing a significant amount of money as well.

"What they did in the last union contract is they managed to lower the percentage going to the players, so there's a huge windfall that's suddenly going to owners," Berri noted.

And while this year's jump in salary cap has already spurred sizable deals and a whirlwind free-agency period so far, early projections are that next year's salary cap will rise past $100 million. Along with the NBA's mammoth television deal and increasing popularity, the expanding global reach of basketball has put the NBA in top financial standing.

"No league enjoying unexpected, historically high increases in revenue is in any financial difficulty at all," Rodney Fort, a co-director of the University of Michigan's Center for Sport Management, wrote in an email. "The financial health of the NBA has never been better."

However, in just a few months time, the current state of affairs may be subject to change. The NBA and the National Basketball Players Association can each opt to terminate the current CBA after the upcoming season by notifying the other party by December 15.