A Breakdown of NBA Salaries

NBA players make money. A lot of it. The median salary of an NBA player is $2.5 million, compared to $31,000 for the average American. And at the top of the fiscal ladder resides the most elite athletes.

Each year, ESPN publishes a list of the players earning the highest salaries in the league. Some players who have frequented this list over the past decade or so include LeBron James, Kobe Bryant, and Kevin Garnett, who have all easily collected $20 million per year on salaries alone. Below is a breakdown of the salary LeBron James raked in during the 2015–2016 season:

It’s obvious that the industry places incredible value on the talent of these players, with teams paying hefty premiums for their services. However, consider the fact that although these figures are inordinately large, the real (adjusting for inflation) income of NBA stars is not immune to prevailing macroeconomic conditions. Below is a graph comparing real income growth for average Americans to the highest paid NBA players.

The real median wages for the highest paid professional basketball players have actually grown more slowly since 2000 than those of the median American. In other words, an average American’s real wage since 2000 has probably increased more than one of the highest paid NBA players during the same span. The median salaries of the highest paid NBA players are also highly volatile (that is, the degree to which the data points for NBA stars fluctuate) relative to ordinary Americans, especially during recessionary periods in the early 2000s and then again in 2008.

The Future

What does the future look like for the salaries of professional basketball players? In a single word — lucrative. The salary cap, the limit placed on how much teams can spend on player contracts every year, is projected to increase from $70 million to $94 million per team in the coming seasons. This is due to a 9-year, $24 billion television contract the league signed with ESPN and Turner Broadcasting to broadcast league games.

As a result, average players will make much more money and the top tier, currently consisting of players such as LeBron James, Russell Westbrook, Kevin Durant, and Anthony Davis, have the potential to make salaries approaching $40 million per season. That amount could pay full tuition to Northwestern University for 570 students!