NBA Escrow System Slashes Player Salaries Nearly $500M for 2024-25

Yahoo

3 days ago

The NBA just wrapped its accounting on the 2024-25 season and pegged basketball-related income (BRI) at $10.25 billion, according to someone familiar with the accounting who was granted anonymity because the details are private. It's a key number for players, as it determines how much of their salary they get to keep from last season.
The news is not great for players, as they will forgo more than $480 million from the escrow fund set aside to make the math work in the shared-revenue system laid out in the collective bargaining agreement between players and the league.
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Stephen Curry gets dinged the most as the NBA's highest-paid last season at $55.8 million—he also made an estimated $100 million off the court. Curry will forgo $5.1 million, and other players taking big haircuts include Joel Embiid ($4.7 million), Nikola Jokic ($4.7 million), Bradley Beal ($4.6 million) and Kevin Durant ($4.5 million).
The CBA calls for players to receive 51% of BRI. The NBA withheld 10% of player salaries last season to ensure that the revenue split was achieved. Overall revenue likely came in light due to some combination of the choppy local media environment and multiple small-market teams among the last ones standing in the playoffs, which dented postseason gate receipts.
Players will ultimately retain 90.9% of their salaries for the 2024-25 season, as the 10% escrow was split 91% to teams and 9% back to players. A player with a $20 million salary would net $18.2 million before taxes and agent fees. Bleacher Report's Eric Pincus first posted about the escrow split on X.
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The escrow system, implemented during the 1999 CBA, was traditionally set at between 8% and 10% of player compensation. Players and the league split the escrow for many seasons, but for three straight seasons beginning with 2014-15, 100% of the escrow was returned to players along with a supplemental check as revenues surged and produced an uneven split.
When COVID-19 hit in March 2020, the league raised the escrow percentage late in the season to 25% to account for the shortfalls in arena revenue. The following season, a 'ten-and-spread' system was implemented to supplement the standard 10% withholding amortized over three years. There was still a carryover of around $130 million going into the 2022-23 season, but players received nearly 100% of their salaries that season when revenues jumped.
The NHL has a similar escrow system that was often a major point of contention for players and agents, and the scales typically tipped towards the owners when final accounting was completed on hockey-related revenue. The escrow system cost NHL players at least 10% of their paychecks for six straight seasons leading into COVID, when the withholdings soared even higher.
Yet, the hockey business is booming, and the league stopped withholding escrow payments for the 2024-25 season in January, with the expectation that the escrow fund would fully revert to players. The newfound harmony between the NHL and its PA was on display last week when it reached a new CBA a year ahead of the expiration of the current one.
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NBA players should be clear to collect their full 2025-26 salaries. The salary cap, based on projected BRI, was set at $154.6 million, up by the maximum 10% allowable increase, per the CBA. The 10% bump was inevitable after the league signed new 11-year media agreements with NBC, ESPN/ABC and Amazon last July worth $77 billion, which is roughly 160% higher than the previous average annual value.
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