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A Warriors salary cap round-up part II: What happens when TV money pours into a league

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Don’t be scared of big numbers — they are here to stay.

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Houston Rockets v Golden State Warriors
These guys are not going to be short of cash
Photo by Ezra Shaw/Getty Images

The Golden State Warriors’ salary cap going forward is always a subject of much debate.

Warriors fans fear that the punitive tax bills will force the front office to break the team up prematurely. Meanwhile everyone else crosses their fingers and hopes for financial armageddon to give their chosen teams a chance.

ESPN Insider Bobby Marks recently published an analysis that showed just how expensive this could get. From his figures, the Warriors could be faced with breaking the $400 million mark in 2019-20.

Far be it for me, basically a slightly weird obsessive with a spreadsheet, to disagree with a man who spent years working in an NBA front office. But I did set out earlier in the year how the Warriors could keep those costs down to a much more reasonable level.

Either way, the bills are still going to be astronomical by historical standards.

History as a guide?

But here’s the thing: You can’t judge the upcoming potential outgoings by what teams have spent in the past.

Again, in the piece earlier in the year I set out all the new sources of income the Warriors are going to have access to.

Beyond that, though, I think it’s instructive to look to other sports which have had a massive influx of TV money, and what that has done to the economics of the game.

If you put more money in...

A great example is the recent influx of cash to the English Premier League.

From 2001-2013 TV deals ranged between £1-£1.7 billion. Then, in 2013 a new deal basically doubled the revenue to £3 billion. Three years later, in 2016, TV income jumped again, this time by 71% to £5.136 billion.

Now football (or soccer if you must insist) operates on a different system. There’s no salary cap, and player swaps (ie trades) are very rare. It’s all about the transfer fees you have to pay.

But the underlying principle is the same - chuck a ton of money into a system and see what happens.

...you get more money out

And guess what? Those fees skyrocketed to unheard of levels in the last few years. A recent article in the Financial Times outlined the impact of the TV money:

English Premier League clubs have spent a record £1.43bn on players during this summer’s “transfer window,” an increase of almost a quarter on last year’s figure and the sixth-consecutive year that records were broken.

They went on to report what analysts said this meant for teams splurging the cash:

Deloitte said, however, that given “the context of generating record broadcast, commercial and match day revenues, Premier League clubs are spending well within their means”.

Dan Jones, partner in the sports business group at Deloitte, said it was “no surprise” that England’s top flight clubs were maintaining their “leading position in the world’s player transfer market,” given the increase in revenue from broadcast rights.

He added that “with Premier League clubs’ revenue showing no sign of decreasing in the foreseeable future, we would expect to see spending continue to rise”.

The Warriors are still in an enviable position

So there you have it. Pump money into a system, and prices get inflated.

So before we all start panicking about the potential costs of this budding dynasty, let’s take a step back and realize these numbers are going to look astronomical no matter what they do. But that doesn’t mean they’re unaffordable.

Brady hit the nail on the head when asking ‘Is Joe Lacob primarily a businessman, or a competitor?

That is essentially the question that will determine whether or not this dynasty stays together long term. For my part I can’t help but being encouraged by Bob Myers comments to KNBR, where he said that Lacob is always happy to spend if it helps the team win.

I’ll give Bobby Marks, a man who actually knows what goes on inside a front office, the final soothing words:

But as one league executive told ESPN, "There are 29 owners that would take this Warriors roster even if the cost was $495 million in luxury tax penalties."

Part I looked at roster flexibility, Quinn Cook’s contract, and the possibility of a Klay Thompson mega-extension.