With free agency about halfway wrapped up, and more than 1 billion dollars worth of contracts handed out, just what exactly makes the amount of money so high?

How are owners paying such huge chunks of money to NBA players across the spectrum all at once? The answer is league revenue.

Getty Images/Andy Lyons

Player salaries are determined by a percentage of what the total league revenue is, and owners have a certain percentage of funds they must spend on players to qualify for leagues’ floor and ceiling policy.

In other words, teams have a minimum and maximum amount of money they must spend that equals out to the percentage amount owed to the players. This amount is signed off on in the CBA agreement the players association (NBAPA) has with the NBA.

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Players have agreed with the NBA to receive 50% of all basketball related income.

The NBA has a tv deal in the amount of $24 billion over nine years, $2.6 billion annually. This has raised the amount of money coming into the NBA significantly.

When you see inflated salaries all of a sudden, this is the reason why, and next year the revenues will increase. There is a very high chance we may see our first $200 million dollar contract surface. Don’t doubt it, we are almost there now.

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