The NBA is pushing for a hard cap as part of its next CBA negotiations, which is being described instead as an "Upper Spending Limit."

"There will be a lockout before there’s a hard cap," said one source from the players' side to Marc Stein.

Currently, there are only three ways a team can be hard-capped:

1. Acquire a free agent via sign-and-trade
2. Sign a free agent with the non-taxpayer mid-level exception
3. Signing a free agent with the bi-annual exception

Sources say there is a strong desire from some within the league to limit overall team spending while the value of individual contracts continues to climb due to another influx of television money. 

The league's current system is built around a salary cap and a luxury tax.

The two sides have until the Dec. 15th deadline to opt out of the current CBA, which would terminate the agreement on June 30, 2023.

The NBA is examining the addition of mechanisms that incentivize top players to participate in more regular season games as part of the next collective bargaining agreement. 

Teams have increasingly prioritized resting players over the past few seasons, which has led to top players participating in fewer games each season. The hope from teams is that those players are as healthy as possible for the playoffs, which is when the league arguably delivers the most value to its television partners. 

The league has attempted to decrease back-to-backs despite their insistence on keeping an 82-game schedule. 

The NBA is pursuing an upper salary limit in its negotiations on a new collective bargaining agreement with the NBPA.

The idea has been met with significant resistance from the union and is considered a non-starter. 

The new system would replace the current luxury tax with a hard limit that teams could not exceed to pay salaries. 

The NBA and NBPA are working to reach an agreement prior to a December 15 deadline.

The league believes the current system fails to provide a level enough playing field to make more of the 30 teams competitive and that the financial imbalance is unsustainable. 

There is also skepticism among smaller NBA marketplaces who worry that an upper spending limit would fail to create the competitive parity that the league is hoping to achieve, instead causing well-constructed smaller market teams to have to break up cores of contending talent despite a willingness to enter into the luxury tax.

The league would also need to find a new mechanism for revenue sharing.

NBA valuations have increased coming out of the pandemic due to the league's growth, profitability and clean balance sheet. 

The average valuation multiple for the 30 teams is 8.6, versus 7 pre-Covid. 

The average NBA franchise is now worth $2.86 billion, 15 percent more than a year ago despite the stock market being down more than 15 percent over the same period.

The average debt/enterprise value of the 30 teams is just 10 percent, which means buying a team today means an owner can quickly begin to make money and never have to put in extra money. 

Tilman Fertitta has pulled out at least $60 million per year, except for the 20-21 season, since purchase the Houston Rockets in 2017. 

Adam Silver walked back the possibility of the NBA instituting a relegation and promotion system as a way of disincentivizing tanking.

Last week, Silver told employees of the Phoenix Suns that relegation had been discussed internally at the league office.

Unlike the NBA, most soccer leagues outside the United States compete in an open system rather than franchises. 

"I can't say I was deadly serious about relegation, because we don't have the same system as European soccer and it would make no sense to send an NBA team to the G League or a G League team to the NBA," Silver said.

"But obviously that is how other leagues deal with situations like this where they force teams to stay competitive because the consequences of finishing at the bottom of the league are dramatically detrimental to the health of the team. But it's something as I was saying to the folks in Phoenix that we keep our eye on. We understand we are selling competition to our fans."

The NBA is seeking upward of $75 billion for its next media right package that will start in 25-26.

Under the current deal that runs through the 24-25 season, ESPN and TNT are paying a combined $24 billion, or $2.6 billion annually.

ESPN and TNT are now playing defense against streaming giants such as Amazon and Apple.

“I would say that all of the leading technology companies are interested in the NBA. Amazon is just one of them. I think Apple, I think Google. All of them,” said John Kosner, former NBA and ESPN executive turned media advisor and the founder of Kosner Media.

“And keep in mind the definition of what’s a ‘rights package’ going forward doesn’t have to be what we grew up with,” he added. “A company like Discord (a social platform with 150 million monthly users) could become an NBA rights holder at some point, too. I think they’re all interested.”

The NBA could put together a linear TV deal with ESPN and TNT while also selling an exclusive streaming package. The NBA already has a $1.5 billion per year streaming deal with Tencent Holdings in China. 

The NFL secured its long-term $100 billion-plus media rights payday last year and the NBA is hoping to match it or come close.

Out of the four major sports leagues in North America, the NBA currently has the highest average value-to-revenue multiple at 8.4. The average revenue for an NBA team is $308 million while the average franchise value is $2.58 billion.

The NFL average value-to-revenue multiple is 7.6 with the average franchise valuation is $4.1 billion.

The MLB average value-to-revenue multiple is 7.4 while the NHL trails behind at 5.0.

The MLS, meanwhile, has a 10.2 average value-to-revenue multiple suggesting there's substantial revenue growth potential for the league.