The National Basketball Association (NBA) has raised the debt limit of owners to US$325 million, marking an increase of US$75 million, according to ESPN.
The new threshold, unanimously passed by the NBA board of governors, could soften the impact of anticipated higher team payrolls and luxury taxes next season according to the report from ESPN’s Adrian Wojnarowski.
The NBA had not raised the debt limit available through its loan facility to teams since late 2014, after the completion of the new nine-year US$24 billion media rights deal with ESPN and TNT.
While teams with cash flow problems built around payroll and taxes can get relief, the ability to take on debt is often focused on infrastructure, facility improvements and other team-related investments.
The rising valuations of NBA teams and the increased player salaries affords the league the ability to work with banks to increase the debt ceiling of each of its franchises.