NBA raises owners’ debt limit to $325 million

The NBA has raised the debt limit of owners to $325 million, a $75 million increase that could soften the impact of anticipated higher team payrolls and luxury taxes next season, league sources told ESPN.

The NBA Board of Governors unanimously passed the increased debt limit in a vote on Friday, sources said.

The NBA hadn’t raised the debt limit available through its loan facility to teams since late 2014, shortly after completion of the new $2.6 billion media deal.

The rising value and financial health of NBA teams was the primary impetus in elevating the debt limit. 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 affords the league the ability to work with banks to increase the debt ceiling of each of its franchises.