NBA executive predicts every team will lose money next season
The NBA is launching an unprecedented and ambitious operation – hosting the rest of its season in a centralized location with frequent testing – because that’s what’s necessary to play amid the coronavirus pandemic.
What about next season?
Coronavirus will likely remain a danger on Dec. 1, when the league hopes to begin. That threatens fan attendance. Heck, that could undermine teams playing at all in their home markets. All 30 teams, rather than just 22, adds complications.
Even if the season gets off the ground, there will be financial issues.Brian Windhorst and Tim Bontemps of ESPN:
“The truth is, things are changing so fast that, when it comes to next season, the best we can do is put a stake in the ground and make a guess,” an Eastern Conference team president said. “The reality is nobody is probably going to operate in the black next season.
“The only question is how much each of us are going to lose.”
NBA owners love to cry poor. The actual math often reveals a different picture. There are complexities that teams can hide.
Some teams have already cut employees salaries. But some teams are also doing extravagant things like shipping their courts to Disney World for practice:
Still, NBA commissioner Adam Silver estimated 40% of league revenue comes from ticket sales and other game-day sources. If teams are ever believable about losing money, it’d be now. Coronavirus has wrecked so many sectors of the economy.
Revenue falling significantly would be felt by players, who – per the Collective Bargaining Agreement – receive about half of Basketball Related Income. (That 50-50 agreement supersedes players’ stated salaries in their contracts.)
It’s undecided how and when players would suffer those losses.
The 2020-21 salary cap could be reduced. But that would put the burden on players – free agents, draft picks – signing new contracts next offseason.
That’s why the salary cap is reportedly expected to remain roughly flat. There are a couple options within that scenario.
Players could have a larger share of their salaries withheld (as they’re doing this season). Then, at the end of the season, owners would return whatever money is necessary to reach the 50-50 split. However, that would reduce players’ spending power during the season.
Or players could collect their usual salaries with an artificially high salary cap. However, that would likely mean they get more than their entitled 50% share and the salary cap would be reduce in future seasons to offset. Current players – some of whom won’t be in the league in future years – would probably love that. Owners likely wouldn’t accept paying players more sooner.
Increased withholding from player salaries is probably the best option. But there’s plenty to decide about the exact withholding amount and how long the money is held. To ensure enough money is withheld, the percentage should initially be fairly high. Then, as the revenue picture becomes clearer, the withholding amount could decrease in future paychecks.
Of course, that assumes the league finds a safe way to play. Which is the biggest challenge.