With no clear end in sight to the COVID-19 crisis in the U.S., NBA owners are facing a serious problem. Actually, they are facing one billion of them.
The NBA is looking at roughly $1 billion in losses if the league does not resume the 2019-20 season. The league did decide to pay players their full paychecks on April 15 and appears as though they will do the same on May 1.
Owners are still planning on paying players their full salary on May, but as the current situation drags on some sort of resolution may need to be reached with the players’ association. The league has proposed to split the coming losses with players, similar to how the current collective bargaining agreement (CBA) splits revenue.
Owners would hold back a percentage of players’ paychecks to help teams balance their books in the event the season gets cancelled. Players still receive a portion of their salary with the balance to be paid at a future date.
Nothing has been decided as of yet, but there is a clause in the current CBA – force majeure – that allows owners to cancel games and recover salaries in the event of a pandemic. There is also a period of time – 60 days – where the league can rip up the CBA and, in effect, create a work stoppage.
Neither players nor owners would want that and both sides have worked very well together through the current CBA. Still, force majeure is entirely possible.
If the league continues to pay players like nothing has happened, players will wind up with nearly 58 percent of the season’s revenue. Players set aside 10 percent of their salary in an escrow fund, per the CBA, to cover potential league shortfalls. That fund would not have enough to cover the losses from this season.
If nothing else is done to correct this imbalance, the result next season would be significantly lower salary cap and that could be trouble for several teams in the league. It will also be a problem for players like Anthony Davis, who is set to become a free agent.