The forced suspension of the NBA’s regular season is hitting the league hard — and it’s about to hit players’ paychecks hard.
The NBA and the players’ union are in negotiations to withhold more of players’ paychecks in an escrow account if the rest of the NBA season is canceled, as is seeming more and more likely. Up to 25 percent of the players’ salaries will be withheld, reports Adrian Wojnarowski of ESPN.
The NBA and National Basketball Players Association are discussing scenarios for withholding up to 25 percent of players’ remaining salaries in a league escrow should regular-season games eventually be canceled, sources tell ESPN…
The Collective Bargaining Agreement maintains that players lose approximately 1 percent of salary per canceled game based on a Force Majeure provision, which covers several catastrophic circumstances, including epidemics and pandemics…
Commissioner Adam Silver, NBPA executive director Michele Roberts and a group of league and union lawyers have been discussing a number of ways to prepare financially for how the likely cancelling of scheduled games will impact some percentage of lost salary for players, sources said.
In every NBA check, even in a typical season, 10 percent of a players’ salary is held back in an escrow fund. Then, at the end of the season when the books are balanced, and the players get 50 percent of the basketball related income (BRI). If league income was slightly lower than projected, the players do not get all of their money back from the escrow fund, the league takes whatever portion is needed to get to the CBA’s prescribed 50/50 BRI split (and the rest is returned to the players).
This season, due to the coronavirus possibly canceling more than 20 percent of the season and condensing the playoffs, there is going to be more than a 10 percent shortfall in the projected BRI.
Players will get a full regular paycheck on Wednesday, April 1. If the NBA and players union reach an agreement before April 15, that check could start to see the reductions as money goes to the escrow account.
The vast majority of players have their pay stretched out for the entire year (the first and 15th of every month), but some players take an option to get more of that money up front. Regardless, everyone will pay into the escrow fund.
Players have the choice of either 12 or 24 installments when it comes to their contract. In the case of a possible salary reduction, every player is on equal footing. For players with only 2 paychecks remaining (after 4/1), a reduction could come in future salary owed (20-21).
— Bobby Marks (@BobbyMarks42) April 1, 2020
The NBA has not officially announced the cancelation of regular season games yet, but games will be lost. Warriors coach Steve Kerr said he doesn’t expect the Warriors will play any more games this season. More and more sources think the regular season is lost, but the league is holding out hope.
It’s impossible to calculate how big the revenue hit to the league will be until a plan for the postseason is put together (if one is put together), but it will be massive. Possibly more than a billion dollars if the season and playoffs are canceled. Right now, the league is simply running a lot of scenarios to try and project how to lessen that blow when they do return to action.
Still, the coronavirus suspension is going to hit the players’ pocketbooks. This increased escrow account is just the first wave.