The NBA is losing major revenue due its coronavirus-forced stoppage.
Owners and players will share the losses.
The Collective Bargaining Agreement calls for each side to split Basketball Related Income approximately 50-50 (each side receiving between 49 percent and 51 percent). In normal times, the NBA keeps 10 percent of player salaries in escrow. Once BRI is calculated after the season, the league releases the necessary amount to players for the split to hit the appropriate level.
Considering coronavirus and China, even keeping all10 percent of player salaries might not get owners their “guaranteed” 49 percent of BRI. That would trigger a lower salary cap next season, and it’d force owners and players to negotiate a solution.
The National Basketball Players Association is apparently willing to make concessions.
Shams Charania of The Athletic:
Sources: The NBA is proposing to the NBPA that players take a 50 percent paycheck reduction beginning April 15. The NBPA has counter-proposed a 25 percent reduction of paychecks starting in mid-May.
— Shams Charania (@ShamsCharania) April 3, 2020
This effectively means players’ salaries will get reduced. Of course, owners want that. If even the union’s counterproposal includes salary reductions, salary reductions are happening. The key questions for haggling: How much and when?
It’s also unclear whether these paycheck reductions will go into an escrow account as an attempt to minimize collecting money from players who’ve already gotten paid more than what their final 2019-20 salary will be or whether this money will definitely just stay with ownership.
The force majeure clause of the CBA allows owners to reduce salaries if games are canceled, not just postponed. So far, everything could be rescheduled. But it seems the regular season and playoffs could both be shortened – if not outright canceled. Presumably, owners and players are discussing those scenarios.
Right now, owners are feeling more coronavirus-caused economic pain. Players will get their turn soon enough – whether through a lower salary cap, force majeure or both.
Paycheck reductions – in a week or a couple months – will spread the effects.