July 2020 Basketball Wiretap

Exec: No NBA Teams Will Operate In Black During 20-21 Season

Jul 10, 2020 11:25 AM

With the NBA unlikely to play the 20-21 season with fans in the arena and limited fans under the best case scenario, the financial outlook for the league is uncertain and far less promising than it did before the COVID-19 pandemic started in March.

Adam Silver has estimated that approximately 40 percent of the NBA's once-projected $8.4 billion in revenue came from arenas.

"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."

In order to help the league account for the shortfall, the NBA could withhold as much as 20 percent of players' salaries in escrow as opposed to the typical 10 percent.

Brian Windhorst, Tim Bontemps/ESPN

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NBA Could Increase Players' Escrow Amount From 10 Percent To 20 For 20-21 Season

Jul 10, 2020 11:23 AM

The NBA and players have agreed to a September deadline for what modifications will need to be made to the collective bargaining agreement to account for the economic realities of the pandemic.

The starting point will be the inverse of the "cap spike" that the NBA faced in 2016. The players rejected "smoothing" the cap and the league didn't push the issue, which resulted in a $24 million spike.

Instead of a steep drop of the cap, the concept would be to keep the cap artificially high for the 20-21 season, potentially around $109 million and achieve the needed 50-50 split by every player taking an equal percentage paycut.

The league withholds 10 percent of players' salaries in escrow currently and sources say one option is to increase the escrow amount to 20 percent for one season.

"Don't think it's lost on any of us that the Warriors could end up benefiting from the cap spike in 2016 and then cap smoothing if we have it in 2020," one general manager said.

Another league executive said, "I agree this concept makes the most sense in the uncertain times we have. But if [smoothing] is where it goes, it does penalize teams who have done better long-term planning."

"In one case, the owners want a loan from the players. And in the other case, the players want a loan from the owners," one prominent agent said. "It will probably end up somewhere in the middle and it will get done after some yelling and posturing."

Brian Windhorst, Tim Bontemps/ESPN

Tags: NBA, NBA CBA

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