NBA 2020-21 salary cap could decline by $25-30 million in worst-case scenario
It’s only a matter of time before the NBA starts to feel the fissures of a two-month hiatus and the financial repercussions in the league’s collective bargaining agreement (CBA). An NBA front office estimated the 2020-21 salary cap could decline by as much as $25-30 million in a worst-case scenario, according to ESPN Insider Bobby Marks.
While there has been a sudden rousing optimism that the league will resume play, the prospect of canceling the 2019-20 season is still plenty palpable.
Should the NBA cancel the remainder of the regular season and the postseason, it could cost the league a whopping $1 billion in basketball revenue — a loss that will be directly reflected in player contracts.
Players could lose as much as 40% of their salaries if the season comes to a close within the next two-to-four weeks, when commissioner Adam Silver is expected to make his decision.
Starting on Friday, May 15, players will have to give back 25% of their pay every two weeks to compensate for the losses their respective franchises have endured during this two-month hiatus.
The league projected a $115 million salary cap and a $139 luxury tax for 2020-21 prior to a scandal with China that caused the NBA to lose its most vital international partner and before the coronavirus outbreak brought the season to a halt.
The initial cap projections were based on the expected $8 billion in basketball-related income (BRI), which could decline by at least $1 billion and potentially as much as $2 billion, according to Marks. BRI accounts for things from gate receipts to broadcast rights — both of which are nonexistent for the league at the time.
Under a standard salary-cap formula with $6 billion in BRI (a worst-case scenario in revenue losses), the salary and luxury cap for 2020-21 could nosedive to $95 million and $115 million, per Marks. This would put 25 of the 30 NBA teams into the luxury tax — by far the most in league history.
Teams like the Golden State Warriors that are slated to pay a projected tax penalty of $45 million would see that balloon to $160 million before the 2020 free agency even begins.
The Warriors won’t be the only ones having to reshuffle the deck to make up for lost revenue, as 24 other teams will have to line up a plan to avoid financial woes at this uncertain time.