With the trade deadline just a week away, the NBA has alerted teams to a somewhat significant change in the salary cap and luxury tax projections for the 2020-21 season. The early warning is a sign that projected league revenues are down and will thus send the cap projections downward as well, according to ESPN’s Adrian Wojnarowski and Bobby Marks.

Initial projections for 2020-21 called for a salary cap of $116 million, but that could dip by as much as $3 million:

The loss of the league’s China-driven revenue has caused many front-office executives to tell ESPN that they’ve been preparing for the possibility that the original 2020-21 cap projection of $116 million could drop as far as $113 million.

As mentioned in the excerpt above, the league’s recent spat with China continues to have adverse financial repercussions throughout the league. China pulled sponsorships and television coverage after Houston Rockets general manager Daryl Morey sent a tweet in support of anti-government protesters in Hong Kong in October 2019.

While this adjustment in the projections may not have a huge impact on this year’s trade deadline because cap space isn’t as important this upcoming summer, there are a number of teams this drop will affect in the future. The luxury tax line was initially expected to be at $141 million, but a revision down to $138 million would only increase tax penalties for a team like the Golden State Warriors:

For example, the Warriors — considered a repeater tax team — would lose more than $14 million if the tax projection dropped $3 million. With an extension for Draymond Green starting next season, the salary slot for a potential top-five draft pick in the 2020 draft and full use of the $5.9 million exception on a free agent this summer, the Warriors could face a nearly $80 million penalty if the tax drops to $138 million. Golden State was projected to pay $65 million in tax with a $141 million salary cap.

There are individual salary ramifications as well, with NBA players on rookie scale deals who recently signed max extensions getting a bit less than expected.