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Will players still get paid?
That, it would appear, depends on whether the games eventually get played. Because there’s a clause in the NBA-NBPA collective bargaining agreement – Article XXXIX, section 5(b) – that discusses this exact scenario. It defines a “Force Majeure Event” as any number of extraordinary circumstances, including “epidemics,” that bring the league to a halt. And it states:
“If a Force Majeure Event occurs and, as a result, one or more Teams are unable to play one or more games … then, for each missed game during such period (the “Force Majeure Period”) that was not rescheduled and replayed, the Compensation payable to each player who was on the roster of a Team that was unable to play one or more games during the Force Majeure Period shall be reduced by 1/92.6th of the player’s Compensation for the Season(s) covering the Force Majeure Period.”
In practice, this means: If the Thunder and Jazz never make up Wednesday’s game, the $38.5 million the Thunder owe Chris Paul this season becomes $38.1 million. If every remaining Thunder regular season game and the entire NBA playoffs were canceled, it would become $28.7 million. The league’s highest-paid players could stand to lose around $10 million.
Now, some or all contracts may very well have their own clauses that counteract this. Some players may have insurance that protects them. All of this, however, highlights how strong the incentives are, for all sides, to eventually finish this season in one form or another. Because the reason player compensation would be undercut? It’s tied to team revenue, which would diminish with every lost game.
How much money could teams lose?
NBA teams average around $2 million per game in revenue from ticket sales, concessions, in-arena merchandise purchases and parking. That’s according to a Yahoo Sports analysis informed by 2018-19 Forbes data and several sports economists. And for every game shelved, that estimated $2 million is lost. In its entirety. If the rest of the regular season were scrapped, that’s a very rough estimate of $518 million down the drain – or 1/18th of the NBA’s annual $9 billion of revenue.
Then there are the local sponsorship deals, and, of course, both local and national broadcast contracts, all of which are affected. But many of these, experts say, will have their own “Force Majeure” provisions, or insurance that indemnifies the league in these worst-case scenarios. The NBA, sports economist Andrew Zimbalist says, “Probably has cancellation insurance and makes good arrangements with TV networks, so additional losses will be moderated.”
“Of course, the other thing you lose is the emotional impact of the games,” Zimbalist continues. This is the intangible consequence of cancellations. It’s the 10-year-old who goes to a game, then asks for a jersey for his birthday, then becomes a fan for life. “That’s a seminal moment in the formation of their fandom,” Zimbalist says. And if games are canceled, for some time, “that won’t be there anymore.”
So the answer to the question — How much money could teams lose? — is largely unquantifiable. What is known is that the impact, even from one night of canceled games, would be eight figures. The impact from two weeks of canceled games would be nine figures.
And whatever money is lost? It’s money lost for the players as well.
Will this impact next year’s salary cap?
Per the CBA, NBA players must earn 51 percent of the league’s basketball-related income. The salary cap, therefore, is a function revenue. When revenue takes a hit, like it did amid the NBA’s China controversy, cap projections dip. In 2017, the Warriors’ crusade through the playoffs meant several fewer total playoff games and contributed to the cap falling $2 million short of a $101 million projection. The cancellation of weeks of games, not to mention the rest of the season, would have a far more significant impact. It would affect free agency, player earnings, and the competitive future of the league.
The line from 2019-20 revenue to 2020-21 cap is far from direct, though. Cap expert Larry Coon explained in an email to Yahoo Sports: “The cap is set based on projected revenues for that season. Under ordinary circumstances the previous season is the best predictor of that, and they normally set the cap by taking the known values for the national TV money and adding a 4.5% bump to the remaining revenues. But obviously, that doesn’t work under circumstances like these. Since this season’s revenues will be a poor predictor for next season’s revenues, they’ll do something different.
“Following the 2011 lockout they played an abbreviated season, so it was a similar circumstance (revenue-wise) to this one. That year they agreed on an amount to use for the cap and luxury tax for that season, and used that amount as a minimum for the following season’s cap – it could get higher, but it couldn’t get lower. I suspect they’ll do something similar this year.”
So, in summary: Missing games would have an impact on the cap. But perhaps not as drastic an impact as lost revenue numbers might suggest.
Who else will suffer financially?
The class of NBA-adjacent humans harmed most by the suspension of the season, however, isn’t the millionaire players or billionaire owners. “LeBron James is not eating ramen next week if his salary is cut and he's not allowed to play,” sports economist Victor Matheson told Yahoo Sports. “Mark Cuban is not downsizing to a 1989 Corolla because he's losing money.
“It's definitely the hourly workers that are hurt the most, because none of them have any sort of vacation benefits, I can assure you that. And the sort of person that has that job typically does not have deep pockets."
It’s the everyday folks whose names you don’t know, who serve you hot dogs and monitor metal detectors and fuel the NBA’s nightly entertainment machine. “It’s not about the team,” Cuban said when asked what concerned him following news of the suspension. “It’s about the country and life in general. … I’m concerned about, now that we’re not playing games, what about the people that work here on an hourly basis?”
Later, he continued: “I reached out to the folks at the arena and our folks at the Mavs to find out what it would cost to financially support people who aren’t gonna be able to come to work. They get paid by the hour. This is their source of income. So we’ll do some things there. We may ask them to go do some volunteer work in exchange. But we’ve already started the process of having a program in place.”
https://sports.yahoo.com/nba-season-suspended-questions-answers-and-what-comes-next-093803715.html
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