The NBA has proposed to the National Basketball Players Association that players accept a 50% pay check reduction beginning on April 15, sources tell Shams Charania of The Athletic (Twitter link). According to Charania, the NBPA has issued a counter-proposal that would see players’ pay checks reduced by 25%, beginning in mid-May.
It would be in both sides’ best interest to resolve these negotiations – which were reported earlier in the week by ESPN’s Adrian Wojnarowski – fairly soon, since the players’ next checks are due in 12 days.
Thus far, team owners have assumed the brunt of the financial losses from the NBA’s stoppage of play, but the impact of that lost revenue will soon hit the players, since the league’s Collective Bargaining Agreement calls for approximately a 50/50 revenue split between the two groups.
The NBA already holds 10% of players’ salaries in an escrow account and would normally either pay out or withhold some or all of that money at season’s end, depending on whether the players were overpaid or underpaid over the course of the year, relative to the revenue split.
Given how much money the league projects to lose this season, the amount in that escrow – approximately $380MM, per Eric Pincus of Bleacher Report – likely won’t be enough to cover the players’ half of the losses, which is why the NBA is looking to recoup an additional portion of its players’ salaries.
The exact amount that the NBA gets back from players will depend on whether or not any part of the season can be salvaged this summer and how much revenue the league ultimately loses. As Pincus notes in a tweet, the NBA’s proposal – a 50% reduction beginning on April 15 – may suggest that the league believes its losses this season will total more than the $1.2 billion he estimated in his article.
If the two sides can’t come to a satisfactory agreement that helps maintain the revenue split, the players would simply be delaying rather than avoiding the financial impact of the suspended season. The effects would be felt if and when the NBA invokes the “force majeure” clause for canceled games, which would unilaterally reduce players’ salaries and could result in re-opened CBA negotiations. The salary cap for 2020/21 could also drop substantially if players earn a much larger portion of the revenue split than owners in ’19/20.