Collective Bargaining Agreement

NBA, NBPA Reach Agreements On Disability Insurance, Salary Withholding

The NBA and NBPA have reached an agreement on a revamped insurance benefit for players who suffer career-ending injuries, sources tell Adrian Wojnarowski of ESPN. According to Wojnarowski, the new disability policy will pay players $2.5MM in the event of a career-ending injury sustained on or off the court.

The previous insurance policy for career-ending injuries paid out approximately $312K — the NBPA had been pushing to increase that amount in the midst of future salary cap uncertainty and the coronavirus pandemic, writes Wojnarowski. The new policy will also apply to career-ending ailments related to COVID-19 complications, Woj adds.

Sources tell ESPN that the new insurance benefit will apply to all active players up to 35 years old and would be paid out in addition to the money owed on the player’s existing contract. As ESPN’s Bobby Marks points out (via Twitter), NBA clubs already have a disability policy in place for their top earners who suffer major injuries, but that policy is designed to protect the teams rather than the players.

Meanwhile, the NBA and the players’ union have also reached an agreement to continue withholding 25% of players’ pay checks in escrow, Wojnarowski reports. That deal has been in place since May 15 and is designed to help maintain a balance of the season’s basketball-related income between teams and players.

The NBA’s Collective Bargaining Agreement calls for approximately a 50/50 revenue split between teams and players. With a portion of the season’s games canceled and the NBA preparing to bring in less revenue than initially anticipated, withholding a portion of player pay checks allows the two sides to begin balancing the books.

According to Marks (via Twitter), there’s already about $600MM sitting in a pair of escrow accounts that has been withheld from players by the NBA and its teams. Once the end-of-season accounting is completed, the NBA will be able to determine if players received more than 51% of this season’s BRI. If that’s the case, the money in escrow will be returned to the teams rather than the players.

Roberts Talks Revenue Loss, Possible 2020/21 Campus, CBA

In a wide-ranging phone conversation with Tim Bontemps of ESPN today, National Basketball Players Association executive director Michele Roberts discussed a variety of topics pertaining to the league’s immediate future. Key on everyone’s mind recently has been the success thus far of the 2019/20 season’s Orlando campus, wherein no NBA players or travel team personnel have tested positive for COVID-19 after clearing their quarantines for the past three weeks.

Roberts acknowledged that another possible campus set-up, with NBA players stationed at a single, isolated site with frequent testing, seems like a realistic possibility for the 2020/21 NBA season, given the current state of the novel coronavirus in the US.

“If tomorrow looks like today, I don’t know how we say we can do it differently,” Roberts said. “So it may be that, if the bubble is the way to play, then that is likely gonna be the way we play next season, if things remain as they are.”

The 2020/21 NBA season is tentatively slated to tip off on December 1, though the NBPA hasn’t approved that start date.

[RELATED: Financial, Logistical Uncertainty Looms Over 2020/21 NBA Season]

Roberts went on to commend the safety precautions implemented within the Disney World campus setup.

“The medical facilities and the physicians on campus, I’m not worried about anyone getting sick and not being able to get absolutely immediate health care,” she said. “I am completely satisfied that we’ve come up with the right protocol.”

The NBA and the NBPA are bracing for a significant loss in league revenue, stemming from the loss of fan attendance for much or all of the 2020/21 season. Both sides will negotiate handling the fallout of these losses and are “beginning some very high-level discussions with respect to what the potential issues are,” Roberts told Bontemps.

Roberts also noted that she does not intend to use the revenue conversations between the NBA and NBPA as a moment to opt out of the NBA’s current Collective Bargaining Agreement for a total renegotiation ahead of the December 15, 2022 deadline for doing so.

“That’s not something that has been addressed and, I would venture to say, is not going to happen.”

New Dates Set For Option Decisions, Salary Guarantees, More

As part of the revised Collective Bargaining Agreement terms that the NBA and NBPA have agreed to, a series of option decision deadlines, salary guarantee dates, and other offseason dates and deadlines have been pushed back.

We don’t yet have a full list that outlines how every date and deadline will be adjusted, but in cases where a deadline fell slightly before or after the start of the 2020/21 league year, those dates have been pushed back to coincide with the new start date for the league year, which will begin on October 19 rather than July 1.

For instance, as Shams Charania of The Athletic tweets, player option decisions for Gordon Hayward (Celtics), DeMar DeRozan (Spurs), Mike Conley (Jazz), and Andre Drummond (Cavaliers) will now be due on October 17 instead of June 29. Lakers big man Anthony Davis will have to decide on his 2020/21 player option by October 14, one day after a potential NBA Finals Game 7, Charania adds.

[RELATED: Re-Examining NBA Player Options For 2020/21]

Meanwhile, the salary guarantee date for four Knicks veterans – Reggie Bullock, Taj Gibson, Wayne Ellington, and Elfrid Payton – who currently have $1MM partial guarantees for 2020/21 will be October 17 at 3:00pm eastern time, rather than on June 28, tweets ESPN’s Bobby Marks.

Additionally, as Tim Reynolds of The Associated Press (Twitter link) reported over the weekend, traded player exceptions that were set to expire in early July will have their expiry dates moved to corresponding dates in October. For example, since the free agency moratorium will now expire on October 23 instead of July 6, the Warriors‘ $17.2MM TPE that would have expired on July 7 will instead do so on October 24.

[RELATED: Outstanding NBA Trade Exceptions]

There are other deadlines that figure to be closely tied to the new league year as well. For instance, the deadline to tender a qualifying offer to a potential restricted free agent will likely be on October 17 rather than June 29.

Some date adjustments may be trickier to determine and will require further clarification. For instance, some players had been scheduled to receive full or partial guarantees if they remained under contract through August 1. That date may simply be shifted to November 19, one month after the ’20/21 league year begins. But the NBA has proposed opening training camps for next season on November 10, complicating that timeline.

NBA, NBPA Finalize Revised CBA Terms For Restart

The NBA and the National Basketball Players Association have finalized the terms of the revised Collective Bargaining Agreement for this summer’s Orlando restart, reports ESPN’s Adrian Wojnarowski (via Twitter).

As Wojnarowski explains, that means that the items outlined in Saturday’s memo to teams – such as the rescheduled date for the 2020 draft and the details of this week’s transaction window – have now been formally agreed upon.

There are still more items that the NBA and NBPA must negotiate and finalize, such as the start date and subsequent calendar for the 2020/21 season. However, this agreement represents an important step toward finishing the ’19/20 campaign.

NBA To Prorate Bonus, Incentive Criteria Using March 11 As End Of Season

A number of players with performance incentives and bonus clauses in their contracts didn’t get the opportunity to earn those bonuses in 2019/20 due to the suspension of the NBA season and the league’s subsequent hiatus.

However, according to Ramona Shelburne and Adrian Wojnarowski of ESPN, the NBA and NBPA have reached an agreement on how to handle performance incentives in ’19/20. The criteria for those bonuses will be prorated, using March 11 as the end of the regular season, so stats accumulated during the eight “seeding games” this summer won’t count toward those incentives.

[RELATED: Hoops Rumors Glossary: Proration]

For instance, Tyus Jones‘ contract with the Grizzlies includes an $858K bonus in the event that Memphis wins 33 games. Prior to the hiatus, the Grizzlies had 32 victories. Rather than needing the Grizzlies win one more game when play resumes, Jones will already be assured of his bonus, since a 32-33 record prorated over a full 82-game season would work out to 40 wins.

Similarly, Raptors guard Kyle Lowry has a series of bonuses related to his All-Star berth and his team’s postseason success that require him to play at least 65 games. When the season went on hiatus, Lowry had appeared in 52 of Toronto’s 64 games. Prorated over an 82-game season, that would work out to approximately 67 of 82 games, so Lowry will be considered to have met that 65-game threshold. He’ll receive his $200K All-Star bonus and could earn up to another $1.5MM, depending on how far the Raptors advance in the playoffs.

ESPN’s Bobby Marks broke down a number of these bonuses and incentives in an earlier Insider-only story. Another important one, noted by Shelburne and Wojnarowski, affects Sixers center Joel Embiid.

The final three years of Embiid’s maximum-salary contract, through 2022/23, had previously only been conditionally guaranteed, with the 76ers retaining the ability to gain salary relief if the veteran center suffered a career-threatening injury related to his back or feet. In order to fully guarantee those salaries, Embiid had to log 1,650 minutes this season.

When the season was suspended, Embiid was only at 1,329 minutes played. However, Philadelphia had only played 65 of 82 games. Prorated over a full season, Embiid’s average number of minutes per Sixers game (approximately 20.45) would work out to 1,677, surpassing the 1,650-minute threshold and ensuring his upcoming salaries are fully guaranteed.

Players whose bonuses and incentives rely on a percentage are unaffected by proration. For example, Mavericks forward Maxi Kleber would receive a $75K bonus for an 80% free-throw rate and another $150K for a 40% three-point average. His percentages are currently 86.3% and 37.4%, respectively, so he’ll receive the first bonus — but not the second. The same would have been true if he had finished at 80.1% and 39.9%.

Restart Notes: CBA, Orlando, BLM, Salaries

As concerns spread among NBA players about the league’s Orlando restart plan, several high-profile players are talking to their fellow players about the possible negative financial impact that not playing would have, not just on this season but on future years, reports Vincent Goodwill of Yahoo Sports (Twitter link).

If the NBA and NBPA can’t reach a deal to complete this season and are unable to agree on the necessary adjustments to the Collective Bargaining Agreement, the league would have the power to terminate the CBA outright and renegotiate it. Those high-profile players are making it clear that the NBPA wouldn’t have any real leverage negotiating a new CBA with team owners in the middle of a pandemic, says Goodwill (via Twitter).

Here’s more on the NBA’s restart, as players continue to express a variety of concerns about the plan:

  • The NBA is working to convey to players that framing the restart as if everyone will be spending three months isolated in Orlando is misleading, per Adrian Wojnarowski and Bobby Marks of ESPN. As Woj and Marks notes, 14 of the 22 teams (the six that miss the postseason and the eight that lose in the first round) will be eliminated and can return home within 53 days of arriving in Disney. Players on the eight teams still active at that point are expected to be able to bring a limited number of guests to Orlando.
  • Sources tell Vincent Goodwill of Yahoo Sports (Twitter link) that several players intend to use the global attention the NBA’s return will receive to promote and support the Black Lives Matter movement this summer. However, players remain concerned that the NBA’s restart will draw attention away from the ongoing battle for social justice reforms. Once we start playing basketball again, the news will turn from systemic racism to ‘who did what’ in the game last night,” one player told ESPN’s Adrian Wojnarowski (Twitter link). “It’s a crucial time for us to be able to play and blend that to impact what’s happening in our communities.”
  • According to Brian Windhorst of ESPN (hat tip to Dan Feldman of NBC Sports), every player on an NBA roster will be paid the same pro-rated percentage of his salary for the final games of the season — even players on the bottom eight teams, who won’t be in action. While that may not be a perfect solution, it wouldn’t be fair to players on those inactive teams if they lose a greater portion of their salaries because the NBA decided not to include them in the restart.

NBA, NBPA Extend CBA Termination Deadline

The NBA and the NBPA have reached an agreement to extend the window during which the league can terminate the Collective Bargaining Agreement, reports ESPN’s Adrian Wojnarowski. The previous 60-day period, which began when the season was suspended on March 11, had been set to expire. The deadline will be pushed back to September, according to Wojnarowski.

It may sound ominous that the NBA will continue to have the ability to “terminate” the CBA, but it’s more of a necessary formality at this point. The “force majeure” provision gives the league that power, but the NBA has no interest in taking advantage of it for now, since both the league and the players’ union want to resume the 2019/20 season in the coming months.

In order for that to happen, the Collective Bargaining Agreement will need to be restructured, so delaying this deadline gives the two sides more time to gather information on the league’s projected financial losses and to work through issues like next season’s salary cap and luxury tax thresholds, as Woj explains. When the time comes, the NBA and the NBPA figure to work together to negotiate the necessary adjustments to the CBA.

“This CBA was not built for an extended pandemic,” Silver said on Friday’s conference call with players, per ESPN. “There’s not a mechanism in it that works to properly accept a cap when you’ve got so much uncertainty; when we’d be going in next season saying, “Well, our revenue could be $10 billion or it could be $6 billion. Or maybe it could be less.”

Besides figuring out salary cap details going forward, the league and the players’ union will have to negotiate a number of other issues, including how the players will be paid for whatever portion of the 2019/20 season can be played, how free agency will work, and what the NBA schedule will look like in 2020/21 and beyond.

NBA Proposes 50% Pay Check Reduction For Players

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.

Force Majeure Provision Opens Window To New CBA

The COVID-19 pandemic has drastically impacted the 2019/20 NBA season and it could have a lasting effect on the financial structure of the league.

The “force majeure” provision in the latest CBA covers a variety of catastrophic circumstances, including epidemics and pandemics, and it calls for players to lose approximately one percent of their salary per canceled game. It’s automatically triggered once games are canceled, though the league has simply “suspended” the season at this point.

Adrian Wojnarowski of ESPN.com reports that if the force majeure provision is triggered, the league has the ability to re-open and renegotiate the current Collective Bargaining Agreement, which runs through 2025. There have been no conversations yet between the NBA and the Players Association about utilizing this feature.

The league and the union are discussing withholding 25% of players’ remaining salaries in an escrow in the event that the remainder of the regular season is canceled, per Wojnarowski. If no agreement is reached on withholding players salaries beginning on April 15, players would continue to be paid in full and would be required to pay back a portion of their salaries down the road if games are canceled.

Under the current CBA, the league holds 10% of players’ salaries in escrow and returns it to them at the end of the season. However, the amount of projected revenue lost for the 2019/20 season exceeds the $380MM that the league has in escrow, so players and teams will likely attempt to work out an arrangement to mitigate those losses.

Another variable is how players get paid. Around 10% of players including LeBron James, are paid their full salary in 12 installments between November 15 and May 1. The overwhelming majority of players receive their income spread out over a full year – November 15 to November 1 – though some players receive larger installments as part of the payout structure. The NBA doesn’t want a scenario where it has to chase down players to recoup payment.

The league, as Woj adds, is hopeful that it can resume part of the regular season before entering the postseason. It has no plan to announce the cancellation of the season, preferring to continue to look for ways to salvage the campaign.

Ripple Effect Of Hiatus On Contracts, Cap, Offseason Dates

Given the typically rigid nature of the NBA’s annual calendar, the current hiatus threatens to complicate a number of dates and deadlines that will arrive in the coming months. In his latest Insider-only article for ESPN.com, Bobby Marks takes a closer look at how those dates – linked to contracts and the salary cap – may be impacted, noting that the NBA and NBPA are expected to collectively bargain a set of transition rules once the league establishes a return timeline.

For instance, there are 29 player options and 12 team options that are currently scheduled to be exercised or declined before the end of June. Those dates will almost certainly have to be adjusted. The same goes for certain salary guarantee dates and the expiry dates on traded player exceptions, as Marks explains. Of course, the start of the 2020/21 league year will have to be pushed back too, so players with expiring contracts don’t become free agents on July 1.

Contract incentives will also be an issue worth keeping an eye on. Marks observes that during the lockout-shortened 2011/12 season, players’ incentives were prorated based on the fact that the league played 66 games instead of 82 games. The NBA could take similar measures this season. For instance, if a player needs to play 1,000 minutes to earn a bonus and his team ends up playing just 70 of 82 games, his incentive requirement would be adjusted so he only needs to play 70/82nds of 1,000 minutes (854 minutes).

Marks’ article is jam-packed with interesting info and is worth checking out in full if you have an Insider subscription. Here are a few more highlights:

  • Although the NBA’s basketball related income for 2019/20 is projected to take a huge hit as a result of this hiatus and the controversy with China in the fall, it’s too early to say what that will mean for the 2020/21 salary cap, according to Marks. In situations like this, the NBA and NBPA generally negotiate in good faith a cap adjustment that satisfies both sides, so we’re unlikely to see a big drop-off next year.
  • Still, with the cap for the next year or two no longer expected to increase by nearly as much as the NBA initially projected, the ripple effect could be significant. Maximum-salary contract extensions scheduled to go into effect next season or in 2021/22 for players like Jamal Murray, Ben Simmons, Pascal Siakam, and Damian Lillard won’t be as lucrative as previously estimated, and teams will no longer have as much cap or tax flexibility as expected. As Marks points out, that could influence players with option decisions — they may be more inclined to opt in for ’20/21, with less leaguewide spending power available in the offseason.
  • Resuming the regular season – rather than just jumping straight to the playoffs – may not be a top priority for many fans, but there are reasons why the NBA won’t want to skip that step, Marks writes. Teams that wanted to make roster moves prior to the postseason wouldn’t get a chance to do so if the NBA moves straight from its current moratorium to the playoffs. For example, in that scenario, the Thunder wouldn’t get the opportunity to convert two-way player Luguentz Dort to their 15-man roster. As such, the NBA may want to play a few regular season games or at least give teams a few days to make necessary roster moves.