Salary Cap

NBA, NBPA Agree To Amended CBA; Free Agency To Begin Nov. 20

November 10th, 2020 at 5:09am CST by Luke Adams

The NBA and the National Basketball Players Association have reached an agreement on an amended Collective Bargaining Agreement in advance of the 2020/21 league year, according to ESPN’s Adrian Wojnarowski and Tim Bontemps. The league and union issued a press release confirming the news.

As a result of the agreement, free agency will begin on 6:00 pm eastern time on Friday, November 20, less than 48 hours after the November 18 draft. After a brief moratorium, signings will officially be permitted starting on Sunday, November 22 at 12:01 pm.

Here are several of the other highlights of the new deal:

As expected, the regular season will begin on December 22 and there will be a 72-game schedule. The full schedule will be released at a later date.
The salary cap will once again be $109,140,000 and the luxury tax line will be $132,627,000. Those are the same numbers as in 2019/20. As a result, figures like minimum and maximum salaries and mid-level/bi-annual amounts will remain the same.
The NBA will reduce the luxury tax bill of taxpaying teams at the end of 2020/21 season by the percentage amount that the league’s Basketball Related Income falls short of its initial projections. For instance, a 30% decline in BRI would result in a 30% reduction of a taxpayer’s bill — say, from $10MM to $7MM. This should benefit projected taxpayers such as the Warriors, Nets, Celtics, and Sixers, among others.
The cap will increase by a minimum of 3% per year and a maximum of 10% per year through the rest of the current CBA. For 2021/22, that means the cap will be at least $112,414,200, and could be as high as $120,054,000.
The standard 10% of player salaries will continue to be held in escrow for the time being. Any necessary salary reductions will be spread out over next season and the following two seasons, but players can never have more than 20% of their salaries withheld in a single season.

The NBA’s transaction freeze remains in place for now, but the expectation is that it will be lifted early next week, perhaps two or three days before the November 18 draft, according to Bontemps and Wojnarowski (Twitter link). Once that freeze ends, teams will be permitted to formally finalize trades and other roster moves.

The league is also expected to soon announce new dates and deadlines for player/team option decisions, certain salary guarantees, qualifying offer decisions, and the expiration of trade exceptions.

NBPA Approves December 22 Start For 2020/21 Season

November 6th, 2020 at 6:52am CST by Luke Adams

The National Basketball Players Association board of representatives voted on Thursday night in a favor of an NBA proposal to start the 2020/21 regular season on December 22 and play a 72-game schedule, according to reports from ESPN’s Adrian Wojnarowski and Shams Charania of The Athletic.

A number of players had been advocating for a later opening night, given how long the 2019/20 season ran, and January 18 was the other start date being considered. However, the NBA estimated that a pre-Christmas start would save up to $500MM and $1 billion in revenue, and a mid-January start would have resulted in a shorter season (around 60 games). As a result, the players ultimately came around on the league’s plan.

The result of the NBPA’s vote doesn’t make the December 22 start date official. As the union indicated in a statement confirming the news, there are still additional financial and logistical details to be negotiated. However, both sides are confident that agreements can be reached on those issues.

As Tim Reynolds of The Associated Press writes, determining what portion of player salaries will be placed into escrow is one important issue the NBA and NBPA need to resolve. According to Charania, the two sides are discussing an escrow in the 17-18% range for player salaries over the next two years, in the hopes that that amount can be reduced to the usual 10% by 2022/23. That would help cushion the blow of the lost revenues for players, spreading the hit over multiple seasons rather than having them bear the brunt of it in ’20/21.

Negotiations between the NBA and NBPA on that subject and other financial issues are expected to extend into next week, sources tell Wojnarowski. Once the two sides reach a formal agreement, the league can lift its moratorium on transactions, allowing teams to conduct trades and other roster moves before the November 18 draft. The transaction freeze is expected to end by November 16, per Charania.

The league and the union hope to open free agency as quickly as possible after the draft, since there will be a very short window before teams have to open training camps on December 1, says Wojnarowski. The start date for free agency still isn’t official, but seems likely to fall within two or three days of the draft.

The salary cap for the 2020/21 season is expected to remain unchanged, with the NBA and NBPA artificially setting at $109.141MM despite projected revenue losses. The league and the union are discussing the possibility of agreeing to have the cap increase by 2% annually for the remainder of the current Collective Bargaining Agreement, per Charania (Twitter link). That would mean a cap of $111.324MM for the ’21/22 campaign.

Meanwhile, the league and the union will also have to agree to a set of safety and health protocols as they look to play the 2020/21 season in teams’ respective home arenas rather than in a single-site bubble, even as the number of coronavirus cases around the U.S. continues to rise. Chris Paul and Russell Westbrook were among the players who said on Thursday’s call that they want to view the official health and safety measures before fully committing to the season, sources tell Charania.

According to a Thursday report, there’s hope that – at least in some markets – fans will be able to attend games in person with limited capacities and strict safety regulations in place. If that’s possible, it would help offset some of the league’s projected revenue losses.

The NBA will have to decide soon where the Raptors will be playing in ’20/21, since there are still significant restrictions in place on cross-border travel between the U.S. and Canada. Newark has been one of several cities discussed as a possibility.

While the league hasn’t yet finalized a schedule for 2020/21, Charania previously reported that the expectation is the season will run from December 22 through mid-May, with the NBA Finals finishing around July 22, just in time for the start of the Tokyo Olympics.

The league is expected to reduce teams’ travel by 25% and there will likely be a six-day All-Star break in early March, though it’s not clear if an All-Star Game will actually be played. The NBA is also hoping to conduct a play-in tournament for the final two seeds in each conference.

Play-In Tournament Could Decide Bottom Seeds In Each Conference

November 2nd, 2020 at 8:47pm CST by Dana Gauruder

A play-in tournament to decide the final two playoff spots in each conference seems likely, Adrian Wojnarowski and Zach Lowe of ESPN report.

The tournament being discussed would include teams with the 7th, 8th, 9th and 10th best records. A 7 vs. 8 matchup would decide the No. 7 seed in the conference playoffs. The winner of the 9-10 game would then face the loser of the 7-8 game to decide the No. 8 seed.

The tournament would create another revenue stream for the league, which is trying to find ways to make up for last season’s losses due to the coronavirus pandemic as well as the likelihood of having few or no fans in the stands for at least a portion of next season. Having more teams participate in the proposed format could also decrease some teams’ desire to tank.

There are concerns of unfairly penalizing a team in the No. 7 slot that has a strong record. However, no standings trigger has been discussed to date.

Commissioner Adam Silver said negotiations between the league and Players Association had reached a critical stage with an increasingly short window to reach an agreement to allow for a December 22 start.

In other developments regarding negotiations, per the ESPN duo:

The league wants to expand guidelines on sports betting, hard alcohol and casinos in order to generate $80-100MM in revenue.
Significant increases in the escrow withholding on players’ salaries has been discussed. That includes the possibility of spreading out the players’ losses over multiple seasons, most likely three, so that they don’t take such a substantial financial hit in one year. If that’s the case, the salary cap and luxury tax levels would need to be set over the next three years.
The league recently told teams that 40% of Basketball Related Income (BRI), which is split between the two parties, could be lost without gate receipts this season.

Deadline For Terminating CBA Extended Once Again

October 30th, 2020 at 8:46pm CST by Dana Gauruder

8:46pm: An NBPA statement issued to Charania (Twitter link) strikes an optimistic tone regarding negotiations: “Each of us has a stake in doing what’s fair, what’s best for our business and what respects the rights and interests of all stakeholders. We are confident we will get there.”

Meanwhile, Wojnarowski reports in his full ESPN.com story that the NBA fears delaying opening night to mid-January could result in potential losses of $500MM to $1 billion next season and beyond.

8:01pm: The NBA and National Basketball Players Association are once again extending the deadline for either side to serve notice on terminating the Collective Bargaining Agreement. The new date is now next Friday, November 6, Shams Charania of The Athletic tweets.

This the fourth time the two sides have agreed to extend the deadline, Adrian Wojnarowski of ESPN tweets. They are trying to hammer out modifications on the CBA, including next season’s salary cap and luxury tax thresholds. Discussions will continue this weekend, Wojnarowski adds.

The decision has been confirmed in an NBA Communications press release. If either side provides notice to terminate by November 6, the CBA will terminate on December 14 unless the parties agree otherwise.

The start of next season remains a point of contention, according to Wojnarowski (Twitter link). The league is pushing for a pre-Christmas start, which would allow its TV partners to broadcast Christmas Day games. The NBPA still prefers a mid-January start date, most likely the Martin Luther King Jr. holiday.

The league reportedly considered countering with a reduced 50-game season and significant reductions in salary if the NBPA insisted on the January start. However, a 50-game proposal hasn’t been put forth at this point, Wojnarowski reports in another tweet. Playing fewer games in the event of a January start hasn’t been raised but a 72-game schedule has been proposed with the December 22 start.

The league’s Board of Governors last week recommended the December start in part so that the 2021/22 season could begin at its normal starting point in late October.

Escrow withholding on player salaries due to reduced revenues without fans in the stands has also been a sticking point, Wojnarowski adds.

Roberts: NBPA “Won’t Be Rushed” On NBA’s Proposal

October 28th, 2020 at 9:54pm CST by Luke Adams

The NBA and NBPA agreed earlier this month to push back the deadline that would allow either side to terminate the Collective Bargaining Agreement to October 30. However, with that deadline just two days away, NBPA executive director Michele Roberts tells Shams Charania of The Athletic that the players’ union expects negotiations to continue beyond this Friday.

“The union and the players are analyzing all of the information and will not be rushed,” Roberts said. “We have requested and are receiving data from the parties involved and will work on a counter-proposal as expeditiously as possible. I have absolutely no reason to believe that we will have a decision by Friday. I cannot and will not view Friday as a drop dead date.

“While we are all anxious to resolve these and other substantive issues outstanding between the parties, we plan to proceed at a pace that provides our players ample opportunity to determine the best way to proceed.”

The players, led by the NBPA, are currently reviewing the league’s proposal to begin the 2020/21 season on December 22. The plan is expected to require teams to begin training camps on December 1, which is just over a month away. The NBA Finals came to an end just two weeks ago, and Roberts suggested in her comments to The Athletic that the players are feeling rushed by the process.

“Given all that has to be resolved between now and a December 22 date, factoring that there will be financial risks by a later start date, it defies common sense that it can all be done in time,” Roberts said. “Our players deserve the right to have some runway so that they can plan for a start that soon. The overwhelming response from the players that I have received to this proposal has been negative.”

According to Charania, the NBA told teams on Wednesday that talks between the league and the players have been “productive” so far, and Roberts tells The Athletic that she believes the two sides are close to an agreement on salary cap figures for the 2020/21 season. The cap and tax are expected to remain right around $109MM and $132MM for next season, Charania reports.

However, the league and the union still need to bridge the gaps on issues such as how much player salary will be held in escrow in ’20/21, as well as the proposed December 22 start date, sources tell The Athletic.

According to Charania, commissioner Adam Silver acknowledged on Wednesday in a conversation with team presidents and general managers that the proposed turnaround is quicker than the NBA anticipated or planned, but said that the league’s TV partners have been pushing for a return to the NBA’s usual October-to-June calendar as soon as possible.

“We’re being strongly encouraged by our partners to work closely to a traditional season,” Silver said, per Charania. “It’s almost disconcerting we’re deep into planning for next season so soon. But the sooner we can get back, the better.”

Charania adds that if the players ultimately accept the NBA’s proposed timeline and report to camps at the start of December, the NBA hopes to conduct three-to-four preseason games to allow teams to “reset their arenas” for the regular season. A number of days at the start of camps would also be set aside for coronavirus testing before team activities are permitted, says Charania.

Latest Details On NBA’s Finances, Plans For 2020/21

October 28th, 2020 at 3:17pm CST by Luke Adams

The NBA’s revenues dropped 10% to $8.3 billion during the 2019/20 season due to the coronavirus pandemic and the controversy with China, according to a report from ESPN’s Adrian Wojnarowski and Zach Lowe.

Those losses included $800MM in gate receipts and $400MM in sponsorships and merchandise, sources tell ESPN. The losses related to last year’s spat with China over Daryl Morey‘s tweet in support of Hong Kong protestors were estimated at $200MM.

The NBA did manage to recoup approximately $1.5 billion in revenue by restarting and completing the season during the summer, according to Woj and Lowe, who note that the bubble’s expenses totaled $190MM.

As Albert Nahmad and Eric Pincus point out in a Twitter thread, it sounds as if ESPN’s report is referring to gross income, since basketball related income (BRI) – which is used to determine the salary cap – was never projected to exceed $9 billion.

While the 2019/20 revenue losses are significant, the losses for ’20/21 will likely be more substantial, since the pandemic figures to affect the entire season rather than just the tail end of it. The NBA has told teams to prepare for a potential 40% loss of total revenue if fans can’t return to arenas, according to Wojnarowski and Lowe.

ESPN’s latest report on the state of the NBA includes a few more noteworthy details, so let’s round them up…

The expectation remains that the NBA and NBPA will look to artificially inflate the 2020/21 salary cap to keep it around its current level of $109MM, sources tell ESPN. Following the usual formula and linking it directly to league revenue would result in a drop to about $90MM, according to Wojnarowski and Lowe.
Amid rumors that some NBA players are pushing for a January 18 start to the 2020/21 season, Wojnarowski and Lowe refer to that possibility as an alternative that is “less palatable” to the league than its December 22 proposal. A mid-to-late January start would push the completion of the season into September, forcing the NBA to compete with the Tokyo Olympics and the start of football season, ESPN’s duo observes.
As the NBA plans its 2020/21 season, it is open to the idea of setting up regional “pods” and reducing inter-conference games in order to cut back on teams’ travel, per Woj and Lowe. While the league is hoping to have its teams play games at their home arenas, it’s also open to a modified bubble environment similar to what the MLB did during its postseason, sources tell ESPN.
The NBA is considering releasing its schedule for next season one half at a time in order to maintain flexibility in the event of postponed games and coronavirus outbreaks, according to ESPN. While the All-Star Game may not take place, the league still may look to schedule a mid-season break, which could also be used as a window to make up some postponed games.

Notes On NBA’s Plan For 2020/21 Season

October 26th, 2020 at 4:05pm CST by Luke Adams

In recent weeks, it seemed as if the NBA was becoming more and more open to a later start date for the 2020/21 season. Commissioner Adam Silver and NBPA executive director Michele Roberts publicly suggested that the season was unlikely to begin until January, while some reports suggested that a February or March opening night was more realistic.

However, that changed on Friday, when word broke that the league is now looking to begin its ’20/21 campaign before Christmas. According to Marc Berman of The New York Post and Brian Windhorst of ESPN, the NBA’s finance committee played a major role in that abrupt pivot.

“The owners’ finance committee – there’s a group of owners who make up the finance committee – had a meeting and in that meeting they looked at everything and decided ‘You know what? We need to play sooner rather than later,'” Windhorst said on his Hoop Collective podcast, per RealGM.

“It’s interesting Silver talked behind the scenes about waiting until a March time-frame if it meant getting a vaccine,” one NBA insider told Berman. “That’s until the finance committee showed him the numbers.”

Tipping off the 2020/21 season before Christmas would allow the NBA to air games on December 25, which is one of the most important days of the year for the league’s TV partners. It would also allow the league to hold its playoffs in the spring, with the Finals taking place at the very start of summer, instead of in the late-summer and fall like this year. Shams Charania of The Athletic reported over the weekend that the NBA believes its new plan could mean salvaging $500MM in potential revenue.

“The priority is getting back to the October-to-June format for 2021/22,” a source told Berman. “They found out the hard way not enough people watch TV in the summer. The virus and real-life struggles obscure the reality that sports on TV in the summer don’t generate enough viewers.”

Here are a few more items related to the NBA’s tentative plans for the 2020/21 season:

People around the league don’t expect push-back from the players’ union to derail the NBA’s proposed schedule, Windhorst stated on his Hoop Collective podcast. “They’re probably going to have to agree to this,” Windhorst said (per RealGM). “In talking to people on the league side this past week, they didn’t act like getting the players to agree was going to be that big of a stumbling block. I’m sure some people are going to be upset, but I’m not sure what they can do about it.”
Assuming the plan gets the go-ahead, the free agent period and offseason will be accelerated in a major way, which isn’t great news for teams expecting to have major roster turnover this fall, as Berman writes. “This is going to favor teams with stable rosters,” one source told The New York Post.
While it sounds as if the NBA is moving toward a December return, there are still a number of potential obstacles to take into account, according to Chris Mannix of SI.com.
Teams are hoping to get clarity soon about where the salary cap will land for 2020/21, as well as an updated projection for ’21/22. Appearing on today’s episode of The Lowe Post podcast with Zach Lowe, ESPN’s Bobby Marks said that for the time being, most teams are using a $115MM cap estimate for ’21/22.

Teams Lobbying For Higher Tax Line In 2020/21

October 26th, 2020 at 10:14am CST by Luke Adams

Even if the NBA’s salary cap doesn’t end up increasing at all for the 2020/21 season, teams are lobbying for a bump in the luxury tax line, according to ESPN’s Bobby Marks (Twitter link).

In 2019/20, the cap was set at approximately $109.1MM, with the luxury tax line at $132.6MM. Generally, the tax threshold is directly tied to where the cap lands, so if the ’20/21 cap remains at $109.1MM, the tax line would remain unchanged too. Teams that cross the tax line must pay a penalty for each extra dollar they spend.

However, given the unusual financial circumstances dictated by the coronavirus pandemic, clubs are hoping the NBA will consider artificially setting next season’s tax level at around $139MM, with a $145MM tax apron, says Marks. Those are approximately the figures the NBA had projected before the pandemic, when the league was forecasting a $115MM cap for 2020/21.

It’s not hard to see why teams – or at least the teams without cap room – would be pushing for a higher tax line. The pandemic has already had a major financial impact on many clubs, and having to pay bigger tax bills than initially expected would only exacerbate those financial woes. Increasing the apron – which serves as a hard cap in certain situations – would also give teams more roster flexibility.

While it’s not clear how the NBPA feels about the issue, there’s incentive for them to favor artificial changes to the tax line as well. Increasing the tax level certainly doesn’t guarantee that teams will put those savings toward player salaries, but it would likely make at least some clubs more willing to be active in free agency and open to taking on money in trades, which would benefit players.

As cap expert Albert Nahmad points out (via Twitter), there are a number of other ways the NBA and NBPA could temporarily tweak the luxury tax rules for the 2020/21 season to lessen the risk of a widespread spending freeze. Besides artificially increasing the tax threshold, the two sides could explore reducing taxpayer penalties or waiving the more punitive repeater tax penalties altogether.

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NBA, NBPA Extend CBA Termination Deadline For Third Time

October 16th, 2020 at 10:05am CST by JD Shaw

The NBA and the National Basketball Players Association have once again agreed to extend the deadline that would allow one side to terminate the Collective Bargaining Agreement due to COVID-19, according to Adrian Wojnarowski of ESPN.com.

The decision marks the third of its kind since May, with the new deadline now being October 30. Both sides are in active discussions on what the Collective Bargaining Agreement should include for next season, according to Wojnarowski, who says the possibility of the CBA being terminated remains unlikely.

“Extending is an easy call,” NBPA executive director Michele Roberts told ESPN in August when the sides agreed to extend the deadline for a second time (Twitter link). “If everyone continues to be well-intentioned on how we deal with the economic effects of this virus, we’ll just make the appropriate adjustments and there won’t be a need to terminate the CBA at all.”

Though exact numbers aren’t known, the pandemic has caused significant financial losses for the league this year and beyond. The two sides are discussing a new salary cap for the upcoming campaign based on future financial projections and implications.

It’s unclear when the 2020/21 season could begin, as the league is currently investigating ways to safely bring fans back into arenas for the first time since the pandemic began. NBA commissioner Adam Silver has previously estimated that 40% of the league’s revenue comes from game-night counts.

While the NBA season will occur in some form, a decision also must be reached about the NBA G League. Discussions have been ongoing about how and when the G League could proceed, with several agents telling Hoops Rumors they’ve prioritized placing clients overseas in recent weeks due to the widespread uncertainty.

The NBA’s current CBA contains a mutual opt-out after the 2022/23 season and extends into the 2023/24 season. The league and union had previously projected a 2020/21 salary cap of $115MM and luxury-tax threshold of $139MM. Some teams fear those numbers could fall by as much as $25-30MM, according to Wojnarowski, though the two sides are expected to reach a compromise to avoid a significant drop.

For fans and officials across the league alike, the importance of the NBA and NBPA configuring a new salary cap mechanism and continuing productive negotiations in the coming weeks is clear.

Michele Roberts Talks Free Agency, 2020/21 Season, Cap, More

October 6th, 2020 at 11:37am CST by Luke Adams

Having rescheduled this year’s draft for November 18, the NBA has yet to officially set a start date for 2020’s free agent period. Speaking to Shams Charania of The Athletic, NBPA executive director Michele Roberts suggested that she thinks free agency will probably start no later than December 1 and that the salary cap and tax figures won’t drop too drastically from what was originally projected.

“We can’t go much beyond (December 1) for (free agency),” Roberts said. “We had a projected BRI (basketball-related income), which I think teams appropriately planned for. I don’t think we can deviate much from where we projected the cap to be.

“It may not reflect what people think is the likely BRI, but since I’m of the view this game is not dead and it will rebound, we can do some things with the cap to allow for a free market and not completely destroy what the teams were expecting the cap to be as they were planning ahead. Frankly, I think that’s going to be one of the easier negotiations, figuring out a cap.”

As Charania writes, Roberts met with NBA commissioner Adam Silver on Sunday, and the two sides left that meeting confident that they’ll be able to negotiate agreements on the many cap- and CBA-related issues that must be resolved before the new league year and the 2020/21 season begin.

“It’s amazing what needs to be accomplished in the next six weeks, but it has to be done. I feel sooner rather than later,” Roberts said, adding that she doesn’t believe there’s any real chance of a lockout. “… We’re going to resolve this.”

Charania’s Q&A with Roberts is jam-packed with interesting info and quotes, and is worth checking out in full if you’re an Athletic subscriber. Here are a few more of the most notable takeaways from the conversation:

Roberts still views January as the “absolute earliest” possible start date for the 2020/21 season. “The latter part of January, February makes sense,” she told Charania. “If it’s later than that, if we have a terrible winter because the virus decides to reassert herself, that’s fine.”
Although Roberts and the NBPA share the NBA’s hope that teams can play a full 82-game season in their respective home arenas in 2020/21, she told Charania that the two sides must be “flexible” and “nimble” as it makes plans for next season. “I’m not of the view that we should wait until we think the arenas can open, because this virus, she’s not cooperative at all,” Roberts said.
Silver has expressed some reluctance to change the NBA’s permanent calendar as a result of the COVID-related delays, but Roberts sounds more open to that possibility. “Even before COVID happened, there was a conversation about starting our season later. Why compete with football in the fall? Why don’t we start our season around Christmas?” Roberts said to Charania. “It may very well be that our regular schedule is going to change, not so much because of COVID, but because of the ability to experiment. I wouldn’t bet on returning to the old normal.”
Faced with the possibility of the NBA’s basketball-related income for next season dipping from $8 billion to something like $6 billion, Roberts acknowledged that maintaining the 51/49 split between players and owners will be tricky. “It comes down to if it’s a $6 billion pie and our owners are entitled to 49%, and they’re already committed to $5 billion in player salaries and fixed costs for example, where’s the rest of their money?” she said. “There’s ways to take that $6 billion and get to their 49%. One of the ways to do it is to slash player salaries. I got to deal with a constituency that, you slash their salaries, this may be for many of my guys on the last two or three years of their careers. Is there a way to deal with that?”
Here’s more from Roberts to Charania on the issue of the BRI split: “We’ll never say to the owners: ‘Y’all just going to have to eat the loss.’ Who’s going to do that? They’re not stupid. They’re not just going to say, ‘OK, yeah you’re right, we’re just going to have to lose a couple billion dollars on our own.’ That’s not going to happen. Instead what you say is, ‘Can we figure out a way to manage that so there is no loss, but there isn’t an immediate pay day. Can you withstand some delay in getting your money?’ I have some real life examples of people I know in my life that say that they live paycheck-to-paycheck. And there are other people that can say that they can deal with deferred compensation. You figure it out.”

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