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Report: NBA, NBPA to Extend Right to Terminate CBA Due to Pandemic Through Sept.
May 11, 2020
The NBA and NBPA agreed to extend a window that would allow the league to terminate its collective bargaining agreement because of the coronavirus pandemic into September.
ESPN's Adrian Wojnarowski reported the two sides came to an agreement in order to give them more time to discuss matters like the salary cap, bearing in mind the potential for financial losses due to games missed and games without fans. The league had a 60-day window to execute the force majeure provision, which was written into the CBA for major global incidents like a pandemic.
“This CBA was not built for an extended pandemic. There's not a mechanism in it that works to properly accept a cap when you've got so much uncertainty," NBA commissioner Adam Silver said Friday, per Wojnarowski.
Silver estimated the league could lose as much as $4 billion in revenue from the 2019-20 season because of the coronavirus pandemic. Items like the salary cap and luxury tax are determined by year-over-year revenue, meaning the extensive losses would likely result in a drastic reduction in both figures—essentially an undoing of the cap spike that took place in 2016.
It's beneficial for both the players and league to negotiate a smoothing of the cap, especially with the pandemic expected to be temporary. If the two sides fail to agree on a smoothing, players who enter free agency this summer will find a league with no cap space. Teams that have long-term contracts on their books, meanwhile, will almost certainly be forced to pay exorbitant luxury tax fees.
The players and owners will also likely want to negotiate a potential reduction in salary for next season in case games must be played without fans. Players are currently having 25 percent of their checks withheld and placed into an escrow account to prepare for the potential losses of games and revenue.
Fans account for roughly 40 percent of the NBA's revenue, Silver said Friday.