NBA pushes CBA termination back, facing revenue loss with no fans
The NBA and its players union have agreed to push back the date by which the league can terminate the Collective Bargaining Agreement in the wake of a pandemic, according to ESPN.
Under normal circumstances, the CBA would be in effect until the end of the 2023-24 season with both sides able to agree to an opt-out after the 2022-23 season.
But after suspending the season on March 11, the NBA had a 60-day window to terminate the CBA under the force majeure event provision triggered by the coronavirus outbreak. The new extension triples that window, establishing a deadline at the end of September.
In pushing this deadline back, both the league and the players union are giving themselves time to assess the far-reaching implications of the coronavirus pandemic. NBA commissioner Adam Silver painted an uncertain picture of the league’s finances in the wake of a pandemic that has shut down not just the basketball season, but player access to team facilities and access to one another.
“This CBA was not built for an extended pandemic,” NBA commissioner Adam Silver said on a call with the National Basketball Players Association on Friday, according to 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 (into) next season saying, “Well, our revenue could be $10B or it could be $6B.”
The NBA is also concerned by the impact removing fans from games will have on its future finances. If fans are unable to attend games, the NBA’s bottom line will suffer.
“Our whole system right now in setting a cap to the next season is based potentially off the prior season — and then a projection off the prior season,” Silver told the NBPA membership on the Friday call. “And we’re looking at a scenario where potentially we would be playing without fans next year. … Roughly 40% of our revenue is generated from … selling tickets … the suites … the activities that happen in the arena.”
The Nets, for example, were originally projected to be $4 million into the luxury tax after signing both Kyrie Irving, Kevin Durant and DeAndre Jordan to four-year deals over the summer. That was with a salary cap figure of $115 million.
Some teams are fearful of a salary cap drop of more than $25 million, according to ESPN. How does that impact teams already over the current cap figure? That is something the league has to address prior to the NBA Draft.
The NBA still wants to salvage what’s left of its regular season, and UFC returning to action with not just one fight card but three separate events scheduled for this week brings hope that sports can resume across all leagues some time soon.
The UFC put on an event without fans, though, and makes money due to the pay-per-view nature of its broadcast. The NBA follows a different revenue model.
What does it look like for them in a world where fans can’t attend games?