The NBA and the National Basketball Players Association have agreed to extend the deadline for negotiating adjustments to the Collective Bargaining Agreement to October 30th. This marks the third time that the two parties have extended their talks. Adrian Wojnarowski of ESPN tweeted the news yesterday.
ESPN Sources: For third time, NBA and NBPA agree to extend deadline to serve notice on terminating the Collective Bargaining Agreement. Extension goes to Oct. 30 now, which allows additional time for talks on CBA modifications that sources say continue to be productive.— Adrian Wojnarowski (@wojespn) October 15, 2020
As the NBA and NBPA negotiate adjustments to the CBA because of the coronavirus pandemic, each side has until October 30 to give 45 days notice on terminating CBA. While that's still on table, there's optimism an agreement on adjusted terms will be in place prior to Nov 18 draft. https://t.co/YsiY8XlxgK— Adrian Wojnarowski (@wojespn) October 15, 2020
As we have discussed repeatedly on site, this is the single most important piece of work that will happen this off-season, of greater significance than any single trade or draft pick by far.
The entire NBA salary structure is predicated on Basketball Related Income. Basically, the league asks how much money they made last year, splits it in a predetermined ratio between players and owners, and the players’ portion determines what the salary cap will be. The Luxury Tax threshold, hard cap apron, and other salary markers also stem from this number.
BRI and the cap line move incrementally each year. Closing the season due to COVID-19, then re-opening in a fan-free bubble, impacted league income drastically. At this point, nobody can forecast a return to normalcy in 2020-21, which raises the possibility of extended losses. If owners and players don’t find a way to adjust the normal formula to the satisfaction of each, the cap will drop.
The difficulties are readily apparent. Most players operate under guaranteed contracts. Teams will owe players the salaries they’ve already agreed to regardless of the final cap number. Many NBA franchises have spent past the cap line already, using cap exceptions. If the overall cap number drops significantly, relatively few teams will have money to offer free agents, outside of the usual, low-level exceptions. Since the Luxury Tax threshold drops with the cap line, teams formerly underneath the tax barrier will find themselves over it, not because they overspent, but because the ocean around them suddenly dropped.
To avoid this, the owners and union will need to adjust the system at some point: artificially inflating the cap for a year or two, changing the ratio of BRI owed to owners and players, adjusting the amount of money withheld from player salaries if projected income targets aren’t met, or even tearing up the current CBA entirely and crafting a new one.
Negotiations between the two groups have been contentious historically, but over the past few years, they’ve appeared to reach a middle ground in which everybody was happy. The recently-signed national television contract was part of that; when the resource pool is huge, it’s easier to be satisfied with your portion of it. It’ll be interesting to see whether the mutual goodwill continues if that pool dries up marginally.