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NBA Owners, Players Discussing Guaranteed Salary Cap Minimum

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With league revenues ravaged by COVID, the NBA and its players are working out how to ensure everyone gets paid.

NBA: All Star Game-Team Lebron at Team Giannis Kyle Terada-USA TODAY Sports

The NBA and the National Basketball Players Association are making headway towards starting the 2020-21 season under mutually-agreeable terms. Tonight Adrian Wojnarowski of ESPN reported that the players have agreed to a December 22nd start to the season, along with a 72-game schedule. Now Shams Charania of The Athletic is reporting that the two sides are closing in on a critical salary cap agreement, setting this year’s cap at $109 million and ensuring a minimum 2% increase for the duration of the current CBA.

The agreement is critical because league revenues have been slashed by closures related to the COVID-19 pandemic. The financial difficulties caused by a truncated 2019-20 season, with games cancelled and/or played without live audiences, is likely to be repeated in 2020-21. The Collective Bargaining Agreement links salary cap (plus luxury tax and other key metrics) to Basketball Related Income. When overall income decreases, so does the cap. If the cap drops proportionately with current league losses, many NBA franchises will find themselves without money to spend on free agents, thrust into the luxury tax just to keep their incumbent rosters. The proposed measure will keep the cap artificially high, allowing roster flexibility and new player contracts.

The actual cap line is only half the equation, though. The CBA also provides for an escrow account withdrawal from player contracts, security in case revenues come in below estimated levels. The withdrawal currently sits at 10%. This keeps the roughly-equal revenue split between owners and players to its designated level. If income comes in short, the owners get the escrow money. If not, its disbursed to the players.

Radical shortfalls also threaten this normally-benign process. The players and owners will need to agree on a designated percentage of player salaries to set aside, one that makes owners comfortable that they’re not taking a bath while assuring players that they aren’t going to lose huge swaths of their guaranteed income.

Update:

ESPN’s Adrian Wojnarowski provides some perspective on timing.