The NBA distributed financial documents to the 30 teams earlier this week that showed that league revenue fell 10 percent for the 2019-20 season.
In normal times, revenue is what dictates the salary cap for the upcoming year. It’s why the cap tends to rise each season as the NBA gets more profitable through gate revenue, TV deals, and merchandise, among other revenue streams.
But 2019-20 wasn’t a normal season, and 2020-21 doesn’t project to be either, which means that the league isn’t bound to its traditional practices. If the NBA were to set the cap based on last year’s revenue, that would put several teams in the luxury tax even before the start of free agency and severely diminish the market for 2020 free agents; it would essentially be the opposite of 2016, when middling free agents entered an offseason flush with cap space and were thus shockingly overpaid, as Lakers fans remember well.
Keeping the cap flat or even raising it presents a separate set of concerns, as players are only entitled to about half of the basketball-related income due to the collective bargaining agreement. If teams commit to salaries that exceed 50 percent of the BRI, then players will have to give some money back. The escrow system already exists for this purpose, but the percentage of money put into escrow could be dramatically higher in this season, especially if arenas aren’t allowed to host fans for the majority of the year.
As the league and players work towards the start of the 2020-21 season, The Athletic reported Wednesday that the financial details are one of the main negotiating points between the two parties:
So far, the gaps between the NBA and NBPA center around two issues: The Dec. 22 start date and the player escrow and total revenue situation. Both remain unresolved from the players, sources say, who are sifting through the information necessary to accept a quicker-than-expected December start to camps and next season.
The sides are close on the salary cap and tax figures, Roberts told The Athletic. Multiple sources say the cap and tax are expected to be $109 million and $132 million, respectively.
Those cap and tax figures are nearly identical to the numbers from the 2019-20 season. From a Lakers perspective, that means they won’t have much additional space to improve upon their roster from this year because most of their players have raises from their 2019-20 contracts, and they still have to re-sign Anthony Davis at a much larger number.
In the grand scheme of things, it’s good for the health of the league to keep the cap constant, but it will make it harder for the Lakers to be players in free agency if these numbers hold. It’s a good thing they already have an excellent roster to run back.