It is time to start evaluating the economic effects that the coronavirus pandemic will leave for the NBA, which begins to have on the table the first reports indicating some losses of more than 1,000 million dollars, if at the end the regular season is not over and the playoffs are not played.
03/23/2020 at 13:33
Given this reality, together with the crisis with China, NBA Commissioner Adam Silver is facing the greatest economic challenge he could face and which is bound to mean a significant reduction in the next salary cap.
Silver already admitted last February, during the Weekend of the Stars, that the crisis generated with China by The tweet sent by Houston Rockets General Manager Daryl Morey in support of Hong Kong protesters was going to cost his organization the loss of $ 300 million to $ 400 million in revenue. Now the situation will be even more critical.
For the first time, A league that has been historically prosperous for the past decade, the combination of the Hong Kong controversy and the coronavirus crisis faces an unprecedented and totally unexpected financial challenge. Over the past 35 years alone, the salary cap, which is tied to league earnings, has declined twice, but never below $ 2.5 million. While during Silver’s tenure, who took office on February 1, 2014, se has been highlighted by the significant economic growth of the NBA, going from $ 58 million, which had the salary cap when he was appointed commissioner, to 109 million this season, thanks to the billionaire television contracts that were signed. The league also generated revenue of $ 8 billion annually, double what it was a decade ago.
It’s impossible to measure the precise economic impact of the suspended NBA season, but team executives already have on their table a report showing that the damage caused by both crises could reach $ 40 million per club., or more than 1,200 million dollars, if in the end the playoffs are not played either. Similarly, an analysis by FiveThirtyEight.com estimated that loss of revenue could exceed $ 1 billion if NBA competition ultimately fails to resume this season. Professional teams are assisting part-time workers, but some who work as vendors in the fields during matches have been excluded from the aid.
So far, 259 regular season games have been postponed and are still to be played, and last year’s playoffs allowed another 82 to play, which means that conservatively they would stop entering close to $ 700 million, only with daily competition. If in the end they are not raised due to the impossibility of completing the regular season and the playoffs due to the coronavirus, along with the loss of income from the Chinese market, both crises would be reflected in the salary cap for next year would be between 10 and 15 million less than that of 2019 (109 million).
This would be disastrous for players who have signed long-term contract extensions and who plan to increase the salary cap by 25 percent next year, as is the case of Australian baseman Ben Simmons of the Fialdelfia Sixers. , and Cameroonian power forward Pascal Siakam, of the Toronto Raptors, the current league champions. While players entering the free-agent market this summer will also be affected with less money owners can spend, which means they won’t until 2021.
The reduction of the salary cap will also immediately lead to lower the luxury tax and many teams are forced to pay tens of millions of millions of dollars to the league they didn’t plan to or reduce the cost of rosters and have less chance of fighting for the title of champions.
At the moment, The NBA already has these financial data on the table, and hence its main concern in the short term is to see how the serious crisis of the pandemic evolves. of the coronavirus, which in the end will be the one that allows them to remember it as a bad dream or on the contrary to have to count on them for the 2020-21 season.