The NBA is losing millions of dollars with each day that games cannot be played amid the outbreak of coronavirus, and the moment, it appears as if the players and league are at an impasse when it comes to how to share the burden of that loss. The NBA has asked players to take a 50 percent pay cut while games are on hold, according to Shams Charania of The Athletic. That pay cut would go into effect on April 15, the next standard NBA payday. The union has countered with a 25 percent pay cut that would begin in mid-May, according to Charania.
While players earn the money that they are contractually owed during the regular season, their paychecks are spaced out over the course of the year. The standard NBA pay schedule calls for 1/24th of a player’s salary to be paid on the 1st and 15th of each month, though players can negotiate different pay schedules so long as at least 20 percent of their base salary is given on standard NBA pay days.
As it stands right now, the NBA already has the right to withhold a meaningful percentage of player salaries. Even in a normal season, 10 percent of player salaries are held in escrow in case players wind up making more than the CBA allows, and the force majeure clause in the CBA allows teams to withhold 1/92.6th of a player’s salary for each game that is missed because of this crisis.
Still, a broader compromise is needed to ensure stability when it comes to the macroeconomics of the league. The salary cap, for instance, is based on projected league revenue, and it will almost certainly be impacted by the games lost to this hiatus. It will likely take years for the league to fully recover, but player salaries are often guaranteed years in advance through long-term contracts. The two sides will have to find a way share that burden. If not, the league could technically invoke the force majeure clause to opt out of the CBA entirely, which could lead to a prolonged work stoppage in the form of a lockout or strike. No compromise would cost either side as much as that would, so one will almost certainly come.
With more than three weeks without games now in the books, teams are beginning to feel the financial crunch of lost revenue. The Philadelphia 76ers attempted to enforce organization-wide 20 percent pay cuts, but reversed course after drawing criticism from fans, media and even those within the franchise. On Friday, the Utah Jazz announced layoffs to non-basketball staff as a result of the virus, with other employees reducing their compensation in an effort to maintain their employment.
It will take months, if not years, for the full financial impact of this crisis on the NBA to be measured. For now, the league is just trying to stop the bleeding. Eventually, the two sides will almost certainly find common ground, but for now, it seems as if there is still a sizeable gap between them.