Expert paints ugly financial picture if NBA ditches Orlando
For the NBA players, the risks and implications of joining the Orlando bubble have largely been identified and dissected. The most obvious involves the coronavirus, which is spiking in Florida and easily transmissible indoors. Everybody assumes that risk in the NBA bubble – the players, the coaches, the referees, the operational staff. Then there’s the threat of injury, which is especially signifi- cant to players on the verge of big contracts. According to a source, Boston Celtics’ forward Jayson Tatum, who is eligible for a max extension in the offseason, has expressed reluctance to play for that reason.
A third issue is the restraints of the bubble, and how quarantining for up to three months can be daunting.
Finally, and most pressing, there’s the social unrest gripping the country, specifically pertaining to this country’s marginalization of AfricanAmericans. Kyrie Irving’s push to skip the bubble has spawned a debate over whether NBA players could effectively influence social reform while playing, or whether they’d have to boycott to force meaningful change. Irving not only led a discussion with close to 100 union members in a conference call, he also urged Nets players to skip the bubble recently in a separate group chat, the Daily News has learned. In that chat, Irving proposed that players could start their own league, according to a source.
On the flip side to these risks of resuming basketball in Orlando, there are consequences to canceling the season that could devastate the salary structure for now and the future. The players, not the owners, will suffer the worst financially. And while Irving is probably set with more than $100 million in career salary earnings (not to mention his Nike and movie deals), the majority of players aren’t near his wealth bracket.
So it’s worth understanding exactly what’s at stake for all players, and ESPN cap guru Bobby Marks – a former Nets executive – broke it down for the Daily News.
It isn’t pretty.
“Not playing, it’s just an economic disaster, it really is,” Marks said.
Here’s the Cliff’s Notes version, as gleaned from Marks’ expert accounting:
The NBA placed 10% of its players’ total salaries — $380 million — into an escrow account, which it uses at the end of the year to balance the revenue shares (players are entitled to 51%). That’s gone for the players. They’re not getting that back because the league has already lost too much money.
Even if the NBA completes its regular season and playoffs – thereby reaping the benefits of TV and advertising revenue – Marks estimates the total salary loss for players will be $580 million because of the pandemic. That number will double if they don’t play.
“It’s going to go to like $1.3 billion (in lost salary),” Marks said. “It’s a huge number.”
Marks used LeBron James’ potential losses as an example.
“Lebron is making $34.7 million and he’ll lose like $13 million (if the NBA doesn’t resume), so like 35 percent of his pay,” Marks said. “Whereas if he’s going back to Orlando, he’s probably looking at a loss of between $5.5 to $6 million.”
Dropping $13 million won’t disrupt LeBron, but, as Marks noted, 72% of the players are paid below the average salary of $9.4 million. It’s a top-heavy system, not unlike American society.
“There are a lot more Ed Davis’ of the NBA world (who is making $4.7 million with the Utah Jazz) than Kyrie Irvings of the world (who is making $31.7 million),” Marks said. “There’s a group of guys making over $20 million, but the majority of them are making less than five.”
The loss of salary this season isn’t even the worst consequence for the players. If Orlando is canceled, the NBA can impose the force majeure clause and rip up the CBA. Marks called it “the nuclear option.” The current CBA is considered favorable to the union, resulting in record salaries and unprecedented power for players. Renegotiating would give owners the chance pull back some of their concessions, with lasting effects for the players. It’s why two agents speculated that owners would prefer to cancel the season.
“I would say (a new CBA) would be extremely less beneficial to the players,” Marks said.
As it stands, the NBA is set to resume in late July and commissioner Adam Silver essentially reiterated Monday that it’s going to happen. There’s concern over whether that will hurt the players’ emotional and physical well-being, as well as their efforts to influence social change. But there’s no debate about what’s best for their salaries.