The world’s newest microscopic killer has forced the NBA’s hand.
After testing positive for coronavirus on Wednesday, Jazz center Rudy Gobert and other Jazz players were subsequently quarantined as they begin testing for the pandemic. As of moments ago, Donovan Mitchell has also tested positive and it is believed others may have been exposed as well.
Following last night’s news, the league decided to suspend the season and it could cost them at least half a billion dollars.
In their recent article on ESPN, Adrian Wojnarowski, Tim Bontemps, and Bobby Marks laid out the financial ramifications of the situation at hand.
According the Collective Bargaining Agreement (CBA), Article XXXIX, section 5, players lose 1/92.6 of their salary for every game missed as a result of a Force Majeure Event (“FME”) — this refers to events or conditions that makes it impossible for the NBA to perform its obligation under the CBA. (Epidemics are specifically covered here) […]
The financial cost is a big reason there is the expectation, according to sources, that the current season will resume at a later date, even if that means the 2020-21 season starts later than expected.
They estimate the cost could reach well into the hundreds of millions.
The first question to answer is, will the season resume at some point? If so, will teams play the full complement of remaining games or an abbreviated schedule?
Any reduction of basketball-related income (BRI) for the season would directly impact the salary cap and luxury tax for next season. A scenario in which the remainder of the regular-season schedule were played without fans could have cost the league an estimated $500 million in BRI, even before the playoffs.
Remember, we have already seen the cap drop from $116 to $115 million in 2020-21 as a result of a projected reduction of $200 million or more in revenue from China.
Factoring in the China incident, the NBA may be reaching close to a billion dollars in lost revenue this season.
Obviously, a loss like that will take years to recover from and the impact could trickle all the way down to the players themselves. With the salary cap expected to decrease dramatically, players will see increased levels of pay cuts and free-agents for the upcoming few years may find it harder to sign large contracts.
The coronavirus may be deadly, but it’s also costly and the NBA is experiencing its impact first-hand.
