What does the resumption of the 2019-20 NBA season mean for player salaries, free agency and future team-building plans?
The board of governors approved a return-to-play plan on Thursday that will see 22 teams play an abbreviated regular-season schedule, followed by a playoff play-in tournament and the postseason.
Now that an agreement is in place, the NBA and players' association will turn their attention to collectively bargain a set of transition rules -- a necessity, because the current collective bargaining agreement (CBA) and 51/49 split of basketball related income (BRI) between players and teams isn't built to fairly handle a dramatic drop in revenue. These rules will include the future economics of the NBA, player salary reductions and amending all future salary-cap dates.
The NBA also will have to adjust the 2020-21 cap calendar that was originally set to start on July 1 and is now scheduled for Oct. 18.
Here's a breakdown of everything that will get negotiated.
Player salary reductions
With BRI expected to decline by at least $1 billion, most players have already faced a 25% withholding in their May 15 and June 1 paychecks, while others are essentially carrying IOUs on payments next season. Starting on June 15, that 25% reduction for each paycheck could change based on how many regular-season games are canceled, though that process will be up for negotiation.
One option is to apply the league's force majeure clause and deduce the per-game amount from each player's paycheck -- roughly a 1% deduction in total pay for every game lost. However, because the season was suspended in mid-March, the amount of games played varies for each team, ranging from 67 (Atlanta Hawks) to 63 (Los Angeles Lakers).
As a result, there are several questions that will need to get collectively bargained, including:
Would the league penalize players because of an unbalanced schedule or prorate the salary deductions?
Would players get a credit toward missed regular-season games for playing in exhibition games?
Does a playoff play-in game count toward the regular-season game count?
What happens if a player refuses to play because of health concerns? Does the team have the authority to deduct a per-game salary from that player?
Would the league expand on the $24 million reward pool for playoff squads because more teams and games are included this season?
Sources confirmed to ESPN that players are likely to continue to see a 25% salary reduction on June 15, with those withholdings ending in mid-September when the full amount of games lost are recouped.
Players such as LeBron James and Stephen Curry will see their 2020-21 salary reduced starting on Nov. 15, since both players were already paid in full for this season.
NBA players do not get hazard pay for playoff games. Instead, that $24 million pool is divided based on seeding and how far each team advances per round. Last season, the Toronto Raptors received $5.6 million in playoff money that was divided among their players.
In the NHL's return plan, the first round of the 24-team tournament will technically count as regular-season games, and the players on the seven teams that did not qualify will not get penalized financially.
One logical economic solution is to take the average games all 30 teams had left in the regular season (17) and deduct the amount of games that will be played for all players, whether or not they are participating in Orlando, Florida. For example, if there are eight games that count as regular-season contests, the league's 434 players would have nine games deducted from their overall 2019-20 pay.
In that scenario, players would lose 18.6% of their annual pay -- $344 million in salary reductions, plus the $380 million already held in escrow to help even the BRI split in normal seasons. If the final BRI number comes in at $6.8 billion (down from the projected $8 billion), that combined $724 million in salary reductions would even things out between both sides. Without it, players could end up with 56% of BRI due to guaranteed salaries.
The economics of the salary cap
With BRI dropping by at least $1 billion, the league and the union will likely abandon the language in the CBA addressing how future cap and tax levels are set, instead negotiating an artificial number while withholding additional player escrow for next season. Rookie scale contracts, minimum salaries and team exceptions will increase or decrease at the same rate the salary cap for that season grows (or drops) over the prior year.
Most teams are beginning to prepare for 2020-21 numbers that mirror the current season: a $109.1 million salary cap with a $132.7 million luxury tax line.
Using the standard BRI-based cap formula would be unsustainable, with the salary cap potentially dropping to $99 million and the luxury tax hitting $119.3 million. That would cause economic hardship among teams suddenly in the luxury tax and freeze free agency. It would also open the possibility for a dramatic cap spike as in 2016, when the Golden State Warriors signed Kevin Durant, sparking issues of fairness and competitive balance.
That's why the league and the union need to take a big-picture approach here. The salary-cap solution will not only need to work for next season, but it will also need to include projections that are financially viable for teams and free agents in future years.
Possibly the most important item won't be negotiated between the league and the union. The revenue-sharing rules only apply to teams, and they will play a massive factor in competitive balance moving forward. Because revenue benchmarks (such as ticket sales and concessions) are unlikely to be met for this season and next season, teams such as the Warriors and Lakers won't have as much revenue to distribute back to the less profitable teams. Without that money from revenue sharing, small-market teams could have trouble attracting free agents or retaining their own players.
Here are some more detailed proposals from league insiders related to the salary cap and free agency.
Player and team options
There are 41 players who have player or team options in their contracts for 2020-21, and those dates will have to be amended with the season scheduled to end as late as Oct. 12. Right now, the Lakers' Anthony Davis has a June 29 player option, which is months before the NBA playoffs would conclude.
Sources confirmed that all June player and team option dates will be amended to align with the last day of the NBA playoffs on Oct. 12, the draft on Oct. 15 and the start of the new cap calendar on Oct. 18. That means Davis' option date will get amended to either Oct. 16 or 17.
There are a few player-option decisions that will be heavily impacted by a likely drop in the salary cap, including the Cleveland Cavaliers' Andre Drummond and San Antonio Spurs' DeMar DeRozan. Six teams were projected to have some spending power in 2020 free agency, but that number will drop, meaning players such as Drummond and DeRozan might be more likely to pick up their options for next season.
Guarantee dates
The season resuming in late-July also would alter the 2020-21 guarantee date for the contracts of more than 40 players.
Players such as T.J. McConnell, Ersan Ilyasova and Monte Morris have end-of-June guarantee dates, but they are in the process of training for a resumption of the season. The New York Knicks have four players with a June 28 guarantee date who could be possible waiver claims for teams with a trade exception (think Golden State or OKC), but teams that are still playing would not be allowed to make a waiver claim.
Sources confirmed that the guarantee dates will now align with the Oct. 18 start of free agency. The four Knicks players with June 28 guarantee dates will see adjustments to either Oct. 16 or 17.
Qualifying offers
The list of 2020 free agents below either were selected in the 2016 first round or have no more than three years of NBA service.
If a player such as the Pelicans' Brandon Ingram receives a $9.4 million one-year qualifying offer from his incumbent, he will become a restricted free agent, allowing New Orleans to match any offer sheet.
Teams previously had from the last day of the NBA Finals to June 29 to submit a qualifying offer.
While the details are still being worked out, sources said that the last date for a player to receive a qualifying offer will be Oct. 16.
Trade exceptions
Expect the league to mirror the language from its 2011 transition rules when it comes to trade exceptions that expire by July 10.
Following the 2011 lockout, the NBA ruled that any traded player exception that expired (or was scheduled to expire) during the period beginning on July 1 and continuing through Dec. 15 would be extended to expire on Dec. 16, 2011.
These 13 trade exceptions will now expire after the start of free agency. For example, the Warriors' $17.2 million trade exception should expire on Oct. 25.
More items to be collectively bargained
Team rosters
Expansion of rosters for playoff teams
Waiver and signing period before the playoffs
The ability to convert two-way contracts before the playoffs
The draft
The draft lottery timing and odds
Pre-draft camp timing and logistics
Individual workouts at team facilities
Deadline to withdraw from the draft
NBA draft date
Player matters
Deadline for contract extensions
The window to make trades
2020-21 basketball calendar
Moratorium window
2020 free agents can sign contracts
Date that first- and second-round selections can sign
Restricted free agents can sign an offer sheet
Minimum and first-round picks can be signed
Third- and fourth-year rookie options can be exercised
Teams can sign unrestricted free agents and officially make trades
Contracts can be renegotiated
Matching period for offer sheets signed during the moratorium begins
Veteran and rookie extensions can be signed
Last day to withdraw a qualifying offer without the player's consent
Last day to use the waive-and-stretch provision
Deadline to sign a supermax contract and rookie extension
10-day contracts
Non-guaranteed contracts become protected
Application of disabled player exception
Deadline for two-way contracts
Trade deadline
All-Star Weekend
Deadline for players to become eligible for the playoffs
The last day to use a disabled player exception
2020-21 game schedule
Dates when the 2020-21 schedule is released
First day of training camp
Regular-season rosters set
Last day to waive a player
Regular season ends
Start of the 2021 playoffs
2021 key dates dates
Draft lottery
Pre-draft camp
Deadline to withdraw from the draft
NBA draft
Player and team options
Qualifying offers
Non-guaranteed dates
Salary cap and luxury tax set
Start of 2021 free agency