Game on! NBA and Players agree to deal for 72 game season; December 22 start
New salary cap wrinkle may favor Warriors by lowering taxes
Congratulations, NBA fans, you just got your Christmas day games back!
After pulling off an unlikely, but ultimately successful bubble in Orlando, the NBA appears to have managed the quickest turnaround in league history by agreeing to a new deal and the rough structure of a shortened 72 game 2020-2021 season.
It’s all going to unfold very quickly from here, so I hope you are all ready to welcome the NBA back into your hearts and lives.
What it does
Everything was up in the air just one day ago. The league had set an aggressively quick offseason, designed to preserve the NBA’s beachhead on Christmas Day television - an estimated $500 million value - but the logistics of it all were seen by many as almost too good to be true.
With this new deal (which will presumably be ratified by team owners sometime today), it sets the gears in motion on an abbreviated offseason that is going to feel almost violently quick.
The draft will occur one week from tomorrow, with free agency beginning just two days after that. Then we have Thanksgiving week, and training camp opens the week after that.
The salary cap - one of the looming issues that could have derailed everything - will be held stable at last season’s levels: $109.1 million for the base, with the luxury tax line at $132.6 million. For perspective, the Golden State Warriors have approximately $130 million devoted to just four players (Steph Curry, Klay Thompson, Andrew Wiggins, and Draymond Green), so it’s a given that they will fly deep into the tax this season.
But the question of exactly how deep is one that was at the center of a lot of questions this offseason. As our friend Patrick Murray has pointed out repeatedly, the Warriors were facing an absolutely massive tax bill that could have them paying upwards of $300 million dollars.
With this new deal though, the league has given the Warriors a hand up by tying a reduction in those tax bills to any dwindling gate revenue - and make no mistake, gate revenue will go down significantly this year so this is not just a hypothetical scenario; From ESPN:
…in an attempt to ease the tax burdens of teams that had been planning on the salary cap and luxury tax continuing to steadily rise, the NBA will reduce the luxury tax bill for teams at the end of the 2021 season by the percentage amount that the league's Basketball Related Income declines from initial projections.
For example, if it drops from a projected $8.45 billion to $5.9 billion -- a 30% decline -- the Golden State Warriors' projected luxury tax bill would be reduced from $60 million to $42 million.
In other words, the league just gifted the Warriors tens of millions of dollars. We don’t know the precise value of this yet, but it’s a big number - big enough to mostly ensure that the Warriors will deploy both the TPE, as well as the MLE.
But this puts a ton of pressure on the Warriors front office. The team could really use a legitimately large big man, and they’ve done little to replace the veteran bench leadership of Shaun Livingston and Andre Iguodala. After making some big free agent signings, the Warriors have struggled to get a lot of traction with their MLE player, from Nick Young to DeMarcus Cousins, the players they’ve found with this contract mechanism have generally been so flawed that they cause as many problems as they solve.
You can review all the potential moving pieces in this excellent video that our own Daniel Hardee put together, but in summary, the Warriors just got gifted a salary consideration along the lines of the one-time rise that allowed the team to add Kevin Durant - we can safely expect them to use it.
What doesn’t this deal do?
There are still a number of missing elements here.
Perhaps most critically, the league still needs to figure out a schedule, and more broadly, how to make this season work. As effective as the bubble was, it’s probably not viable for a full 72 game schedule and every team in the league. This is a much bigger problem to solve, and the scope of it all surpasses what the league was able to pull off in the bubble - for example, there’s a team in Canada, which is currently off limits to travel from the United States.
The Coronavirus is rampaging through middle America, with hospitals reaching capacity and no end in sight, teams travelling to venues across the country doesn’t seem viable or safe.
This new deal also punts a fair number of league revenue matters down the road. They’ve agreed to a cap that will steadily increase over the next few years, and with little or no in-person attendance revenue in sight any time soon, we may quickly find small market team owners facing harsher and harsher economic realities. Will ownership come back to this during the next labor negotiation? Because as it stands now, it seems like the league has taken the lead in eating the lost revenue.
There’s also one key date missing from the NBA’s proposed timeline. The league's current moratorium on transactions is probably going to be lifted shortly before the NBA draft is scheduled to take place next week - the Warriors need this to happen so that they can finalize whatever deals they are going to do around the draft.
I don’t have any personal insight into how these deals generally go down, but under a compressed timeline like this, we can expect a fast and furious trade period - whenever that may be.
One thing it’s going to be for sure: fun!
Welcome back NBA, I’ve missed you.