NBA Musings Today …

It appears that a bit of clarity regarding the 2020/2021 NBA season has begun to emerge.  The league and the players’ union have agreed to begin the new season on December 22nd and the next season will be 72 games in length instead of the normal – prior to  the last season – 82 games.  The NBA Draft will happen on November 18th and training camps will open on December 1st.  Fans with nothing better to do on Christmas Day after the presents are opened and before Christmas Dinner can rest assured that they will have NBA basketball to watch on TV.

This is not to say that the NBA will be returning to normal and that the only noticeable difference between next season and years past is the number of games in the season.  For example, reports indicate that the NBA would like to limit travel for health/safety reasons and to allow for player recovery time during the compressed schedule.  Yes, there will be fewer games – – but there is also a shorter time from season start (12/22/20) to the end of next season (5/16/21).  [Aside:  Reduced travel also means reduced travel costs for teams; after the “revenue issues” in the 2020 season, do not ignore that aspect of the allure of reduced travel.]  I doubt the league would try this, but here is a potential way to achieve that end:

  • Eliminate inter-conference games.  That gives teams much shorter distances to travel and it sets up an interesting dynamic for the playoffs wherein the teams in the finals will not have played each other prior to that series.  [Aside:  If you want to get really crazy, once you winnow down the playoff teams to four, play “first place East” against “second place West” and vice-versa.]

There is another economic question hanging out there to be resolved by negotiation.  It has to do with the salary cap and the luxury tax.  When the formulae for calculating those threshold numbers were negotiated and devised, no one ever built in any sort of provision for what happens in a season where revenues declined significantly.  The cap and the luxury tax numbers are simply percentages of what is called “basketball-related income” and the sticking points in all the previous negotiations have been over what percentage of that income should flow to the players and what should stay in the pockets of the owners.  Last year, the salary cap was $109M; reports say that the salary cap next year – – if there is no cap modification – – could be as low as $88M.  For those of you keeping score at home, that would be a 19.3% drop.

If the league applied the formula directly, this year’s free agent crop would be seriously disadvantaged since most teams would be near or over the cap before signing any free agents; that would put teams in “luxury tax territory” meaning any new signees would cost even more than the figures contained in their contracts.  There is going to have to be give-and-take on both sides of the table and it is going to have to happen toute de suite because the target date for the start of the free agency season is November 19th or 10 days from now.

One other thorny area is what to do with the vagabonds known as the Toronto Raptors.  As of this morning, there is a pesky little problem caused by the Government of Canada.  That pesky problem makes complete sense so it is not likely to be swept away just because it is inconvenient to the NBA and the fact that the problem is created by the Government of Canada means that it cannot be resolved by NBA negotiations with the NBPA.  Here is the deal:

  • As of this morning, anyone arriving in Canada from another country must quarantine for 14 days as a measure to reduce the spread of the coronavirus.

Eventually, that restriction will be lifted – – but I do not think it would be a good bet to assume that it will be lifted by December 22nd when the NBA season is to begin.  Ergo, what does the league do with the Raptors?

I mentioned the revenue losses for the NBA last year that will lead to salary cap crunches this year without some sort of negotiated way out of the jungle but I do not want to leave the impression that once those negotiations are finished everything is hunky-dory on the economic front.  Front Office Sports reported the following economic losses by the NBA in the interrupted season that just ended; they estimate the NBA saw a reduction of $1.5B in revenue last season and here were the major components of that reduction:

  • $800M lost in arena revenues due to lack of fans
  • $400M lost in sponsorship deals and merchandise sales
  • $200M lost due to “tensions with China”.

Let me stipulate that I have no reason to doubt the numbers cited above nor am I privy to any “inside information” regarding league revenues.  With that caveat in mind, it is not clear to me how the NBA is going to eliminate those “reduction factors” in the upcoming season.

First, I cannot think of any NBA city that is going to allow the league to pack 20,000 people into an indoor arena for 3 hours to watch a basketball game any time soon.  Remember, last season, the NBA played to normal fan attendance from November until mid-March meaning that teams took in about 75-80% of regular season gate revenue before the shut-down occurred.  There may be some cities that will allow greatly reduced attendance at games, but it is not clear to me how that $800M in “lost arena revenues” will be recouped.

Second, at least some of the revenue taken in from sponsorships and from merchandise sales depends on factors outside the control of the league.  Local or regional companies that may want to sponsor some aspect of NBA games or possibly purchase advertising banners in arenas will need to be financially able to justify that expenditure.  Fans who want to buy official league-branded merchandise need to have discretionary income in their accounts to do so.  Those are factors determined by the economy at large and not with the NBA and its schedule accommodations to COVID-19.

Third, the NBA ‘s “tensions with China” exist in a totally different dimension than the one that I live in.  It just may be that those “tensions with China” exist in a totally different dimension than the one NBA players and execs live in too.  That revenue loss factor may be cured overnight, or it may not be cured for a decade or so.  C’est la guerre…

Finally, since I mentioned China in passing today, let me close with this definition from The Official Dictionary of Sarcasm:

Great Wall of China:  A remarkable testament to what several million slaves can accomplish when an emperor puts his mind to it.”

But don’t get me wrong, I love sports………



2 thoughts on “NBA Musings Today …”

  1. The Athletic reports the Raptors are looking at Nashville as a home base during the pandemic. Tampa and Kansas City are also under consideration.

    1. Murray:

      I think all three of those venues are problematic. Tennessee – Memphis to be specific – did not support pro basketball in the past and neither did KC. The Rays and the Bucs – prior to the arrival of Tom Brady – have dealt with empty seats in stadiums.

      At the same time, the Raptors need to be located somewhere in the “East” in order to minimize travel demands. This is not an easy problem to resolve…

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