Reduction of NBA player salaries

However, the checks that players will receive on May 1st will arrive without reduction.

Although the league has not released the final content of the plan, news sources have assured that it aims for a gradual reduction of player salaries before the labor agreement that allows the league not to pay due to a major cause such as a pandemic.

The aforementioned would have to be adopted if regular season games are canceled as of May.

This would allow the league to establish a guarantee deposit account to return to the players in case the regular season can be completed, with 259 games still to be played.

Otherwise, teams would retain a percentage of the money based on the cancellation of games, which is estimated to be over two million dollars per game.

The salary withholding would prevent a scenario in which players could go through several pay periods without salary if the NBA cancels most or all of the remaining regular season games.

According to the plan developed by the NBA and the union, both parties will distribute salary deductions in the first four pay periods, until November and December, of the 2020-2021 season.

The NBA has no immediate plans to announce the cancellation of any regular season games, and the union has informed its associates that players will not know if games are canceled until June 15th.

According to the collective agreement, players lose 1% of their salary for each canceled game, under the force majeure provision that covers various catastrophic circumstances, including epidemics and pandemics.

Once games are canceled, force majeure is automatically activated under the current collective agreement in force within the NBA.

The use of force majeure further protects against a significant drop in the salary cap and luxury tax for the next season.

Force majeure is an additional mechanism for the NBA to make the financial formula work to deliver the agreed 51 percent share of revenues to the owners.

The league already has 10 percent of player salaries withheld.

The significant decline in revenue would result in the projected deposit of 380 million dollars returning to NBA teams after the season.

If the projected loss of revenue without the application of force majeure exceeds the current retention available to teams, the NBA would need other means to compensate for the loss.

In the event that salaries decrease as a result of lost games to the point that there is a shortage in the retention system, the currently withheld 10 percent would probably be returned to players.