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THREAD: The CBA states that if NBA games are canceled, the force majeure provision is automatically invoked, which I believe could have various interesting and perhaps unintended consequences...
Every NBA team’s “Team Salary” includes the aggregate “Salaries” of all active players… (Art VII, Sec 4(a)(1)).
“Salary” (the singular of “Salaries”) means, with respect to a salary cap year, a player’s “Compensation” with respect to the season covered by such salary cap year… (Art I, Sec (lll)).
“Compensation” means the compensation that is or could be earned by, or is paid or payable to, an NBA player in accordance with a player contract (Art I, Sec (i)).
If a “Force Majeure Event” (in this case, COVID-19) occurs, then, for each missed game that is canceled due to it, the “Compensation” payable to each player on the roster is reduced by 1/92.6th of the player’s “Compensation” (Art XXXIX, Sec 5).
NBA teams have between 15 and 19 regular season, and for force majeure purposes 5.6 playoff, games left. So players would lose 16.2% to 20.5% of their salary if (big if) the rest of regular season is canceled (~$650M), and 22.2% to 26.6% if the playoffs are canceled too (~$850M).
“Team Salary” is what is used to determine how much cap room each team has (Art I, Sec (kkk)), and how far over the luxury tax line each team is (Art VII, Sec 12(f)).
So… If games are canceled, force majeure would reduce players’ “compensation,” which’d reduce their “salary,” which’d reduce their teams’ “team salary.” Which would give all NBA teams more cap room, and, for teams over the tax (e.g., Heat), reduce or eliminate their tax bills.
And that’s not all…
“Minimum Team Salary” is equal to 90% of the “Salary Cap.” If any team’s “Team Salary” is below the "Minimum Team Salary" at the start of the last regular season game, the team has to pay its players the amount of the shortfall in a manner determined by NBPA (Art VII, Sec 2(b)).
So… If games are canceled and force majeure is invoked, it could cause certain teams to fall below the minimum team salary, which could force those teams to pay their players the difference.
The most fundamental principal of the CBA is the revenue split: For 2019-20, if revenue comes in at $5.302 billion or below, players get 49%. If it’s $5.307 billion, players get 50%. If it’s $6.418 billion or above, players get 51%. (Art VII, Sec 12(b)(3).)
The NBA’s revenue split supersedes all (though, as I’ve previously noted, Art VII, Sec 12(h) doesn’t explicitly protect it). So if a minimum team salary payment is triggered for any team, it would effectively just redistribute players’ money.
And that’s not all (although I’m starting to wear myself down)…
“Total Salaries” means the total “Salaries” included in the “Team Salary” of all NBA teams… (Art I, Sec (vvv)).
“Total Salaries” is also one of the two components that comprises “Total Salaries and Benefits” (the two components being "Total Salaries" and "Total Benefits") (Art I, Sec (www)).
The “Salary Cap” calculation has an adjustment mechanism that causes it to increase (or decrease) if Total Salaries and Benefits in the prior season were less than (or way more than) players’ designated share of revenue in the prior season (Art VII, Sec 2d)).
So… If NBA games are canceled in 2019-20 and force majeure is invoked, it would lower Total Salaries and Benefits. That, in turn, could increase the 2020-21 salary cap (and, depending upon the # of games canceled, potentially even hugely).
That’s not all. But I’ve worn myself out (and, in my real life, misery causes lack of focus, which means I want to go relax)… I’ll leave this thread open, and continue on later. Or, others are welcome to keep it going. There are lots of things tied to player compensation…
… Also, I write this thread knowing that, even if it’s correct, the NBA could, and perhaps will, invalidate it all anyway. I gave you the actual definitions and CBA references, instead of summarizing everything, so you can interpret what the CBA actually says yourselves!
