Report: NBA began 2020 $1.5 billion under revenue

NBA Commissioner Adam Silver (Photo by Elsa/Getty Images)
NBA Commissioner Adam Silver (Photo by Elsa/Getty Images) /

The NBA began 2020 nearly $2 billion under revenue

It went from a delirium season to a Walt Disney “bubble campus” where uncertainty and team adjustments caused subtle frustration for players, coaches, and fans. But the frustration and uncertainty didn’t stem from the encapsulated gameplay itself.

Instead, it came from an economic shortfall.

According to the Associated Press, revenue projections for the league this season were missed by $1.5 billion. That projected revenue derives from league sponsorships affecting local and national television contracts. Factors include the shutdown caused by the pandemic, the cancellation of 171 regular-season games, completing the season in a bubble at Walt Disney World without fans, and a yearlong rift with the Chinese government that saw NBA games not shown on state television there, per an AP report.

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When NBA Commissioner Adam Silver ascertained the NBA’s restart, the possibility of a collapse in revenue had already crossed his mind. Because of that possibility, according to reports, the NBA spent approximately $180 million in revenue for a four-month operation to resume games and team procedures. The three-month pandemic shutdown prompted the league to take immediate action preventing future losses.

If the league missed revenue projections, how does that affect player compensation? Here’s a brief economic breakdown.

An escrow, a contractual agreement where a third party receives and disburses money or property for the primary transacting parties, is an account where the NBA holds 10 percent of player salaries. It’s an enacted program that correlates with the NBA’s Collective Bargaining Agreement. The program ensures players don’t receive in excess of their contractual financial agreements with team organizations. The money held in escrow accounts is distributed to players at the end of the league year if player salaries fail to reach the collectively bargained percentage of revenue given to players.

The NBPA (National Basketball Players Association) hasn’t made any final decisions regarding financial procedures or how the league will proceed. Although finances are questionable, the 2020-21 NBA season is slated to start Dec. 22.

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Despite the economic shortfall, there was one bright spot. Everyone left the encapsulated space unharmed. But what happens if another lockdown befalls? With rocky finances, no one knows.