Still uncontrolled, the coronavirus pandemic continues to impact on the way the NBA conducts its business. The league remains in shutdown mode and quite possibly will function greatly influenced by the killer virus when the basketball operations resume. One thing to expect is the lowering of the salary cap for next season.
It's not hard to see that COVID-19 has made it harder to do business and even so to realize profits. Anticipating this, NBA officials are said to be favoring a downward adjustment of the salary cap at the start of Season 2020-21.
"The salary cap will be lowered, according to league sources. On the surface, that makes it advantageous to build around younger players on cheaper contracts," Clutch Points reported Marc Berman of the New York Post as saying.
The details on this planned move are still scarce and the report said it is unclear how exactly low the figures will be set by the NBA, which obviously is implementing the measure in light of the revenue losses that the league has been absorbing due to the season shutdown.
The NBA ordered the games suspended in March and there is no telling if the season will restart soon. The possibility is also there that the current season will be canceled altogether.
The same report noted that the projected salary cap for next season is at $115 million and in the current, it was set at $109 million. There is no hint yet if the pushed down cap for 2020-21 will be lower than the projection for next year or this year.
In any case. It's quite clear that the league is bracing for the deep impact that the global health crisis will bring on the U.S. economy and to the NBA. It is estimated that even if the games were resumed, the league will still suffer huge losses, likely to the tune of $1 billion.
The salary cap decreased will at least make it easier for team owners to conduct business going into the next season, which if the reports are true will only start in December to accommodate the expected late resumption of the 2020 postseason games and the NBA Finals series.
According to Bleacher Report, NBA commissioner Adam Silver has already indicated that COVID-19 will certainly hurt the league's financial prospects, although the executive has made clear that "it's too soon to tell what the economic impact will be."
The NBA commissioner explained: "We've been analyzing multiple scenarios on a daily if not hourly basis and we'll continue to review the financial implications. Obviously, it's not a pretty picture but everyone, regardless of what industry they work in, is in the same boat."
For NBA teams, the immediate impact of the financial difficulties could be the offloading of players that hold giant contracts if only to avoid the payment of luxury tax, which is expected to be activated for many teams when the salary cap is lowered.
