Money Trouble

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NBA Concerned Over Salary Cap, Small Market Team Financial Situations

As the global pandemic continues, more information continues to come to light in regards to the NBA’s financial situation, with an added emphasis on next year’s salary cap and small market team profitability.

Small market teams such as the Charlotte Hornets and Memphis Grizzlies already collect around $20 million per season from more profitable teams around the league due to the NBA’s revenue sharing policy. With the projected losses linked to games set to be played without ¬†fans in attendance, the league’s creme de la creme – the Golden State Warriors, New York Knicks, and Los Angeles Lakers for example – will all take in less profits, meaning less money will ultimately be distributed to their small market counterparts.

The NBA’s 30 owners also have the option of altering their current revenue-sharing model without negotiating with the union.

Additionally, the league is projecting a 2020-21 season salary cap of $115 million and a luxury tax of $139 million. According to one front office executive, the cap could see a decline in the range of $25-30 million before the start of next season. The initial cap projections were based on an anticipated $8 billion in basketball-related income, but that sum can now see a drastic $1-2 billion decrease.

If the salary is to drop drastically, 25 teams will land in the luxury tax, which would be a record high for any NBA season in league history.

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