Salary cap implications of the Coronavirus

[NYG]

Using rough estimates off of a $100 Million salary cap, I would project the following with current draft order before free agent signings:

$100 Million
$121.2 Luxury Tax
$127.2 Tax Apron
$8.4 Million Non-Tax MLE

Atlanta - $34.4 Million in Cap Space
Boston - $20.9 Million above Luxury Tax
Brooklyn - $22.6 Million above Luxury Tax
Charlotte - $13.6 Million in Cap Space
Chicago - $10.3 Million below Luxury Tax
Cleveland - $3.8 Million below Luxury Tax
Dallas - $11.8 Million below Luxury Tax
Denver - $16.8 Million below Luxury Tax
Detroit - $21.1 Million in Cap Space
Golden State - $33.5 Million above Luxury Tax
Houston - $10 Million above Luxury Tax
Indiana - $4.2 Million above Luxury Tax
L.A. Clippers - $5.3 Million below Luxury Tax
L.A. Lakers - $27.8 Million below Luxury Tax
Memphis - $8.8 Million below Luxury Tax
Miami - $12.5 Million in Cap Space
Milwaukee - $10 Million above Luxury Tax
Minnesota - $14.9 Million below Luxury Tax
New Orleans - $32.9 Million below Luxury Tax
New York - $30.6 Million in Cap Space
Oklahoma City - $15.2 Million below Luxury Tax
Orlando - $4.1 Million above Luxury Tax
Philadelphia - $27.4 Million above Luxury Tax
Phoenix - $29.4 Million below Luxury Tax
Portland - $6.2 Million below Luxury Tax
Sacramento - $17.3 Million below Luxury Tax
San Antonio - $1.4 Million above Luxury Tax
Toronto - $31.2 Million below Luxury Tax
Utah - $2.4 Million below Luxury Tax
Washington - $14.2 Million below Luxury Tax

[DBoys]

You are correct in your approach - in this current CBA, the various numbers are are designed to be proportional (or proportional-ish) to the cap as it goes up and down. Tax, maximums, exceptions, rookie scale, etc.

"At a $100 Million salary cap, am I doing the math right by saying ..."

* "...luxury tax would be $119.6 Million and $125.6 Million would be the apron?"
I think you're low by a tad. Tax is a bit more than 20% above the cap, although it does have some "adjustments" rather than being the exact same percentage from year to year, so in practical terms it's "120.5% or so." They also do some rounding as the final step of their calculation. So, perhaps 120.5-121M.
The amount above that to the apron is also adjustable rather than an exact 6M spread, although it doesn't move in the same percentage up or down as the cap increase or decrease.

*"...MAX Contracts would be $25 Million, $30 Million and $35 Million?"
Yes, exactly.

[NYG]

You are correct in your approach - in this current CBA, the various numbers are are designed to be proportional (or proportional-ish) to the cap as it goes up and down. Tax, maximums, exceptions, rookie scale, etc.

"At a $100 Million salary cap, am I doing the math right by saying ..."

* "...luxury tax would be $119.6 Million and $125.6 Million would be the apron?"
I think you're low by a tad. Tax is a bit more than 20% above the cap, although it does have some "adjustments" rather than being the exact same percentage from year to year, so in practical terms it's "120.5% or so." They also do some rounding as the final step of their calculation. So, perhaps 120.5-121M.
The amount above that to the apron is also adjustable rather than an exact 6M spread, although it doesn't move in the same percentage up or down as the cap increase or decrease.

*"...MAX Contracts would be $25 Million, $30 Million and $35 Million?"
Yes, exactly.

Yeah I adjusted in the post above to account for that slight difference. It seems like a lot of teams would have interesting decisions in that scenario.

[NYG]

You are correct in your approach - in this current CBA, the various numbers are are designed to be proportional (or proportional-ish) to the cap as it goes up and down. Tax, maximums, exceptions, rookie scale, etc.

"At a $100 Million salary cap, am I doing the math right by saying ..."

* "...luxury tax would be $119.6 Million and $125.6 Million would be the apron?"
I think you're low by a tad. Tax is a bit more than 20% above the cap, although it does have some "adjustments" rather than being the exact same percentage from year to year, so in practical terms it's "120.5% or so." They also do some rounding as the final step of their calculation. So, perhaps 120.5-121M.
The amount above that to the apron is also adjustable rather than an exact 6M spread, although it doesn't move in the same percentage up or down as the cap increase or decrease.

*"...MAX Contracts would be $25 Million, $30 Million and $35 Million?"
Yes, exactly.

Yeah I adjusted in the post above to account for that slight difference. It seems like a lot of teams would have interesting decisions in that scenario.

Actually, the top post accounts for the regular rookie scale. So as a rule of thumb using the first overall pick as an example, would I use...

$9,757,440 / $109.14 Million = X Amount / $100 Million?

[DBoys]

Actually, the top post accounts for the regular rookie scale. So as a rule of thumb using the first overall pick as an example, would I use...

$9,757,440 / $109.14 Million = X Amount / $100 Million?

Assuming that was the rookie scale number for 2019, then yes.

[NYG]

Is suspending the luxury tax a realistic option? https://www.cbssports.com/nba/news/why-the-coronavirus-pandemic-should-propel-the-nba-to-suspend-its-luxury-tax-for-the-2020-21-season/

Is some combination of cap smoothing, lower annual raises, an amnesty clause, suspending luxury tax, etc. more likely than a giant dip in salary cap/luxury tax? https://www.cbssports.com/nba/news/coronavirus-nbpa-tells-agents-it-doesnt-expect-big-drop-from-115m-salary-cap-projection-per-report/

Allowing everything to proceed as is with the lower salary cap/luxury tax amount with an amnesty clause is interesting as Gordon Hayward (even after he opts in), Taurean Prince, Kevin Love, Blake Griffin, Andrew Wiggins, Russell Westbrook, Evan Fournier (again, even after he opts in), Al Horford, DeMar DeRozan (again, even after he opts in) and John Wall could all become 2020 free agents and others like Nicolas Batum, Julius Randle, Jeremy Lamb, etc.

[DBoys]

Is suspending the luxury tax a realistic option? https://www.cbssports.com/nba/news/why-the-coronavirus-pandemic-should-propel-the-nba-to-suspend-its-luxury-tax-for-the-2020-21-season/

I seriously doubt it.

And I think the author of that article lacks real comprehension of the NBA's cap mechanisms and the reason they are there in the first place. Very shallow knee-jerk reasoning.

Note that this article is Apr 1. Somewhat dated because much has evolved.

But the reality is that teams have only so much money coming in, and a budget. There are penalties for exceeding the tax line, that's your budget, so don't exceed it. And sometimes that limit forces hard choices, or regrets about past spending. Some teams may be rewarded this off-season for having been careful with their commitments, but in one sense, that's EXACTLY what the system was designed to do. If you weren't so careful? You still have choices. It's on you to figure out your best solution. Maybe you decide the best path for you is to eat some tax? If so, it is what it is.

Is some combination of cap smoothing, lower annual raises, an amnesty clause, suspending luxury tax, etc. more likely than a giant dip in salary cap/luxury tax? https://www.cbssports.com/nba/news/coronavirus-nbpa-tells-agents-it-doesnt-expect-big-drop-from-115m-salary-cap-projection-per-report/

Note that this article is Apr 7. Much is likely to be different in their projections (and probably thinking as well) now.

Cap smoothing could still happen if union and league work together. But (a) projection of revenues - if done accurately - takes care of the bulk of that anyhow, (b) the CBA is designed to be a pay-as-you-go split, as much as possible, (c) based on past experience when the shoe was on the other foot, I don't expect the owners would favor this, and (d) the CBA itself has some smoothing already, without something extra being needed.

The other things you list seem like completely DOA ideas.

The key concept is this: each season is intended to be treated in and of itself, without much impact for later. They've addressed the stoppage of this season via a solution regarding player pay for this season (the extra hold back on upcoming player paydays), because they want to put this season to bed with both sides (players and teams) being paid as equal as possible.

Each future season (including 20-21) the CBA itself will specify a cap and etc that reflect expected revenues of that season, and perhaps some payback (if this season doesn't end up split equally). Players and owners basically can expect to split the reward that comes from that season. By design, payback due for 19-20 (if any) won't necessarily hit all in one year.

So imo they can and will simply let the system play out as it's designed, and let the chips fall where they may.

Allowing everything to proceed as is with the lower salary cap/luxury tax amount with an amnesty clause is interesting as Gordon Hayward (even after he opts in), Taurean Prince, Kevin Love, Blake Griffin, Andrew Wiggins, Russell Westbrook, Evan Fournier (again, even after he opts in), Al Horford, DeMar DeRozan (again, even after he opts in) and John Wall could all become 2020 free agents and others like Nicolas Batum, Julius Randle, Jeremy Lamb, etc.

Amnesty clause? Pure fan fantasy.

Proposing "amnesty" is a fan favorite idea to one spending hurdle after another. But it's no real answer to lack of revenues (the current crisis), because teams still have to pay the contracts. In fact, it's just a mechanism to then have owners spend even MORE; when they are already bleeding money and there's much uncertainty about how to have full arenas again, it may be fun to pretend about, but it's not gonna be THEIR answer.

(Note that it has only ever been NBA proposed and used when the system changed, only twice (2005 CBA, 2011 CBA), and for a brand new CBA that changed the tax RULES completely; there was no amnesty with the last CBA; and there is no new CBA here.)

[NYG]

Is suspending the luxury tax a realistic option? https://www.cbssports.com/nba/news/why-the-coronavirus-pandemic-should-propel-the-nba-to-suspend-its-luxury-tax-for-the-2020-21-season/

I seriously doubt it.

And I think the author of that article lacks real comprehension of the NBA's cap mechanisms and the reason they are there in the first place. Very shallow knee-jerk reasoning.

Note that this article is Apr 1. Somewhat dated because much has evolved.

But the reality is that teams have only so much money coming in, and a budget. There are penalties for exceeding the tax line, that's your budget, so don't exceed it. And sometimes that limit forces hard choices, or regrets about past spending. Some teams may be rewarded this off-season for having been careful with their commitments, but in one sense, that's EXACTLY what the system was designed to do. If you weren't so careful? You still have choices. It's on you to figure out your best solution. Maybe you decide the best path for you is to eat some tax? If so, it is what it is.

Is some combination of cap smoothing, lower annual raises, an amnesty clause, suspending luxury tax, etc. more likely than a giant dip in salary cap/luxury tax? https://www.cbssports.com/nba/news/coronavirus-nbpa-tells-agents-it-doesnt-expect-big-drop-from-115m-salary-cap-projection-per-report/

Note that this article is Apr 7. Much is likely to be different in their projections (and probably thinking as well) now.

Cap smoothing could still happen if union and league work together. But (a) projection of revenues - if done accurately - takes care of the bulk of that anyhow, (b) the CBA is designed to be a pay-as-you-go split, as much as possible, (c) based on past experience when the shoe was on the other foot, I don't expect the owners would favor this, and (d) the CBA itself has some smoothing already, without something extra being needed.

The other things you list seem like completely DOA ideas.

The key concept is this: each season is intended to be treated in and of itself, without much impact for later. They've addressed the stoppage of this season via a solution regarding player pay for this season (the extra hold back on upcoming player paydays), because they want to put this season to bed with both sides (players and teams) being paid as equal as possible.

Each future season (including 20-21) the CBA itself will specify a cap and etc that reflect expected revenues of that season, and perhaps some payback (if this season doesn't end up split equally). Players and owners basically can expect to split the reward that comes from that season. By design, payback due for 19-20 (if any) won't necessarily hit all in one year.

So imo they can and will simply let the system play out as it's designed, and let the chips fall where they may.

Allowing everything to proceed as is with the lower salary cap/luxury tax amount with an amnesty clause is interesting as Gordon Hayward (even after he opts in), Taurean Prince, Kevin Love, Blake Griffin, Andrew Wiggins, Russell Westbrook, Evan Fournier (again, even after he opts in), Al Horford, DeMar DeRozan (again, even after he opts in) and John Wall could all become 2020 free agents and others like Nicolas Batum, Julius Randle, Jeremy Lamb, etc.

Amnesty clause? Pure fan fantasy.

Proposing "amnesty" is a fan favorite idea to one spending hurdle after another. But it's no real answer to lack of revenues (the current crisis), because teams still have to pay the contracts. In fact, it's just a mechanism to then have owners spend even MORE; when they are already bleeding money and there's much uncertainty about how to have full arenas again, it may be fun to pretend about, but it's not gonna be THEIR answer.

(Note that it has only ever been NBA proposed and used when the system changed, only twice (2005 CBA, 2011 CBA), and for a brand new CBA that changed the tax RULES completely; there was no amnesty with the last CBA; and there is no new CBA here.)

Awesome! You’re really helpful in this given the lack of info out there. I know I can’t hold you to most of this due to the lack of info as well, but it’s good to hear the real scoop.

[DBoys]

Thanks.

One of the problem with articles for changing the rules midstream is that ideas like that address what's on one writer's "crisis list" at the moment, motivated by something in their eyes being seen as a negative. But the rules were designed to motivate accountability and consequences over the long run, and balance competing interests as things change.

And here's the reality. The "crisis" for the NBA is simply that the owners and players are both harmed financially by the epidemic. It's millionaires and billionaires not making as much, so it's not the same sort of harm as the guy who lost his business or job and can't pay bills, of course. But they will have to make do with less, and there's no idea that can just make that go away.

Paying tax or not? That's just shuffling the revenue money from one billionaire owner to another, per rules in place. If you are rich enough to have a too-high payroll, you send some money to other teams too. End the tax in one way or another, and you lose that balancing mechanism. The other ideas? Similar result - someone gains, but someone else loses. It's a zero-sum game .

That's why I don't expect them to change the pieces of the system. Change one thing, and then you're owing someone else on the other end. And then fix that, and someone else is shorted. It ends up a mess. And none of it restores lost revenues from the pot they are splitting. Getting back to playing games with sold out arenas, or as close as possible as quickly as possible, is the only solution that is gonna really fix what ails them.

[meekrab]

Players with contracts that have a season 1 base year 19-20 or older are going to be robbing players with a season 1 base year 20-21 or newer.

And players who were lucky enough to be free agents in the summer of 2016 when every GM had new cap money to spend have been robbing all the other players in the league for four years now. Doesn't seem to have mattered overall.

[G R E Y]

So we know the cap will be lower next season. This season's player salaries are dropping a bit, right? Does that mean player salaries will proportionately for next season as well?

Specifically, DeRozan has a PO for $27+M for next season. Does he get that full amount if he opts in or does it drop as well?

I recall a tweet in which two recent max signees' contracts would be adjusted and that max amount would be slightly lower. I thought that might apply to an annual salary like DD's as well. Can someone please confirm that either way? Much obliged!

[DBoys]

"This season's player salaries are dropping a bit, right?" ....Existing salaries? Not exactly.

"Does that mean player salaries will proportionately for next season as well?"...Salaries for existing contracts? No.

Re this season, the extended suspension of the season triggered the opportunity (and need) to somehow balance the revenue payouts, because the players had been paid to play games that no longer existed. The league could have just voided everything, per the CBA, and stopped paying. Instead, they agreed to a larger payroll deduction for escrow from May 15 salary payments and onward.

But no player contract has been changed for this season - it's just a holdback to account for reduced revenues if they fall short of projections (and it's all but certain that will be the case). The players are only entitled to half of revenues, whatever they are. The norm is 10% holdback, but that has been bumped to 25% for remainder of payments for this season..

So far, future contracts are still in place. Life will go forward as normal, they hope. The cap itself is designed to adjust revenue splits between owners and players for next season and ensuing future years, assuming the games are played. If they aren't, who knows - anything could happen then, if this is still ongoing for another year or three and massive games (or months, or even seasons) are lost.

"Specifically, DeRozan has a PO for $27+M for next season. Does he get that full amount if he opts in or does it drop as well?" ....Full amount, subject to escrow outcome of course. This assumes there is a season, and it's played in full.

As for max salary extensions, that have already been signed but don't start until next season, they are written for the "max." Whatever that number turns out to be will be the starting salary of that deal. And that max number is tied to the cap.

[NYG]

I read each home game generates around $2 Million and fans being at games contribute 40% of that. I read there is 259 suspended regular season games and there was 82 playoff games played last season.

Am I doing this math correctly?

Current NBA Salary Cap Projection (pre-Coronavirus): $115 Million

Let's say the NBA freezes the regular season and just jumps right to an NBA playoffs without fans.

That's $2 Million multiplied by 259 regular season games not played equaling $518 Million.
There would be 82 playoff games played using last year's numbers, but without fans so 40% of $2 Million multiplied by 82 equals $65.6 Million.

Total lost revenue from my figures would then be $583.6 Million multiplied by 44.74% is $261.1 Million divided by 30 teams is $8.7 Million lost in cap space.

115 minus 8.7 gets us to basically a $106 Million salary cap in that case.

Using $106 Million (divided by 44.74%) gets us to around $237 Million (multiplied by 53.51%) gets us to a $126.8 Million luxury tax.

Is it reasonable to use these estimates in the frozen season, jumping to a playoffs without fans scenario?

[DBoys]

Using their latest statements (that their Expected Scenario for next season is playing with no fans in seats whatsoever), "normal" (as specified by 2017 CBA) is out the window. It just won't work. They have contracts in place to pay out 100M or so per team, with some already far north of that number, but their revenues will only support something around 70M or so. They have to do some sort of reset to negotiate something different, because that disparity just won't work.

Where will they go? How will the numbers work? How far off? Personally I don't want to wade through the numbers, because it's an exercise in trying to guess what they are going to try to guess and how they will decide based on layers and layers of what ifs that even they are guessing at.

One possibility is they would aim for a solution that leaves as much of the structure as intact as possible (say, for example, an escrow of 50% of every contract), but who knows. Once they throw the setup mechanisms of the CBA out the window, the CBA would be effectively voided, as would all contracts, so they can go anywhere they negotiate.

[DBoys]

The NBA situation may get very ugly because of the looming loss of revenue. The following "wiretap" includes quotes and info that is as significant not only for the blunt admissions but also for what is not being said.

The NBA and NBPA have reached an agreement to extend through the September the 60-day window that preserves the league's right to terminate the current Collective Bargaining Agreement by use of the force majeure clause.

The original 60-day window was set to close this week.

The agreement to push back the deadline allows the NBA and union to gather a clearer picture of the economic losses and bargain on a number of crucial financial issues including salary caps and luxury tax thresholds.

During a conference call with members of the NBPA membership on Friday, Silver began to prepare the players for the harsh financial realities.

"This CBA was not built for an extended pandemic," Silver said on the call, according to the audio tape. "There's not a mechanism in it that works to properly accept a cap when you've got so much uncertainty; when we'd be going in next season saying, 'Well, our revenue could be $10 billion or it could be $6 billion. Or maybe it could be less.'"

I mentioned earlier that the NBA could consider termination of the CBA, if they needed to. While they aren't willing to say it explicitly, this advances that possibility into the realm of likelihood (maybe even near a certainty), as the NBA owners are forced to envision the economics with no fan attendance for who knows how long.

It appears they are planning to await a vaccine. But what if no vaccine is ahead? The truth is that there are no vaccines for any corona viruses. Do they wait forever? Or at some point do they begin to say, "Hey, it's never coming. (Or, I've bled too much financially and I can't keep waiting.) Now what?" They do have deeper pockets, as it's a world of the mega-wealthy with billionaires paying millionaires and mega-millionaires, but at some point they might be forced into the same realities that us working schmucks are having to deal with.

[Smitty731]

I read each home game generates around $2 Million and fans being at games contribute 40% of that. I read there is 259 suspended regular season games and there was 82 playoff games played last season.

Am I doing this math correctly?

Current NBA Salary Cap Projection (pre-Coronavirus): $115 Million

Let's say the NBA freezes the regular season and just jumps right to an NBA playoffs without fans.

That's $2 Million multiplied by 259 regular season games not played equaling $518 Million.
There would be 82 playoff games played using last year's numbers, but without fans so 40% of $2 Million multiplied by 82 equals $65.6 Million.

Total lost revenue from my figures would then be $583.6 Million multiplied by 44.74% is $261.1 Million divided by 30 teams is $8.7 Million lost in cap space.

115 minus 8.7 gets us to basically a $106 Million salary cap in that case.

Using $106 Million (divided by 44.74%) gets us to around $237 Million (multiplied by 53.51%) gets us to a $126.8 Million luxury tax.

Is it reasonable to use these estimates in the frozen season, jumping to a playoffs without fans scenario?

I'm not sure that anything is reasonable right now. You also have lost TV money. You have the China impact from the beginning of the year.

I'd just throw it out the window entirely. It's kind of an exercise in futility. I was talking to a team that started down the path of running a scenario with a cap of $90M and realized "Everyone is screwed if that happens." and just quit on it.

This is a case where I think you'll see both sides invoke special bargaining and come up with a workable solution(s) that ignores the previously agreed upon BRI calculations for the most part.

[NYG]

I read each home game generates around $2 Million and fans being at games contribute 40% of that. I read there is 259 suspended regular season games and there was 82 playoff games played last season.

Am I doing this math correctly?

Current NBA Salary Cap Projection (pre-Coronavirus): $115 Million

Let's say the NBA freezes the regular season and just jumps right to an NBA playoffs without fans.

That's $2 Million multiplied by 259 regular season games not played equaling $518 Million.
There would be 82 playoff games played using last year's numbers, but without fans so 40% of $2 Million multiplied by 82 equals $65.6 Million.

Total lost revenue from my figures would then be $583.6 Million multiplied by 44.74% is $261.1 Million divided by 30 teams is $8.7 Million lost in cap space.

115 minus 8.7 gets us to basically a $106 Million salary cap in that case.

Using $106 Million (divided by 44.74%) gets us to around $237 Million (multiplied by 53.51%) gets us to a $126.8 Million luxury tax.

Is it reasonable to use these estimates in the frozen season, jumping to a playoffs without fans scenario?

I'm not sure that anything is reasonable right now. You also have lost TV money. You have the China impact from the beginning of the year.

I'd just throw it out the window entirely. It's kind of an exercise in futility. I was talking to a team that started down the path of running a scenario with a cap of $90M and realized "Everyone is screwed if that happens." and just quit on it.

This is a case where I think you'll see both sides invoke special bargaining and come up with a workable solution(s) that ignores the previously agreed upon BRI calculations for the most part.

Yeah the most agreeable solution I have read is probably no increase or decrease for as many years as it takes until that’s actually backed up by the income so leaving luxury tax and cap at the 2019-20 figures seems like a fair way of not screwing owners or players totally because there’s no way to do it screwless for both sides. So players starting salaries being flattened every year and the owners eating annual salary increases without a raise in luxury tax until it’s backed up in real revenue stops the bleeding easiest IMO

[DBoys]

Yeah the most agreeable solution I have read is probably no increase or decrease for as many years as it takes until that’s actually backed up by the income so leaving luxury tax and cap at the 2019-20 figures seems like a fair way of not screwing owners or players totally because there’s no way to do it screwless for both sides.

Respectfully, "Let's leave the cap at 109.1 and the tax at 132.6 until it all balances out" has no chance whatsoever, if you're actually paying the players those numbers. That idea not only doesn't necessarily fix the short term, but it also doesn't have any way to keep future years from being just as bad of a split, or even worse.

The cap is merely a mechanism to get the salaries to a number that will split revenues evenly with the owners. The problem is the revenues this year aren't going to come anywhere close to matching the payout that derived from that $109.1M cap. And there's no guarantee that future years won't even be worse. In fact, as Smitty has outlined, all their revenue streams are uncertain going forward, and potentially going even lower.

[Note: I found some better data for revenues, so I have edited my guesses below. They're still only a broad guess. And bottom line is still the very same - revenues are still too small and iffy, and there's too great of a difference between old path and new path, to be fixed by just a different cap number.]

This season? Reasonable guess is they've booked about $5.5M [edited from $4.5M] in revenue so far, which fits a cap in the $80M [edited from $66M] area. (The first issue will be: how can the owners get that overpay back from the players? It's a partnership, and the owners aren't going to agree to be the only partner taking a hit.) Next season? As Smitty noted, all future revenue streams are imperiled, but if they ONLY lose their attendance (40% of revenues), that leaves revenues for only a $72M [edited from $60M] cap.

So at those revenues, they can't simply keep paying existing contracts as is, and replacing them with like contracts. Such payouts don't work. And that's the reality they are dealing with right now.

How can they fix it? If they want to leave the system intact, but pay based on whatever revenues they actually get, they would have to agree to change the escrow setup, and hold back about half of every player's pay until an after the season calculation of actual revenues. And that might not be enough hold back - it has to be enough where the owners can be CERTAIN they won't end up shorted.

But that creates another issue - lower revenues means the benefits package to retired players and current players becomes a much bigger slice out of revenues. That might be seen by some, or many, as a problem.

They really need to go back to "normal life" sooner rather than later, and let the chips fall where they may, to make this go away. That's probably the only "easy" way out.

[NYG]

Yeah the most agreeable solution I have read is probably no increase or decrease for as many years as it takes until that’s actually backed up by the income so leaving luxury tax and cap at the 2019-20 figures seems like a fair way of not screwing owners or players totally because there’s no way to do it screwless for both sides.

Respectfully, "Let's leave the cap at 109.1 and the tax at 132.6 until it all balances out" has no chance whatsoever, if you're actually paying the players those numbers. That idea not only doesn't necessarily fix the short term, but it also doesn't have any way to keep future years from being just as bad of a split, or even worse.

The cap is merely a mechanism to get the salaries to a number that will split revenues evenly with the owners. The problem is the revenues this year aren't going to come anywhere close to matching the payout that derived from that $109.1M cap. And there's no guarantee that future years won't even be worse. In fact, as Smitty has outlined, all their revenue streams are uncertain going forward, and potentially going even lower.

This season? Reasonable guess is they've booked about $4.5M in revenue so far, which fits a cap in the $66M area. (The first issue will be: how can the owners get that overpay back from the players? It's a partnership, and the owners aren't going to agree to be the only partner taking a hit.) Next season? As Smitty noted, all future revenue streams are imperiled, but if they ONLY lose their attendance (40% of revenues), that leaves revenues for only a $60M cap.

So at those revenues, they can't simply keep paying existing contracts as is, and replacing them with like contracts. Such payouts don't work. And that's the reality they are dealing with right now.

How can they fix it? If they want to leave the system intact, but pay based on whatever revenues they actually get, they would have to agree to change the escrow setup, and hold back about half of every player's pay until an after the season calculation of actual revenues. And that might not be enough hold back - it has to be enough where the owners can be CERTAIN they won't end up shorted.

But that creates another issue - lower revenues means the benefits package to retired players and current players becomes a much bigger slice out of revenues. That might be seen by some, or many, as a problem.

They really need to go back to "normal life" sooner rather than later, and let the chips fall where they may, to make this go away. That's probably the only "easy" way out.

I basically feel like there is no solution if the season is cancelled and 2020-21 is played without fans then. Even if the 2019-20 season resumes without fans, there’s no way to pull this off without just changing existing contracts which then becomes a major legal battle, no?

I know this is wayyyy above our responsibility level, but what would you do under the this season is cancelled and next season has no fans scenario? I know you mentioned no amnesty, no waiving of luxury tax, etc. So what would you do in this case (not necessarily what you predict will happen)?

[DBoys]

I basically feel like there is no solution if the season is cancelled and 2020-21 is played without fans then. Even if the 2019-20 season resumes without fans, there’s no way to pull this off without just changing existing contracts which then becomes a major legal battle, no?

I'm not sure what you mean by "legal battle." Yes, they are headed for a major re-do with the choices they are making. But it's not a lawsuit thing. It's just a case of them voiding the current CBA (which is the path they are heading towards right now, and which seems inevitable) which leads to a negotiation that's the same sort as any other new CBA. Existing player contracts technically are no longer valid at that point, until a new CBA is put in place (which will then provide specifications on what to do with those pre-CBA deals).

I know this is wayyyy above our responsibility level, but what would you do under the this season is cancelled and next season has no fans scenario? I know you mentioned no amnesty, no waiving of luxury tax, etc. So what would you do in this case (not necessarily what you predict will happen)?

That appears to be the road they are expecting. And since the current CBA (with its current contracts and cap) won't work for that scenario, that means this one becomes null and void and a new deal has to be negotiated (although they may end up with a new agreement that keeps much of it intact). I don't think they see any way around that.

As I noted before, I would try to keep things as close to the current setup as possible, and I think the escrow system (the hold back of salary to see whether revenue projections are met or not) could be the best mechanism to use to adjust for the inability to know in advance how the season will play out. I think that has the most potential for "life as is" in the middle of this storm. There would still be a ton of side issues to work through.

But once the existing CBA is discarded, it's all up for negotiation; neither side can simply pick to keep this and discard that - at that point, NOTHING really exists, and they have to mutually agree on whatever goes back into a new deal.