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Even though the current NBA season is still technically suspended due to the coronavirus pandemic, its return this year seems less and less likely with each passing day.
Team executives are starting to feel the pressure, frustrated with the lack of information from the league and pushing for an outright cancellation of the season so everyone can focus on safely resuming play next season.
NBA team executives and players’ agents spoke to CNBC in recent weeks about the challenges in resuming play. They said team owners are concerned with liability issues and are conflicted about whether or not to give up on the current season. The individuals spoke on condition of anonymity as they aren’t authorized to discuss league matters publicly.
Billions of dollars are on the line if the NBA can’t rescue its season. NBA teams split the roughly $2 billion per year in national TV money the NBA receives from ESPN and Turner Sports. But clubs also gain revenue from local media deals with Regional Sports Networks.
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If the NBA cancels the remainder of the regular season, leaving open the possibility of only a postseason, it hurts nonplayoff teams who want to collect the remainder of local TV dollars. But nonplayoff team owners would also benefit as they don’t incur the costs associated with resuming under postseason formats.
The NBA’s revenue sharing system among teams is confusing even to executives. Despite their massive media rights deal, teams are still reporting losses. One of the individuals said a Western Conference team has already lost roughly $50 million this season and doesn’t have much incentive to restart the season anymore.
And team owners already mitigated their biggest cost: player contracts. The league and National Basketball Players Association agreed to withhold 25% of players’ checks starting next month. With that settled, team executives say many owners have no desire to return, saying the league’s other sources of revenue has temporarily dried up.
“What [owners] are saying is, ‘If we return, where is the revenue that is going to justify the additional cost of returning?” one team executive said. “They are looking at the cost side versus the revenue side. What revenue comes in now?”
Also, NBA clubs have many limited partners who are taking losses.
“These owners aren’t just sitting there with an ATM that’s printing more than ever before,” said Andy Dolich, the Memphis Grizzlies former president of business operations. “Some of them are looking at vast losses outside of just their basketball team.”
Though the NBA was first to pause operations due to Covid-19 last month, team executives also criticized the league office over a lack of information, like the recent plan to allow players to return to practice sites.
Despite all the signals that it will be nearly impossible to rescue the rest of the NBA season, a league spokesperson told CNBC the league is still working on plans to resume.
“It is the responsibility of the league office to explore all options for a return to play this season,” the spokesperson told CNBC in a statement. “We owe that to our fans, teams, players, partners and all who love the game. While our top priority remains everyone’s health and well-being, we continue to evaluate all options to finish this season. At the same time, we are intensely focused on addressing the potential impact of Covid-19 on the 2020-21 season.”
Calls to cancel
With so much uncertainty still surrounding coronavirus, agents are also privately calling on NBA Commissioner Adam Silver to cancel the remainder of the season.
“I’m surprised because [Silver] always errs on the side of caution and doing what’s right,” said one agent, who added he felt Silver would have decided to cancel by now.
Player representatives have also questioned why the league continues to drag on what appears to be an inevitable cancellation of the season. With so many concerns the league must address, including how to deal with trigger dates in coaches and player contracts, few see the upside.
And should the NBA get its own house in order, challenges from the government await.
In an interview with The New York Times this week, Dr. Anthony Fauci, the White House’s health advisor on the coronavirus pandemic, said he doubts most sports will be able to return this year.
“If you can’t guarantee safety, then unfortunately you’re going to have to bite the bullet and say, ‘We may have to go without this sport for this season,'” Fauci said.
Team executives said the league office hasn’t considered more ideas about next season, especially since some local and state governments are threatening to ban live events until 2021. Some large companies such as Facebook and Microsoft have canceled plans to hold large, in-person events until as late as July 2021.
The hallway outside the locker room is empty at the Amway Center in Orlando, home of the NBA’s Orlando Magic, on Thursday, March 12, 2020.
Stephen M. Dowell | Orlando Sentinel | Tribune News Service via Getty Images
In his post-board of governors media call on April 17, Silver said owners want to save the year, including regular-season games, “almost” viewing the challenge as a “civic obligation.” But it’s the NBA that also wants to recover some of what Silver said is now “zero revenue.”
Sports marketing executive Marty Conway estimated the NBA would lose over $1 billion if it cancels the rest of the season, factoring in media, corporate sponsorship and game-day revenues.
“You’d be looking a billion dollar hole that would then play into next year’s salary cap,” said Conway, a professor at Georgetown University’s McDonough School of Business.
The NBA is signaling that it doesn’t want to take the financial hit that comes with canceling the season.
According to one of the individuals, another proposal is to restart games in July. The model points to the defunct Orlando Summer League, where fans weren’t allowed, as a potential way to honor any social distancing guidelines.
But it only adds to the many other models tossed around — from a tournament in Las Vegas, to playing in protected bubble environments, to considering Florida, a state that considered the WWE an “essential” business.
Longtime sports television executive Neal Pilson questioned the perception suspended leagues like the NBA are sending by still considering plans to resume.
“You’re saying, ‘You guys go ahead and risk getting the disease, as long as we have TV money,'” he said, echoing that restarting involves has too many “risk factors.” Pilson also predicted a summer with limited sports due to Covid-19.
“Are we going to know enough on May 1 or June 1, to schedule live sports on July 1 or Aug. 1?” Pilson said. “I doubt we will know enough in the next 30 to 60 days to project live sports.”
If the NBA does cancel, it could have an impact on how the National Football League moves forward. NFL Commissioner Roger Goodell said in a memo to employees Wednesday that the league plans to cut pay and furlough workers due to the financial strain caused by the pandemic.
“How can we start if [the NBA] didn’t get to finish their sport?” an NFL league insider told CNBC. “The NBA finishing their season would be a positive for all sports getting back to work.”