NBA Teams want to cancel 2020 Season
Key Points
- Team executives said the NBA should cancel the remainder of the 2019-20 season due to Covid-19, citing health concerns, extra time to plan for a new year.
- The NBA became the first major U.S. league to postpone its season last month due to the pandemic.
- The NBA said it’s still considering options to rescue the rest of the season and announced plans this week to open practice facilities.
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.
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.”
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