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Mystictiger
LSU Fan
Louisiana
Member since Jul 2015
2046 posts

NBA tax hypothetical: possibly Pels related
Hypothetical: If games are canceled, force majeure would reduce players’ “compensation,” which’d reduce their “salary,” which’d reduce their teams’ “team salary.” Which would give all NBA teams more cap room, and, for teams over the tax (e.g., Heat), reduce or eliminate their tax bills. It could also in turn put teams below the minimum threshold. Which the teams would have to pay their players the difference.

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THREAD: The CBA states that if NBA games are canceled, the force majeure provision is automatically invoked, which I believe could have various interesting and perhaps unintended consequences

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Every NBA team’s “Team Salary” includes the aggregate “Salaries” of all active players… (Art VII, Sec 4(a)(1)).

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Salary” (the singular of “Salaries”) means, with respect to a salary cap year, a player’s “Compensation” with respect to the season covered by such salary cap year… (Art I, Sec (lll)).

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Compensation” means the compensation that is or could be earned by, or is paid or payable to, an NBA player in accordance with a player contract (Art I, Sec (i)).

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If a “Force Majeure Event” (in this case, COVID-19) occurs, then, for each missed game that is canceled due to it, the “Compensation” payable to each player on the roster is reduced by 1/92.6th of the player’s “Compensation” (Art XXXIX, Sec 5).

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NBA teams have between 15 and 19 regular season, and for force majeure purposes 5.6 playoff, games left. So players would lose 16.2% to 20.5% of their salary if (big if) the rest of regular season is canceled (~$650M), and 22.2% to 26.6% if the playoffs are canceled too (~$850M).

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Team Salary” is what is used to determine how much cap room each team has (Art I, Sec (kkk)), and how far over the luxury tax line each team is (Art VII, Sec 12(f)).

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So… If games are canceled, force majeure would reduce players’ “compensation,” which’d reduce their “salary,” which’d reduce their teams’ “team salary.” Which would give all NBA teams more cap room, and, for teams over the tax (e.g., Heat), reduce or eliminate their tax bills.

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Minimum Team Salary” is equal to 90% of the “Salary Cap.” If any team’s “Team Salary” is below the "Minimum Team Salary" at the start of the last regular season game, the team has to pay its players the amount of the shortfall in a manner determined by NBPA (Art VII, Sec 2(b)).

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So… If games are canceled and force majeure is invoked, it could cause certain teams to fall below the minimum team salary, which could force those teams to pay their players the difference.

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The most fundamental principal of the CBA is the revenue split: For 2019-20, if revenue comes in at $5.302 billion or below, players get 49%. If it’s $5.307 billion, players get 50%. If it’s $6.418 billion or above, players get 51%. (Art VII, Sec 12(b)(3).)

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The NBA’s revenue split supersedes all (though, as I’ve previously noted, Art VII, Sec 12(h) doesn’t explicitly protect it). So if a minimum team salary payment is triggered for any team, it would effectively just redistribute players’ money.
This post was edited on 5/20 at 1:09 pm


shel311
Nicholls St. Fan
McKinney, Texas
Member since Aug 2004
76435 posts

re: NBA tax hypothetical: possibly Pels related
What's the question?


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touchdownjeebus
New Orleans Pelicans Fan
Member since Sep 2010
13959 posts

re: NBA tax hypothetical: possibly Pels related
The obvious answer is hookers and blow.


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21
oVo
New Orleans Saints Fan
Member since Dec 2013
9400 posts

re: NBA tax hypothetical: possibly Pels related
3.50


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30
TD SponsorTD Fan
USA
Member since 2001
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NOFOX
New Orleans Pelicans Fan
New Orleans
Member since Jan 2014
8791 posts

re: NBA tax hypothetical: possibly Pels related
Force majeur clause requires good faith negotiation on rule changes. They will work rule changes out with the players.


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10
cgrand
New Orleans Pelicans Fan
HAMMOND
Member since Oct 2009
21432 posts

re: NBA tax hypothetical: possibly Pels related
so, you just copy/pasted a long twitter thread, and then didnt ask a question.

good talk, russ


macatak911
New Orleans Pelicans Fan
Metairie, LA
Member since Sep 2007
10950 posts

re: NBA tax hypothetical: possibly Pels related
holy wall-o-text


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southdowns84
LSU Fan
Member since Dec 2009
530 posts

re: NBA tax hypothetical: possibly Pels related
Words.


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