Published 16:59 IST, July 28th 2020
NBA owners could lose nearly $50 MILLION if 2020-21 season continues without fans
While NBA salaries and the salary cap will take an inevitable hit, NBA owners could face a subsequent $50 million loss if an audience does not fill the arenas.
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As COVID-19 cases continue to rise, the NBA might have to continue playing games without fans attending even for the 2020-21 season. While NBA salaries and the salary cap will take an inevitable hit, NBA owners will face substantial losses if an audience does not fill up the arenas next season. Per recent reports, an anonymous owner revealed that their team could lose up to $50 million due to the COVID-19 pandemic.
NBA finances: NBA owners worried about potential revenue loss, including NBA salaries reduction
As the NBA restart is right around the corner, NBA owners are already looking to secure their finances before the 2020-21 season begins. Per ESPN's report, Golden State Warriors owner Joe Lacob is working on a deal with Goldman Sachs to raise around $250 million to bear the monetary burden. ESPN added that NBA owners are currently looking at and considering multiple sources that will allow them to raise money, including legal action against insurance companies withholding COVID-19 claims.
NBA Commissioner Adam Silver had previously told players that around 40% of the NBA revenue is generated from ticket sales and arena sponsorships. The league and the players' union are working together to make adjustments in the current Collective Bargaining Agreement (CBA) before the fast-approaching 2020-21 season.
The Warriors stand out amid other NBA owners and teams, where 80% of their revenue is derived from the Chase Center. They make $5 million from a home game, while others earn less than $1 million on average. That being said, the Warriors have also refrained from laying off any of their employees and are investing in technology and testing methods which could gather fans back at their home arena in time for the 2020-21 season. The aforementioned deal could help the team maintain their payroll for their stars – Stephen Curry, Klay Thompson, Andrew Wiggins and Draymond Green – who are set to earn over $22 million each next year. ESPN reported a statement by a team president, who said it is 'good' that the Warriors can raise money, as their team might have to trade players to 'deal with it'.
Also read | NBA teams could face upto $28.75 million penalty due to luxury tax problems: NBA finances
Another team executive hinted at first-round picks being sold during the draft, something which was last seen in 2013 by the Denver Nuggets, where Utah Jazz had selected Rudy Gobert. As NBA salaries and finances are bound to be affected, teams are reportedly looking to sell assets (including real estate), to generate more cash inflow. As of now, the Minnesota Timberwolves are already on sale.
One unidentified owner told ESPN that while no one knows "what till happen", they could "lose $50 million next season." He laid out three options for them if that happens – borrowing money from a third party, selling a part of the team or do a cash call where all partners will have to "write checks". Some owners are already moving to create revenue, as Brooklyn Nets owner Joe Tsai recently sold approximately 25% of his shares of Chinese company Alibaba, which were valued at $3.3 billion on July 10. Despite the rumours, he denied his plan to join a group to purchase MLB's New York Mets.
(Image source: AP)
16:59 IST, July 28th 2020