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The NBA and the players’ union have reached an agreement in principle to start the 2020-21 season, the two sides announced Monday evening.
The deal calls for free agency to begin Friday, November 20 at 6 p.m. ET, two days after next week’s NBA Draft.
As agreed last week, the regular season will begin on December 22 and the schedule will be 72 games.
The salary cap will be set at $ 109.1 million, and the luxury tax will be $ 132.6 million – the same numbers as in the 2019-20 season, before the league’s finances were cut. hard hit as a result of the ongoing COVID. 19 pandemic. Teams had expected both numbers to stay the same next season for some time now as it was better for teams and players to avoid a massive drop in the salary cap for next season due to the unexpected drop in income.
The salary cap will be guaranteed to increase by at least 3% per year – and by a maximum of 10% – during the remainder of the collective agreement.
The two sides also found a compromise on the escrow system to spread the losses over several seasons. The typical 10% escrow holdback will remain in place. If there is a need to cut player salaries by more than 10%, that loss will be spread over that season, as well as the next two – and players can never have more than 20% of their salary withheld in one. times. season. The hope on both sides is that future seasons will allow the league to return to normal financial conditions as the pandemic subsides.
Sources also said that, in an effort to ease the tax burden on teams who predicted the salary cap and luxury tax to continue to rise steadily, the NBA will reduce the luxury tax bill for teams at the end. of the 2021 season by the percentage decrease in the league’s basketball-related income compared to initial projections.
For example, if it goes from an expected $ 8.45 billion to $ 5.9 billion – a 30% drop – the Golden State Warriors’ projected luxury tax bill would be reduced by $ 60 million. to $ 42 million.
Another way the luxury tax break could benefit Golden State is to potentially use its $ 17.2 million trade exception generated by the Andre Iguodala swap last summer. If the Warriors were to acquire a player for that full amount in a trade, their tax bill would rise to $ 149 million. A league-wide revenue cut, however, could cut as much as $ 45 million from that total number.
Currently, four teams – the Warriors, Brooklyn Nets, Boston Celtics and Philadelphia 76ers – are subject to the luxury tax, although that number is likely to increase as the cap and tax will now remain. stable.
Teams likely won’t receive official league numbers until the end of the week, after a final deal is formally made. The league’s current trading moratorium is also set to be lifted early next week – shortly before the NBA Draft set to take place on November 18.
This will kick off a frenzied and compact offseason, with free will to begin shortly after the draft – all of this will happen less than two weeks before training camp begins on December 1.
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