The NBA announced a COVID-19-induced hiatus on March 11 after Utah Jazz's Rudy Gobert became the first NBA player to test positive for coronavirus. Since coronavirus cases have been rising since, the NBA suspension will continue until the league finds a safe way to resume the 2019-20 season. With games being missed, the league will be facing a loss, especially if the season gets cancelled.
While the NBA's total loss of revenue due to the NBA suspension can not be calculated just yet, reports have confirmed that next season's salary cap will be drastically reduced. As per ESPN, an unidentified team has stated that the salary cap could decline by $25 million to $30 million. Next season's salary cap was projected to be $115 million, with the luxury tax line at $132 million.
A $25 million reduction would result in the NBA salary cap dropping below its 2016-17 level. That season, the salary cap was $94.1 million while the luxury tax line was $113.3 million. A lowered salary cap for next season would, therefore, result in problems for free agents. Giannis Antetokounmpo, who can opt for a five-year extension with the Milwaukee Bucks after this season could be declined a max salary should the NBA salary cap suffer a major hit.
As the lowered salary cap will ultimately affect teams who have high payrolls, specifically those with a luxury tax. Teams that exceed the set tax limit ($132.6 million), will face penalties based on how much a team exceeds the limit. For example, if a team is $1 million over the tax limit, they will have to pay $1.5 million in luxury tax. While teams under the luxury cap line will pass the penalties, teams like the Philadelphia 76ers will have to face the maximum penalty.