NBA salary cap to take a $3M to $12M hit due to COVID-19, cap could remain at $109M

The COVID-19 pandemic put a pause on the sports world months ago, with leagues having to postpone their games and seasons. When sports returned, however, organizers had to continue their games without any audience in attendance. Paired with a lot of other factors, leagues all around the world faced a financial loss possibly worth millions. This includes the NBA, who were reported to face a decrease in their cap space, mainly due to the loss of revenue from selling tickets at venues. 

Also read | NBA teams like Lakers could face upto $28.75 million penalty due to luxury tax problems: Report

How much is the NBA cap space expected to decline?

League sources have put the decline in the cap at anywhere between $3 million and $12 million, per @Con_Chron

(h/t @basketballtalk ) pic.twitter.com/r4e97hayVs

— NBA Central (@TheNBACentral)

While the exact number is yet to be announced, reports state that sources don't expect a dip below $109 million. Some reports hint at a relatively similar number as the 2019-20 season, while some think there could be a $3 million to $12 million decline. As of now, the projected salary cap for the upcoming season is $115 million. 

According to ESPN, teams are confident that the salary cap won't be below $109 million. That means it could climb to $111 million. Teams are also reportedly aiming for the tax level to rise to $139 million, while the hard-cap line (or the apron) touches $145 mullion. If a flat luxury tax is low, free agency and trade will freeze, as only teams with cap space will be able to strike a deal. This might also be the first time the salary cap is not derived with the help of the season's basketball-related income (BRI). 

Also read | NBPA not expecting major drop in $115 million NBA salary cap despite likely losses

One thing that is unanimous is that teams are lobbying for the tax level to come in at $139M and apron at $145M.

If the tax stays flat at $132.7M, FA and the trade market essentially will become frozen.

A flat tax would only benefit the teams with cap space.

— Bobby Marks (@BobbyMarks42)

Reports add that the NBA and National Basketball Players Association (NBPA) are currently deciding on which team will land more cap space. As of now, the Atlanta Hawks, New York Knicks, Detroit Pistons and Charlotte Hornets are expected to have the most cap space before the 2020-21 season begin. Depending on what number is decided, cap space could open up for the Miami Heat, Phoenix Suns and the New Orleans Pelicans. 

Also read | NBA salary cap set for drastic hit from current $109.1 million next season

NBA salary cap 2020-21 impact on NBA contracts

Big teams, who have more expensive contracts signed, will definitely want to lower the luxury-tax. This includes teams like the Golden State Warriors and Los Angeles Lakers, who currently have signed the highest NBA contracts. However, as teams like the Hawks will have a lot of cap space, they will not spend enough to reach the luxury tax line – which is distributed among teams. While the NBA 2019-20 season ended in October, the next season could begin before Christmas on December 22. 

Also read | LeBron James among NBA players in Forbes list of highest-paid NBA athletes: Highest paid NBA player

(Image credits: AP)