Financial impact of cancellation
McHale is spot on here as it pertains to the league’s TV dollars, which is where the brunt of the NBA’s profits come from. Prior to the 2016-17 season, both ESPN and TNT upped their contracts to roughly $24 billion, and you’d certainly have to believe they’d expect some sort of return on that investment.
It’s not far-fetched to believe that not having playoffs would lead the networks to request their money back, and it would be a fair request if the league does in fact cancel. And how exactly would the league be able to handle the profit loss from the networks?
The short answer is that they wouldn’t be able to, as we’ve already heard owners speaking out about how the league’s inactivity has affected their profits. Beyond that, many of these owners have had diminished revenue on their outside businesses due to the coronavirus pandemic.
The league has already had to deal with the issue of paying the players’ salaries during these times, as they requested that the players take a 50 percent salary reduction, although the players agreed on 25 percent. The financial concerns extend beyond just the salaries, however, as there will be challenges of being without fans if the league is forced to go that direction next season due to the coronavirus.
To this point, many small market teams believe they’ll lose north of $20 million in revenue sharing next season, which is a grim reality. In addition, the league is expected to have a lower salary cap next season, which would prove to be problematic for players who inked max contracts last offseason. Although the Houston Rockets don’t have anyone in that situation, they’ll certainly be affected by a cancellation, as one league executive estimated that each team would lose an average of $40 million in the event of a cancellation.
All told, the league could lose roughly one billion in revenue if the coronavirus pandemic were to force a cancellation, which echoes the same figures McHale referenced. For this reason, we should expect the league to exhaust all efforts to attempt a return to action, and especially if the players want to play.