clock menu more-arrow no yes mobile

Filed under:

Oh hey, Suns might reduce payroll next season, actually

Due to incredible revenue losses from the pandemic, NBA teams may dramatically reduce spending next season

NBA: Indiana Pacers at Phoenix Suns Mark J. Rebilas-USA TODAY Sports

More than once over the past few weeks, national ESPN writer Brian Windhorst has mentioned with his podcast colleagues — you can find the Hoop Collective podcast on your favorite podcast app — that the Suns could be among the NBA teams who reduce spending due to the incredible losses being incurred due to the worldwide coronavirus pandemic.

The league has been hit hard by the pandemic, first by games being cancelled entirely and now by losing game-day revenue from fan attendance at games. Yes, I know that season tickets were already sold for the year, but a great deal of revenue also comes from game-day sales of remaining tickets, concessions, merchandise, etc. That’s all gone.

The revenue saved by the Orlando Bubble is the national and regional TV contracts, which comprise the majority of the other 60 percent of revenue.

The NBA salary cap is based on total revenues, with players being promised 50 percent of Basketball-Related Income (BRI)... and if you follow the prior paragraphs that could mean a 40 percent reduction of BRI in the 2020-21 season.

Yet, the league’s teams have already committed most of the expected BRI split in guaranteed contracts for the upcoming season and beyond under the current Collective Bargaining Agreement, though it’s not certain that will stay in place.

Just look at the Suns, who are already one of the more... shall we say financially prudent... teams in the league in terms of spending each year on the cap.

The Suns have already committed $90.41 million dollars to the 2020-21 season, but that number includes the No. 10 draft pick and three minimum-salary roster holds.

The actual MONEY committed in guaranteed contracts right now is $83.24 million. The eight-player depth chart of guaranteed salaries for 2020-21 is:

  • PG Ricky Rubio, Ty Jerome
  • SG Devin Booker, Jalen Lecque
  • SF/PF Kelly Oubre Jr., Mikal Bridges, Cameron Johnson
  • C Deandre Ayton

This $83.24 million number does NOT include any money for Dario Saric, Aron Baynes, Cameron Payne, Cheick Diallo, Elie Okobo, Jevon Carter or the No. 10 overall pick in the 2020 NBA Draft. Any or all of that could conceivably be jettisoned, though the Suns HAVE to have at least 13 players under contract once the season starts (five more than the current eight guaranteed)

For comparison purposes, it’s possible that the league brings in 40 percent less in actual money than expected in the 2020-21 season, if they never figure out how to bring fans into the their home arenas (though Adam Silver has repeatedly said they would push the season back if it meant safely bringing some number of fans to games). That would mean the player-share should go down 40 percent, which drops a player-share to less than $70 million.

So you can see the NBA owners’ dilemma. And again, the Suns’ commitment for 2020-21 has been ranked as among the fifth-LOWEST of all NBA teams, and yet even that might already be higher than the 50/50 split would otherwise cover. The owners’ share of the BRI is used not only to line owners’ pockets, but also to pay operating costs of running an NBA team. The actual yearly profit margin on an NBA team is reportedly relatively slim. Places like Forbes.com do the work to tell us that many teams actually lose money on annual basis. It’s the ultimate SALE price that makes the owners incredibly rich.

I am NOT here to defend Robert Sarver, and I am NOT here to tell you that cutting costs is the right thing to do.

I am NOT here to defend Robert Sarver, and I am NOT here to tell you that cutting costs is the right thing to do.

I am not here to defend anyone—

I’m simply telling you that on the grand scale, this is no different than you or I. If our salary gets cut in half, we are unlikely to keep spending like it hadn’t been. Obviously, it’s all a lot more complicated than that, but the sentiment is the same.

This is why NBA Commissioner Silver recently said they might postpone the 2020-21 NBA season as long as possible as he deals with two competing objectives:

  1. Waiting long enough to safely fill home arenas with fans while also...
  2. Still being able to play 70-plus games to keep the national and regional TV contracts intact.

If the NBA has to go into the 2020-21 season unable to include game-day receipts and ticket sales in the revenue numbers, you can expect that all 30 NBA teams will tamp down any unnecessary spending.

And yes, there’s a 100 percent chance that Robert Sarver and the Phoenix Suns will be one of the leaders in curbed spending.

What are Sarver’s required minimums? According to the CBA, he still has to meet these minimum objectives for the 2020-21 season:

  • 13 players on the roster (only 8 have guaranteed contracts at the moment)
  • spending at least 90% of the ‘salary cap’, whatever that turns out to be. Given that most teams have already committed $100+ million — and some of them a great deal more — for 2020-21, there’s no way the cap drops below $100 million no matter what revenues indicate.

There is no incentive for Sarver to gut the team.

But there’s also no incentive for him to use every possible avenue to spend big on new players either.

And now we get to wait and see.