National Basketball Association players have agreed to a 25% reduction in their salaries while games are on hold because of the Coronavirus.
Under terms of the agreement, ratified today by the owners and players’ association, the withholding will begin with the May 15 paychecks.
The funds will be held in escrow until it’s known how many games, if any, are ultimately lost.
The NBA on March 11 became the first major U.S. sports league to pause its regular season, taking the step after a Utah Jazz player tested positive for the virus that has killed more than (140,000) people.
Even though the season was halted, NBA players had been receiving their full salaries through their April 15 paychecks. Under the Force Majeure clause in the NBA’s collective bargaining agreement, which specifically includes epidemics, owners can withhold about 1% of a player’s salary for each game that isn’t staged. The NBA’s regular season is 82 games.
By agreeing to the withholding, the players would spread any lost salary over time instead of having checks stop immediately. Most players are compensated on a 12-month basis.
The league is considering several options that would allow it to resume the regular season or, in the alternative, some semblance of a postseason, which accounts for a significant portion of annual revenue.
The league already holds 10% of players’ salaries in escrow, which is redistributed after an audit following the season. Under the labor contract players receive 51% of what’s called basketball-related income.
Scott Soshnick is the editor-in-chief of Sportico, Penske Media’s new sports business platform.