Teams are prepping scenarios where the cap is 10-15% lower due to the NBA situation with China

[Duke4life831]

So there is a chance that the NBA grows a spine and stands up against China?!

Go NBA, i think you are still the most progressive league out there, now you just need a leader (Maybe LeBron) to push Silver to do the right thing.

Lebron has been silent on this issue. This also isn't the NBA growing a spine and standing up to China. Why do you think the NBA has been getting blasted publicly over the past week. All we have seen so far is the Chinese government flexing its muscles and Adam Silver saying he's going to try his best to fix this relationship.

If the NBA was truly this super progressive league, they would've been the ones to end their relationship with China, not the other way around. NBA would be/will be in bed with China as long as they possibly can.

[MrDollarBills]

Honestly, Darryl Morey really does deserve to be fired for this. I wouldn't want the Rockets to do it for several reasons, but he really did some serious damage here.

My friend. He posted a tweet. If I call you ugly and you hit me in the face - or, to make the analogy more appropriate, you blast me in the face with a rocket launcher - who is responsible for the violence?

hey now, I said I wouldn't want the Rockets to fire him because I believe that he had good intentions behind it, and most important of all I find the idea that the CCP can dictate American free speech to be a non starter. But being objective here, his actions are a fireable offense because the fallout not only impacted the Rockets but it is being felt league wide. He put the entire league in a lose/lose situation.

[JonFromVA]

Honestly, Darryl Morey really does deserve to be fired for this. I wouldn't want the Rockets to do it for several reasons, but he really did some serious damage here.

My friend. He posted a tweet. If I call you ugly and you hit me in the face - or, to make the analogy more appropriate, you blast me in the face with a rocket launcher - who is responsible for the violence?

It's tricky because words have repercussions even if they were said as a private individual and not as the GM of the Rockets; but we should judge those words by our culture.

Taken that way, I would not fire Morey. I think he has every right to stick up for the Hong Kong protestors in an informed or ill-informed manner in the context of them seeking freedom and democracy. If he was saying something that could be construed as approving acts of criminal violence, hatred, or terror; then by all means he should and would be canned.

Doing business in China is high-risk. Everyone knows this. If both sides prefer money to words, though, they'll eventually set it aside.

[Buzzard]

So there is a chance that the NBA grows a spine and stands up against China?!

Go NBA, i think you are still the most progressive league out there, now you just need a leader (Maybe LeBron) to push Silver to do the right thing.

Lebron has been silent on this issue. This also isn't the NBA growing a spine and standing up to China. Why do you think the NBA has been getting blasted publicly over the past week. All we have seen so far is the Chinese government flexing its muscles and Adam Silver saying he's going to try his best to fix this relationship.

If the NBA was truly this super progressive league, they would've been the ones to end their relationship with China, not the other way around. NBA would be/will be in bed with China as long as they possibly can.

All the media outlets, including ESPN, have been calling for the NBA to pull out. It does not look like that is going to happen. Like you said, staying there is bowing down; and that is exactly what the NBA is doing for the almighty dollar ( 10-15 % ).

[Duke4life831]

Honestly, Darryl Morey really does deserve to be fired for this. I wouldn't want the Rockets to do it for several reasons, but he really did some serious damage here.

My friend. He posted a tweet. If I call you ugly and you hit me in the face - or, to make the analogy more appropriate, you blast me in the face with a rocket launcher - who is responsible for the violence?

I mean I get what he's saying. Not speaking from a moral perspective, but from a business perspective. There is a chance NBA loses China as a market (I still believe Silver will do whatever it takes to fix this and probably will). If the NBA loses China, we are talking about a business losing billions of dollars.

Again not speaking morally, but most of the time when one individual loses a business billions of dollars, that dude is getting canned.

[CptCrunch]

Some more back of napkin math/thoughts.

1. Player salaries are fixed, so there are only 3 edge case players who will be hurt by this: Lillard, Murray and Simmons (yes, other players will be hurt but they will be signing smaller contracts with accurate numbers on paper before they dot the i's, not the Lillard thought he was getting 196m, but might only end up with 166m situation). Players will now get 52.6 to 54.1% of the total league revenue based on a 10-15% projected revenue decrease. This might cause some teams will cry and force a CBA negotiation. Last time the CBA was renegotiated, we went down from 57% to a target of 50%.

2. This will doubly hurt the teams. Roughly speaking, the NBA had a revenue of 8 Billion last year. The league payed 51% in revenue as salary. The average earnings before interest, tax, depreciation and amortization was 61 million (or 1.8 Billion total) last season, which means the total NBA operational and fixed cost was a grand total of around 2 Billion. These costs and salary costs (unless renegotiated as mentioned above) are going to be fixed even if revenue goes down meaning any decrease in revenue will come out of the pockets of the owners. This means the average owner is going to lose 26 million to 40 million on average resulting in an average EBITA between 21 and 35 million this year assuming a 10-15% decrease in revenue.

61m average to 21 to 35m. This is basically a 43 to 66% decrease in earnings. Also this is EBITA, not profit. Only half the NBA teams make money anyways. My conjecture is that at least 20 teams will lose money this year if the cap drops by 10-15%.

[Duke4life831]

So there is a chance that the NBA grows a spine and stands up against China?!

Go NBA, i think you are still the most progressive league out there, now you just need a leader (Maybe LeBron) to push Silver to do the right thing.

Lebron has been silent on this issue. This also isn't the NBA growing a spine and standing up to China. Why do you think the NBA has been getting blasted publicly over the past week. All we have seen so far is the Chinese government flexing its muscles and Adam Silver saying he's going to try his best to fix this relationship.

If the NBA was truly this super progressive league, they would've been the ones to end their relationship with China, not the other way around. NBA would be/will be in bed with China as long as they possibly can.

All the media outlets, including ESPN, have been calling for the NBA to pull out. It does not look like that is going to happen. Like you said, staying there is bowing down; and that is exactly what the NBA is doing for the almighty dollar ( 10-15 % ).

I could see the NBA pulling out if they started getting pressure from their big time sponsors to pull out. But the thing is, all the big businesses that have money tied up in the NBA have business deals with China and they wouldn't want to get tossed in this mess either.

I think the NBA's plans and hopes are, within a month or so all the heat will die down (it will because we have short attention spans and most news cycles don't last more than a week). Once it dies down, I'm sure the NBA will try to make a deal with them. More big name teams playing regular season games over there in the future, more NBA sponsored events over there and so on. We will never hear about it, but we will also forget about all of this and we will continue to see games and events being held in China.

[JonFromVA]

Honestly, Darryl Morey really does deserve to be fired for this. I wouldn't want the Rockets to do it for several reasons, but he really did some serious damage here.

My friend. He posted a tweet. If I call you ugly and you hit me in the face - or, to make the analogy more appropriate, you blast me in the face with a rocket launcher - who is responsible for the violence?

hey now, I said I wouldn't want the Rockets to fire him because I believe that he had good intentions behind it, and most important of all I find the idea that the CCP can dictate American free speech to be a non starter. But being objective here, his actions are a fireable offense because the fallout not only impacted the Rockets but it is being felt league wide. He put the entire league in a lose/lose situation.

I don't think so ... as long as he wasn't speaking as the GM of the Rockets he has a right to his own personal opinions as long as those opinions do not conflict with whatever personal morality and ethics are expected of him.

I mean if he tweeted that "shooting cops before they could shoot you was a good idea", he would be fired.

Now, maybe the Chinese government sees no difference, but that's not really the standard we as American's should be held to.

[Buzzard]

Lebron has been silent on this issue. This also isn't the NBA growing a spine and standing up to China. Why do you think the NBA has been getting blasted publicly over the past week. All we have seen so far is the Chinese government flexing its muscles and Adam Silver saying he's going to try his best to fix this relationship.

If the NBA was truly this super progressive league, they would've been the ones to end their relationship with China, not the other way around. NBA would be/will be in bed with China as long as they possibly can.

All the media outlets, including ESPN, have been calling for the NBA to pull out. It does not look like that is going to happen. Like you said, staying there is bowing down; and that is exactly what the NBA is doing for the almighty dollar ( 10-15 % ).

I could see the NBA pulling out if they started getting pressure from their big time sponsors to pull out. But the thing is, all the big businesses that have money tied up in the NBA have business deals with China and they wouldn't want to get tossed in this mess either.

I think the NBA's plans and hopes are, within a month or so all the heat will die down (it will because we have short attention spans and most news cycles don't last more than a week). Once it dies down, I'm sure the NBA will try to make a deal with them. More big name teams playing regular season games over there in the future, more NBA sponsored events over there and so on. We will never hear about it, but we will also forget about all of this and we will continue to see games and events being held in China.

About the worse case domestic scenario is if some of the grass roots human rights groups start protesting outside NBA games. The NBA could stomach a PR hit like that far better than the players. Otherwise this goes away, either with China taking the NBA back in or without them.

[YogurtProducer]

Well this is propaganda and BS at its finest. It would never be 10 x 15% first off.ll but and it would never happen en masse by teams two days later. And how can anyone believe this trash....it’s just another reason to shut down people’s free speech.

Two days later.. in October... teams prepping scenarios for caps situation over a year years away. ... and nobody asked if this would be an insane overreaction? honestly, could we have any kind of critical thinking before posting trash.

That’s how the price of gas is set as well. It’s called the speculative market. It’s like when Iran bombed the Saudi oil fields, the speculation was that the world supply of oil would be reduced therefore the price of gas at the pump immediately went up about 50 cents per gallon. The Saudis brought their productions back to normal in two weeks with a minimal to impact to actual supply production, but the price of gas remains high.

NBA teams are not futures Chicago or stocks tracked on the Dow or S&P, nor would their yearly financial projections, budgets, and most importantly cap space projections which have nothing to do with either of those... require revising after 48 hours with no known outcome.

You quite underestimate how fine tunes nba teams are. They are 100% forecasting the potential effects of losing the Chinese market. I guarantee it is gonna lead to teams being more conservative with extensions right now. In the case of Toronto; they would be foolish to extend Siakam today knowing that the cap might decrease 10-15% and they can sign him 10-15% cheaper if they simply wait for this to unfold.

The cap is tied to basketball revenue. If China backs out of the NBA immediately those in tuned with how BRI is calculated would be able to project these potential salary cap hits very quickly.

[xdrta+]

Some more back of napkin math/thoughts.

1. Player salaries are fixed, so there are only 3 edge case players who will be hurt by this: Lillard, Murray and Simmons (yes, other players will be hurt but they will be signing smaller contracts with accurate numbers on paper before they dot the i's, not the Lillard thought he was getting 196m, but might only end up with 166m situation). Players will now get 52.6 to 54.1% of the total league revenue based on a 10-15% projected revenue decrease. This might cause some teams will cry and force a CBA negotiation. Last time the CBA was renegotiated, we went down from 57% to a target of 50%.

2. This will doubly hurt the teams. Roughly speaking, the NBA had a revenue of 8 Billion last year. The league payed 51% in revenue as salary. The average earnings before interest, tax, depreciation and amortization was 61 million (or 1.8 Billion total) last season, which means the total NBA operational and fixed cost was a grand total of around 2 Billion. These costs and salary costs (unless renegotiated as mentioned above) are going to be fixed even if revenue goes down meaning any decrease in revenue will come out of the pockets of the owners. This means the average owner is going to lose 26 million to 40 million on average resulting in an average EBITA between 21 and 35 million this year assuming a 10-15% decrease in revenue.

61m average to 21 to 35m. This is basically a 43 to 66% decrease in earnings. Also this is EBITA, not profit. Only half the NBA teams make money anyways. My conjecture is that at least 20 teams will lose money this year if the cap drops by 10-15%.

Not sure what you mean by only 3 players. Every player with a maximum contract, meaning it is a percentage of the cap, stands to have salary downsized if the cap decreases. No player can earn more than the maximum salary, according to his veteran status, for the year, which is determined by the size of the cap. If the cap decreases those salaries will be adjusted.

[Michael Jordan]

Wiggins is reportedly devastated that his next max contract will be 10% less

[Johnny Bball]

That’s how the price of gas is set as well. It’s called the speculative market. It’s like when Iran bombed the Saudi oil fields, the speculation was that the world supply of oil would be reduced therefore the price of gas at the pump immediately went up about 50 cents per gallon. The Saudis brought their productions back to normal in two weeks with a minimal to impact to actual supply production, but the price of gas remains high.

NBA teams are not futures Chicago or stocks tracked on the Dow or S&P, nor would their yearly financial projections, budgets, and most importantly cap space projections which have nothing to do with either of those... require revising after 48 hours with no known outcome.

You quite underestimate how fine tunes nba teams are. They are 100% forecasting the potential effects of losing the Chinese market. I guarantee it is gonna lead to teams being more conservative with extensions right now. In the case of Toronto; they would be foolish to extend Siakam today knowing that the cap might decrease 10-15% and they can sign him 10-15% cheaper if they simply wait for this to unfold.

The cap is tied to basketball revenue. If China backs out of the NBA immediately those in tuned with how BRI is calculated would be able to project these potential salary cap hits very quickly.

There is no way there are doing it at this stage when the fallout isn't even defined, if truly there even will be any. And there are stil going to be paid the revenue form the TV deal. Nothing changes but what ... jerseys? Streaming maybe? None of that is consequential. I just firmly of of the mind that this tweet talking about this is a big pile of it is all.

[CptCrunch]

Some more back of napkin math/thoughts.

1. Player salaries are fixed, so there are only 3 edge case players who will be hurt by this: Lillard, Murray and Simmons (yes, other players will be hurt but they will be signing smaller contracts with accurate numbers on paper before they dot the i's, not the Lillard thought he was getting 196m, but might only end up with 166m situation). Players will now get 52.6 to 54.1% of the total league revenue based on a 10-15% projected revenue decrease. This might cause some teams will cry and force a CBA negotiation. Last time the CBA was renegotiated, we went down from 57% to a target of 50%.

2. This will doubly hurt the teams. Roughly speaking, the NBA had a revenue of 8 Billion last year. The league payed 51% in revenue as salary. The average earnings before interest, tax, depreciation and amortization was 61 million (or 1.8 Billion total) last season, which means the total NBA operational and fixed cost was a grand total of around 2 Billion. These costs and salary costs (unless renegotiated as mentioned above) are going to be fixed even if revenue goes down meaning any decrease in revenue will come out of the pockets of the owners. This means the average owner is going to lose 26 million to 40 million on average resulting in an average EBITA between 21 and 35 million this year assuming a 10-15% decrease in revenue.

61m average to 21 to 35m. This is basically a 43 to 66% decrease in earnings. Also this is EBITA, not profit. Only half the NBA teams make money anyways. My conjecture is that at least 20 teams will lose money this year if the cap drops by 10-15%.

Not sure what you mean by only 3 players. Every player with a maximum contract, meaning it is a percentage of the cap, stands to have salary downsized if the cap decreases. No player can earn more than the maximum salary, according to his veteran status, for the year, which is determined by the size of the cap. If the cap decreases those salaries will be adjusted.

Except your understanding is wrong. A player's contract is the 25%/35% of the salary cap on the year it goes into effect. Subsequent years are 1.05% of the previous year and is exempt from the max salary.

Only these 3 are affected negatively because they are the only players who signed max percentage based contracts that do not start in the 2019/2020 season.

[MrDollarBills]

So there is a chance that the NBA grows a spine and stands up against China?!

Go NBA, i think you are still the most progressive league out there, now you just need a leader (Maybe LeBron) to push Silver to do the right thing.

Lebron has been silent on this issue. This also isn't the NBA growing a spine and standing up to China. Why do you think the NBA has been getting blasted publicly over the past week. All we have seen so far is the Chinese government flexing its muscles and Adam Silver saying he's going to try his best to fix this relationship.

If the NBA was truly this super progressive league, they would've been the ones to end their relationship with China, not the other way around. NBA would be/will be in bed with China as long as they possibly can.

Do you really want Lebron James to start talking **** about the CCP while he is in China?

You do realize that authoritarians don't give a damn, right?

Some of you are really asking for a lot here.

[MrDollarBills]

Wiggins is reportedly devastated that his next max contract will be 10% less

Wiggins will be lucky to get the MLE on his next deal at this rate.

[MrDollarBills]

My friend. He posted a tweet. If I call you ugly and you hit me in the face - or, to make the analogy more appropriate, you blast me in the face with a rocket launcher - who is responsible for the violence?

hey now, I said I wouldn't want the Rockets to fire him because I believe that he had good intentions behind it, and most important of all I find the idea that the CCP can dictate American free speech to be a non starter. But being objective here, his actions are a fireable offense because the fallout not only impacted the Rockets but it is being felt league wide. He put the entire league in a lose/lose situation.

I don't think so ... as long as he wasn't speaking as the GM of the Rockets he has a right to his own personal opinions as long as those opinions do not conflict with whatever personal morality and ethics are expected of him.

I mean if he tweeted that "shooting cops before they could shoot you was a good idea", he would be fired.

Now, maybe the Chinese government sees no difference, but that's not really the standard we as American's should be held to.

I 100% agree that he has a right to his own opinions and to express them. However, knowing the gravity of his situation, being the GM of a franchise who is heavily in bed with the Chinese Government, he clearly did not think rationally before tweeting that picture out.

I say this all the time, regardless if I agree with the person or not (and I agree with him): Freedom of speech always comes with consequences.

[Duke4life831]

So there is a chance that the NBA grows a spine and stands up against China?!

Go NBA, i think you are still the most progressive league out there, now you just need a leader (Maybe LeBron) to push Silver to do the right thing.

Lebron has been silent on this issue. This also isn't the NBA growing a spine and standing up to China. Why do you think the NBA has been getting blasted publicly over the past week. All we have seen so far is the Chinese government flexing its muscles and Adam Silver saying he's going to try his best to fix this relationship.

If the NBA was truly this super progressive league, they would've been the ones to end their relationship with China, not the other way around. NBA would be/will be in bed with China as long as they possibly can.

Do you really want Lebron James to start talking **** about the CCP while he is in China?

You do realize that authoritarians don't give a damn, right?

Some of you are really asking for a lot here.

No I dont and I never said I did. All Im saying is LeBron or any player hasn't showed any form of standing up to China in this instance. The NBA has not shown to be a super progressive organization fighting against China in this situation. Again if the NBA was the progressive league people claim that they are, they wouldnt have waited for China to threaten to end their relationship, they would've already done it a long time ago.

I only brought up LeBron because LeBron was brought up in the post I quoted saying maybe a leader like LeBron is needed to push Silver to do the right thing. LeBron hasn't shown to be pushing Silver to do the right thing in this situation is all I was saying.

[MrDollarBills]

Honestly, Darryl Morey really does deserve to be fired for this. I wouldn't want the Rockets to do it for several reasons, but he really did some serious damage here.

My friend. He posted a tweet. If I call you ugly and you hit me in the face - or, to make the analogy more appropriate, you blast me in the face with a rocket launcher - who is responsible for the violence?

I mean I get what he's saying. Not speaking from a moral perspective, but from a business perspective. There is a chance NBA loses China as a market (I still believe Silver will do whatever it takes to fix this and probably will). If the NBA loses China, we are talking about a business losing billions of dollars.

Again not speaking morally, but most of the time when one individual loses a business billions of dollars, that dude is getting canned.

Yeah, from a moral perspective Morey should not be fired. But putting myself in NBA leadership's shoes I absolutely would think that what he did is a fireable offense for putting the league in a perilous position.

Morey meant no harm, but he didn't think things through before committing to his actions. Adam Silver probably wants to strangle him because he's going to be the one taking the beating here.

[MrDollarBills]

Lebron has been silent on this issue. This also isn't the NBA growing a spine and standing up to China. Why do you think the NBA has been getting blasted publicly over the past week. All we have seen so far is the Chinese government flexing its muscles and Adam Silver saying he's going to try his best to fix this relationship.

If the NBA was truly this super progressive league, they would've been the ones to end their relationship with China, not the other way around. NBA would be/will be in bed with China as long as they possibly can.

Do you really want Lebron James to start talking **** about the CCP while he is in China?

You do realize that authoritarians don't give a damn, right?

Some of you are really asking for a lot here.

No I dont and I never said I did. All Im saying is LeBron or any player hasn't showed any form of standing up to China in this instance. The NBA has not shown to be a super progressive organization fighting against China in this situation. Again if the NBA was the progressive league people claim that they are, they wouldnt have waited for China to threaten to end their relationship, they would've already done it a long time ago.

I only brought up LeBron because LeBron was brought up in the post I quoted saying maybe a leader like LeBron is needed to push Silver to do the right thing. LeBron hasn't shown to be pushing Silver to do the right thing in this situation is all I was saying.

I think that Adam Silver has already done the right thing by apologizing and also standing up for Morey's right to freedom of speech. Personally, I would have pulled the Lakers and Nets out of China 48 hrs ago but that's easier said than done. Also, the owners are probably pushing him to smooth this situation over in a way that pleases both China and public perception back home....I don't envy his position, but that's why he's paid the big bucks