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NBA salary cap and luxury tax expected to drop in 2020-21 season due to decreased revenue, per report

We haven’t even gotten to the All-Star break yet, but it’s never too early to start thinking ahead in the NBA. And based on the projections for the salary cap and luxury tax in the 2020-21 season, teams are going to have some extra work to do preparing for next season.

Due to a decline in revenue, the league has reportedly offered a warning to teams that the cap and tax numbers are going to drop next season. According to a report from Adrian Wojnarowski and Bobby Marks of ESPN, the cap could fall from a projected $116 million to $113 million. The official numbers will be released by the league in the coming days. 

The NBA has alerted teams to the impending release of adjusted 2020-2021 salary and luxury tax projections, signaling the likelihood that a decline in revenue will cause a drop in the figures, league sources tell ESPN.

The league office is expected to deliver revised projections as soon as Thursday, an accommodation that allows for teams to make more informed financial and roster decisions ahead of the February 6 trade deadline.

The advanced notice and pre-trade deadline timing of these looming projections, communicated in a recent league memo, is a departure from past protocol.

Back before the season began, Houston Rockets GM Daryl Morey tweeted out an image expressing support for protests that were going on in Hong Kong. That was met by a swift, emphatic backlash by Chinese authorities, and the fallout resulted in Rockets games being pulled from Chinese airwaves along with dropped sponsorships. 

The immediate aftermath was a PR nightmare for the NBA, and now its seeing the bill come due in the form of lower revenue. China is a huge market for the league, and even a slight drop in coverage is worth hundreds of millions of dollars for the league. 

A lower cap and luxury tax number for next season will obviously impact what teams do in the summer in terms of free agency, but the reason the league rushed the information out now is because it could also dictate what some teams do at the trade deadline. Furthermore, the lower numbers in those areas will have an impact on max salaries for players such as Ben Simmons and Pascal Siakam, as their contracts are tied to percentages of the cap. 

At this point it’s still too early to see how this will fully affect teams around the league, and we might not ever know the true impact, because we don’t know the thought process in every single front office. Still, it figures to play a role in decision making around the league moving forward over the next year. 

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