ESPN’s Adrian Wojnarowski and Bobby Marks reported last week that the Chinese government’s backlash to a tweet from an NBA general manager calling for freedom for the people of Hong Kong cost the league $150-200 million in revenue. That sounds like a whole lot of money. I mean, it is a whole lot of money.
But in the grand scheme of things, this is a blip for the NBA.
The league was projected to earn $6.089 billion in basketball-related income next season, per Larry Coon’s invaluable CBAFAQ.com. Even if the league lost the full $200 million, that’s 3 percent of the total revenue expected to be earned. It’s a meaningful chunk, and as an unexpected knock on league income it’s uncomfortable. Capitalists don’t like to see revenue decrease while costs continue to rise.
But the losses from the backlash won’t even make the team salary cap go down, even though the salary cap is calculated based off of league revenue. Despite the hit, league revenue is still projected to go up — just not by as much as originally forecasted. The team salary cap will go up by less than forward-looking teams originally thought. The luxury tax threshold (figured off of the salary cap) will go up by less than previously thought, but it will still go up. Starting levels for individual maximum player salaries will go up by less than previously thought, but they will still go up.
On the fringes, some teams might need to cut salary to get out of the tax they would have previously avoided. On a league-wide level, this will be a minor inconvenience for a few teams, and a barely perceptible smudge for the few high-end players (like Anthony Davis) who have a new max contract taking effect in 2020-21.
After all the caterwauling about how much the incident cost the NBA and its players and its teams, this is it?
There are some caveats. This doesn’t include sponsorship money lost by individual players, which don’t count in basketball-related income. And that $150-200 million may hit a few teams harder than others; particularly, the Rockets stand to suffer most.
The Chinese government’s reaction to Morey’s tweet (which he deleted and apologized for) has severely damaged the Rockets’ previously popular brand in the most populous nation on Earth. Tilman Fertitta may decide to fire him for that. His action led to a reaction that cost his boss real money. Bosses of the world typically react poorly to that. Fertitta couldn’t have fired Morey when the incident occurred without looking like a puppet for Xi Jinping. (That Fertitta is a Trumpist and President Donald Trump has been in an off-and-on, wholly bizarre trade war with Xi only complicates matters.) But after the season, assuming Houston doesn’t rally and win the title or make the NBA Finals, Fertitta can lose Morey for falling short with an expensive team starring one of the five best players on the planet.
If that happens, the rest of the league should rally to Morey instead of whispering jokes and knocks on him. Some team (maybe multiple teams) should immediately offer him a job with full personnel control and independence from ownership — his record of success (including building a team that nearly knocked off the KD-Steph Warriors!) speaks for itself. And this nonsense of colloquially calling the revenue hit from this episode the “Daryl deduction,” as ESPN’s Tim MacMahon claimed is happening, should end. The action is not to blame here. The extreme reaction is to blame.
All of that bemoaning for a minor salary cap blip for most teams? NBA executives can be so dramatic sometimes.