Decline in revenue could 'chill' NBA free agency, force most teams to pay tax

Teams located in the NBA's smaller markets fear that they may lose more than $20 million in revenue sharing next season, according to Adrian Wojnarowski of ESPN.

Smaller market franchises rely heavily on revenue sharing from those located in larger markets -- such as the Los Angeles Lakers and Clippers, Golden State Warriors and New York Knicks.

Along with revenue sharing, all teams depend on gate receipts, as NBA commissioner Adam Silver has said approximately 40 percent of the league's revenue is from game-night ticket sales.

But with the salary cap due to increase significantly, as many as 25 of the 30 teams could be paying luxury tax in 2021.

Some team executives fear the salary cap for next season could be slashed by 25 to 30 percent. 

The projected salary cap for the 2020-21 season is $115 million, Wojnarowski reported, with a luxury-tax threshold of $139.

This scenario is "something that would chill free agency and limit many organizations' ability to operate in a normal manner in the marketplace," Wojnarowski wrote.

"This (collective bargaining agreement) was not built for an extended pandemic," Silver told the players union, per Woj. "There's not a mechanism in it that works to properly set the cap when you've got so much uncertainty, when our revenue could be $10 billion or it could be $6 billion. Or less."