A Force Majeure Clause Could Cause NBA Players to go Without Pay During COVID-19 Crisis
March 30, 2020
The sports world came to a screeching halt amongst COVID-19 concerns and bans on crowds. The National Basketball Association (“NBA”) led this charge when several players tested positive for COVID-19. The pandemic shut down of the NBA has contractual implications for all players. NBA players may also go without pay due to the force majeure clauses in the NBA’s collective bargaining agreement.
Article XXXIX, Section 5 of the NBA’s Collective Bargaining Agreement (“CBA”), contains the force majeure clause, designed to protect the NBA’s duties under the contract in case of an unavoidable catastrophe that prevents the NBA from fulfilling its contractual obligations. Under the CBA force majeure, the NBA has the ability to terminate the CBA after 60 days if events such as wars, terrorism, explosions, epidemics, natural disasters, or governmental orders or actions make it impossible for the NBA to perform under the contract, frustrates the purpose of the agreement, or makes it economically impracticable for the NBA to fulfill its obligations under the agreement. The clause continues, stating that teams are able to reduce players’ pay if the games during the force majeure period are not rescheduled and played. The pay is reduced by a formula: the ratio of how many games are missed compared to the total amount of games played (i.e., 92.6 total games). The amount of money determined by the application of the formula would be taken out of each specific player’s pay.
The good news is that the NBA is trying to find a resolution such as postponing the season several months and/or playing televised games without fans. These delays will likely impact the amount of games played, and it is likely that a portion of games will not be rescheduled following the resolution of this global crisis.
NBA players should be aware of the CBA provisions and investigate what it could mean for them financially. Additionally, players and agents in other leagues, such as the National Football League, should inspect their players’ contracts and league agreements to understand the impacts COVID-19 could have on them. We will continue to update our analysis of this situation as the NBA makes decisions regarding the remainder of the season.