How COVID-19 Shattered Pro Sports Economics: Salary Cuts, Force Majeure, and the Fight to Stay Afloat
As the COVID-19 pandemic swept across the globe, one of the most visible casualties was professional sports. Leagues came to a sudden halt. Arenas went silent. And with that pause came a storm of financial uncertainty.
From the NBA and Premier League to the NHL and MLB, athletes across all professional leagues were plunged into limbo, unsure whether they’d see the season resume, or their full salaries.
Most player contracts are structured around the regular season, yet in many leagues like the NBA or NFL, salaries are paid out in increments throughout the year. When games stop, but payments continue, a dilemma forms. If entire seasons are canceled, franchises and ownership groups face the prospect of paying tens of millions of dollars in salaries with no incoming revenue.
Daily Losses, Mounting Pressure
Leagues collectively lose millions of dollars per day during a shutdown. For example, according to Forbes, the NBA was estimated to lose over $1 billion in revenue if the 2020 season remained suspended. Similarly, the English Premier League (EPL) faced up to £1 billion in losses, from matchday revenue, broadcasting contracts, and commercial deals.
To cope, sports federations proposed drastic measures. Some leagues, like Serie A in Italy and La Liga in Spain, proposed salary reductions up to 50% for players during the suspension.
While athletes understand the broader economic hit, many were reluctant to accept such cuts without negotiation. In Major League Baseball (MLB), a tense back-and-forth ensued between the players’ union and the league over how to prorate salaries, eventually delaying the start of the 2020 season.
The Salary Cap Domino Effect
This isn’t just about short-term pay. The salary cap, which dictates how much teams can spend on players, is based on overall league revenue. For leagues like the NFL, which ties its cap directly to revenue share between owners and players, a drop in income means a reduced cap. That affects future contracts, team building, and even competitive balance.
The NBA saw its 2020–21 salary cap projections drop by over $20 million, forcing teams to restructure deals and postpone contract extensions.
Yet many athletes are signed to long-term deals worth tens or hundreds of millions, guaranteed years in advance. Owners and executives now face the burden of honoring large contracts in a diminished economy. Without a compromise, this becomes financially unsustainable.
The Nuclear Option: Force Majeure
Should talks break down, some leagues can turn to an obscure but powerful clause in the collective bargaining agreement: force majeure.
This legal clause allows leagues to terminate contracts or CBAs due to extraordinary events beyond control, like a global pandemic. The NBA included such a clause in its CBA, and even withheld 25% of player paychecks in 2020 to prepare for a potential cancellation trigger.
If invoked, this could lead to the collapse of the existing agreement and spark lockouts or strikes, as seen in past labor disputes like the 2011 NBA lockout or the 2004–05 NHL lockout. Such work stoppages harm everyone, layers, owners, fans, and the league’s long-term credibility.
A Shared Sacrifice
The sports world stands at a crossroads. The pandemic revealed the fragility of a billion-dollar industry built on packed stadiums, live broadcasts, and global advertising.
If owners expect players to share the burden through pay cuts, players will likely demand a say in league policy, health protocols, and post-pandemic revenue restructuring.
Several teams and players led by example. Barcelona FC players voluntarily took a 70% pay cut, and NBA stars like Kevin Love donated significant sums to arena staff who lost wages.
It’s clear that the path forward lies in compromise, not conflict. Without it, both sides risk much more than money, they risk the very future of their sport.
