Nine NBA Teams Lost Money Last Season After Collective-Revenue Sharing Payouts
Fourteen of the NBA's 30 teams "lost money last season before collecting revenue-sharing payouts, and nine finished in the red even after accounting for those payments," according to confidential financial records cited by Windhorst & Lowe of ESPN.com. The gap between the league's "most profitable teams and its weaker siblings will be addressed" at the league's BOG meeting on Sept. 27-28 in N.Y. Sources said that owners have "planned a half-day review of the league's revenue-sharing system." Ownership sources said that some teams in smaller markets "struggling to keep up with a fast-rising salary cap have pushed the league's richest franchises to share more of their profits." The nine teams that "lost money," by the league's accounting for net income (which includes revenue sharing and luxury tax payments), were the Hawks, Nets, Cavaliers, Pistons, Grizzlies, Bucks, Magic, Spurs and Wizards. The NBA's new $24B TV deal was "believed to be a potential panacea for the league's revenue disparity." But the data from the first year of the deal "shows the gap between the have and have-not franchises remains extremely wide." According to the documents, 10 teams transferred $201M "combined in revenue-sharing to 15 other teams." Four teams -- the Warriors, Knicks, Lakers and Bulls -- accounted for $144M, or 71.5%, of those "revenue-sharing transfers." Windhorst & Lowe noted "none of this is to say the league is struggling." Critics of the system want to "tweak it, not blow it up." These numbers "focus only on basketball operations; several teams own their arenas, and revenue they generate from hosting non-basketball events is not included in the league's basic financial reporting" (ESPN.com, 9/19).
BRIDGING THE GAP: ESPN's Brian Windhorst said there is a "humongous difference between the haves and have nots in the NBA." The Lakers essentially "make in one week" what the Grizzlies make "in the entire season in local TV revenue." Windhorst said almost $200M was "transferred from the richer teams," like the Knicks, Lakers and Bulls, to teams in the smaller markets, like the Hornets and Grizzlies, so the system "is working" ("SportsCenter," ESPN, 9/19). ESPN's Rachel Nichols said the small-market teams "need to exist to have an NBA, so subsidies and revenue-sharing make sense." Nichols: "On the other hand you do hear complaints from teams that we know are well run and have good management, there are some teams in the NBA that are not as well run as other teams" ("The Jump," ESPN, 9/19). NBCS Bay Area's Ray Ratto said the "interesting thing" about the ESPN report is that there are owners "talking about changing the revenue-sharing to the point where every team makes money, which means that's a lot of money coming off the Warriors' bottom line" ("The Happy Hour," NBCS Bay Area, 9/19).