The NBA’s massive new $24 billion media deals with Turner and ESPN could affect the amount of revenue that’s shared between the league’s teams, but how exactly that sharing might change is still to be determined.
“It is something we have to consider,” said Minnesota Timberwolves owner Glen Taylor, chairman of the league’s board of governors and a member of the planning committee assigned to devise any changes to the revenue-sharing plan. “The committee is tackling that right now.”
Owners gathered last week in New York for a board of governors meeting. Ahead of those meetings on Tuesday and Wednesday, team representatives gathered on Monday to discuss the revenue-sharing system specifically.
According to several executives who attended that meeting, each team was given the opportunity to offer its assessment of the current plan.
The re-evaluation of revenue sharing at this time was called for as part of the plan’s implementation in 2011. But as business for the league has played out, the meeting comes with the NBA now holding national media contracts that will be worth nearly triple the amount of money paid annually by ESPN and Turner than what they were paying in their deals when the revenue-sharing system was put into place: $24 billion over nine years (starting in 2016) compared with $7.44 billion across eight seasons (since 2008).
{podcast}
SBJ Podcast Archives:
From Oct. 6: Media writer John Ourand, NBA reporter John Lombardo and Executive Editor Abraham Madkour discuss the NBA's massive new media rights agreement.
“Under the current plan structure, the revenue increase from the new media deals would reduce the amount of revenue shared among teams,” said Joel Litvin, president of league operations for the NBA. “The planning committee will consider this topic, among others, in its broader review of the league’s revenue-sharing plan.”
The next step will be for the planning committee, chaired by Philadelphia 76ers owner Josh Harris, to design changes to the plan in response to the owners’ feedback. Any changes proposed by the planning committee would have to be voted on by all of the league’s owners. No specific timetable has been set for the process.
“There will be changes made around the edges,” predicted one team executive who attended the revenue-sharing meeting.
The 2012-13 season was the first full, 82-game season for the league in which the system was implemented, after the lockout-shortened 2011-12 season. For 2012-13, teams contributed a total of $131 million to a revenue-sharing pool that, when combined with other shared revenue streams, pushed total revenue-shared dollars to more than $200 million.
Big-market teams contributed the most: The Los Angeles Lakers paid $45 million into the plan, followed by New York at $23 million and Chicago at $17 million. On the receiving end, Charlotte took in $21 million followed by Milwaukee at $17 million.
Teams have not yet received revenue-sharing checks from the 2013-14 season.
“My opinion is that there is not a need for a significant overhaul,” said Alex Martins, chief executive officer of the Orlando Magic. “There could be tweaks.”
