David Stern

Foul called on NBA owners’ claims of money lost


The NBA owners continue to say the lockout is going on because the players don’t understand the fundamental need to change the league’s poor financial system — that $300 million was lost this past year.

More and more reports are questioning the severity of that loss.

The latest is Nate Silver at the New York Times, who questions the heavy losses the owners claim, and particularly the claim that player salaries are to blame.

On this point he is spot on — NBA players salaries make up 57 percent of the Basketball Related Income the league takes in. That number is fixed in the current Collective bargaining agreement — it is a fixed cost, the owners know exactly how much the players will cost the league as a whole. It’s the non-player costs that increase faster than income, Silver notes.

Growth in non-player expenses has outpaced that of salaries, having increased by 13 percent over five years and 43 percent over 10 years. Although some of this undoubtedly reflects sound business ventures, like the league’s investments in digital media or efforts to expand the game internationally, they have nevertheless had a reasonably large effect on the league’s bottom line. Had nonplayer expenses been the same in 2009-10 as they were in 1999-2000 (adjusted for inflation), the league would have made a record profit that year.

Even with those costs, Silver says the owners are making money.

Even as it stands, however, the Forbes data suggests that the league is still profitable. Its operating income — revenues less expenses (but before interest payments and taxes) — is estimated to have been $183 million in 2009-10, or about $6 million per team. The N.B.A.’s operating margin (operating income divided by revenues) was about 5 percent in 2009-10 and has been about 7 percent during the life of the current labor deal.

A 5 percent or 7 percent profit is not dissimilar to what other businesses have experienced recently. Fortune 500 companies, for instance, collectively turned a 4.0 percent profit in 2009 and a 6.6 percent profit in 2010 (both figures after taxes). Profit margins in the entertainment industry, in which the N.B.A. should probably be classified, have generally been a bit lower than that.

Silver goes on to say that a lot of the losses the owners claim are tied to depreciation and amortization when a team is sold. However, the league has noted that amortization is not used in the $300 million loss figure for the past season. Silver misses the mark there.

The players need to understand that some owners are hurting and there needs to be adjustments to the system. Things like the players hotel rooms and food per diems are not taken out of that 57 percent — they get to count the revenue minus any expenses. Those expenses are rising. Players need to give up some of their pie (maybe by rather than taking 57 percent of the gross allowing some deductions of league expenses from that before the “net” is divided up, maybe just taking a much smaller percentage of the gross). The owners have some valid points about the needs to alter the system to create a chance for all teams to make money (although revenue sharing must be part of that).

But it’s still hard to buy the owners claims that the league is in that much financial peril. Particularly when people are stepping in to pay record prices for franchises.

Barack Obama picks Warriors to win title. Like everyone else.

Barack Obama
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The Baller and Chief is on his way out the door.

Barack Obama has been by far the biggest hoops fan to inhabit the White House (with John Quincy Adams a very distant second). He’s put up a basketball court at the White House, filled out NCAA Tournament brackets, jokingly applied for the Wizards’ coaching job, thought about becoming an owner, gone to NBA games, and just been a fan like the rest of us.

And he’s picking the Warriors to win it all. Like everyone else.

In what was primarily a “get out the vote” effort, President Obama called in to ‘Sway in the Morning’ hosted by Sway Calloway on Eminem’s SiriusXM channel Shade 45. Asked to pick the next NBA champ, the Bulls fan went exactly where everyone else did — Golden State.

“I’m going to go with the Warriors just because of [Kevin] Durant, that addition. I think they just have too much firepower,” Obama said. “Although they just got spanked in their first game, so it will take a while to figure things out.”

Obama also picked the Patriots to win the NFL title. He’s such a frontrunner.

Report: NBA owners rejecting expansion ‘at every turn’

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With rumors of NBA expansion swirling, it’s time to look at more concrete evidence.

NBA commissioner Adam Silver has repeatedly shot down expansion talk, and that’s not him going rogue. His bosses have apparently taken a firm stance.

Steve Kyler of Basketball Insiders:

Basketball Insiders reached out to an NBA owner and a voting member of the Board of Governors and was told flatly that any talk of expansion has been shot down at every turn inside the Board of Governors meetings. It’s been a non-starter.

There is a theoretical one-time expansion fee so high where the current 30 owners would divide their shares of revenue further. But the NBA takes in so much annually, it’s hard to imagine a new ownership group could and would front enough money.

Sorry, Seattle (and Louisville and Las Vegas and…). The evidence is overwhelmingly on the side of the league staying at 30 teams. You’ll probably just have to poach a team from another city.

Greg Oden on basketball career: ‘It’s over’

Indiana Pacers v Miami Heat - Game 6
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Greg Oden’s multiple injuries dictated the former No. 1 pick wouldn’t have the career forecasted for him.

But he returned from three years off an NBA court to play for the Heat in 2014. He followed that breakthrough with a couple tryouts and a stint in China.

Could he once again return to the league?

Dana Hunsinger Benbow of IndyStar:

Asked whether he’d play basketball again, he said, “I wish. It’s over.” Instead, he is back with the Buckeyes as a student coach, helping out the players and Matta any way he can.

Oden, who was picked one spot before Kevin Durant, once declared: “I know I’m one of the biggest busts in NBA history and I know that it’ll only get worse as Kevin Durant continues doing big things.” That statement is blunt, reality and sad all wrapped into one.

It’s a shame we never got to see Oden healthy for long. There was good reason for the Trail Blazers to pick him first, but injuries ruined what could’ve been an intriguing extend debate over him and Durant.

Hopefully, Oden finds fulfillment in the next chapter of his life.

Report: LeBron James didn’t want to play for Cavaliers before they drafted him

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The Cavaliers landing the No. 1 pick in the 2003 NBA draft seemed like a fairytale.

The consensus top choice and one of the most-hyped prospects of all-time was a local kid from nearby Akron, LeBron James.

But this happy accident didn’t come through rainbows and butterflies. To get the top seed in the lottery, Cleveland had to get bad – really bad. The Cavs missed the playoffs five straight years, bottoming out at 17-65 in 2002-03.

Brian Windhorst of ESPN:

When James was a teenager, he started attending games at the arena, and he couldn’t believe how bad the Cavs were, how empty the arena often was, with its bright blue seats seeming like a neon sign of disinterest. During his senior year of high school, he went to several games, was given courtside seats and visited the locker room. His thought was pretty clear after he watched that 17-win team with the lowest attendance in the league: They were awful, and he didn’t want to be a part of it.

Can we be surprised someone who grew up in Akron, Ohio, as a Bulls, Yankees and Cowboys fan didn’t want to join the Cavs? LeBron was a frontrunner.

What he didn’t realize at the time: He’d gain the power to singlehandedly transform a franchise, and he’d develop an emotional attachment to the Cavaliers.

Cleveland wasn’t going to remain unwatchable with him. He turned the Cavs into a credible championship contender. Then, after leaving for the Heat, he returned. He even delivered delivered its long-awaited title last season.

The tears of joy he cried afterward show just how much that area, including its NBA team, means to him.

That he was initially sour on the Cavaliers adds an interesting twist to the story. It doesn’t detract from it.