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.

As expected, Jimmy Butler says no issue between him, Derrick Rose

Derrick Rose, Jimmy Butler
1 Comment

Is the Derrick Rose/Jimmy Butler relationship nothing but puppy dogs and rainbows? No. There will be sparks between two intense competitors.

Have those sparks started a fire Bulls fans should be concerned about? A report on Wednesday said the core problem was Butler doesn’t respect Rose’s work ethic, which provided some kindling for that spark to catch.

However, as you would expect, Butler said this was all much ado about nothing, that he and Rose are all good. Via K.C. Johnson of the Chicago Tribune:

Spin this however you wish: Their relationship is fine and someone in the media is making this up; or their relationship has been rough, and this is all just leaking out now.

This is a Bulls team in a bit of a transition as Rose declines some and Butler has grown into a top-flight player. Clearly that dynamic has some people around the team — likely the people in one of one of the players’ camps doesn’t like the power struggle or where it leaves his buddy — talking out of school to the press.

But as Butler noted, winning cures all ills. If Chicago can get off to a fast start, nobody will be asking chemistry questions.

For now, however, tounges are wagging.

Report: No criminal charges to be filed against Matt Barnes

Matt Barnes
Leave a comment

The NBA is still investigating and can take its own action. In theory people involved in the incident could decide to file a civil lawsuit (although Fisher said he would not).

However, Memphis’ Matt Barnes is not going to face any criminal charges for an altercation he instigated with Knicks’ head coach Derek Fisher at the home of Barnes’ estranged wife in Los Angeles, according to police, who talked to TMZ.

Matt Barnes will NOT be charged with a crime for allegedly attacking Derek Fisher over the weekend … the Redondo Beach Police Department tells TMZ Sports.

Cops tell us they did respond to an incident and a police report was filed regarding the altercation — but officers say the case “was reviewed and there is no basis for criminal charges.” As we previously reported, a witness at the home says Barnes struck Fisher in the face and a fight ensued. However, the NY Post is reporting that Fisher did not want to pursue charges against Barnes.

Fisher has been seeing Gloria Govan — Barnes’ estranged wife and star of the “Basketball Wives” reality series — for several months, and was over at her house in the South Bay of Los Angeles Saturday night, along with other friends. Barnes said he got a call from one of his two sons, who “looked distressed” that Fisher was over, and that caused Barnes to drive over to the house. Once he arrived an altercation broke out between the two men, with Barnes allegedly texting a friend that he beat up Fisher and spat in his wife’s face. That’s not going to scar the young boy any further, well done.

If Barnes did this as described (and we don’t know the details), the NBA has to look hard at this. Barnes does not get to decide for a woman he is no longer seeing who she can and cannot see, and who she has over to her home. She is not property. That is the level of control seen in domestic abuse situations, and the league can’t sit back and tolerate it.