Foul called on NBA owners’ claims of money lost

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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.

Rumor: Grizzlies had to choose between Marc Gasol and David Fizdale

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David Fizdale has been linked to most of the NBA’s head-coaching vacancies.

He developed a legion of backers as lead a Heat assistant, and he did good things guiding the Grizzlies before they unexpectedly fired him. He deserves consideration.

But he also must explain his fractured relationship with Memphis star Marc Gasol. They weren’t speaking for a while.

And maybe the problem was even worse than that.

Marc Berman of the New York Post:

According to a source close to Fizdale briefed on the Grizzlies’ decision, it was ownership having to make a choice — trade their All-Star center Marc Gasol, who has fallen in love with its small-market city, or fire the coach. Their relationship had gotten that bad.

If Grizzlies ownership felt it had to choose between Gasol and Fizdale, it’s not clear why.

Fizdale benched Gasol down the stretch during the coach’s last game, and Gasol publicly expressed his frustration.

But Gasol denied issuing a me-or-Fizdale ultimatum. Fizdale said focus on his relationship with Gasol was “overblown,” adding he cared far more about whether he could win with a player than whether they got along personally.

Memphis obviously sided with Gasol – probably too strongly.

LeBron James bought Cavs teammates matching designer suits to wear to game tonight

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I’m still trying to decide if this is cool or a little too Stepford.

The Cavaliers rolled into the Bakers’ Life Fieldhouse in Indianapolis tonight wearing matching designer suits, all paid for by LeBron James and custom fitted to each player.

If a college team rolled into a game in four-digit designer suits, the NCAA would have questions. And not about the vests.

The Cavaliers are LeBron’s team, and if he wants to buy his teammates suits and tell them to wear them it’s going to happen. Is it a bonding thing that helps bring them together? Sure. Is it in place to make sure LeBron remembers which ones are his new teammates? Probably not.

Do the suits help on the court? No. And the Cavaliers better bring it in Game 3 because if they go down 2-1 in this series — something that is a realistic possibility — the whispers of doubt are going to get a lot louder.

Report: Knicks to discuss coaching vacancy with Hawks’ Mike Budenholzer

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Mike Budenholzer is restless in Atlanta, seeing a rebuild coming and looking at other jobs (something Hawks management is fine with). He went down the road a ways with the Suns before pulling out of that process, but he’s still looking around.

The Knicks are casting a wide net in their search, talking to virtually everyone looking for coaching jobs.

So, this seemed inevitable, right? Budenholzer and the Knicks are going to talk, according to Michael Cunningham of the Atlanta Journal-Constitution.

This will be very preliminary. The Knicks have already had some level of conversation with Mark Jackson, David Fizdale, Jerry Stackhouse, David Blatt, Mike Woodson, and TNT analyst Kenny Smith (Jackson and Fizdale are the rumored early leaders). Budenholzer has established a style and culture in Atlanta, giving the franchise a path forward. New York could certainly use that.

However, the Knicks job comes with real challenges, too. That starts with James Dolan as owner and the erratic, at times paranoid culture he has created there. Also, expectations in New York are always high, but the team will be without Kristaps Porzigis for at least half (maybe all) of the upcoming season as he recovers from an ACL injury, and that puts a ceiling on the team in the short term. Is all that worth leaving Atlanta for?

 

Stephen Curry to begin “modified” practices with Warriors

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Golden State has flipped the switch in the first round, going up 3-0 on overmatched San Antonio. The Warriors have been outscoring the Spurs by 20.2 points per 100 possessions in the series, allowing less than a point per possession on defense and scoring when and where they want. Kevin Durant is averaging 27.3 points per game, Klay Thompson is shooting 63.3 percent from three and scoring 25.7 points per game, and the Warriors are clicking.

But they are not yet whole — they need Stephen Curry back. Not for this round, but before the Western Conference Finals for sure.

Curry was re-evaluated Friday and will begin practicing with the team in a limited — or “modified” to use the team’s term — way.

The target has always been a return somewhere during the second round, and that still seems to be on track. That is also a little faster than traditional for a Grade 2 MCL sprain, which can take up to two months to heal (not the 4-6 weeks of the Warriors timeline), but the Warriors are being cautious here for now.

Eventually, the Warriors will need him back — their offense is built around Curry and his ball movement and movement off the ball. Curry’s gravity to draw defenders, even when he doesn’t have the ball, opens up the floor for others. Put simply, if he’s 28 feet from the bucket on the weak side defenders still have to watch and be near him, and help defenders need to be aware, which pulls the defense to wherever he is. Without Curry and the Warriors take more midrange jumpers, it’s just in the first round series against the Spurs they are hitting them.