So much of the recent NBA lockout was really about small market owners trying to rein in the spending of big market owners in the name of mythical “competitive balance.” (I would say a lot of that was misplaced anger at bigger markets having better management, but we can debate that another day.) The Lakers and their $90 million payroll had to be stopped, so the group of Republican owners put a bunch of socialist rules in place — luxury taxes and forced revenue sharing — to slow the Lakers spending down.
But in the case of the Lakers, the question starts to become will any of that matter?
You know that the Lakers signed a massive new television deal to be the anchor of a regional sports network in Los Angeles to be launched by Time Warner in 2012. (Why the Lakers didn’t get equity in that deal confuses me, it seems a mistake on their part.) Here is a reminder of just how massive it is and how it could lead to them spending like always, via Kevin Ding of the Orange County Register.
That $5 billion is over 25 years – or it’ll be merely $4 billion over 20 years if the future option isn’t exercised. It has been widely and wrongly reported as less.
Let’s pause and appreciate how much money one club, starting next season, will get per year all to itself just from local TV: $200 million … when Forbes values the entire Milwaukee Bucks franchise at $258 million.
It leads to a very good question: whether the NBA’s new supposedly prohibitive luxury-tax penalties to start in 2013 are really going to stop the Lakers from continuing to throw money at their problems – because they’ve solved a lot of them very well that way without having this new billionaire boys’ club.
Revenue sharing plays into this — the final details of it are not yet finalized among the owners, but the Lakers are likely to have to kick $60 million a year or more to small market teams. Plus the increased luxury tax could kick the Lakers’ tax bill from $20 million to $45 million in a couple years (at last year’s spending level. That’s an extra $100 million a year or more going out the door.
But the Lakers’ annual income from local television revenue is about to jump more than $150 million a year. So what’s to stop them?
It’s good to have the Lakers’ problems.