Tag: NBA business

David Stern, Adam Silver

Stern says NBA revenues should be $5 billion this season


During the NBA lockout, we all got frustrated watching the owners and argue over how to divide up $4 billion in revenue. Billion. With a “B.”

Now, make that $5 billion.

That is what NBA Commissioner David Stern said speaking Tuesday at Beyond Sport United conference in New York, according to the Associated Press.

The $5 billion figure is considerably higher than the $4.3 billion estimated that would come in under the BRI this season (via NBA CBA FAQ from the brilliant Larry Coon).

The owners will get a higher share of that revenue — under the old CBA the players were guaranteed 57 percent of the league’s revenue, that falls to 50 percent this year under the new CBA. Hopefully now, somehow, these poor men can find a way to turn a meager profit (*cough*).

The increase in revenues shows fans and sponsors did not leave the league during the lockout. It shows that local television deals are up, as is the spread of the NBA brand globally. You can also chalk some of this up to an economy starting to find it’s footing and turn around (we hope).

In case you’re curious, the NFL has revenues of around $9 billion and MLB around $7.5 billion.

Owners of St. Louis ABA team want more NBA TV money


Each year, the NBA pays part of the television revenue from the four former ABA teams — the Spurs, Pacers, Nets and Nuggets — to the owners of the now defunct Spirit of St. Louis. Seriously. It’s a budget line item for those teams. Nobody talks about the actual amount over the past 36 years but estimates have it at around $240 million.

It was part of a settlement of a lawsuit filed before the 1976 merger of the old ABA and NBA, one where name players like Oscar Robertson, John Havlicek and Bill Bradley challenge the anti-trust status of the NBA. The case was settled before the merger.

As part of the deal owners of the ABA team the Spirit of St. Louis, Ozzie and Dan Silna, agreed to fold their team if they were paid 1/7th of the NBA’s television revenue for four merged teams. Forever. As in a portion of the national television revenue that would go to the Spurs, Pacers, Nets and Nuggets next season will instead go to the Silna family. Not bad for doing nothing but waiting for the checks to roll in.

But it wasn’t enough.

Last year the NBA asked the courts to re-open the settlement, so the Silna brothers countered they were being shortchanged by not getting a piece of international and cable broadcast rights, reports the Associated Press.

Thursday a judge listened to arguments from both sides then told them to try and settle the case out of court, according to the AP.

To which I say yes — courts are already backlogged with actual cases that are of import to people’s lives, this is frivolous crap. The Silna’s are getting rich (well, richer, they were already rich) sitting on their behind, with their payments getting larger as the national television deals for the NBA have grown.

The Silna’s made a savvy business move a few decades back, when nobody predicted the NBA’s popularity surge. Good for them. I get why the NBA wants to revisit it, but they signed on to it. However, for the brothers to ask for more now just seems greedy. But welcome to America.

Lockout didn’t turn NBA fans away at all

Dallas Mavericks Victory Parade

The conventional wisdom goes that casual NBA fans — and there are a lot of them — don’t really pay attention until Christmas (and not seriously until after the Super Bowl).

Based on results so far in this lockout-shortened season, that seems about right. The NBA wiped out everything before Christmas and the league’s attendance and television viewship are up this season.

Here are the numbers, via Henry Abbott at TrueHoop.

The first 325 games of this NBA season averaged attendance of 17,094. That’s better than 89 percent of capacity, and a hair better than the first 325 games of last season, which averaged 17,057. …

• ABC has had just three games, so it’s hard to say anything conclusive, but the audience is up five percent compared to a year ago.
• ESPN viewership is up 23 percent.
• TNT viewership is up 50 percent.
• NBA TV viewership is up an insane 66 percent.
• NBA on regional cable sports networks are up 12 percent.
• Local over-the-airwaves broadcasts are up 36 percent.

Whew. I think we were all worried about those poor owners and if they’d be able to make their money back after all those concessions they had to give up during the lockout. Would they have enough money to put Foie Gras on their plate? Now we can all rest easy knowing they can sleep on ever-larger piles of money.

(Yes, I know that television ratings do not impact the teams’ bottom line immediately, but this is a sign of future larger broadcast rights deals. It also is a sign they may get more for sponsorships and other short term boosts because the fans came back.)

Details emerge of league’s new revenue sharing plan

AP Money Found

Revenue sharing was a big part of this summer’s Collective Bargaining Agreement talks, but the most secretive part. The owners wanted it to be something separate from the CBA itself, the players wanted it included, but what was going to be included was vague.

Even when the deal was finalized and the lockout lifted, the details of revenue sharing were not finalized and unclear. But now they are starting to come into focus. In part due to a story in the Sports Business Daily on Tuesday (hat tip to IamaGM).

Looks like the NBA is going with a “pool” system for revenue sharing, something that is dramatically different in both style and amount than it was in the last labor deal.

Sources said that the core of the plan calls for all teams to contribute an annually fixed percentage, roughly 50 percent, of their total annual revenue, minus certain expenses such as arena operating costs, into a revenue sharing pool.

Each team then receives an allocation equal to the league’s average team payroll for that season from the revenue pool. If a team’s contribution to the pool is less than the league’s average team payroll, then that team is a revenue recipient. Teams that contribute an amount that exceeds the average team salary fund the revenue given to receiving teams.

So, what does that really mean? Well, if you’re a small market team it means a lot of money.

For example, one high-revenue team could contribute 50 percent of its total revenue, minus certain expenses, for a total of $70 million put into the pool. A low-revenue team could contribute total revenue of $45 million. After allocating to both teams the average team payroll of $58 million, the low-revenue team would receive $13 million in revenue sharing to make up the difference between its pooled revenue from the league’s average payroll. The high-revenue team would be contributing $12 million to be distributed among receiving teams, adding financial balance between the markets.

Remember we are talking about the local revenue — money from ticket sales, concessions, parking and local television deals — not the national television deal revenue which is already split evenly between the teams.

There are caps on the percentage of revenue so that the big market teams — Lakers, Knicks, Celtics — get to keep a good percentage of their money. Jeanie Buss of the big-revenue Lakers toes the company line in the SBJ article. Of course, they have so much money coming in starting next year from their new local television deal this isn’t fazing them. At all.

Video: Suns owner Robert Sarver talks NBA business

Suns Robert Sarver
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Suns owner Robert Sarver went on Darren Rovell’s Sports Biz Game On on CNBC and talked NBA business. He wisely sidestepped the steaming pile of Chris Paul trade fiasco and instead focused on what the shortened schedule (but he didn’t complain too much this time) and revenue sharing will mean for small market owners.

Not sure there is anything earth shattering here, but it is interesting to hear the perspective.