Tag: NBA revenue sharing

AP Money Found

Details emerge of league’s new revenue sharing plan


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.

New revenue sharing plan could mean $15 million for teams

Leave a comment

Revenue sharing between the owners was one of the things at the core of the new labor deal — players wanted to see more of it from the owners so they were not carrying the burden of sacrifices for the smaller markets all by themselves. Smaller market owners demanded it, too.

Now a more robust (to use a David Stern term) revenue sharing program has been put in place by owners. One that could mean $150 million a year total. (That plan will need a final approval after a labor deal is in place — the owners want to see the numbers from that before finalizing the sharing levels.)

But what does that mean in terms of dollars to a small market team (such as the Kings or Grizzlies)? Maybe a lot reports Howard Beck at the New York Times.

Although the details remained confidential, the league’s poorest franchises could receive up to $15 million a year under the new revenue-sharing formula, according to a person who has seen the plan. The two biggest payers would be the Los Angeles Lakers, who are expected to contribute $50 million a year, and the Knicks, who are expected to contribute $30 million a year.

The larger market payers have wanted to make sure their share of revenue sharing came mostly from additional revenues from the new labor agreement — they didn’t want to tap into their profits.

But for NBA teams that lost upwards of $10 million a year (some teams more than $20 million, according to their reports), that much revenue sharing money could make a huge difference.

Although, you can bet some teams are going to squander that money on bad decisions. In the end, good management wins and is profitable in the NBA.

Owners come to agreement on new revenue sharing plan

Mark Cuban, David Stern

The players demanded greater revenue sharing among the owners be part of the labor deal. The small market owners demanded it as well — they wanted the rich guys to share.

They got it, a new plan was approved in concept at Thursday’s Board of Governor’s meeting, Deputy Commissioner Adam Silver told the assembled media. A final version of the plan will be in place once the owners approve the labor deal with players and know that split of revenues.

Silver also said that David Stern was sent home with the flu and likely would not be part of negotiation with the union on Thursday.

David Aldridge of NBA.com (and TNT) had these tweets after the meeting.



Two thoughts: $150 million would be a near tripling of the $60 million that was shared last season. That should make players happy. However, big market owners had said they only wanted to share money that they saved under the new deal — they didn’t want to touch their existing profits. That they are sharing shows what they think they are getting out of the new labor deal.

Second, the owners may say that the revenue sharing was a separate process from the labor negotiations, but the players didn’t see it that way at all. The union wanted proof that the owners were working to share their burdens, not just balance their books on the backs of the players.

We’ll see if this deal satisfies them. If so, it is another step toward an agreement.