In negotiations that have had a lot of sticking points — percentage of Basketball Related Income (BRI), hard cap — one of the other big ones has been revenue sharing.
The owners know they need to address it and David Stern has called the discussions on the topic “robust.” The players think it is an essential part of the current CBA negotiations — why should the players take massive salary cuts to make the league profitable when the owners of big market teams do not share much of their revenue with struggling smaller markets?
The NBA owners’ planning committee is discussing the issue Monday via conference call, and the owners will talk about it again when they meet Tuesday in Dallas. Ken Berger at CBSSports wrote about revenue sharing talks.
But a key tipping point in bargaining could be what revenue-sharing details the owners come forward with this week. Owners have long rejected the players’ request that revenue-sharing be collectively bargained, but the players believe many of the issues owners have addressed with regard to improving competitive balance could be satisfied by redistributing revenues from successful to struggling teams…
It has been difficult for the NBPA to justify the massive salary reductions the league is seeking without knowing how owners plan to address this enormous disparity among teams. One option at the NBPA’s disposal would have been to file a request with the National Labor Relations Board seeking a ruling that revenue sharing should be a “mandatory subject” of collective bargaining. Sources say union officials have opted not to go this route and instead have trusted the owners to come forth with an effective and transparent approach to getting their own financial house in order before getting further salary concessions from the players.
How big is the disparity?
In the NFL — the gold standard for revenue sharing among professional sports — about 70 percent of what is considered football related income is shared (which is an issue because that used to be more than 80 percent just a few years back). In the NBA, that number is about 25 percent. That NFL number is driven largely by the massive national television contracts the league has. (Numbers via EightPointsNineSeconds.)
Or look at it this way, The Lakers new local television contract that kicks in next seasons and will pay them upwards of $150 million a season, which is more than some teams will make in total revenue in a season. Yet, under the current system the Lakers have to share none of that money.
It’s an issue the owners need to deal with. Big market owners have valid concerns that if they share more money that needs to be invested back into the business and not just pocketed by owners.
The question is — should the revenue sharing between owners be part of the CBA negotiations? The players say yes, the owners no. It’s just another in the long line of sticking points between the two sides that makes a lockout inevitable.