Foul called on NBA owners’ claims of money lost

16 Comments

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.

Knicks: Reggie Bullock has spine injury

Ron Turenne/NBAE via Getty Images
Leave a comment

Reggie Bullock had his agreed-upon salary cut by more than half with the Knicks. He’ll reportedly miss at least a month of the regular season.

All because of a mysterious health issue.

The Knicks have finally disclosed what’s happening.

Knicks release:

Reggie Bullock underwent successful surgery today at the Hospital for Special Surgery in New York for a cervical disc herniation. The team will plan to provide an update on his rehab and progress around the start of training camp.

Bullock is a good shooter from the wing. New York could use him. Many teams could use him.

But Bullock must get healthy first.

At this point, we probably shouldn’t expect much from him any time soon. The best indication: how eagerly his agent praised the Knicks for their handling of this situation. Again, Bullock settled for less than half his initially agreed-upon salary.

Report: Suns signing Cheick Diallo to two-year contract

Layne Murdoch Jr./NBAE via Getty Images
Leave a comment

The Suns went old in the draft, picking 23-year-old Cameron Johnson at No. 11.

Phoenix will go younger in free agency with 22-year-old Cheick Diallo.

Adrian Wojnarowski of ESPN:

Barring another move, the Suns have only the minimum available. Diallo will get $1,678,854 next season and $1,824,003 the following season.

The No. 33 pick in the 2016 draft, Diallo worked his way into the low end of the rotation during his three years with the Pelicans. He’s a hustle big, committed rebounder and athletic player. But at 6-foot-9 and 220 pounds, he’s not strong enough to bang with most centers. His skill level is low for power forward.

Phoenix will stick him behind Deandre Ayton, Dario Saric, Aron Baynes and Frank Kaminsky in the frontcourt. Diallo might receive situation minutes, but he must develop further to hold staying power.

Report: Chris Paul increasingly expected to start season with Thunder

Tim Warner/Getty Images
Leave a comment

Last week, the Thunder had an expensive point guard who’s into his 30s and didn’t fit a team shifting into rebuilding without Paul George.

Same story now.

Oklahoma City traded Russell Westbrook for Chris Paul to acquire draft picks and shed long-term salary. Getting Paul as a player was of minimal concern. That’s why the Thunder worked with him to flip him. But a team like the Heat wanted draft picks just for taking the three years and $124,076,442 remaining on Paul’s contract.

So, Oklahoma City might hold onto Paul, after all.

Adrian Wojnarowski of ESPN:

The 34-year-old Paul is past his prime. But he’s still good. It’d be interesting to see him once again as his team’s best player after he spent so much time stuck in the corner watching James Harden.

Paul, Danilo Gallinari and Steven Adams could form the core of a solid team this season. Paul can run an offense, and Adams (pick-and-roll) and Gallinari (pick-and-pop) offer nice complementary skills. If Andre Roberson is healthy or if a young player like Shai Gilgeous-Alexander, Nerlens Noel, Terrence Ferguson or Hamidou Diallo takes the next step, Oklahoma City could make real noise.

The Thunder’s biggest challenge: They play in the loaded Western Conference. That makes it far more difficult to make the playoffs. But in terms of team quality, Oklahoma City could be in the thick of competitiveness.

If Paul and Gallinari stay healthy. That can’t be assumed, though Adams can do some dirty work to keep those two clean.

The Thunder have tremendous draft capital – so much of which is tied to the fates of the Clippers, Rockets, Heat and Nuggets. Oklahoma City could tank and improve its draft position further and sooner. But owning so many picks from other teams allows the Thunder to try to win now while simultaneously rebuilding. They don’t necessarily have to waste seasons in the basement just to build themselves back up.

It will probably be easier to trade Paul on Dec. 15. That’s when most free agents who signed this summer become eligible to be traded. Right now, too many teams have untradable players, making it difficult to match Paul’s high salary. Generally, the more of Paul’s contract the Thunder pay out, the easier it’ll be to trade him.

But if Paul declines sharply or gets hurt, his value could diminish even further. There’s risk in waiting, though an injured Paul might allow Oklahoma City to tank anyway.

The Thunder must also cut a few million of salary before the final day of the regular season to avoid the luxury tax. That’s a priority.

So, Oklahoma City will make some move – Paul or otherwise.

But it appears likely we’ll see Paul play for the Thunder. It’ll be a return to Oklahoma City after he played home games there with the New Orleans/Oklahoma City Hornets following Hurricane Katrina.

This isn’t the reunion Paul or the Thunder appeared to desire when the Westbrook trade was agreed upon. I still think it could be pretty cool.

Ben Simmons reverses course, withdraws from Australia’s Word Cup squad

Vaughn Ridley/Getty Images
3 Comments

MELBOURNE, Australia (AP) — Ben Simmons‘ new contract extension with the Philadelphia 76ers came with bad news for Australian basketball fans: The Melbourne-born NBA All-star won’t play for the Boomers at the World Cup.

Hours after Simmons and the 76ers agreed to a $170 million, five-year contract extension on Tuesday, Simmons said he preferred to spend time with his new teammates in September instead of travelling to China for the Aug. 31-Sept. 15 World Cup.

“I wanted to let everyone know that after consulting with my representation, I’ve made the difficult decision to forego playing in the World Cup in China,” Simmons said in a statement.

“Ultimately, we decided it was best that I use the time in September to return to Philadelphia to acquaint myself with my new teammates and prepare for the upcoming NBA season.”

Simmons had been selected for Australia’s World Cup squad and had earlier indicated he planned to play the tournament in China.

He now plans to play only for the Boomers in two exhibition games against the United States in Melbourne on Aug. 22 and 24 at a stadium that is expected to be sold out – 50,000 fans – for each game. He also said the Olympics next year in Tokyo remain on his schedule.

“I will still be heading back home to Australia to host my camps as well as train and play with the Boomers in the upcoming exhibition games,” Simmons said. “I’m really excited about the talent we have on the Boomers squad, especially moving closer to 2020 where I will be honored and humbled to represent my country on the world’s biggest sporting stage at the Olympics in Tokyo.”

Simmons was the No. 1 overall draft pick in 2016. He made his NBA debut in the 2017-18 season and was the Rookie of the Year. He was an All-Star for the first time last season. He has averaged 16.4 points, 8.5 rebounds and 7.9 assists in his two seasons.

Australia’s World Cup lineup is set to feature San Antonio’s Patty Mills, Joe Ingles of Utah Jazz, Phoenix center Aron Baynes, Cleveland’s Matthew Dellavedova, former No. 1 draft pick Andrew Bogut, Detroit center-forward Thon Maker and Simmons’ 76ers teammate Jonah Bolden.