The league office has been working hard in recent days to make its case that the NBA owners are losing money. Big money.
They have now released some audited net income numbers — money left after all the costs are put out — to Forbes in an effort to make a more definitive case.
The following numbers are audited figures. If the projected figures are correct, the NBA will have lost $1.845 billion over the last 6 years, not turned a profit, as reported (in the New York Times).
Those numbers show a handful of teams — the Lakers, Bulls and Knicks for example — turning profits while a majority of teams lose money. The largest league loss was for $370 million in the 2008-09 season, while last season was $300 million. The players union disputes those numbers still, we need to add.
We also need to remind you that the players are a fixed cost for the league — the players get 57 percent of the gross basketball related income that the league takes in. Every year. That may be a high percentage (although not wildly out of line with the NFL an MLB) but it is a known number. What are driving losses for the owners is a rise in non-player expenses (that is supposed to be up 43 percent in the last five years).
Forbes also talks about a fix, which involves compromise.
For the NBA to get on any form of solid footing, there is going to have to be significant concessions by both the players and owners. When you see a trend of well over half your clubs running at a loss, there’s a problem that needs addressing.
With local television rights deals driving the economic disparity, the NBA owners are going to need to look at MLB’s revenue-sharing model closely.
In terms of the players, some ability to allow competitive balance has to come into play. Since owner can’t seem to self-regulate like Major League Baseball, then some adjustment of the cap has to be considered – other methods to allow cost certainty.
Compromise is the only way a deal is going to get done. But until there is real pressure — until the threat of lost revenue from games and lost paychecks gets closer — there is not motive to compromise. So we sit and watch two sides with their heels dug in for a summer lockout. And we hope when time for a compromise does come around, both sides are willing to do it.
