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Details emerge of league’s new revenue sharing plan

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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.

Report: NBA deprioritizing playing regular-season games for local TV

Steve Kerr and LeBron James before NBA game
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The NBA is financially incentivized to play more regular-season games to satisfy local-TV contracts.

How does that square with resuming play – currently suspended due to the coronavirus pandemic – with a play-in tournament and playoffs?

It doesn’t.

Marc Berman of the New York Post:

According to one source, getting some teams to a magical number of 70 regular-season games had been a goal, but in the last week has taken on less of a priority.

This stoppage is going to cost the NBA a lot of money. There’s no way around that. Not every source of revenue can be preserved. It’s about finding the optimal setup.

Importantly, canceling games could allow the NBA to reduce player salaries through force majeure. Of course, the union would consider that action when negotiating how to proceed.

LeBron James advocated for playing some regular-season games before the playoffs so everyone could get back into shape. But Steve Kerr called it very unlikely the Warriors would play another regular-season game. Perhaps, playoff-bound teams like the Lakers will play tune-up regular-season games while Golden State – the only team officially eliminated from the playoff race before the hiatus – doesn’t. It’d be a little odd to have such different formats, though. (Then again, these are odd times).

Considering this report, we ought to give more credence to the idea that Kerr knows something about the NBA’s plan and that the regular season is finished.

Lakers update that all players ‘currently symptom-free of COVID-19’

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Nearly two weeks ago, the Lakers announced that two of their players tested positive for the coronavirus. “Both players are currently asymptomatic, in quarantine and under the care of the team’s physician… All players and members of the Lakers staff are being asked to continue to observe self-quarantine,” the Lakers said at that time.

On Tuesday, the team provided an update saying nobody on the team is showing any symptoms after a couple of weeks of quarantine.

“All Lakers players are currently symptom-free of COVID-19. The team will continue to follow the health and safety guidelines set by government officials, the Lakers and the NBA,” the statement said.

The Lakers’ players who tested positive were never publicly identified (in fitting with HIPAA regulations).

A total of 10 NBA players — plus five members of staff associated with teams — have tested positive for the virus that has upended life in the United States. None reportedly have had to be hospitalized. Players such as Marcus Smart and others have recovered and free from the virus.

The NBA remains suspended, with the league hoping to jump-start the playoffs in June, possibly with all the teams in one location.

Report: NBA won’t hold draft until after season

NBA draft
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The NBA draft is scheduled for June 25. Most expect that date to change as the coronavirus pandemic causes postponements around the world.

Apparently, the draft will come after the NBA season – whether the season is completed in a modified format or just cancelled.

Adrian Wojnarowski of ESPN:

I think everybody in the league feels it’s almost impossible to have a draft if you still have a season that’s ongoing.

You can’t have a draft while teams are still playing. You can’t have some teams able to do trades because their season’s done and then some teams unable to do trades because they’re still playing.

It doesn’t strike me as difficult to hold the draft before the season ends. Teams wouldn’t be allowed to trade current players. The restriction would apply across the board, just like the interrupted pre-draft process. That’s not ideal, but compromises must be made amid this chaos.

Importantly, holding the draft sooner could appeal to both sides of the Collective Bargaining Agreement.

It’d be an opportunity to hold a revenue-producing TV event. Obviously, drafted players wouldn’t attend a mass gathering. But with sports fans starved for content, people would watch the selections. A handshake with NBA commissioner Adam Silver is only a small part of the festivities.

The National Basketball Players Association should also push for an earlier draft. Prospects want information sooner so they can prepare for their next step – whether that’s the NBA, returning to college or playing overseas. That said, the union has bigger priorities than potential future members.

So, it’s easy to see why postponing the draft has gained momentum, even if that’s not a no-brainer solution.

Kevin Durant, Donovan Mitchell headline televised NBA video-game tournament

Kevin Durant and Donovan Mitchell
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The NBA season isn’t returning any time soon.

So, the closest thing you’ll get to live basketball on television is a video-game tournament between NBA players. The bracket has been revealed.

The Boardroom:

1. Kevin Durant (Nets)

2. Trae Young (Hawks)

3. Hassan Whiteside (Trail Blazers)

4. Donovan Mitchell (Jazz)

5. Devin Booker (Suns)

6. Andre Drummond (Cavaliers)

7. Zach LaVine (Bulls)

8. Montrezl Harrell (Clippers)

9. Domantas Sabonis (Pacers)

10. Deandre Ayton (Suns)

11. DeMarcus Cousins (previously Lakers)

12. Michael Porter Jr. (Nuggets)

13. Rui Hachimura (Wizards)

14. Patrick Beverley (Clippers)

15. Harrison Barnes (Kings)

16. Derrick Jones Jr. (Heat)

I have questions:

  • How does Hassan Whiteside have the same rating as Donovan Mitchell and a higher rating Devin Booker?
  • Does being extremely online bode well for Kevin Durant?
  • Is Donovan Mitchell, who spent his coronavirus isolation playing video games, in the best game shape?
  • Will Zach LaVine redeem himself?
  • Will players use their own teams? If so, will Devin Booker and Deandre Ayton both use the Suns, Montrezl Harrell and Patrick Beverley both use the Clippers? If not, the most interesting aspect of this tournament – to non-esports aficionados – could be reading way too much into which teams players pick.