As we march inevitably toward a lockout this summer, Wednesday night was David Stern’s turn to throw an elbow.
One day after players’ union president Derek Fisher said the latest owner from the owners was no step forward, Stern responded with what he considers the bottom line in negotiations — the actual bottom line.
As in the league has to start making money, he told Steve Aschburner of NBA.com.
“We’re not going to lose any money,” Stern said. “I’m not going to be commissioner of a league that is comfortable [losing money]. Because I don’t have a group of owners who find it acceptable for me to have that conversation with them.
“You don’t have $4 billion worth of revenue and pay out over $2 billion in salary and benefits to lose money. It’s something that we have sort of gotten used to as the revenues have gone up … but the world has changed about the prospect for all franchises, the world has changed for a lot of reasons – and economically – and now people who make investments in buildings and things expect not to lose money.”
Nobody, not even the players, thinks the owners should have to lose money. But the issue is more complex — the league said before that 22 teams will lose a combined $300 million this year. But, the 8 teams making money have almost no revenue sharing. Put simply, the Lakers are about to make nearly $200 million a year in local television revenue and the Kings make $11 million and the Lakers do not have to share currently. It’s not a simple matter of just controlling costs.
But the owners have gone through a recession and seen revenues dip. More importantly, the value of franchises has dipped. Ten years ago you could count on the value of the franchise going up to cover any losses. (Think of it this way: If you bought a franchise for $100 million, lost $5 million a year for 10 years, then sold the team for $200 million, you would have made $50 million and those losses were really just an investment. Those days of the franchise value bailing owners out on paper are gone.)
The owners want fundamental changes to the system and Stern is clearly standing his ground. The players are pretty good with the system as is and are not moving right now either.
So, we are headed for a lockout. Enjoy these playoffs.