NBA Isn't in Financial Distress

[Erick Blasco]

 

 

The first column is league’s gate receipts or ticket revenues; the Forbes data suggest this is one area of legitimate concern. Adjusted for inflation, ticket revenues are down 6 percent compared to five years ago, although they are up 22 percent compared to the 1999-2000 season.

 

 

Other revenues, like licensing and media rights, have increased at a healthier clip, because the N.B.A. is locked into long and lucrative television contracts. They have grown by 11 percent over five years, adjusted for inflation, or by 30 percent over 10 years.

 

The league’s primary expense is player salaries. They have followed a nearly identical trajectory to league revenues, having grown at a 24 percent rate over 10 years, but with growth having flattened out since the recession. This is not a coincidence: under the league’s current collective bargaining agreement, player salaries are strictly tied to league revenues. In fact, because of a little-known provision in the labor agreement, players must return a portion of their salaries if they exceed 57 percent of league revenues, as has happened in several recent seasons. As I will discuss at more length later, the portion of revenues earned by N.B.A. players is similar to that of the other major sports leagues and has been stable over the past decade.

 

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 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

 

Much more here:

 

http://fivethirtyeight.blogs.nytimes.com/2011/07/05/calling-foul-on-n-b-a-s-claims-of-financial-distress/

[?QuestionMark?]

The Union has pretty much conceded that were were losses. They just don't buy that it's as much as Stern is claiming. I'm not an accounting major but I'm pretty sure you can screw with the numbers to show you're losing more money than you really are.

 

On the radio I was hearing that the biggest gripe from the union is that owners are using the purchase price of a franchise in their losses. If that's true then yeah the owners a full of it. Players shouldn't have to be responsible because someone overpaid to buy a team.