Although the new national broadcasting copyright contract has brought a lot of benefits to the NBA, according to ESPN, an NBA confidential financial report they obtained showed that there were 14 teams in the NBA last season. And even after the income redistribution, there are still 9 teams that are not profitable.
On the 27th and 28th of this month, the board of directors of NBA will hold a meeting in new york. According to the news obtained by ESPN, the team owner plans to spend half a day studying and discussing the revenue sharing scheme between teams.
A team owner revealed to ESPN that it is difficult for some small ball market teams to keep up with the rapidly rising salary cap standard, which leads to the need for the most profitable teams in the league to distribute more profits. Some people think that the widening profit gap between teams will upset the balance on the field, because big teams can make huge profits even if they pay luxury tax, and theoretically they can sign more stars.
After the redistribution of income and luxury tax, the nine teams that are still losing money are Atlanta Hawks, Brooklyn Nets, Cleveland Cavaliers, Detroit Pistons, Memphis Grizzlies, Milwaukee Bucks, Orlando Magic, San Antonio Spurs and Washington Wizards.
"People always say that our small ball market team needs to run our business well to make money," a team owner told ESPN. "But teams in big markets can still make money even if their operations are very bad."
What is the income gap of NBA teams?
The sale of the $24 billion broadcasting copyright contract was once considered as a good medicine to solve the income inequality in NBA. However, from the first season when the contract came into effect, the income gap between teams was still very large. The Lakers and the Grizzlies are two typical examples.
After Kobe retired, last season's Lakers had no star players for the first time in more than 20 years. In order to get a better draft pick, the Lakers chose to screw up in the second half of the season and won only 26 games in the whole season. This is the fourth consecutive season that they won no more than 27 games.
But from a financial point of view, last season's Lakers were quite successful. Even if it is divided into $49 million, the Lakers' net profit last season was as high as $65,438+/kloc-0.50 million, ranking first in the league and $25 million higher than the second. The reason why the Lakers earn so much money is that time warner Inc. Company paid $654.38+49 billion for the local copyright of the Lakers.
Four years ago, ESPN selected Memphis Grizzlies as the best sports team, and this team was highly praised in ESPN's annual report. Grizzly's stadium style is tough and tough, and it has established close ties with fans through various marketing activities. In the past seven years, the Grizzlies have reached the playoffs in a row, which is a force that no team can underestimate.
But the grizzlies struggled financially last season. After strengthening the team lineup, the Grizzlies lost nearly $40 million, while their local media copyright only sold for $9.4 million, the lowest in the league. Through the league's income distribution mechanism, Grizzlies got the league's highest $32 million. In the new season, Grizzly Bear will start a new round of local media copyright cycle, which may be an opportunity to increase income. However, according to Nielsen, a market research company, as one of the smallest teams in the market, the Grizzlies' next local broadcast contract may still be difficult to compare with other big city teams.
A team owner told ESPN: "The national broadcasting contract has raised the salary cap, but the local broadcasting contract still needs to keep up with the players' salary level. If the team can't get enough local income, they will lose money. "
According to the materials obtained by ESPN, 16- 17 NBA * * has 10 teams giving the remaining 15 teams $20 10/00000. Toronto Raptors, Brooklyn Nets, Miami Heat, Dallas Mavericks and Philadelphia 76ers have no extra income to share and no income from other teams.
The income distribution mechanism of NBA league is very complicated, which can be explained from one point: Nets are one of the teams with the most serious losses in the league, but they have not benefited from other teams. Golden State Warriors, new york Knicks, Los Angeles Lakers and Chicago Bulls * * received $654.38 +0.4 billion, accounting for 765.438+0.5% of the league's revenue share.
The original intention of the income distribution system is to transfer the money from the big teams whose players' salaries are capped all the year round to the small teams to balance the strength of each team. Big-ball teams and small-ball teams should have a mutually beneficial relationship. From this point of view, although the Lakers are a huge printing machine, they need to compete with teams like Grizzlies to ensure a steady stream of income. Distributing income to grizzly bears is a way to ensure the operation of this model.
However, some teams are not satisfied with the current income distribution model. A big ball city team owner told ESPN: "The demand for income distribution should be a special subsidy, not a permanent relief."
This is not to say that the NBA is in trouble now. The lockout crisis no longer exists, and the new labor agreement will ensure the smooth operation of the alliance until 2024. The debate about the team's income distribution system only hopes to make some fine-tuning instead of completely overthrowing the original system.
Last season, the total net profit of all NBA teams was $530 million. More importantly, these are just the profits related to basketball affairs. Some teams have their own stadiums, and the income generated by holding non-basketball events on the stadiums will not be included in the financial statistics of the NBA. For example, according to the NBA financial report, the Nets lost $44 million last season, but this does not include the income generated by the Nets' home Barclays Center.
As we can see, the market value of NBA teams is rising. Leslie alexander spent only $85 million when he bought the rocket in 1993, but this month he sold the rocket for $2.2 billion. After deducting inflation, the value of the rocket in Alexander's hand rose by 15 times. The valuation of the rocket is so high because Houston, a big city, has turned the rocket into a money-making machine: last season, the rocket's net profit was $53 million.
The players' union and their economists have always claimed that the boss of the team used accounting methods to make the profit in the team's financial statements lower than the actual situation. The players' union is actually more concerned about the team's basketball-related income than the team's balance sheet, because the basketball-related income is related to the players' income sharing. The players' union has the right to conduct financial audits on five teams every season. Before 20 15, this right was rarely exercised. ESPN learned from relevant sources that the players' union used this power to review five teams in the 20 16- 17 season. Starting from the new season, the new labor agreement will allow the players' union to audit the 10 team.
What caused the present situation?
When the NBA signed a new broadcasting copyright contract of $2.7 billion per season, only a few teams foresaw that this might lead to disputes between teams about the income distribution system.
The adjustment of NBA salary cap is determined by the overall income of the league. After hovering around $60 million for many years, the new broadcasting copyright contract made the salary cap jump from $63 million last season to $94 million, and the player's salary also rose sharply.
The NBA league and the players' union initially estimated that the salary cap would soon reach $65.438+$200 million as the league's overall income rose steadily every year. During the off-season of 20 16 summer, because the salary cap soared by 24 million dollars, teams frantically threw money at the free agent market. The team bet that when the salary cap continues to rise, those big contracts that seem incredible at present will look good and cheap.
But at present, this expectation is a bit too optimistic. In the coming 20 17- 18 season, the salary cap of NBA players will be reduced to 99 million dollars, and according to the latest expectation, the salary cap for next season will only rise slightly to 102 million dollars. Those teams that spend a lot of money have never thought of paying luxury tax, but in the face of the total salary of players that will exceed 654.38 billion US dollars in the next few seasons, luxury tax may be inevitable. At the same time, the team needs to keep the total salary of players in the team above 90% of the salary cap, which means that the "poverty line" (the minimum standard of the total salary of team players) will be as high as 89 million US dollars next season.
The total income of 30 teams determines the number of salary caps, and the team with the largest market makes the most money, so in fact, it is the big earners who raise the salary caps of all teams. Golden State Warriors are typical.
Last season, although the Warriors' home court was the oldest stadium in the league, the Warriors' net profit was still as high as 92 million dollars after distributing 42 million dollars to other loss-making teams.
Every playoff game at the Warriors' home will bring a lot of money. According to ESPN, last season's finals, the Warriors earned about $6.5438+0.5 million at home-and every extra basketball-related income of the Warriors helped other teams in the league raise their salary caps. The Warriors won't get all this income, because the playoff income also needs to be distributed to the league, but according to the documents obtained by ESPN, the Warriors earned as much as $44.3 million in nine playoff home games last season, almost twice as much as the second Cavaliers (the Cavaliers earned $20 million at home in the playoffs).
The local TV broadcasting contract will also raise the salary caps of all teams. Last season, the local media copyright revenues of the Lakers and Knicks both exceeded $6,543.8 billion, while there were only four such teams in the league. The Knicks' local TV copyright income is even higher than the six teams with the lowest local copyright income combined by $654.38+million.
The advertising revenue of each team's jerseys has little effect on the salary cap. Warriors recently signed an annual sponsorship contract with Lotte Japan for 20 million dollars in jersey advertisements, which is by far the highest sponsorship in NBA jersey advertisements. However, this income will not all go to the Warriors' account, 50% will be distributed to Warriors players, 25% will be distributed to other teams in the league, and Warriors can only keep 25%.
As for the income from national broadcasting copyright, NBA teams share it equally, so it can help teams offset some of the increased costs. However, the more critical local income is still stagnant in some markets, leading to unexpected shortage of funds for some teams. Therefore, the intensity of income redistribution in NBA league is unprecedented, but the pressure is also unprecedented.
Is it inevitable to expand the army and relocate?
According to sources, at the recent NBA board meeting, at least one team owner proposed to expand the army, and mentioned that the existing 30 teams should share the entrance fee of the new army equally. Joining a new team needs to pay more than $65.438 billion to the NBA, which is a great temptation for other teams, because the money does not need to be shared equally between the team and the players.
Adam Xiaohua, president of NBA, has said many times that the league is not prepared to expand its troops in the short term, but in an interview with Players Tribune recently, he said that perhaps at some point, the expansion of NBA will be inevitable.
At the same time, some profit-making teams are very dissatisfied with the idea of asking them to allocate more income. They even suggested that those teams that lose money every year and need to redistribute league income to survive should move to stronger markets.
The debate about the relocation of the team may focus on Seattle. At present, the Seattle municipal government is considering whether to rebuild the former home of the Sonics, KeyArena, or rebuild a new stadium. It is estimated that Seattle will make a final decision by the end of this year, and when Seattle really owns a stadium, perhaps the debate on the relocation of the NBA board will be more intense.
The piston is really moving, but not leaving Detroit, but heading for a new arena. Last season, the Pistons lost as much as $63.2 million before redistributing income, which is one of the most serious teams in the league, and Detroit is not a small ball market. After redistributing profits through the income distribution system, Pistons only got $654.38+076,000 last season.
With the help of the income distribution system, Pistons made up his mind to move out of the old stadium in the suburbs of Detroit and move to the new stadium in the city in the new season. They hope that this move will improve the team's income.
The Los Angeles Clippers are also considering a transfer. Although the Clippers earned $5 1 10,000 in local broadcasting copyright last season, their quarterly net profit was only $2 1 10,000. The main reason is that the Clippers rented the Lakers' Staples Arena at home, which made them far behind the Lakers in venue income (including tickets and other venue income).
That's why steve ballmer, the owner of the Clippers, is discussing the construction of a new stadium with Inglewood recently, because if the Clippers can't get a more favorable lease policy from Staples Arena in the future (the contract between the two parties will expire in 2024), the Clippers will leave downtown Los Angeles.
Can moving from a small ball market to a big ball market like Seattle solve the problem of NBA income distribution mechanism? Can expanding the army solve the problem? Now, these two ideas still exist only in hypothesis.
Solution?
Although the big marketing teams are critical of the income distribution system, they are still making money, and they are not the ones who cause controversy.
This summer, the Warriors attracted a lot of envious eyes. The new arena didn't open until 20 19, but the Warriors have already bought season tickets for the new arena.
Some team owners believe that the league should ensure that all 30 teams are profitable. According to ESPN, paul allen, the owner of Portland Trailblazers, one of the richest people in the world, is one of the bosses who strongly advocate sharing more profits. At the recent shareholders' meeting in Las Vegas, a boss even suggested that the league should ensure that each team earns at least $20 million every season.
But these proposals will certainly not be accepted.
"Before you bought the team, everyone knew how this league was played," a team owner told ESPN.
It has also been suggested that if a team benefits from other teams for several years in a row, it should gradually reduce the amount it can get. In the past four seasons, five teams have earned at least $6.5438+0.5 million each season. Memphis Grizzlies, Charlotte Hornets, Indiana Pacers, Milwaukee Bucks and Utah Jazz.
The calculation method of income distribution system is very complicated, and variables such as the size of the ball market in the city where the team is located, the expected income of the team, consumption level and so on need to be considered. There will also be various adjustment indicators to reduce team costs. These complicated rules cause a team's financial performance to fluctuate greatly every year.
For example, this document obtained by ESPN fully proves the "lebron james effect". In the 20 13- 14 season, none of James' knights got 108 million dollars from other teams. Since James returned in the 20 14- 15 season, the Cavaliers have allocated $29 million to other teams in the past three seasons. Last season, before the income distribution, the Cavaliers' net profit was $265,438+$7,000, but after paying the luxury tax of $24.8 million and distributing it to other teams, the Cavaliers actually lost money last season.
If a team's performance exceeds the market scale of its region and the expectation of past data, it will greatly reduce the income obtained from the income distribution system.
This is why the Thunder, although located in Oklahoma, one of the smallest markets in the NBA, has distributed its income to other teams for six consecutive seasons. So is the Spurs. At the same time, Denver Nuggets, located in Big Ball City, can share the 8-figure income of other teams and make profits year after year, although it keeps balance all the year round. Moreover, according to the materials obtained by ESPN, the Nuggets' expenditure on players' salaries and team management fees is the lowest in the league.
From 20 1 1 to 20 14 in the first year when the league began to implement the income distribution mechanism, any change in the income distribution mechanism requires more than 20 votes from the NBA board of directors. However, after 20 14, it can be amended as long as the board of directors agrees to 16 or more votes.