The dreaded Oct. 4 is only getting closer and closer. As the date draws closer so does the deadline for the players and owners to reach a consensus. So what’s the issue?
The NBA last year made around $4 billion in projected revenue. However, the owners are complaining that only eight out of the thirty teams recorded a profit: LA Lakers, New York Knicks, Boston Celtics, Miami Heat, Chicago Bulls, Oklahoma City Thunder, Houston Rockets and the Golden State Warriors — so basically the cities with the largest populations and potential for revenue. Another key factor to understand is that the owners fund these teams themselves; unlike other sports leagues, NBA teams are primarily privately owned and funded.
Under the current bargaining agreement (CBA), players receive 57 percent of revenues generated outside the game. The owners feel that to account for their losses and the overhead of maintaining the teams, this split should be changed to 60/40 in favor of the owners. This would amount to roughly $750 million to $800 million in a collective loss to the players’ income, and of course the players aren’t budging. During the middle of the summer, revenue sharing among the franchises was brought up as a solution. Under this situation the teams would figure out a way to split revenue proportionally and the owners would divvy it among the team players, managers and staff.
With 73 percent of the league operating in the red, revenue sharing would seem like an obvious solution. However, with revenue sharing comes disgruntled superstars. Teams spend years and millions of dollars to surround one superstar player with the support he needs and revenue sharing doesn’t factor into that calculation.
Math-wise, the NBA really shouldn’t be in that much financial trouble. The league generated $4 billion in revenue last year. The players get their automatic 57 percent cut, which amounts to $2.3 billion. The owners are left with $1.7 billion, which should be more than enough. It costs the NBA $1 to produce every $6 in income. According to ESPN, the overall the fixed cost of the NBA should be roughly $700 million. Do some basic algebra, and you’re left with $1 billion in revenue. If the league has a billion in cash at the end of every season, what’s the issue with the lockout? The owners. Certain owners, i.e., the owners of the teams mentioned above, make a ridiculous majority of that billion and sharing has never been a part of the game.
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