Is the NBA over its head financially?

[Minstrel]

Everyone but NO?

Perhaps. Even last year, the cap spike was called a one-time phenomenon. Maybe Olshey just thought the cap would increase enough that more crazy deals would be signed. Plus, I guess, he didn't think the deals were crazy.

 

[Charcoal Filtered]

The NBA owner are going to be ok. Contracts are not long enough to put them in danger of significantly hurting them financially. Remember, if they break even, they still are making bank with the franchise value increase not being part of the revenue calculations.

 

[joeBlazers]

The value of NBA franchises (LA Clippers) went from $12 millions to $2 billions. Nobody is talking about the amount of money the owners are making. The value of Apple Computers went from zero to billions. The value of Google went from nothing to billions ... etc. When your product is popular, your employees need to profit from it, not only the owners or CEOs.

 

[Voodoo]

The value of NBA franchises (LA Clippers) went from $12 millions to $2 billions. Nobody is talking about the amount of money the owners are making. The value of Apple Computers went from zero to billions. The value of Google went from nothing to billions ... etc. When your product is popular, your employees need to profit from it, not only the owners or CEOs.

What are you? A commie? Oh wait no that is capitalism, unfortunately Republicans don't believe in that anymore and seem to only care about the rich.

 

[Chris Craig]

The wheels are going to fall off sooner or later

 

[Minstrel]

The wheels are going to fall off sooner or later

Entertainment is a pretty durable industry. People always need it, it doesn't really go obsolete. I guess there could come a day when basketball isn't popular, but that's probably still quite a-ways off.

 

[Orion Bailey]

The cap isn't regressing--it went up from $94M last season to $99M this season. It went down from previous projections of what it would be (at one point, it was expected to be around $107M) but that's not a regression, that's just slower growth.

Everyone knew that growth would slow after last year's cap spike.

I should have clarified.... the growth is slowing. I meant the growth is regressing. It's not continuing.
I don't know if everyone knew it. What if it has zero growth two years from now? I get it's a ripple effect and it always seems to even out, by the drastic growth we saw never sustains, like my op states. Read below for my thoughts on the results.

Entertainment is a pretty durable industry. People always need it, it doesn't really go obsolete. I guess there could come a day when basketball isn't popular, but that's probably still quite a-ways off.

In entertainment he wheels falling off means lockout and some major changes.
It has happened before so it's not impossible. I think that is the scenario non of us fans want. But if we see another rash of big signings this off season and then the regular season seems predictable and fans tune out like last year, stunting growth... it's gonna be a problem I think.

 

[tlongII]

Nope. And the reason is because it is the only league that is truly recognized globally as the best and it's a global sport.

 

[Minstrel]

In entertainment he wheels falling off means lockout and some major changes.
It has happened before so it's not impossible.

Lockouts generally don't happen because the NBA or the teams are struggling. They generally happen because the owners feel that players are getting too much of the pot and they think they can force the players to give up some of their revenue. In other words, it rarely has to do with the growth of the pie, but how the pie is being divided.

 

[Orion Bailey]

Lockouts generally don't happen because the NBA or the teams are struggling. They generally happen because the owners feel that players are getting too much of the pot and they think they can force the players to give up some of their revenue. In other words, it rarely has to do with the growth of the pie, but how the pie is being divided.

But that is what I am saying is going to happen. James Harden will make 50 mill his final year of his new contract. If/when the revenue continues to slow its growth, these contracts WILL be too much of the pie....

 

[Minstrel]

But that is what I am saying is going to happen. James Harden will make 50 mill his final year of his new contract. If/when the revenue continues to slow its growth, these contracts WILL be too much of the pie....

How the pie is split is set by the CBA. Currently it's 50/50--players get 50% of all NBA revenue and owners get 50% of all NBA revenue. So it doesn't matter how high max salaries go--if Harden makes $50M in a year, it just means less money for other players.

I'm not saying there won't be a lock0ut--it just won't be because the NBA is "in over its head" or becoming less profitable. It'll be because owners will be trying to pry more of the revenue away from players. They'd be doing that no matter how profitable the NBA is because more money for them is more money for them.

 

[Trackjack]

To me owners are there worst enemies how can you ever agree on super Max contract. Then they later on cry about we not making any money. They put there self in bad situations. But the fans going to pay higher ticket sales and merchanise will go up. Put get more pricey for the fan. The big contracts by networks help too. Now is the league in bad shape no if one network goes down another going to pick it up.

 

[joeBlazers]

Social media like Youtube, Instagram is showing us that entertainment is indeed a massive business. If ESPN/Turner Sport cannot pay the money, I'm sure some of the new media will gladly pick up the tab. America and the world wants to be entertained. Sport is one way of doing it. It is no secret. The actors of this should get rewarded handsomely. And If the reason the value of these franchises is going up is because there are guys with cash on the sidelines (around the world) waiting to spend it. You see it in Europe with guys coming out of nowhere and buying soccer teams. Even former athletes are now spending their fortunes on teams (Jeter, Hill, LeBron ...).
Once these (former) Athletes realize what they can do with their millions (Guys like Durant, Harden, Curry, Kobe will probably make 1/2 billion+ in their careers) ... a whole new class of owners will be out there.

 

[Wizard Mentor]

How the pie is split is set by the CBA. Currently it's 50/50--players get 50% of all NBA revenue and owners get 50% of all NBA revenue. So it doesn't matter how high max salaries go--if Harden makes $50M in a year, it just means less money for other players.

I'm not saying there won't be a lock0ut--it just won't be because the NBA is "in over its head" or becoming less profitable. It'll be because owners will be trying to pry more of the revenue away from players. They'd be doing that no matter how profitable the NBA is because more money for them is more money for them.

I understand what you are saying, but some get the wrong idea. Owners don't get anywhere near 50% profit.

I think if you went up to the owners and said "you guys get 30%" in profits, they jump at that. The remaining 70% goes to the "players" who have to pay the salary of all of the team's employees, for the stadiums, for practice facilities, for advertising, doctors and medical .... for everything.

 

[Minstrel]

I understand what you are saying, but some get the wrong idea. Owners don't get anywhere near 50% profit.

I think if you went up to the owners and said "you guys get 30%" in profits, they jump at that. The remaining 70% goes to the "players" who have to pay the salary of all of the team's employees, for the stadiums, for practice facilities, for advertising, doctors and medical .... for everything.

Sure, I said 50% revenues. Expenses are taken out of revenues to get profit. If you want to go in that direction, players have to pay their agents out of their salaries, which is generally at least 10%.

I'm also not sure why it not being "50% net" is relevant--yes, the 30 owners aren't netting as much as the 450 players, but each one of them is making far more than any player. The players are also the ones actually producing what people want to see. The owners are making a hefty amount of money from providing the venue. Also, in many cases, owners don't have to pay for stadiums. While that may be starting to change, generally stadiums are tax-payer funded and many times the team owners are the ones who profit from other, non-basketball uses of the stadium.

IMO, owners are getting a pretty nice deal.

 

[Wizard Mentor]

Sure, I said 50% revenues. Expenses are taken out of revenues to get profit. If you want to go in that direction, players have to pay their agents out of their salaries, which is generally at least 10%.

I'm also not sure why it not being "50% net" is relevant--yes, the 30 owners aren't netting as much as the 450 players, but each one of them is making far more than any player. The players are also the ones actually producing what people want to see. The owners are making a hefty amount of money from providing the venue. Also, in many cases, owners don't have to pay for stadiums. While that may be starting to change, generally stadiums are tax-payer funded and many times the team owners are the ones who profit from other, non-basketball uses of the stadium.

IMO, owners are getting a pretty nice deal.

I have no info for the last 10 or so years, but previously, many owners made zero until they actually sold the team - when owner got 53% of the BRI.

Zero is much less than what James Harden is getting paid next year. I'm not sure the owner of the Rockets is making that much next year.

Of course, players do not need to use agents.

If you don't see why "50% net" is relevant, don't worry about it - I have nothing further to add.

 

[Minstrel]

I have no info for the last 10 or so years, but previously, many owners made zero until they actually sold the team - when owner got 53% of the BRI.

Do you have a source for that? My understanding was that both NBA and MLB teams have claimed to be unprofitable going into lockouts, but refused to open their books to prove it. I wouldn't take the unsubstantiated claims of the teams as gospel, considering they're trying to get leverage in negotiations.

 

[SlyPokerDog]

GoFundMe so SlyPokerDog can go party in Vegas or a GoFundMe to save the NBA?