The most recent report from Forbes is to be expected. NBA owners now make 50 percent of the revenue their teams and players bring in, up from the previous 43 percent mark. Two teams have recently been sold, one team is about to be sold, two new very lucrative local TV contracts have hit their stride, apparel sales are on point, and the already-negotiated TV money is the same regardless of whether one or 1 billion tune into tonight’s Golden State Warriors/Los Angeles Clippers game on NBA TV.
As a result, the average NBA team is worth 30 percent more than it was this time last year. That improvement is not a reaction to the lockout, mind you, unlike television ratings or attendance. It isn’t as if valuations were lower this time last year just because the NBA was less than a month into its season. It’s a result of the lockout’s tenets and a wave of good fortune for those wonderful men we know as “NBA owners.” From Forbes:
The New York Knicks are the league’s most valuable team, worth $1.1 billion, reclaiming the crown from the Los Angeles Lakers, who topped last year’s list. The Knicks’ value rose 41%, mainly due to a $980 million renovation of Madison Square Garden that is expected to be completed this summer. The makeover resulted in an NBA-leading $243 million in revenue last season. The Knicks’ operating income of $83 million was the highest in the league for a third straight year. Another plus: better play. In 2012, the Knicks won a playoff game for the first time since 2001.
The report goes on to rank the Los Angeles Lakers second overall despite a massive payroll, two straight second round sweeps, and what appears to be one of the biggest failures in NBA history in the making during 2012-13. Why do the Lakers take the No. 2 spot? Already rich, they cut payroll significantly (in all areas, from head coaching to scouting to front office personnel and actual players) from May of 2011 until last summer, while taking in the start of a 20-year, $3.6 billion television contract.
Bummer, unemployed former Laker scouts!
The NBA’s record profitability last season was a function of the new CBA and player costs (owners’ biggest expense) being slashed 20% due to the 66-game season. Yet revenues only fell 7% as teams were locked into long-term media and sponsorship deals that in many cases did not require teams to refund any money from lost games.
In other words, even though the arenas were empty, all that guaranteed TV and sponsorship money kept the lights on for these owners even while they slashed jobs across the board. From starting centers (oh, boo hoo) to ticket-takers (yes, go ahead and boo).
You’ll recall that the NBA, save for just a few of its players, runs on guaranteed contracts. The players and owners signed these contracts in the years leading up to 2011 under terms in the 2005 Collective Bargaining Agreement to which the NBA’s owners and players happily agreed. In ways that are somehow not illegal, the NBA then decided it didn’t want to pay the players the money they owed them — money that was negotiated in good faith under a legal document both worked together to develop. How any of this is legal — no moral turpitude or performance clauses were invoked in order to make it so the owners could suddenly stop paying the players they owe money to — is beyond me.
So with that 20 percent slash, the owners made tons of money in 2011-12, and continue to see the value of their franchises skyrocket no matter how many terrible moves they make in the wake of yet another Collective Bargaining Agreement designed to save the owners from themselves.
And have we heard any talk about the owners somehow passing along those profits to the non-players and NBA workers whose lives were completely turned upside down by the nearly five-month lockout? Hell no. Hope you can afford this copy of Forbes, Stadium Worker That Had No Income as the Holidays Approached in 2011!
TV ratings, as it really is with most sports and just about every TV show, are down. Attendance is down as well in many markets, as well. We’re to remind ourselves that though this is not ideal for the NBA’s front office and the owners they serve, they don’t mind this nearly as much as making money for their owners, while allowing those owners to make sometimes two and three times what they paid for their teams when it comes time to sell. This is why we have lockouts. This is why parking attendants and low-level team employees lost jobs in 2011, jobs a great many never recovered.
It’s not worth giving up shouting about, as the NBA prepares for its next lockout a few years from now after putting advertisements on jerseys and offering us just as many head-scratching free-agent signings in the 2011 and 2012 offseasons as they did in the years before the 2011 lockout.
Kobe Bryant and LeBron James still technically have a chance to engage in a classic seven-game NBA Finals next June. If Kobe fails, then Kevin Durant and his Oklahoma City Thunder are the likely candidates. February’s All-Star Game could be a classic. Derrick Rose could return in time to lead his underdog Chicago Bulls to the brink of it all yet again. This is a golden age.
Whatever happens, though, behind the scenes you’ll be hard-pressed to find the NBA’s offices giddier than they are today, breaking out the champagne even on a dreary Wednesday in the dead of winter. This is their Finals appearance, and they won in a sweep.