NBA Needs Laker Revenue Sharing Plan

The rich get filet mignon and the poor get sawdust burgers.

In the latest affront to the centuries-old American quest for equality, the Lakers signed a $3 billion deal with Time Warner Monday to make sure Jerry Buss will sleep comfortably forever in Forest Lawn. Thanks to tj for the heads-up.

Who do the Lakers think they are - the Yankees? I say the League should take Buss's money and give it to the Clevelands and Charlottes of the NBA. They're in trouble and what would the league be like if it didn't have a franchise in Cleveland? Or Sacramento? I'll tell you what: a bush league, that's what.

But that would only treat the symptom. The real cure would be to force the sale of the Lakers to some level-headed, egalitarian type from way out west. Wait, I know - the league should make Buss sell the Lakers to Charlie Sheen. (Maybe we'd find out the truth about 9/11 that way, too.)

Disclaimer: this was all meant in jest (except the part about Charlie Sheen).

Your post may be in jest, but it addresses a significant issue. It's my hope that the next CBA makes the playing field far more balanced, though it's a complicated situation that can't be solved in a simplistic manner. On top of the everpresent fact that big-market teams don't want to part with their handsome profits, consider these factors:

-- State taxes vary greatly by franchise.

-- Large-market teams typically have greater operating expenses due to increased cost of living, higher advertising rates, and so on.

-- One team (Toronto) has to deal with foreign exchange rates as an issue. There may be more if Stern gets his wish and the league gets teams in London or Mexico City.

-- If you're going to divvy up fat media contracts like the Lakers' $3 billion deal, how much of that goes to revenue sharing? If you take it all, then the deal really isn't with the Lakers, it's with the NBA.

From one article on the subject (http://www.aolnews.com/2010/01/28/nba-needs-stronger-revenue-sharing/). Bold for emphasis is mine.

That's the crux of revenue sharing: small market teams have trouble surviving without help, and the league needs small market teams to survive itself... [T]he margins are so slim for teams without millions of potential customers, any slip is magnified... [S]maller market teams must go to extreme measures to stay afloat. The Kings last season, for instance, left Kenny Thomas, an end-of-the-bench veteran seeing little playing time, home in Sacramento on road trips to save on hotel costs. Do you think the Knicks -- just as bad as the Kings over the last few seasons -- would ever have to resort to that?

Not only can the Knicks, by virtue of their home location, avoid such weird cost-cutting measures, but the team can make money just by existing. How is that fair to teams like the Magic, who made the Finals out of the league's ninth smallest market, but actually lost money on the season due to an antiquated arena and relatively low income from corporate suites? How can a league survive with such a disparity in earning potential among the members? It'd be like capping player salaries by height. Even if you're an MVP candidate, one of the most electric players in the world, but you're 6-feet-tall (Chris Paul?), you can only make $5 million, while 7-footers (Kwame Brown?) make $5 million minimum, upwards of $20 million if they're actually good, because, well, that's how it is. It sounds stupid, because it is stupid. And it's exactly how an NBA without decent revenue sharing works.

Outside,

Toronto players are paid in US dollars so they don't have to worry about the exchange rate from their paychecks.

Concerning the AOL article, why does the NBA need small market teams to survive? Who said the league needs to support 30 franchises, why not 26? The writer failed to mention Orlando giving that stupid contract to Rashard Lewis and now taking over Arenas and Turkoglu's contracts. Orlando knew their market size when the wanted to become a franchise. They don't need and shouldn't get NBA welfare.

There is no way the NBA goes to London because of the travel difficulties and not to Mexico because of security issues.

The NBA, NHL and MLB have too many failing companies/teams and throwing money at their failed businesses is not working.

TJ,

Sorry that I wasn't clear. For the Toronto foreign exchange issue, I didn't mean player salaries but instead franchise costs and determining the amount to be shared.

As for whether the league could shrink, they obviously can, but there's two separate issues: 1) what model will the league use from a financial and competitive standpoint? and 2) if the league does decide to contract, what costs are associated with that?

For the first question, it sounds like you're inclined to go with a "survival of the fittest" model, which would lead to a smaller number of teams, mostly in large markets. Is that correct? So franchise in a small market should fold because it's not making money, even if they're run reasonably well, and should also expect to have a much lower chance of being competitive because they can't attract, keep, or afford better players? While a poorly run franchise in a large market can stick around because they're still making money? That doesn't sound like a sustainable business model for the league. There needs to be a balance that evens the playing field financially and competitively for all teams and doesn't reward incompetence or poor decisions. That's the challenge.

For the second issue (what costs are associated with contraction), this is from my post in the Clarification of Terms thread from Feb. 16.

By "contracting," Stern is indeed referring to eliminating the franchise. This has happened in the past, primarily in a natural way when a franchise went bankrupt and closed up shop on its own. In this instance, Stern is using it purely as a negotiating ploy, and not even a serious one. I think he's mostly using it as a public relations/media tactic, because the players know full well that it's not a serious possibility.

Consider the circumstances. If you're Memphis, Minnesota, or whichever franchise would be "contracted," you're not actually bankrupt. Your franchise has considerable value, as demonstrated by the recent sale of the Warriors for $450 million. You want to contract my franchise, fine -- where's my $450 million? To shrink the league down to 24 teams, for example, all the other owners would have to chip in $2.7 billion. Even if they only eliminate two franchises, that's $900 million. That's just for starters.

On top of that, the NBA develops relationships with sponsors in each city, and those sponsors are crucial to the financial success of individual franchises and the league as a whole. As a sponsor, how are you going to feel if the league gets rid of the franchise you tied your company to? Do you think you'll continue the relationship with the NBA? Or are you more likely to sue the franchise and league for breach of contract and recovery of sponsorship fees paid?

Outside,

When teams are awarded a franchise or move to a city, they are well aware of the demographics and whether they are a small/medium/large market team. Should the NBA allow new franchises in other small market cities then those owners expect the NBA and large market teams to support them?
If there was a natural disaster or something similar in the area of an NBA team I would say that the NBA should help these teams but why should the other owners be obligated to support these teams when they intentionally moved to/started in these cities?
When the NBA took over the Hornets they paid Shinn $300m. That is probably the value of other stressed teams not $450m like Golden State sold for.
There are lease/sponsorship issues with contracting teams but I doubt they couldn't be overcome.
The Knicks/Yankees/Lakers/Celtics can overcome bad contracts but small market teams don't have the same luxury. That is the way it is. San Antonio is a small market team and is very successful.
San Antonio is the 37th largest market in the US and Salt Lake City is the 33rd. I doubt they would look for a handout. On the other hand Minnesota is the 15th largest market and Sacramento 20th. They now can't claim to be in need as a small market team because they have had some bad years.

The notion that small market teams must be supported by the weathier franchises isocialism. Don't get me wrong i am not totally against all forms of socialism (afterall people need heath care) but a NBA team that can not stand on it's own financially should b allowed to go under.

The reason why the Celtics and Lakers only play twice per year is because of the expansion in the NBA. There are places in the NBA particuarly in the Southern part of the country where football is King. I would let some of these weak teams go under. This would stimulate competition and also re-established rivalries that everyone wants to see.

Teams like LA and Boston need to play more games against each other. Team like the Raptors, Hornets, T Wolves, Grizzlies can disappear and the NBA fan base would not miss them.

Although many fans are upset by theresent movement of star players, i think the NBA is more attractive when a team like the Knicks have star power.

Anybody out theredying to see the next Sacramnento Kings game?

dboss

dboss

Many of us would love to be able to see ANY game!

beat

Beat I have had NBA league pass for 5 years and I watch a lot of teams other than the Celtics. But quite frankly there are some teams that I rarely watch. Interestingly those are also the teams that are in smaller markets.

I think the luxury tax thing is a bad idea because it punishes teams that can spend the money to retain their players and add others.

The way I see it if you do not have the money to spend in order to compete for the best talent then maybe you should open up a resturant. lol

dboss, I have LP too but what i'm refering to is being able to AFFORD to watch a game LIVE in an arena! Not on TV.

beat

tjmakz wrote:Outside,

When teams are awarded a franchise or move to a city, they are well aware of the demographics and whether they are a small/medium/large market team. Should the NBA allow new franchises in other small market cities then those owners expect the NBA and large market teams to support them?

You'd feel much differently if you were a fan of Portland, Denver, or Utah.

dboss wrote:Anybody out theredying to see the next Sacramnento Kings game?

Actually, I watch the Kings. And so do lots of people. That's a side effect of fantasy leagues, which have brought millions of new fans to the NBA and have created interest in players throughout the league for fans who used to primarily follow just one team. Fantasy leagues are huge with the younger demographic (I got involved only because my son asked me to), and those younger fans are a big part of the league's future. I used to watch the "big" games with my sons, but now we'll watch a good chunk of a game like Milwaukee-Portland because last year we had Brandon Jennings and I got his friend to pick up Andrew Bogut. Because of fantasy leagues, he knows LeMarcus Aldridge is a stud, Andre Miller is trick or treat, and Wesley Matthews can put up good numbers. That initial interest gets him to watch the game, and now we're talking about how these guys really play, and we're seeing the advertising displayed in the arena and the commercials at timeouts and halftime. There's huge, building interest in players throughout the league which translates into a benefit to the league as a whole.

The fact is, I'd be interested in the Kings even if I wasn't involved in fantasy leagues. I grew up in Northern California as a Warriors fan, but Sacramento is pretty darn close. Those Rick Adelman teams were very good and entertaining. They have some good players and have potential to be decent in the future. I like Paul Westphal. Evans is good but hurt this year. Cousins is a head case but talented. They have a bunch of other players who are good but not superstars. Beno Udrih can play. Omri Casspi is an interesting story.

Even more, are you aware that this is the same franchise that used to be the Kansas City Kings, and before that the Kansas City Royals, and before that the Cincinnati Royals, and before that the Rochester Royals? They've been around since 1948-49, when the league was called the BAA, and they won the NBA title in 1950-51. There's some history there that shouldn't be tossed to the roadside just so the Knicks, Celtics, Lakers, Heat, and Bulls don't have to deal with them.

Outside wrote:

tjmakz wrote:Outside,

When teams are awarded a franchise or move to a city, they are well aware of the demographics and whether they are a small/medium/large market team. Should the NBA allow new franchises in other small market cities then those owners expect the NBA and large market teams to support them?

You'd feel much differently if you were a fan of Portland, Denver, or Utah.

Portland has the wealthiest owner in all of professional sports. They have spent money like drunken sailors over the last 15 years.
Portland, Denver and St. Lake City aren't the most attractive places for a free agent to sign.
I too would rather live and play in FL, CA or NY.