Last season, 14 teams lost money. What happened to the NBA?

Although the new national broadcasting copyright contract brought a lot of benefits to the NBA, according to ESPN, a confidential financial report of the NBA they obtained showed that 14 teams in the NBA had operating losses last season. And even after the income redistribution, there are still 9 teams that are not profitable.

The board of directors of the NBA will be held in new york from 27th to 28th of this month. According to a tip obtained by ESPN, team owners plan to spend half a day studying and discussing the scheme of revenue sharing among teams.

A team owner told ESPN that it is difficult for some small-ball 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-ball teams can earn huge profits even after paying 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 teams need to run our business well in order to make money," a team owner told ESPN. "But teams in big markets can still make money even if their operations are very bad."

how big is the income gap between p>NBA teams?

The sale of a $24 billion broadcast copyright contract was once considered as a good medicine to solve the income inequality in the NBA. However, from the first season when the contract came into effect, the income gap between the teams was still very large. The Lakers and Grizzlies are two typical examples.

After Kobe Bryant retired, last season's Lakers didn't have a star player for the first time in more than 21 years. In order to get a better draft pick, the Lakers chose to mess up in the second half of the season and won only 26 games throughout the 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 after being divided into $49 million in revenue, the Lakers' net profit last season was still as high as $15 million, ranking first in the league and $25 million higher than the second place. The reason why the Lakers make so much money is the rich local broadcasting contract-time warner Inc. paid $49 million for the local copyright of the Lakers.

Four years ago, ESPN rated Memphis Grizzlies as the best sports team, and this team has been highly praised in ESPN's annual report. Grizzlies' stadium style is tough and tough, and they have 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 last season, the Grizzlies struggled financially. After strengthening the team lineup, the Grizzlies lost nearly $41 million, while their local media copyright only sold for $9.4 million, the lowest in the league. Through the league income distribution mechanism, the Grizzlies got the highest $32 million in the league. In the new season, Grizzlies will start a new copyright cycle of local media, 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, in 2116-17 NBA***, 11 teams gave 211 million dollars to the other 15 teams. Toronto Raptors, Brooklyn Nets, Miami Heat, Dallas Mavericks and Philadelphia 76ers have neither extra income to share nor income from other teams.

The income distribution mechanism of p>NBA league is very complicated, which can be explained from one point: Nets is one of the teams with the most serious losses in the league, but they have not received any benefits from other teams. The Golden State Warriors, the new york Knicks, the Los Angeles Lakers and the Chicago Bulls * * distributed $44 million, accounting for 71.5% of the league's revenue sharing.

The original intention of the income distribution system is to transfer money from big-ball teams whose players' salaries have exceeded their caps all the year round to small-ball teams, so as to balance the strength of each team. Big-ball city teams and small-ball city teams should have a mutually beneficial relationship. From this point of view, although the Lakers are a huge printing machine, it needs to compete with teams like the Grizzlies to ensure a steady stream of income. Distributing the income to the Grizzlies 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 facing difficulties now. The lockout crisis no longer exists, and the new labor agreement will ensure the smooth operation of the alliance until 2124. The debate about the team's income distribution system only hopes to make some fine-tuning, rather than completely overthrow the original system.

Last season, the total net profit of all NBA teams was $531 million. More importantly, these are just the profits related to basketball affairs. Some teams have their own stadiums, and the income generated by hosting non-basketball events in 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 did not include the revenue generated by the Barclays Center, the home stadium of the Nets.

As we have seen, the market value of NBA teams is rising. Leslie Alexander)1993 bought the Rockets in 2113 for only $85 million, but this month he sold them for $2.2 billion. After deducting inflation, the value of the Rockets in Alexander's hands rose by 15 times. The valuation of the Rockets is so high because Houston, a big city, has turned the Rockets into a money-making machine: last season, the Rockets made a net profit of $53 million.

The players' union and their economists have always claimed that the team owners 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, not 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 2115, this right was rarely exercised. ESPN learned from relevant sources that the players' union used this power to review five teams in the 2116-17 season. Starting from the new season, the new labor agreement will allow the players' union to review 11 teams.

what caused this 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 among teams about the income distribution system.

the adjustment of p>NBA salary cap is determined by the overall income of the league. After years of hovering around $61 million, the new broadcasting copyright contract made the salary cap jump from $63 million last season to $94 million last season, and the salary of players also rose sharply.

the p>NBA league and the players' union initially estimated that the salary cap would soon reach $21 million as the league's overall income increased steadily every year. During the offseason in the summer of 2116, because the salary cap soared by $24 million, teams threw money wildly in the free agent market. The team bet that when the salary cap continues to rise, those big contracts that seem incredible at the moment will look good and cheap.

But at present, this expectation is somewhat optimistic. In the coming 2117-18 season, the salary cap of NBA players will drop to $99 million, and according to the latest expectation, the salary cap for next season will only rise slightly to $12 million. Those teams that spend a lot of money have never thought about paying luxury tax, but in the face of the total wages of players that will exceed $1 billion in the next few seasons, luxury tax may be inevitable. At the same time, the team needs to keep the total salary of the players in the team above 91% of the salary cap, which means that the "poor line" (the minimum standard of the total salary of the team players) will be as high as 89 million US dollars next season.

The total income of p>31 teams determines the amount of salary caps, and the team with the largest market makes the most money. Therefore, in fact, it is the big earners who raise the salary caps of all teams. The Golden State Warriors are typical.

Last season, although the Warriors' home stadium was the oldest in the league, the Warriors' net profit was still as high as $92 million after distributing $42 million to other loss-making teams.

Every playoff game played at the home of the Warriors will bring a lot of money. According to ESPN sources, in last season's finals, the Warriors earned about $15 million in a single game at home-and every extra basketball-related income of the Warriors was helping 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 income of the Warriors in nine home games in the playoffs last season was as high as 44.3 million US dollars, which is almost twice that of the second Cavaliers (the Cavaliers earned 21 million US dollars at home in the playoffs).

The local TV broadcasting contract will also raise the salary cap for all teams. Last season, the local media copyright income of the Lakers and Knicks both exceeded $1 billion, while there were only four such teams in the league. The Knicks' local TV copyright income is even $11 million higher than that of the six teams with the lowest local copyright income combined.

jerseys advertising revenue of each team has little influence on salary cap. The Warriors recently signed an annual sponsorship contract with Lotte Japan for 21 million dollars in jersey advertising, which is by far the highest sponsorship team in NBA jersey advertising. However, this income will not all go to the Warriors' account, 51% will be distributed to Warriors players, 25% will be distributed to other teams in the league, and the Warriors can only keep 25%.

As for the national broadcasting copyright, all NBA teams share it equally, so it can help each team offset some of the increased costs. However, the more critical local income is still stagnant in some markets, which leads to some teams being unexpectedly short of funds. 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 the source, at the recent board meeting of NBA, at least one team owner proposed to expand the army, and mentioned that 31 existing teams should share the entrance fee of the new army equally. Joining a new team requires paying more than 1 billion US dollars to the NBA, which is a great temptation for other teams, because the money does not need to be divided equally between the team and the players.

Adam Xiaohua, president of NBA, has repeatedly stated that the league is not going to expand its troops in the short term, but recently he said in an interview with The Players Tribune that maybe at some point, the expansion of NBA troops will be inevitable.

At the same time, some profitable teams are very dissatisfied with the idea of asking them to distribute more income. They even suggest that those teams that lose money every year and need to redistribute income from the league to survive should move to markets with stronger performance.

The controversy about the relocation of the team may focus on Seattle. At present, the Seattle municipal government is considering whether to renovate the KeyArena, the former home stadium of the SuperSonics, or to 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 team on the NBA board will be more intense.

The Pistons are really moving, but not out of Detroit, but to 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, the Pistons only got $17.6 million last season.

With the help of the income distribution system, the Pistons made up their minds 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 such a move will improve the team's revenue.

The Los Angeles Clippers are also considering moving. Although the Clippers earned $51 million in local broadcasting copyright last season, their net profit for the season was only $2 million. The main reason is that the Clippers rented the Lakers Staples Arena at home, which made them far behind the Lakers in venue revenue (including tickets and other venue revenue).

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 2124), 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 income distribution mechanism in NBA? Can expanding the army solve the problem? Now, both of these ideas still exist only in hypothesis.

the solution?

Although the big market teams complain about the income distribution system, they are still making money, and they are not the one who started the argument.

This summer, the Warriors attracted a lot of envious eyes. The new arena didn't open until 2119, but the Warriors have already bought season tickets for the new arena.

Some team owners believe that the league should ensure that all 31 teams are profitable. According to ESPN sources, paul allen, the owner of Portland Trailblazers, one of the richest men 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 $21 million a season.

but these proposals will definitely not be accepted.

"Before you buy the team, everyone knows how this league is played," a team owner told ESPN.

Some people also suggest that if a team receives benefits from other teams for several years in a row, it should gradually reduce its share. In the past four seasons, five teams have received at least $15 million each season. They are Memphis Grizzlies, Charlotte Hornets, Indiana Pacers, Milwaukee Bucks and Utah Jazz.

The calculation method of income distribution system is very complicated, which needs to consider the size of the ball market in the city where the team is located, the expected income, consumption level and other variables of the team. There will also be various indicators for the adjustment of reducing team expenses. These complicated rules cause a team's financial performance to fluctuate greatly every year.

for example, this document obtained by ESPN fully demonstrates the "lebron james effect". In 2113-14, there was no James.