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Constellations
05-04-2011, 06:32 AM
http://www.prosportsdaily.com/articles/players-unhappy-with-owners-new-offer-495026.html

Pacerized
05-04-2011, 07:14 AM
I'm glad the owners are still pushing for a hard cap. If it gets implemented over a 2 year period as suggested then our cap space would be even more valuable in 2012 then it is now, and Posey's expiring contract might have a lot of value at the trade deadline. There aren't a lot of details about the new proposal but I like the part about teams being able to compete for a championship and I hope it refers to some parity clauses. I hope the owners don't eventually cave in for a system just like the one we have with a lower bri but it doesn't sound like they will.

grace
05-04-2011, 08:39 AM
Color me shocked. :-o

I've heard this is going to be long and ugly.

BillS
05-04-2011, 09:43 AM
Looks like the union figures fans will be on their side, so they are playing the "please me" game rather than making any counter proposals.

It might also indicate they aren't willing to grant any of the owners' statements on league finances, so they feel no need to change from their year-old proposal.

*sigh*

I almost don't care about the bottom line, I just want a more level playing field. Does the NBAPA realize that if only 20-30 guys get the top money with 4-5 teams and the remaining are scrubs that leaves an awful lot of players making the minimum or without jobs if franchises fold or go the "no loss payroll" route.

ksuttonjr76
05-04-2011, 11:55 AM
Wade, Lebron, and Bosh took less money...why can't the rest of the league do the same?

wintermute
05-04-2011, 12:27 PM
BillS, why do you think it's the players' union being intransigent? By all accounts, it is the owners who are pushing wholesale changes. They claim those changes are necessary, but from the outside it certainly looks like the NBA as a whole is doing pretty well.

Here's the way I see it. While overall the NBA is a very profitable business, the obvious contention is on how the pie is divided. Of the 3 groups of stakeholders - big market teams, small market teams, and the players - it's pretty clear that the big market guys and the players are doing well. On the other hand, the small market teams (including the Pacers) are struggling financially, and many are losing money.

So the pie needs to be redistributed so that more money goes to the small market teams. The only question is, how much of it is coming from the big market teams, and how much from the players. The owners' current proposal, as I understand, is to take the needed money from the players, and redistribute it to the owners, big market and small market alike.

Now consider the implications. For the small market teams, they've gone from losing money to perhaps making a small profit. But for big market teams, they've gone from being profitable to being even more lucrative. How exactly is that improving competitive balance?

Personally, I've always felt that to really improve balance, the redistribution should actually be going from the big market teams to small market teams, i.e. revenue sharing. And I think it's right that the players' union is insisting that it's part of CBA negotiations. Some people like to point to the hard cap as the reason for the NFL's balance, but I think revenue sharing has a lot more to do it. Just look at NFL teams' annual payrolls, it's pretty obvious that the "hard cap" is a polite fiction.

And even if the NBA can come up with a real hard cap, think on those implications. Everyone will have the same spending budget on players. Level playing field right? Not really, because it's obvious that the big guys are making much more money. Which means they can overspend on things not covered by the cap, like top coaches and executives, improved facilities, and player amenities. Last offseason we already saw top free agents take less money to go to their preferred destination. With a hard cap I think this becomes an even more common occurrence.

I think for the sake of the owners' bottomline, the players will have to give back some salary - and the players have already conceded that. For competitive balance though, IMO revenue sharing is the one factor that could improve it. It's not perfect, and I can understand the big market teams being reluctant to part with their profits, but it seems to me to be the best option.

BillS
05-04-2011, 01:07 PM
BillS, why do you think it's the players' union being intransigent? By all accounts, it is the owners who are pushing wholesale changes. They claim those changes are necessary, but from the outside it certainly looks like the NBA as a whole is doing pretty well.

<i>snip for length</i>

I suppose from the owners' side they want to know why a franchise that can command a lot of revenue both has to pay big money players and small market teams.

The other thing is that revenue sharing alone isn't going to be some automatic point of agreement. I doubt if revenue sharing will be based solely on top line, since a market with a high top line and no sweet arena deal would be hurt by it. The question becomes whether revenue sharing is BEFORE or AFTER player salaries are taken out. If it is BEFORE salaries are taken out, that's an incentive for high-revenue owners to reduce salaries because the amount of revenue shared will eat into the profit margin - not going to be a favorite of the players. If it is after the player salaries are taken out, it will be an disincentive for the player salaries to be controlled. Since higher payroll would reduce the amount teams have to put in the share pool, the big market teams would want to spend any money they'd have to spend anyway (whether sharing or salaries) on salaries - which will make it harder for the small-market teams to come up to par and therefore won't be a selling point to those owners. A hard cap, with revenue sharing being an after-salaries number, specifies the balance between these two issues - owners in all markets will have an incentive to spend up to the cap, which is good for players overall, and revenue to be shared can't be spent locally on salaries and made unavailable.

I understand that a hard cap alone doesn't change the amenities and attractions a big market can offer. I think a combination of things is required, many of them not in the CBA. In all, I'd prefer to see some combination of:

Hard cap
Revenue sharing
Franchise tag
Less random draft position system based more on franchise performance over time
Shorter guaranteed contract limit
League takeover of St. Louis Spirits payments
Removal of 75-mile marketing limit

In exchange, I'd be perfectly willing to see the max salary limit removed (go ahead, spend your entire cap on one player, bwaa haaa haaa haaaaaaaa) and even for the players to continue receiving the majority of BRI.

In general, one could say it is in the best interests of the players to make proposals to help the small market teams because the loss of franchises (the worst case scenario) hurts players more than it hurts the big-market owners. So, if across-the-board pay cuts plus revenue sharing aren't sufficient, and a hard cap isn't acceptable to the players, what do <i>they</i> think is a better plan?

I think the players are choosing to believe the owners have no leverage (based on the NFL lockout decision), which is why they are choosing not to negotiate as such, just to wait and see.

Since86
05-04-2011, 01:15 PM
BillS, why do you think it's the players' union being intransigent? By all accounts, it is the owners who are pushing wholesale changes. They claim those changes are necessary, but from the outside it certainly looks like the NBA as a whole is doing pretty well.

When over 50% of your league is LOSING money, I don't think that falls into the "pretty well" category.

http://www.businessinsider.com/forbes-17-of-30-nba-teams-lost-money-last-year-2011-1

That's not even taking into account the payroll differences from the top teams, to the bottom teams. Teams that are barely spending any money are still posting a negative hit.

http://thehoopdoctors.com/online2/2010/10/2010-2011-team-payrolls/

There's almost a 60 MILLION dollar difference between LAL and Minnesota. The Twolves lose money, and yet LAL makes money.

That's not a good financial model, so this idea that the NBA is doing "pretty well" as a whole, just isn't reality.

This isn't the NFL where the owners want to make a bigger portion of the profit. The NBA just wants to make a profit.

Hicks
05-04-2011, 02:03 PM
I know there's questions about the legitimacy of the league's claims about losing money, but here's what concerns me, as a Pacers fan. This is a graphic done by Tim Donahue (count55) using Shamsports information:

http://www.eightpointsnineseconds.com/wp-content/uploads/2011/05/09playoffs.jpg
http://www.eightpointsnineseconds.com/2011/05/simon-willing-to-spend-but-is-he-willing-to-spend-enough/

I'd like to see this graph for more than just last season, but I have a feeling that for several years, this is basically what it would look like each year.

Personally, I think the luxury tax threshold of today should become the hard cap of tomorrow.

wintermute
05-04-2011, 02:07 PM
I suppose from the owners' side they want to know why a franchise that can command a lot of revenue both has to pay big money players and small market teams.



Ah. Was the NBA better off when it only had 8 teams, or now that it has 30?

I think having more teams improves the mindshare of the league, and thus the profits of the largest teams. While there are NBA fans in non-NBA cities, I'm sure the presence of the Pacers creates more NBA fans in Indiana than there would have been otherwise. Indirectly, to casual fans a 30 team league is superior to a 8 team league, and these casual fans would naturally gravitate to the biggest stars playing for the best teams (invariably big market). So a franchise like the Pacers provides tangible value to a team like the Lakers, if only by acting as a foil. Quantifying this value is tricky, I'll admit, but it's certainly in the Lakers' best interest that teams like the Pacers can survive.




I understand that a hard cap alone doesn't change the amenities and attractions a big market can offer. I think a combination of things is required, many of them not in the CBA. In all, I'd prefer to see some combination of:

Hard cap
Revenue sharing
Franchise tag
Less random draft position system based more on franchise performance over time
Shorter guaranteed contract limit
League takeover of St. Louis Spirits payments
Removal of 75-mile marketing limit



I agree with most of these actually, except the hard cap, though from your argument I can see the need. Even then I'd rather have a more punitive luxury tax system in place, like a 2x penalty for exceeding the luxury tax threshold.




In exchange, I'd be perfectly willing to see the max salary limit removed (go ahead, spend your entire cap on one player, bwaa haaa haaa haaaaaaaa) and even for the players to continue receiving the majority of BRI.


Ha, I'd love this actually. Would certainly put a stop to the top players agreeing to play together in their favored locales, or at least make it more punitive financially.

BillS
05-04-2011, 02:13 PM
Ah. Was the NBA better off when it only had 8 teams, or now that it has 30?

I think having more teams improves the mindshare of the league, and thus the profits of the largest teams. While there are NBA fans in non-NBA cities, I'm sure the presence of the Pacers creates more NBA fans in Indiana than there would have been otherwise. Indirectly, to casual fans a 30 team league is superior to a 8 team league, and these casual fans would naturally gravitate to the biggest stars playing for the best teams (invariably big market). So a franchise like the Pacers provides tangible value to a team like the Lakers, if only by acting as a foil. Quantifying this value is tricky, I'll admit, but it's certainly in the Lakers' best interest that teams like the Pacers can survive

That's an interesting point, though as you say very hard to try to quantify.

I guess my question is whether you need 30 teams. 8 might be too small, but how much mindshare do you lose if you drop teams in all but the largest urban markets? One would think 16 might be plenty, for instance.

If one believes that the best situation for the league is to only have 2-4 teams contending for titles, those are the ones that will be on national sports news and broadcast anyway. If you have enough geographical balance that those teams show up locally a few times a year, how many pieces of cannon fodder do you really require?

wintermute
05-04-2011, 02:16 PM
When over 50% of your league is LOSING money, I don't think that falls into the "pretty well" category.


So why don't you take some profit from the rich teams, and give them to the poor teams? The NBA as a whole made a profit, not great, I think about 6%, but profit nonetheless.

And the players have said from the start that they're willing to reduce their share of BRI. It should be a matter of negotiating a percentage that would give the league as a whole a decent return.




That's not even taking into account the payroll differences from the top teams, to the bottom teams. Teams that are barely spending any money are still posting a negative hit.

http://thehoopdoctors.com/online2/2010/10/2010-2011-team-payrolls/

There's almost a 60 MILLION dollar difference between LAL and Minnesota. The Twolves lose money, and yet LAL makes money.



To me, what that shows is the enormous disparity in revenue for the top teams and bottom teams.

Nothing that the owners are proposing changes this disparity. Instead, they're proposing that the lowest common denominator, i.e. what the poorest franchise can afford, be the standard.

What this means, is that the poorest teams break even or maybe make a small profit, while the rich teams rake it in even more. That's not parity.

wintermute
05-04-2011, 02:21 PM
If one believes that the best situation for the league is to only have 2-4 teams contending for titles, those are the ones that will be on national sports news and broadcast anyway. If you have enough geographical balance that those teams show up locally a few times a year, how many pieces of cannon fodder do you really require?

That's a good question, and it's why contraction is such a potent threat for the owners. It could make financial sense for them, and obviously it would be very bad for the players.

My opinion though, is that the league (and especially Stern) values the size and reputation of the NBA, such that they'd never really consider contraction. So I think it's a bit of an empty threat. But it's the best one they have to hold against the players.

Since86
05-04-2011, 02:25 PM
So why don't you take some profit from the rich teams, and give them to the poor teams? The NBA as a whole made a profit, not great, I think about 6%, but profit nonetheless.

Why would you do that when you can change the system and every team could become financially independent of each other?

The Lakers or Boston or Chicago shouldn't be depended on for the Pacers to make money. They're an association, not a single corporation. They are ran independently from each other, and they should operate independently from each other.

Piggy backing off the rich, so the poor can survive, isn't a very good business model either, because what happens if one of the major market teams that is propping up the entire system falters for whatever reason?

They need a system that can support all the teams, not just a select few.

I really doubt Dr. Buss would be very happy watching his profits go out the window so Minnesota can pinch every penny and still make a profit.

wintermute
05-04-2011, 02:29 PM
Why would you do that when you can change the system and every team could become financially independent of each other?

Because as I've said, the rich teams get even richer while the poor teams are just above break even point?

While it does solve the problem of every team being financially solvent, it doesn't solve competitive balance, which should be an equally pressing issue for a small market team like ours.

Revenue sharing isn't perfect, but it does address both problems.




The Lakers or Boston or Chicago shouldn't be depended on for the Pacers to make money. They're an association, not a single corporation. They are ran independently from each other, and they should operate independently from each other.

Piggy backing off the rich, so the poor can survive, isn't a very good business model either, because what happens if one of the major market teams that is propping up the entire system falters for whatever reason?

They need a system that can support all the teams, not just a select few.

I really doubt Dr. Buss would be very happy watching his profits go out the window so Minnesota can pinch every penny and still make a profit.

I addressed this in my reply to BillS. It is in Dr. Buss's best interest for the likes of Minnesota and Indiana to survive. It helps bring more profit to his team. The actual value is arguable of course, but I think it's pretty obvious that an NBA reduced to say 8 teams wouldn't bring the same amount of interest or revenue. IMO the Lakers aren't really independent of say the Twolves or the Pacers.

Eleazar
05-04-2011, 02:32 PM
Just look at NFL teams' annual payrolls, it's pretty obvious that the "hard cap" is a polite fiction.


I am assuming you are talking about signing bonus. I am just wondering if you understand exactly how that works?

aaronb
05-04-2011, 02:34 PM
Why would you do that when you can change the system and every team could become financially independent of each other?

The Lakers or Boston or Chicago shouldn't be depended on for the Pacers to make money. They're an association, not a single corporation. They are ran independently from each other, and they should operate independently from each other.

Piggy backing off the rich, so the poor can survive, isn't a very good business model either, because what happens if one of the major market teams that is propping up the entire system falters for whatever reason?

They need a system that can support all the teams, not just a select few.

I really doubt Dr. Buss would be very happy watching his profits go out the window so Minnesota can pinch every penny and still make a profit.


Historically pro leagues are strongest when the whole of the league is strongest. The NFL is the strongest league in the world right now. It became that because there is wholesale revenue sharing and extreme league wide parity.

Baseball and NBA basketball on the other hand has seen attend drops overall due to disenfranchised fan-bases losing interest.

A higher low tide will raise all ships if you will?

Hicks
05-04-2011, 02:37 PM
Could things be set up to where each teams' earnings go 50% to the franchise and 50% to a league pool to be equally shared with all 30 teams?

Since86
05-04-2011, 02:39 PM
Historically pro leagues are strongest when the whole of the league is strongest. The NFL is the strongest league in the world right now. It became that because there is wholesale revenue sharing and extreme league wide parity.

Baseball and NBA basketball on the other hand has seen attend drops overall due to disenfranchised fan-bases losing interest.

A higher low tide will raise all ships if you will?

You cannot compare the NBA to the NFL with regards to revenue sharing. Networks negiotate with the league in order to broadcast the games, and not the individual teams. YES can't broadcast a Pacers/Bulls game, but Fox/CBS/NBC/NFL network can. (Yes I understand that Fox/CBS have rights to each league)

But you're first point is correct, they are strongest when the entire league is strong. Teams being dependent on other teams in order to make a profit, isn't a characteristic of "strong."

Indiana shouldn't be given any money from a network that can't even broadcast a Pacers game.

EDIT: Not only that, but were talking about an extra 5-6 million dollars, when the Pacers are losing 15mil per year.

You're not going to make up 15mil, for each team losing money, from revenue sharing.

Eleazar
05-04-2011, 02:40 PM
So why don't you take some profit from the rich teams, and give them to the poor teams? The NBA as a whole made a profit, not great, I think about 6%, but profit nonetheless.

And the players have said from the start that they're willing to reduce their share of BRI. It should be a matter of negotiating a percentage that would give the league as a whole a decent return.



To me, what that shows is the enormous disparity in revenue for the top teams and bottom teams.

Nothing that the owners are proposing changes this disparity. Instead, they're proposing that the lowest common denominator, i.e. what the poorest franchise can afford, be the standard.

What this means, is that the poorest teams break even or maybe make a small profit, while the rich teams rake it in even more. That's not parity.

As long as all the teams can at least break even, and no team can just out spend everyone in order to win a championship I don't care if one team makes $20 trillion dollars in profit and the other makes $2 in profit.

wintermute
05-04-2011, 02:44 PM
I am assuming you are talking about signing bonus. I am just wondering if you understand exactly how that works?

To be honest, I'm going by this

http://content.usatoday.com/sportsdata/football/nfl/salaries/team

My understanding of the signing bonus is that it essentially allows the cap to artificially increase one year but that it would be correspondingly reduced some time in the future. It seems to me that the same effect could be obtained with a soft cap.

Since86
05-04-2011, 02:47 PM
In terms of revenue sharing, what would stop an owner from low balling his negiotations for TV contracts and such, in order to minimize their contribution to the general fund?

They would still be able to make a profit, and have a payroll that dwarfs their competition, while lowering the profit margin for their competition.

wintermute
05-04-2011, 02:51 PM
It's interesting to me that some of you seem to be applying free market principles to NBA teams. That's not really appropriate, because the NBA is in effect a cartel of basketball teams. A legal cartel, with willing participation of the players through the CBA. The CBA is what allows stuff like the draft, rookie contracts, maximum contracts, etc, which would normally be regarded as anticompetitive measures in a free market. For heaven's sake, the commissioner gets to fine anyone for speaking out of turn! That doesn't happen in the real world.

Within this artificial system, I think it's wholly appropriate that the league gets to decide which revenues should go where. And IMO the best distribution is a fairly equitable one which promotes parity.

aaronb
05-04-2011, 02:51 PM
Could things be set up to where each teams' earnings go 50% to the franchise and 50% to a league pool to be equally shared with all 30 teams?


In a perfect world the league would collect 100% of all broadcasting revenue (radio,TV,Internet) and split them evenly 30 ways.

Then maybe a 75/25 home road split for live gates.

Unclebuck
05-04-2011, 02:56 PM
Here is a great website. Each NFL team gets $134M per season from their national TV rights - that is Fox, NBC, ESPN, and CBS. That does not include Directv, which I think is another few million per team.

Each NBA teams gets approx $35M per year. So that is almost $100M dollars difference right there.

http://members.cox.net/lmcoon/salarycap.htm

aaronb
05-04-2011, 02:57 PM
You cannot compare the NBA to the NFL with regards to revenue sharing. Networks negiotate with the league in order to broadcast the games, and not the individual teams. YES can't broadcast a Pacers/Bulls game, but Fox/CBS/NBC/NFL network can. (Yes I understand that Fox/CBS have rights to each league)

But you're first point is correct, they are strongest when the entire league is strong. Teams being dependent on other teams in order to make a profit, isn't a characteristic of "strong."

Indiana shouldn't be given any money from a network that can't even broadcast a Pacers game.

EDIT: Not only that, but were talking about an extra 5-6 million dollars, when the Pacers are losing 15mil per year.

You're not going to make up 15mil, for each team losing money, from revenue sharing.


The reason the NFL broadcasting is different is because the league set it up that way. No reason that the league couldn't negotiate the rights of every team.

Ultimately the Lakers are as valuable as they are is BECAUSE there are 29 other strong franchises. People aren't going to pay top dollar to watch the Lakers play the Washington Generals 82 times per year.

So it ultimately behooves the large market teams to prop up the smaller teams. The NFL struggled before agreeing to this concept. NBA would be wise to follow suit.

Since86
05-04-2011, 03:03 PM
The reason the NFL broadcasting is different is because the league set it up that way. No reason that the league couldn't negotiate the rights of every team.

No.....

The NBA can't negiotate with the networks for every team, because they would be negiotating with 30 different networks.

CBS gets to pick and choose which games they air in which markets. They have the ability to flex games into national games, etc.

That cannot happen with the NBA, for a number of reasons. It's just not feasible.

aaronb
05-04-2011, 03:08 PM
In terms of revenue sharing, what would stop an owner from low balling his negiotations for TV contracts and such, in order to minimize their contribution to the general fund?

They would still be able to make a profit, and have a payroll that dwarfs their competition, while lowering the profit margin for their competition.


Why would anyone do that? If its split 30 ways you'd have pressure to maximize every last dollar.

aaronb
05-04-2011, 03:14 PM
No.....

The NBA can't negiotate with the networks for every team, because they would be negiotating with 30 different networks.

CBS gets to pick and choose which games they air in which markets. They have the ability to flex games into national games, etc.

That cannot happen with the NBA, for a number of reasons. It's just not feasible.



Why couldn't they? Instead of each broadcast vendor calling individual teams, then could call a central office. Or each team could negotiate themselves and the league could collect the money? Either way it would end up at the same place.

Unclebuck
05-04-2011, 03:20 PM
Why couldn't they? Instead of each broadcast vendor calling individual teams, then could call a central office. Or each team could negotiate themselves and the league could collect the money? Either way it would end up at the same place.


I'm confused as to what you are suggesting. The NFL negotiates national TV deal where each team gets the same amount of money. Every single NFL game is on national TV (except the preseason)

That will not work in the NBA because so few games are on national TV. The pacers do get the same national TV money as the Lakers although the lakers were on 35 times and the pacers zero - there is a ton of revenue sharing there. The Pacers receive a huge benefit because teams like the Lakers, Heat and Celtics get very high ratings. If you were to tell ABC, ESPN, TNT, that the pacers will be on as often as the lakers, they would slash what they pay to the NBA

But the difference in the NBA is in the local TV rights. The Lakers get 75M per year and the Pacers $5M

Please note, I am using estimate in local TV $$ just to make the points.

so are you suggesting that all local TV rights deals be split equally? I don't see how that could possibly work in the real world.

The NFL is a completely different model from the NBA, MLB or the NHL. The once a week structure makes it different.

aaronb
05-04-2011, 03:22 PM
I'm confused as to what you are suggesting. The NFL negotiates national TV deal where each team gets the same amount of money. Every single NFL game is on national TV (except the preseason)

That will not work in the NBA because so few games are on national TV. The pacers do get the same national TV money as the Lakers although the lakers were on 35 times and the pacers zero - there is a ton of revenue sharing there.

But the difference in the NBA is in the local TV rights. The Lakers get 75M per year and the Pacers $5M

Please note, i am using estimate in local TV $$ just to make the points


What I'd suggest would be that all broadcasting revenue for all 30 individual teams would go into a central fund. Then would be split evenly between the 30 teams.

Since86
05-04-2011, 03:23 PM
Because the Lakers are going to make a profit regardless, for example.

So if they can profit 40mil, instead of 45mil, all while their competition profits drop from 5 mil to, say, 3 mil. It would weaken their competition, and thus make them a better team basketball wise.

They have the ability to go above and beyond the luxury tax, because their profit margins are so high they can eat the penalty. If a team is barely making a profit, they can't afford to go over the luxury tax and get penalized.

http://blogs.forbes.com/mikeozanian/2011/02/15/los-angeles-lakers-new-new-cable-deal-propels-team-value-to-over-1-billion/
The Lakers just made a deal with Time Warner for TV rights. It's a 20 year agreement for $3billion. That breaks down to $150,000,000 per year. Say you split it 50-50, that means the Lakers get 75,000,000 with 75,000,000 going to the rest of the league. That means each team will get 2.58 million per year. That's not going to make much of a dent for the Pacers.

Since86
05-04-2011, 03:25 PM
Why couldn't they? Instead of each broadcast vendor calling individual teams, then could call a central office. Or each team could negotiate themselves and the league could collect the money? Either way it would end up at the same place.

Because CBS/Fox/NBC/ESPN are all national channels. FSNIN isn't. Just like FSNOH isn't. Just like FSNMW isn't.

All three of them are networks that show NBA games. They can't pick and choose which games they want, because their channel is restricted to their market.

CBS/NBC/Fox/ESPN can broadcast to any market in the US.

Since86
05-04-2011, 03:27 PM
What I'd suggest would be that all broadcasting revenue for all 30 individual teams would go into a central fund. Then would be split evenly between the 30 teams.

And the deals wouldn't be the same size as they are right now.

Why would Time Warner pay LAL 3billion dollars to the rights to broadcast Laker games, when half of that money wouldn't even go to the Lakers?

That isn't smart business.

aaronb
05-04-2011, 03:38 PM
And the deals wouldn't be the same size as they are right now.

Why would Time Warner pay LAL 3billion dollars to the rights to broadcast Laker games, when half of that money wouldn't even go to the Lakers?

That isn't smart business.


Why the hell would Time Warner care who gets the money? If anything THEY WOULD BE HAPPY THAT THE LAKERS WOULD BE PLAYING BETTER TEAMS WHILE BEING BROADCAST ON THEIR CHANNEL?

Bottom line is that the same channels would be bidding to broadcast the same games. If Time Warner didn't want to pay, then someone else would bid. That part of the equation wouldn't change.

Since86
05-04-2011, 03:46 PM
A $3,000,000,000 deal, thats 3 BILLION DOLLARS, would only amount to 2.5 mil per year for each team. The Pacers are losing 15million dollars per year now.

Even IF you are correct, which you're not btw, that Time Warner doesn't care who ends up with their money, the extra money going out to the teams isn't nearly enough to makeup for lost profit.


You're arguing like revenue sharing is the magic solution to all the problems, when it's clearly not. There still needs to be major changes to the system.

aaronb
05-04-2011, 03:50 PM
A $3,000,000,000 deal, thats 3 BILLION DOLLARS, would only amount to 2.5 mil per year for each team. The Pacers are losing 15million dollars per year now.

Even IF you are correct, which you're not btw, that Time Warner doesn't care who ends up with their money, the extra money going out to the teams isn't nearly enough to makeup for lost profit.


You're arguing like revenue sharing is the magic solution to all the problems, when it's clearly not. There still needs to be major changes to the system.



Revenue sharing would be part of the solution. Doing nothing isn't really a solution at all is it?


The Time Warner example is only 1/30th of the equation. Every other team would split their broadcasting revenue as well. If teams can't profit from that then they might as well fold the league.

BillS
05-04-2011, 04:03 PM
A $3,000,000,000 deal, thats 3 BILLION DOLLARS, would only amount to 2.5 mil per year for each team. The Pacers are losing 15million dollars per year now.

Even IF you are correct, which you're not btw, that Time Warner doesn't care who ends up with their money, the extra money going out to the teams isn't nearly enough to makeup for lost profit.


You're arguing like revenue sharing is the magic solution to all the problems, when it's clearly not. There still needs to be major changes to the system.

OK, wait. what percent are you assuming would go to revenue sharing? For each team to only get 2.5 million, you'd be talking only 75 million total from the 3 billion, meaning they'd only be having to share 2.5%??

Since86
05-04-2011, 04:08 PM
Revenue sharing would be part of the solution. Doing nothing isn't really a solution at all is it?

And who is advocating doing nothing? I'm certainly not.

I've said revenue sharing shouldn't be done for a number of reasons, and have laid out my argument as to why. I never said the league should stay as is.


The Time Warner example is only 1/30th of the equation. Every other team would split their broadcasting revenue as well. If teams can't profit from that then they might as well fold the league.

That would cause the Pacers to lose even more money. I can't find the numbers for the Pacers deal, but let's say they get 30 mil per year from FSNIN. That means that number would be cut down to 15mil per year, and they would lose an extra 15mil on top of the 15mil they already post.

http://www.pacersdigest.com/showpost.php?p=433510&postcount=38

There's a post from UB a couple of years ago when FSN IN and the Pacers reached a deal. FSN OH only gives the Cavs $25mil over 5 years.

That means, 5 mil per year. That means $2.5mil would go into the general fund to get split 29 different ways. That means each team would get $86,206.89.

The revenues aren't big enough to do anything.

Since86
05-04-2011, 04:11 PM
OK, wait. what percent are you assuming would go to revenue sharing? For each team to only get 2.5 million, you'd be talking only 75 million total from the 3 billion, meaning they'd only be having to share 2.5%??

I was working with aaron's 50-50 split.

The Lakers get $150,000,000 per year as the agreement now. If it was split 50-50, then they and the league would each get the $75,000,000.

BillS
05-04-2011, 04:12 PM
I was working with aaron's 50-50 split.

The Lakers get $150,000,000 per year as the agreement now. If it was split 50-50, then they and the league would each get the $75,000,000.

OK, I didn't know it was a 20-year deal.

aaronb
05-04-2011, 04:13 PM
And who is advocating doing nothing? I'm certainly not.

I've said revenue sharing shouldn't be done for a number of reasons, and have laid out my argument as to why. I never said the league should stay as is.



That would cause the Pacers to lose even more money. I can't find the numbers for the Pacers deal, but let's say they get 30 mil per year from FSNIN. That means that number would be cut down to 15mil per year, and they would lose an extra 15mil on top of the 15mil they already post.

http://www.pacersdigest.com/showpost.php?p=433510&postcount=38

There's a post from UB a couple of years ago when FSN IN and the Pacers reached a deal. FSN OH only gives the Cavs $25mil over 5 years.

That means, 5 mil per year. That means $2.5mil would go into the general fund to get split 29 different ways. That means each team would get $86,206.89.

The revenues aren't big enough to do anything.



So because the Cavs TV deal is bad everyone will lose money?


If all 30 teams paid in 100% and it would split evenly. It would boost the smaller markets take (while reducing the take of the bigger markets).

It's how revenue sharing works. It's how Green Bay Wisconsin can win SB's and lure free agents. Its how the Colts can pay to keep who they wish to keep.

It works.

Unclebuck
05-04-2011, 04:16 PM
So because the Cavs TV deal is bad everyone will lose money?




The Cavs deal at $5M per year is pretty good at the time 2006 one of the four riches deals in the NBA. The Lakers deal is a landmark deal that is so much higher than anything ever before.

If you add all the other 29 teams combined that isn't anywhere close to the Lakers deal alone.

aaronb
05-04-2011, 04:18 PM
The cavs deal at $5M per year is pretty good. The Lakers deal is a landmark deal that is so much h8igher than anything ever before. I would say at least 20 NBA teams get $5M per year or less from their local TV deals.



Which is exactly the reason why the other 10 teams need to share revenue.

BillS
05-04-2011, 04:21 PM
So because the Cavs TV deal is bad everyone will lose money?


If all 30 teams paid in 100% and it would split evenly. It would boost the smaller markets take (while reducing the take of the bigger markets).

It's how revenue sharing works. It's how Green Bay Wisconsin can win SB's and lure free agents. Its how the Colts can pay to keep who they wish to keep.

It works.

I think it works or fails depending on how the size of the pot compares to the individual team. In other words, if the Lakers and Knicks are huge exceptions and everyone else is on that lower end, the return is pretty much squat in addition and only really takes money from the Lakers and Knicks. If the Pacers and Cavs are the teeny-weeny exceptions, then it works out great for them. If the Pacers and Cavs are in fact above the median, the chances are that they would lose money by the deal.

But what Since86 is pointing out is that revenue sharing alone, even in the ideal case where only teams making more than the Pacers put into the pot and the Pacers put nothing in, would likely not bring in enough to cover the losses, much less add enough to allow them to go over the luxury tax like a big market team.

Since86
05-04-2011, 04:33 PM
Which is exactly the reason why the other 10 teams need to share revenue.

Did you not read that the Cavs deal was one of the four RICHEST when it was signed? There isn't a whole lot of money to be shared for 90% of the league.

The Cavs would give each team $86,000 from their deal, you know a top 4 deal.... So that means the other 26 deals would give each team less than $86,000. You know how many teams would have to give Cleveland $86,000 just to break even? 29

29*$86,000= $2,494,000

That's just to BREAK EVEN on the amount they would put into a general fund to what they would get out of it.

Let me remind you that 26 teams had deals for less money. They wouldn't be giving each team $86,000.

aaronb
05-04-2011, 04:44 PM
I think it works or fails depending on how the size of the pot compares to the individual team. In other words, if the Lakers and Knicks are huge exceptions and everyone else is on that lower end, the return is pretty much squat in addition and only really takes money from the Lakers and Knicks. If the Pacers and Cavs are the teeny-weeny exceptions, then it works out great for them. If the Pacers and Cavs are in fact above the median, the chances are that they would lose money by the deal.

But what Since86 is pointing out is that revenue sharing alone, even in the ideal case where only teams making more than the Pacers put into the pot and the Pacers put nothing in, would likely not bring in enough to cover the losses, much less add enough to allow them to go over the luxury tax like a big market team.


I agree, but the size of the pot is what will ultimately matter. The equation for figure this out would be


Combine ALL BROADCASTING revenue for all 30 teams. Then divide by 30

=

The amount that each individual team would share



I'm not saying its the end all to solve every problem. I'm saying it would be a huge start to solving the leagues issues. Much more so than just a hard cap or no revenue sharing at all.

wintermute
05-04-2011, 05:04 PM
If revenue sharing ends up only adding $5m per year to the Pacers, then there's obviously not enough revenue sharing.

Look I'm not going to speculate on how revenue sharing can be implemented. They have lawyers and accountants for that. Let's just say that a certain percentage of all league revenue becomes shared, which gets split 30 ways.

Here is Forbes' estimate of each team's revenue in 2010:

http://www.forbes.com/lists/2011/32/basketball-valuations-11_rank.html

Sum them all up, and it's $3.8b. So if 100% of league revenue is shared and split 30 ways, that's $126m per team. Forbes' estimate for the Pacers' revenue is $95m, so that's an additional $31m coming from shared revenue.

But wait, no way the big market teams will go for 100% shared revenue right? Ok, let's figure on a more conservative 50% of revenue shared. That's still an additional $16m coming in, enough to make the Pacers solvent I think.

Is 50% of all revenue getting shared too much? Let's take a look at the NFL. Here's the Green Bay Packers income statement for 2010:

http://www.bloggingtheboys.com/2011/2/21/2004505/nfl-lockout-2011-revenue-gap-problem

Of their total $258m revenue, $158m comes from shared revenue. Obviously NFL teams account things differently, but it does show that our little example above isn't excessive.

(Btw, that link above gives a nice overview of NFL revenue sharing, its history and its issues. Well worth a read)

No one's saying revenue sharing solves everything. But honestly? I think it would be a huge step forward. As an NBA fan, I'd welcome the level playing field that should improve competition. As a Pacer fan, I'd welcome the financial stability that revenue sharing would bring.

wintermute
05-04-2011, 05:24 PM
That isn't smart business.

Sorry, I just have to hammer at this point again.

The NBA isn't a free market. It's a cartel. For example, it has a system for allocating the best incoming prospects (draft picks) to the worst teams. There is no way that is legal in a free market. Why then, is it such a stretch to say that the NBA should have a system for allocating money to the poorest teams?

It's about balance. And balance makes the whole league stronger.

Eleazar
05-04-2011, 07:03 PM
To be honest, I'm going by this

http://content.usatoday.com/sportsdata/football/nfl/salaries/team

My understanding of the signing bonus is that it essentially allows the cap to artificially increase one year but that it would be correspondingly reduced some time in the future. It seems to me that the same effect could be obtained with a soft cap.

The signing bonus is no different than a guaranteed contract in the NBA. It would be no different than if the Pacers decided to pay all of Danny's guaranteed money this year. It isn't an exception that allows the team to go over the cap, the team is still limited on how much a team can pay a guy per year just instead of waiting to pay the player every year it is just all payed up front. The only reason it works is because there is a hard cap.

Hicks
05-04-2011, 11:40 PM
The other idea I still like if they don't make today's tax threshold tomorrow's hard cap is if they multiply the luxury tax by two or three, and possibly have a second level where the multiplier increases again. That way the super rich can still buy a premium talent team, but the rest of the league gets more coin.

aaronb
05-04-2011, 11:50 PM
The other idea I still like if they don't make today's tax threshold tomorrow's hard cap is if they multiply the luxury tax by two or three, and possibly have a second level where the multiplier increases again. That way the super rich can still buy a premium talent team, but the rest of the league gets more coin.

I agree! Tier penalties where teams pay x2 or x3 for going over the cap. Another thing less financial I'd like to see is independent 3rd party referees. Seems like the NBA's largest credibility issue is rumors of referee mandated intervention. Having a non-NBA( FIBA?) entity policing the Refs might bring some fans back?

wintermute
05-05-2011, 04:52 AM
You know, we've had a lot of discussion on the hard cap and revenue sharing, but another contentious issue is the owners' demand for a rollback in existing player contracts. Supposedly the initial demand was for a 30% rollback in existing salaries, later toned down to 20% in the latest offer. The players of course don't want any rollback at all.

For the Pacers, rollbacks are no good. We've worked very hard to put ourselves in a position with lots of cap space and no bad contracts. Any sort of rollback undermines the value of that cap space.

In principle I don't like rollbacks or other amnesty type clauses. It rewards mismanagement since owners will get to thinking that they can rely on the next CBA to clean up their current mess. With that said, instead of a wholesale rollback I'd rather have another one time amnesty clause that allows each team to designate one bad contract to get rid of, similar to 2005. Again, this is not that good for the Pacers - our cap space would be more valuable if other teams remain financially constrained - but at least the pool of available free agents would increase once bad contracts get bought out.

I had the feeling last summer that certain teams (notably Memphis and Phoenix) were anticipating a future rollback when taking on new deals. Remember how ludicrous it seemed for the NBA to be crying poverty on one hand while lucrative free agent offers were being handed out by teams? Guess what, owners Sarver and Heisley are reportedly now leading the charge to get rollbacks from the players, on contracts they handed out just a year ago. Kind of underhanded if you ask me.

able
05-05-2011, 05:49 AM
1. No one has to buy a basketball team
2. "books" are a patient entity, and certainly not always showing what really is going on, as mentioned before; to come to the "loss" many owners are counting depreciaton on the franchise and interest payments on loans to purchase the franchise, these are of course nice, but have no realy influence on the ongoing concern.
3. BRI is a lot more then gate, merchandise and tv; losses for the Pacers were mainly the cost of CFH over the years, but now with attendance down this bad the loss comes from gate and all BRI because low gate = low merchandise, low parking, low everything.
4. No one forces any team to go over the LT, if the owners as a whole are really concerned, they can as a whole decide not to pass it, yet they all do when there is a chance to win, even the Pacers in the year we last went ECF were well over the LT
5. Most newer owner knew what they bought, yet now they have it, they are unhappy, what does that make you think of?
6. Owners like Herb Simon have lost money, done a great thing for the society they live in but in the end turned a 16 million dollar investment into a 300 million dollar entity (min value)
7. contraction - less games, less gate, less tv, less dollars.
8. local tv rights should be part of the total NBA tv package, there is only a game on tv if there is an opponent to play, who is entitled to part of that income, one way or the other. With for instance a higher amount of money from the national entity that buys the right, they have the right to re-sell in part, restricted, and a percentage of that revenue also ends up with the NBA which in turn all goes to teams. Why do you think the LA rights were fdor 20 years, just before the lockout ? NBA now has to work around that if they want to change anything, yet i don't hear any of the owners out there calling Buss out for changing the playing field.

Parity like the NFL is maybe best, but that does not mean all the systems in place in the NFL are best.
The fact that the owners can shut down an entire industry and lock people out from doing their job, while not having to pay them just to force them to do what they want is something absolutely grossly unfair no matter how you look at it.
They are willing to damage their product just to get it "their way"

What would you say if the automotive industry did that tomorrow? (and yes I include all manufacturers in that) ? what would the world say ?

And no there is no difference, there are ppl making lots of money in all walks of life.
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Shade
05-05-2011, 07:39 AM
I'm totally with the owners on this one. The league as a whole is supposedly hemorrhaging money, and states that they can provide the proof to validate that claim. If they do, then the players need to step back and stop being greedy. A hard cap is ESSENTIAL to the long-term validity of the NBA.

BillS
05-05-2011, 10:25 AM
The fact that the owners can shut down an entire industry and lock people out from doing their job, while not having to pay them just to force them to do what they want is something absolutely grossly unfair no matter how you look at it.
They are willing to damage their product just to get it "their way"

Seems to me a lockout is just the owners' ability to do exactly what a strike does for a union - sacrifice their own income because they find the current situation worse than losing money for a period of time. I would think that if workers have rights to shut down a company to force their demands, why don't owners?

I know your sympathy is entirely with Labor on these issues, and I respect that even if I don't agree with it. But think of it this way - unless owners are willing to buy teams, players won't have a job. It is in the players' best interests for owners to be successful, not to tell owners to treat it like a really expensive toy and suck it up if they are losing money.

True success comes from the workers and the capitalist owners of the means of production understanding they each benefit from the other - even when workers take over they can drive a company into the ground by making bad economic decisions.

able
05-05-2011, 10:54 AM
Bills, I'm a salon socialist, not a real one :D
I employ people, not the other way around, so please don't make me out to be a communist, which has very little to do with socialism anyway and in my case nothing, referrence to the word "SALON" here is very important :P

Strikes have rarely shut down whole companies and I am sure if the players decided to go on strike a large portion might just play and other players are quickly brought in on temp contracts from all over the place.

I would not support the players striking either unless there was a very very valid reason.

The "loss" they make is not a valid reason and and to lower the 57-43 division to 47-53 is definitely not based on reality
What happens here is we sign player A to make 10 million a year and make this contract depending on the league's result (there is a hefty variance in income in regards to this, up to 5%) and knowing that this is paid based on the 57-43 rules also know that if we change that, the contract changes as well, there is a legal expression for this, i will refrain from it.

The league is certainly not bleeding money, as I said, and many with me, if turover is 75 mio, cost and salary are 68 mio you turn a profit, however if you then deduct 25 mio intrest on the loan for purchase of the franchise and another 25 mio as depreciation on that franchise and player contracts, then your loss is all of a sudden 43 mio.

So now we are buying a franchise and the players have to pay for that, something I can not support.

The alternative suggested by the owners (to deduct those posts before BRI is split) is even more ridiculous.

IF (big if) the hardcap means NO ONE can spend more money then that, then why not, no change to BRI needed, simple, contracts respected till end date and done.
But we all know that what happens next is that LA, NY etc extend additional contracts via sponsors for representation outside basketball, free cars etc. and so because NY can give away a 2 mio costing Bugatti and Pacers "only" a Caddilac of 200 thousand, NY once again wins and imparity reigns on.

What i am trying to say is that if it is parity a la NFL what they want then all they need to do is agree on that among each other
Players already said they were willing to drop a few percentage points on the BRI split, heck i am sure they even will agree on 4 yr max contracts, if push comes to shove.

but a hardcap is no source of parity and parity can be reached forcefully easier with the LT ( like some said, treble or quadruple it) point there is you have to make paying the LT unattractive and not reward it with a championship.

Unclebuck
05-05-2011, 11:25 AM
Even with a hard, hard cap and a high minimum, parity is a very difficult goal to reach. Just by the nature of stars winning, and the fact that 1 player can make a huge difference, and also team chemistry is so important. That to me is a much bigger reason why the same teams win over a 4 to 5 year period.

Where you notice the money difference is over a 10-15 year difference. It is going to be much easier for the lakers to re-build once Kobe retires than it will be for the Spurs to re-build once TD retires. But the spurs have been great for 10 years as long as TD has bene there and is still good.

BillS
05-05-2011, 11:59 AM
Bills, I'm a salon socialist, not a real one :D
I employ people, not the other way around, so please don't make me out to be a communist, which has very little to do with socialism anyway and in my case nothing, referrence to the word "SALON" here is very important :P

:buddies: You come down pretty hard and definite on the player side, so you certainly argue the worker vs. capitalist side very well.


Strikes have rarely shut down whole companies and I am sure if the players decided to go on strike a large portion might just play and other players are quickly brought in on temp contracts from all over the place.

The players that choose to continue playing would pay for it in the locker room when things are settled, and replacement players would definitely not fit the "hype the superstar" league marketing strategy, so I think the leverage of the players is much greater than you credit.

And strikes have and do shut down entire companies, if enough workers aren't available with the appropriate skillset to continue operations. I observed the Eastern Airlines strike that put the company out of business, and have been involved in the old Bell Telephone system strikes at a management level - where operations were possible but caused money to be lost rather than made.


The league is certainly not bleeding money, as I said, and many with me, if turover is 75 mio, cost and salary are 68 mio you turn a profit, however if you then deduct 25 mio intrest on the loan for purchase of the franchise and another 25 mio as depreciation on that franchise and player contracts, then your loss is all of a sudden 43 mio.

So now we are buying a franchise and the players have to pay for that, something I can not support.

While the accounting losses might be arguable, they are very real losses at a certain level (depreciation just defers a real expense over multiple years because it is durable rather than consumable). Your point is whether the employees should be subject to pay decisions based on those losses, though, and I would put to you that if expensing interest on money borrowed to buy the team is disallowed, franchises become less marketable (especially small market ones) and the possible (not probable, perhaps, but definitely possible) result is franchises folding rather than being sold and/or moved.

In the current economy even the paper value of many franchises has gone down, so one really can't make the argument that this is something like real estate (ha!) that can be held for a long-term gain unless you were lucky enough to buy low a long time ago.


The alternative suggested by the owners (to deduct those posts before BRI is split) is even more ridiculous.

IF (big if) the hardcap means NO ONE can spend more money then that, then why not, no change to BRI needed, simple, contracts respected till end date and done.
But we all know that what happens next is that LA, NY etc extend additional contracts via sponsors for representation outside basketball, free cars etc. and so because NY can give away a 2 mio costing Bugatti and Pacers "only" a Caddilac of 200 thousand, NY once again wins and imparity reigns on.

What i am trying to say is that if it is parity a la NFL what they want then all they need to do is agree on that among each other
Players already said they were willing to drop a few percentage points on the BRI split, heck i am sure they even will agree on 4 yr max contracts, if push comes to shove.

but a hardcap is no source of parity and parity can be reached forcefully easier with the LT ( like some said, treble or quadruple it) point there is you have to make paying the LT unattractive and not reward it with a championship.

My point has been that no single action can make parity happen. Nothing is going to completely negate the advantage a large franchise has to woo a big name player, which is why some other incentives/disincentives (like a form of franchise player, where a selected player is essentially overcompensated in return for an inability to change teams) need to be in place.

I'd be really interested in knowing how you can keep a championship from someone willing and able to pay even a ridiculously high LT.

Since86
05-05-2011, 12:47 PM
Is 50% of all revenue getting shared too much? Let's take a look at the NFL. Here's the Green Bay Packers income statement for 2010:

http://www.bloggingtheboys.com/2011/2/21/2004505/nfl-lockout-2011-revenue-gap-problem

Of their total $258m revenue, $158m comes from shared revenue. Obviously NFL teams account things differently, but it does show that our little example above isn't excessive.

(Btw, that link above gives a nice overview of NFL revenue sharing, its history and its issues. Well worth a read)

No one's saying revenue sharing solves everything. But honestly? I think it would be a huge step forward. As an NBA fan, I'd welcome the level playing field that should improve competition. As a Pacer fan, I'd welcome the financial stability that revenue sharing would bring.


I like how you didn't mention the most important paragraph in the dealings with GB.

I'll quote it.



In the past, the NFL teams shared more than 80% of the total league revenue. More recently, there has been a dramatic increase in unshared or retained revenue. League rules have incentivized going after unshared revenue, which has resulted in the construction of new stadiums and the expansion of local revenue streams. In principle, this is a very good thing.

Ironically, what is good for the league revenue overall can be bad for individual teams, as unlocking these revenue streams is easier for big market teams than for small market teams who are falling behind further and faster than ever before. The revenue gap between the league's haves and have-nots is widening almost hourly, and the imbalance this creates is threatening the future financial parity and competitiveness of the NFL. The Cowboys topped the league in 2009 with an estimated revenue of $420 million. The Lions (http://www.sbnation.com/nfl/teams/detroit-lions) were at the bottom of the league with a figure of $210 million, exactly half of what the Cowboys took in. This revenue gap will create a competitive imbalance that the league must address if it wants to avoid becoming the MLB.

The NFL’s revenue sharing agreement is coming apart at the seams. Today, the owners do not appear to have a solution to this, and are looking to gain time by asking the players to finance part of the income disparity between the teams that the successful, financially potent teams have helped create, just as much as the bottom dwellers of the league helped create it by not being able or willing to keep up with the Joneses.

http://www.bloggingtheboys.com/2011/2/21/2004505/nfl-lockout-2011-revenue-gap-problem

You link an article to support your argument for revenue sharing when the summary of it is an anti-revenue sharing theme, and no mention of that?

Come on now....

wintermute
05-05-2011, 01:17 PM
You link an article to support your argument for revenue sharing when the summary of it is an anti-revenue sharing theme, and no mention of that?

Come on now....

Thanks for reading I guess? But you read it wrong actually. It's not anti revenue sharing at all, if anything it argues for more revenue sharing.

How strange that I read that section you quoted and come up with an entirely different interpretation. The article says that the NFL's revenue sharing is coming apart because of a dramatic increase in unshared revenue. This creates a competitive imbalance. The very thing which is happening in the NBA.

Given that statement, logically the solution is to share even more revenue right? Not get rid of revenue sharing? How in the world do you construe that as anti-revenue sharing?

Since86
05-05-2011, 01:36 PM
It shows that even with a high percentage of revenue sharing, it's still a broken model. This is what happens when teams depend on revenue sharing to make a profit, rather than be financially independent.

http://sportsillustrated.cnn.com/2010/writers/joe_sheehan/08/25/pirates.finances/index.html


When you base revenue sharing on actual revenues, you incentivize sloth and aggressively diminish a franchise's motivation to move upward, as gains in revenue will be offset initially by lost welfare payments. It's a zero-sum game -- one the Pirates elected not to play.

What the system doesn't do is level the playing field. It simply creates a welfare class of teams that can turn significant profits by keeping payroll down, knowing that if revenues fall, they'll cash a big check from the Yankees, the Red Sox, the Cubs, the Dodgers. What the Pirates have done may be morally wrong, and it's more than a little dishonest, but it's also economically rational for an ownership group that values steady profits over on-field success and the risk that pursuing the latter would entail.
You can fix this system, but to do so, you'd have to give up the salary-dampening features of it. MLB's problem isn't gaps in actual revenue, but in potential revenue, and a well-designed system would address those gaps. Gather smart people and have them quantify what it means to play in the Bronx versus Baltimore, or in Queens versus the Queen City. Establish the baseline differences in market sizes using everything but actual revenues. Then design a system that shares revenue according to those differences, leveling the gap between Kansas City and Philadelphia, rather than between the Royals and Phillies. If a team does a particularly good job of leveraging its market to make money, they shouldn't be penalized for that. Similarly, if a large-market team becomes a sad joke, they shouldn't get bailed out by dipping into the fund. Revenue-sharing shouldn't be punishment for failure or reward for success; it should be a tool to create a fair and level field of competition.

In a well-designed system, the Pirates would have the same incentive to improve, to compete, to win as every other team, because the money they would make by doing so would belong to them. There would be no diminishing returns. The revenue-sharing mechanism would properly adjust for their small market separate from their revenues, leaving them free to invest in their product with the same potential for return as the Yankees do. That is not the case today, and while the Pirates are the easy and obvious target, be sure to save some opprobrium for the owners, led by commissioner Bud Selig, who aggressively pursued this setup over the past two decades. The crime isn't the Pirates' decisions -- it's the system that made those decisions rational.

The revenue sharing models in both the NFL and MLB aren't working, and both need to be fixed.

aaronb
05-05-2011, 01:41 PM
It shows that even with a high percentage of revenue sharing, it's still a broken model. This is what happens when teams depend on revenue sharing to make a profit, rather than be financially independent.

http://sportsillustrated.cnn.com/2010/writers/joe_sheehan/08/25/pirates.finances/index.html



The revenue sharing models in both the NFL and MLB aren't working, and both need to be fixed.



Revenue sharing isn't the problem. It's that bigger market teams (Washington and Dallas in particular) are trying to find ways around sharing their money.

It makes sense, both are terribly run franchises who want to have NY Yankees types of competitive advantages.

Since86
05-05-2011, 01:41 PM
And why I say it's an anti-revenue sharing article is because of the combination of your two posts. The NBA isn't going to share 100% of the revenue. They will have unshared revenue, like gate revenue's etc. LA can simply raise ticket prices, while the Pacers can't. They will get to keep more.

It takes away incentives for small markets, like Pitt, and it provides loopholes to larger markets to retain their own money.

They aren't going to share 100% of the revenue. That's not going to happen.

wintermute
05-05-2011, 01:44 PM
It shows that even with a high percentage of revenue sharing, it's still a broken model. This is what happens when teams depend on revenue sharing to make a profit, rather than be financially independent.


The previous article pointed out that the NFL previously shared up to 80% of all revenue. Problems cropped up when this percentage went down, which is what is happening now. So it wasn't broken when the shared percentage was high, but it's broken now that the percentage is being reduced. Seems very sensible to me.



The revenue sharing models in both the NFL and MLB aren't working, and both need to be fixed.

I don't really know much about MLB, but it seems to me the problem being referred to there is the MLB's lack of a salary floor. Both the NFL and MLB have salary floors. And I heartily agree with any provisions that say shared revenue must be spent, not saved. After all, that is the whole point, giving poorer teams spending money to compete.

Since86
05-05-2011, 01:46 PM
Revenue sharing isn't the problem. It's that bigger market teams (Washington and Dallas in particular) are trying to find ways around sharing their money.

As they should, it's THEIR money.

When small market teams can turn a profit, by minimizing their expenses and just racking in the shared revenue, it hurts the league.

It doesn't make the league more competitive, it actually does the opposite.

What incentive is there for a team like Indiana to go out and spend money, and make their own profit, when they can collect cash for doing little?

As much as we love the NBA, it's still a business. And the point of business is to make money. What's going to stop owners from just sitting back and collecting while doing very little?

Nothing. That's why there are the Pittsburgh Pirates of the world that don't even attempt to try and get better.

wintermute
05-05-2011, 01:48 PM
And why I say it's an anti-revenue sharing article is because of the combination of your two posts. The NBA isn't going to share 100% of the revenue. They will have unshared revenue, like gate revenue's etc. LA can simply raise ticket prices, while the Pacers can't. They will get to keep more.

It takes away incentives for small markets, like Pitt, and it provides loopholes to larger markets to retain their own money.

They aren't going to share 100% of the revenue. That's not going to happen.

The difference is, the NFL is going from a system with a very small percentage of shared revenue (80%) to one where the shared component is much less. That is a problem.

The NBA has very limited shared revenue right now. Going up any amount is an improvement.

Since86
05-05-2011, 01:51 PM
The previous article pointed out that the NFL previously shared up to 80% of all revenue. Problems cropped up when this percentage went down, which is what is happening now. So it wasn't broken when the shared percentage was high, but it's broken now that the percentage is being reduced. Seems very sensible to me.

The rules didn't change. Teams found out ways to increase the profit they could keep. Like raising ticket prices.....

Like I said, those rules would still have to be in place. You're not going to get 100% sharing. That won't happen.


I don't really know much about MLB, but it seems to me the problem being referred to there is the MLB's lack of a salary floor. Both the NFL and MLB have salary floors. And I heartily agree with any provisions that say shared revenue must be spent, not saved. After all, that is the whole point, giving poorer teams spending money to compete.

All a salary floor would do is reduce the profit. They would still be able to turn a nice little profit, not as big mind you, but they still would make money for doing very little.

It takes the incentive away for fielding a competitive team. They can be horrible, and the team can make money. Why would they want to reduce their profit in order to get better? In the end it's all about money.

Seattle got their team ripped away from them because the new owners thought they could turn a bigger profit in OKC. You don't think owners would start toeing the salary floor?

Since86
05-05-2011, 01:53 PM
The difference is, the NFL is going from a system with a very small percentage of shared revenue (80%) to one where the shared component is much less. That is a problem.

The NBA has very limited shared revenue right now. Going up any amount is an improvement.

They aren't going to any new system. It's the same system, teams have just found away around it.

And even so, it still doesn't fix the lack of incentive to build a competitive franchise.


Revenue sharing creates a ton of problems. There isn't a single model out there that works. NFL and MLB are different and they have different problems, but some similiar ones as well.

Revenue sharing isn't THE answer.

wintermute
05-05-2011, 01:53 PM
When small market teams can turn a profit, by minimizing their expenses and just racking in the shared revenue, it hurts the league.

It doesn't make the league more competitive, it actually does the opposite.

What incentive is there for a team like Indiana to go out and spend money, and make their own profit, when they can collect cash for doing little?

As much as we love the NBA, it's still a business. And the point of business is to make money. What's going to stop owners from just sitting back and collecting while doing very little?

Nothing. That's why there are the Pittsburgh Pirates of the world that don't even attempt to try and get better.

Totally agree. Small market teams must spend in order to make the league competitive. I think we're actually agreeing now.

Revenue sharing must come with provisions such that the shared revenue should be spent on improving the team. I don't know what's the mechanism for that is going to be, maybe min spending floors, spend-to-earn, etc, but I agree wholeheartedly that teams like Indiana should not have incentive to receive shared revenue checks and just sit on the profit.

However, to get there you must have revenue sharing in the first place. After that, tweak the system to your heart's content.

Since86
05-05-2011, 01:57 PM
I look at revenue sharing the same way I do communism. Looks great on paper, but it's a trainwreck when put into use.

wintermute
05-05-2011, 01:59 PM
Seattle got their team ripped away from them because the new owners thought they could turn a bigger profit in OKC. You don't think owners would start toeing the salary floor?

What? Now this is going totally OT. OKC is a smaller market than Seattle. You don't think Clay Bennett knows that? You don't think Clay Bennett being from OKC is the main factor in the move?


They aren't going to any new system. It's the same system, teams have just found away around it.


It worked for a long time though. But nothing is perfect. Teams find loopholes, then the league should plug them.



Revenue sharing creates a ton of problems. There isn't a single model out there that works. NFL and MLB are different and they have different problems, but some similiar ones as well.

Revenue sharing isn't THE answer.

Agreed and agreed. I've repeatedly said the revenue sharing is not THE answer. But I certainly think it's a major component. You on the other hand, seem to think there shouldn't be any revenue sharing at all.

aaronb
05-05-2011, 02:01 PM
I look at revenue sharing the same way I do communism. Looks great on paper, but it's a trainwreck when put into use.


As is unchecked and unregulated capitalism.

wintermute
05-05-2011, 02:05 PM
I look at revenue sharing the same way I do communism. Looks great on paper, but it's a trainwreck when put into use.

Well if it's an ideological thing with you then there's no way to convince you.

For what's it worth, I'm a big believer in free markets.

But as I've mentioned twice in this thread, the NBA is NOT a free market. It gets to dictate various things which its teams must do. For example, for the sake of competitive balance, the league mandates that the best prospects go to the worst teams. Why aren't you upset about that? Why then would you be upset that the league can decide to reallocate revenue to improve competitive balance?

I don't agree btw that NBA teams are independent businesses. If they are, then the Pacers for example should be able to up roots and go touring a la the Globetrotters. The NBA teams have a symbiotic existence with each other.

Since86
05-05-2011, 02:06 PM
What? Now this is going totally OT. OKC is a smaller market than Seattle. You don't think Clay Bennett knows that? You don't think Clay Bennett being from OKC is the main factor in the move?

No. I think money is the main factor, as it usually is.



Agreed and agreed. I've repeatedly said the revenue sharing is not THE answer. But I certainly think it's a major component. You on the other hand, seem to think there shouldn't be any revenue sharing at all.

I think a hardcap is a better solution.

Since86
05-05-2011, 02:09 PM
I don't agree btw that NBA teams are independent businesses. If they are, then the Pacers for example should be able to up roots and go touring a la the Globetrotters. The NBA teams have a symbiotic existence with each other.

I view them the same way I view state governments. Indiana shouldn't be responsible for keeping California out of the red. But at the same time, they work together to create our wonderful union. The Lakers have no control over the way Indiana spends their money, so they shouldn't have to shoulder the financial burden.

I think there should be rules that each team has to work within, like a salary floor and a hardcap, but they should be financially independent from one another.

I don't mean to say that there shouldn't be ANY revenue sharing, but it should be kept minimal.

Unclebuck
05-05-2011, 02:11 PM
My main point in this thead is that it is not practical to compare NBA with NFL. NFL teams get almost 70% of all their revenue from the national TV deals which is already shared 100% equally. The NFL essentially does not have local deals except for preseason games. In the NBA teams get about 30% of their revenue from the national TV deals.

Since86
05-05-2011, 02:12 PM
As is unchecked and unregulated capitalism.

Agreed, but 100% revenue sharing is pretty much communism, and that doesn't provide an incentive for competitiveness. And competitiveness is the backbone of sports.

aaronb
05-05-2011, 02:13 PM
They aren't going to any new system. It's the same system, teams have just found away around it.

And even so, it still doesn't fix the lack of incentive to build a competitive franchise.





I'm calling shenanigans here!!!!

Why would a team not try and build the best franchise possible? Why own a pro sports team (the equivalent to a rich mans toy yacht) if you aren't going to try and win at some point?

Did the Pacers draw higher attendance and more revenues back when they were good?

Are the Colts better off now than when Jack Trudeau was playing QB?

Where the Spurs better off when Jack Hailey was the Center instead of Robinson or Duncan?



You are going off the rails a little with hypothetical situations where someone is going to spend 300 million on an NBA team to steal a Govt check. Ain't happening

wintermute
05-05-2011, 02:17 PM
I think a hardcap is a better solution.

Myself and several others have already pointed out the problems of just implementing a hard cap. I don't see your rebuttals.

Simply, a low hard cap would solve every team's financial problems. But the rich teams get even richer, while poor teams are breaking even. Competitive balance gets worse. If you don't think that's a problem, I don't know how to convince you.


I view them the same way I view state governments. Indiana shouldn't be responsible for keeping California out of the red. But at the same time, they work together to create our wonderful union. The Lakers have no control over the way Indiana spends their money, so they shouldn't have to shoulder the financial burden.


I'm sorry, that's a poor analogy. The states don't compete with each other. There is no reason to maintain competitive balance between California and Indiana. Sorry, it just doesn't work.

wintermute
05-05-2011, 02:21 PM
My main point in this thead is that it is not practical to compare NBA with NFL. NFL teams get almost 70% of all their revenue from the national TV deals which is already shared 100% equally. The NFL essentially does not have local deals except for preseason games. In the NBA teams get about 30% of their revenue from the national TV deals.

Revenue sharing isn't just about TV deals. Not all the NFL's revenue sharing comes from the national TV deal either.

What happens in the NFL is that teams with big revenue (like the Cowboys) write a check to the poorer teams. No, I don't know the exact mechanism but it happens. Nothing stops the NBA from doing the same. The NBA already collects luxury tax revenue and redistributes it. Why can't shared revenue use the same mechanism?

Since86
05-05-2011, 02:22 PM
I'm calling shenanigans here!!!!

Why would a team not try and build the best franchise possible? Why own a pro sports team (the equivalent to a rich mans toy yacht) if you aren't going to try and win at some point?

Did you read my article talking about the Pit. Pirates? Obviously not.

I don't know why someone would do it, but they do.

wintermute
05-05-2011, 02:24 PM
Agreed, but 100% revenue sharing is pretty much communism, and that doesn't provide an incentive for competitiveness. And competitiveness is the backbone of sports.

Competitiveness in sports comes from different athletic abilities.

It comes from coaching ability.

It comes from the manager's skill.

It should not come from the size of the market!

Revenue sharing seeks to equalize the market size factor. It's not perfect, no. But can you come up with a better mechanism?

aaronb
05-05-2011, 02:28 PM
Did you read my article talking about the Pit. Pirates? Obviously not.

I don't know why someone would do it, but they do.



Thats MLB baseball. Where they DON'T share revenue on a large scale.

naptownmenace
05-05-2011, 02:29 PM
Parity is an impossible dream. The NFL doesn't have true parity. They have a system with a hard cap, where players have partial guaranteed contracts, and franchise tags that allow them to keep/match any offers made to their best free agents. That still hasn't produced actual parity.

What the NFL's system really provides is greater player movement through free agency. Players change teams more frequently which helps teams rebuild faster. That's a good thing for a down on it's luck franchise because it gives the fans and players on that team hope every year but there are no guarantees that a Pro Bowl free agent is going to want to play for a small market team. They can still decide to go play for a team in NY or a warm weather city.

Having more player movement in the NBA might actually be a good thing because at least it would give the fans more hope that their favorite team can make a drastic improvement from one year to the next. Jersey sales would certainly increase as new players join the team every year. That doesn't necessarily mean this will produce more parity. A team could still remain perpetually bad and never lure a major Free Agent. No matter what changes are made to the CBA there will always be bad teams that are bad most seasons because they make bad personnel decisions.

The biggest thing that would help is if the Owners could keep more of the revenue split and come up with a better revenue sharing system based on TV revenue. The Luxury tax was designed to level out the team's payrolls and give the teams under the cap some revenue to gain from the rich teams but it hasn't produced the desired results.

I have no idea how they can solve the revenue sharing issue mainly because I don't understand how the TV contracts for NBA teams are set up. Maybe they can give each team a split of the TV revenue when they play each other. So the home teams would have to pay the road team a royalty when their games are telecast. The royalty would be based on the amount of revenue the home team receives from their TV broadcast. That way a team like the Pacers wouldn't have to pay the same amount of royalty that a team like the Knicks or Lakers pay.

Another rule I'd like to see introduced is an Amnesty rule where the team can cut one player every 3 years and have them not count against the salary cap. They would still have to pay that player or pay the difference if they are signed by another team for 1 season but they would free and clear afterward - no matter how many years were remaining on that player's contract.

Since86
05-05-2011, 02:31 PM
Competitiveness in sports comes from different athletic abilities.

It comes from coaching ability.

It comes from the manager's skill.

It should not come from the size of the market!

Revenue sharing seeks to equalize the market size factor. It's not perfect, no. But can you come up with a better mechanism?

And it also comes from each teams ability to manage their team.

I don't care if LA makes 150mil per year in profit if the Pacers are making 30mil per year in profit. That doesn't matter.

The thing that matters is a level playing field. A hard cap gives that structure. Sure LA could spend more, but with a hard cap they can't. It handcuffs their ability to merely stock up on talent.

If LA isn't allowed to go over the cap, then they have to pick and choose their assets to keep and which ones they let go. Those let go are free to go to teams that have the cap space, and that creates competitive balance.

Since86
05-05-2011, 02:40 PM
Thats MLB baseball. Where they DON'T share revenue on a large scale.

MLB shares 6 BILLION a year.

TV is responsible for 2/3 of revenue sharing for the NFL. They collected 3.8 billion in 2010. If that's 2/3, that means the total shared for the NFL last year was 5 billion.

But yeah, totally small scale.

wintermute
05-05-2011, 02:46 PM
And it also comes from each teams ability to manage their team.


But how do you divorce market size from that factor? Do you think Sterling is a better manager than say Simon? After all, Sterling makes a profit every year.




The thing that matters is a level playing field. A hard cap gives that structure. Sure LA could spend more, but with a hard cap they can't. It handcuffs their ability to merely stock up on talent.



But LA would then spend more on non-capped things. Like coaches, GMs. Facilities, amenities? It's naive to think a hard cap cures all, just as it's naive to say revenue sharing cures all.

Unclebuck
05-05-2011, 02:48 PM
I have no idea how they can solve the revenue sharing issue mainly because I don't understand how the TV contracts for NBA teams are set up. Maybe they can give each team a split of the TV revenue when they play each other. So the home teams would have to pay the road team a royalty when their games are telecast. The royalty would be based on the amount of revenue the home team receives from their TV broadcast. That way a team like the Pacers wouldn't have to pay the same amount of royalty that a team like the Knicks or Lakers pay.



It is pretty simple.

The NBA negotiates the national TV deal (currently it is with ESPN/ABC and TNT) all 30 teams share equally in that revenue. So the pacers get the exact same as the lakers even though the pacers were not on national TV this past season.

Each individual team negotiates their own local TV deal usually with a local cable company/station. The lakers just signed a new deal where the Lakers get $150M per year. The Cavs 5 years ago had the 4th richest deal and that was 5M per year. I would guess probably 25 of the 30 teams currently get less than 10M per year on their local TV deal. And probably half of the teams get less than $5M per year.

To my knowledge there is no sharing at all of the local TV money, local advertising, local radio deals......

Since86
05-05-2011, 03:01 PM
But LA would then spend more on non-capped things. Like coaches, GMs. Facilities, amenities? It's naive to think a hard cap cures all, just as it's naive to say revenue sharing cures all.

This isn't college football.

And I never said it's a cure all, I said I think it's a better approach. All those things that you mentioned aren't going to be fixed with revenue sharing either. Those are just part of the game.

Teams will never be on equal footing.

If were going to talk about facilities we should start talking about the difference in weather and state income taxes. Those are things that FA weigh out as well.

aaronb
05-05-2011, 03:31 PM
MLB shares 6 BILLION a year.

TV is responsible for 2/3 of revenue sharing for the NFL. They collected 3.8 billion in 2010. If that's 2/3, that means the total shared for the NFL last year was 5 billion.

But yeah, totally small scale.



So if I follow? Baseball shares ALMOST TWICE AS MUCH MONEY AS THE NFL TAKES IN?




I'm going to have to see a link on that one? The NFL is far and away the richest league. The salary cap is higher for every team than all but the top 6 MLB franchises.

http://profootballtalk.nbcsports.com/2010/09/19/team-by-team-salary-cap-numbers-if-there-were-a-salary-cap/

aaronb
05-05-2011, 03:36 PM
MLB shares 6 BILLION a year.

TV is responsible for 2/3 of revenue sharing for the NFL. They collected 3.8 billion in 2010. If that's 2/3, that means the total shared for the NFL last year was 5 billion.

But yeah, totally small scale.

According to this link. Baseball shares about 450-500 Million. Quite a bit less than your 6 Billion dollar number.

http://www.fangraphs.com/blogs/index.php/will-leaked-mlb-financials-kill-revenue-sharing/

Since86
05-05-2011, 03:37 PM
Where did you get the idea that it's almost double? I said they get 3.8 from TV, which is 2/3 of the total. The total would be about 5 billion. 6 billion isn't almost double 5 billion, last time I checked.

http://network.yardbarker.com/mlb/article_external/mlb_revenues_grown_from_14_billion_in_1995_to_7_bi llion_in_2010/4560405

Sorry, I was off on my MLB number. It's 7 billion, not 6.

Here's a link giving the 2/3rds number for NFL.
http://football.calsci.com/SalaryCap.html

About 2/3 of the NFL's money comes from the TV deal.

Here's a link giving the TV revenue numbers which account for 2/3rds.
http://nfllabor.com/2011/02/17/wall-street-journal-nfl-revenue-flattens/

“Revenues from media rights increased to $3.8 billion for 2010 from $2.6 billion in 2005—a 46% increase. But between now and 2013, the final year of the new broadcast contracts, fees will only increase $350 million, or about 9%.

And here's a story back in 2007 that talks about how MLB is catching the NFL.
http://money.cnn.com/2007/10/25/commentary/sportsbiz/index.htm?section=money_commentary_columnsportsbiz

aaronb
05-05-2011, 03:41 PM
Where did you get the idea that it's almost double? I said they get 3.8 from TV, which is 2/3 of the total. The total would be about 5 billion. 6 billion isn't almost double 5 billion, last time I checked.

http://network.yardbarker.com/mlb/article_external/mlb_revenues_grown_from_14_billion_in_1995_to_7_bi llion_in_2010/4560405

Sorry, I was off on my MLB number. It's 7 billion, not 6.

Here's a link giving the 2/3rds number for NFL.
http://football.calsci.com/SalaryCap.html


Here's a link giving the TV revenue numbers which account for 2/3rds.
http://nfllabor.com/2011/02/17/wall-street-journal-nfl-revenue-flattens/


And here's a story back in 2007 that talks about how MLB is catching the NFL.
http://money.cnn.com/2007/10/25/commentary/sportsbiz/index.htm?section=money_commentary_columnsportsbiz


Thats total revenue. Baseball doesn't share all revenue. The real number THAT IS ACTUALLY SHARED is 450-500M (433 in 2009, the last year they released figures)

Eleazar
05-05-2011, 03:42 PM
My main point in this thead is that it is not practical to compare NBA with NFL. NFL teams get almost 70% of all their revenue from the national TV deals which is already shared 100% equally. The NFL essentially does not have local deals except for preseason games. In the NBA teams get about 30% of their revenue from the national TV deals.

Who cares where the money comes from. That isn't the debate. The debate is about what to do with the money after they get the money. Where they get it from has absolutely zero importance in this debate.


Agreed, but 100% revenue sharing is pretty much communism, and that doesn't provide an incentive for competitiveness. And competitiveness is the backbone of sports.

Why would it stop competitiveness? If the system is set up in a way that you are going to make money no matter what why not try to have the best team?


Myself and several others have already pointed out the problems of just implementing a hard cap. I don't see your rebuttals.

Simply, a low hard cap would solve every team's financial problems. But the rich teams get even richer, while poor teams are breaking even. Competitive balance gets worse. If you don't think that's a problem, I don't know how to convince you.


Who cares if the rich teams get richer if every team is making money and no team can take advantage of the extra money they make? That is my whole point why do you guys care so much what the owners do with their extra money? If every team can make money, and no team can have a competitive advantage because they make more money why do you care that some teams make more while others make less?

Since86
05-05-2011, 03:43 PM
Thats total broadcasting revenue. Baseball doesn't share broadcasting. The real number THAT IS ACTUALLY SHARED is 450-500M (433 in 2009, the last year they released figures)

Uh, no.


Based on financial information provided by Major League Baseball, gross revenues have grown from $1.4 billion in 1995 to $7 billion in 2010, or a 400% increase. When accounting for inflation, the league still sees phenomenal growth at a 254% increase.
http://network.yardbarker.com/mlb/article_external/mlb_revenues_grown_from_14_billion_in_1995_to_7_bi llion_in_2010/4560405

Since86
05-05-2011, 03:47 PM
Why would it stop competitiveness? If the system is set up in a way that you are going to make money no matter what why not try to have the best team?

Did you not read the article about the Pirates either?

Eleazar
05-05-2011, 06:59 PM
Did you not read the article about the Pirates either?

No because an article about the MLB has nothing to do with any system that I want to see put in place. It is only pertains to those who want a similar system to what the MLB has.

Like I said if everything on the court is equal then it doesn't matter if one owner makes enough to get the US out of debt while the other only makes enough to buy a new mansion.

wintermute
05-06-2011, 06:16 AM
Who cares if the rich teams get richer if every team is making money and no team can take advantage of the extra money they make? That is my whole point why do you guys care so much what the owners do with their extra money? If every team can make money, and no team can have a competitive advantage because they make more money why do you care that some teams make more while others make less?

I think it does matter. Oh, I don't think it matters much if one team makes $100m and the other $30m. But if one team makes $100m and another $1m? Then I think it would matter more.

It comes down to owners' competitiveness I think. Yeah, you have the odd team like the Clippers whose owner seems more interested in profits than in fielding a competitive team (and even now the Clippers seem to be changing), but in general most owners aren't in it just to make a buck. Don't mistake me, in the end it's still a business, but frankly there are a lot of easier ways to make money if you have the capital to buy a professional sports team anyway. Rather, I think for most owners it's an outlet for their competitiveness. That's why we have all these rules in the CBA restricting maximum salary and contract length. These aren't restrictions on players, these are restrictions on the teams. Their competitiveness is so extreme that the owners have to put in rules to rein themselves in.

Given that, it seems very unlikely that the richer teams won't use their extra revenue for competitive advantage. This has already happened to some extent - for example, Portland buying extra picks and Dallas lavishing players with perks and luxurious treatment. Granted, in both cases the money came from the billionaire owner's pockets. But it's not a big stretch to imagine that the gulf in revenues could create 2 tiers of NBA teams.

Certainly, we've seen that money is a factor in staffing decisions. For a time, the Hornets had the league's smallest front office (probably still is), featuring GM Jeff Bower, 2 executives, and 2 scouts. For poorer teams, firing a coach while still paying his replacement is a big issue. Richer teams though don't give a second thought to eating a coach or executive's long term contract. The Nets and Sixers shared a summer league team to cut costs, and I think Charlotte didn't even send a team.

How much would these things affect a team's competitiveness? I don't really know either. But I think it's undeniable that rich teams could use their extra revenue to advantage. Not to the extent of buying up all the best players and winning championships that way. But still enough that I think I'm more comfortable with a different solution than just a straight out hard cap.

wintermute
05-06-2011, 06:31 AM
Having more player movement in the NBA might actually be a good thing because at least it would give the fans more hope that their favorite team can make a drastic improvement from one year to the next. Jersey sales would certainly increase as new players join the team every year. That doesn't necessarily mean this will produce more parity. A team could still remain perpetually bad and never lure a major Free Agent. No matter what changes are made to the CBA there will always be bad teams that are bad most seasons because they make bad personnel decisions.


I think it's true that more player movement will be good for the league as a whole. But I also think overall it hurts teams like the Pacers. As you say, the tendency of free agency movement is toward bigger cities or warmer climates. So I think more player movement is likelier to mean more Pacer stars leaving than other teams' stars coming in, no matter how good the team's management is in making personnel decisions.




Another rule I'd like to see introduced is an Amnesty rule where the team can cut one player every 3 years and have them not count against the salary cap. They would still have to pay that player or pay the difference if they are signed by another team for 1 season but they would free and clear afterward - no matter how many years were remaining on that player's contract.

I don't like amnesty rules very much. Seems like a license for teams to screw up, since they know they can take a mulligan every once in a while.

I prefer shorter guaranteed contracts, or incentive-tied contracts. Yeah, incentive mechanisms are going to be tricky, but I think it would provide a way forward.

BillS
05-06-2011, 11:58 AM
Agreed, but 100% revenue sharing is pretty much communism, and that doesn't provide an incentive for competitiveness. And competitiveness is the backbone of sports.

I'm finding the discussion on both sides of the issue interesting, but I wanted to point out that the NBA is closer to a single business with 30 branches than it is to 30 independent entities that would be forced to put all their income into one basket. Communism would be the latter, while the former is just distribution of income between departments.

Franchise operations fall weirdly in between those two extremes, but since rules for operation - including how franchises can spend money - are controlled by the franchiser (the NBA), rules on what to do with the income are perfectly valid.

Now if the NFL was forced to share its revenue with the NBA :drool:

Since86
05-06-2011, 12:25 PM
No because an article about the MLB has nothing to do with any system that I want to see put in place. It is only pertains to those who want a similar system to what the MLB has.

Like I said if everything on the court is equal then it doesn't matter if one owner makes enough to get the US out of debt while the other only makes enough to buy a new mansion.

It's not about their system though, it's about the owners desire to produce a quality product.

If the NBA shares revenue to ensure that each team will make a profit, then what is going to stop an owner from just collecting a profit and not spend any money towards his team other than what he absolutely has too?

You can force them to spend money by having a salary floor, but what happens when they just meet the minimium?

Revenue sharing doesn't help competitiveness, it hurts it. It makes sure that franchises will turn a profit, regardless of the product they're putting out there.

BillS
05-06-2011, 12:41 PM
Revenue sharing doesn't help competitiveness, it hurts it. It makes sure that franchises will turn a profit, regardless of the product they're putting out there.

So how is that worse than a system where franchises can fail to turn a profit even if they put a good product out there?

There are already franchises where the motivation seems to be to do the minimum required to turn a profit - don't spend on FAs, let veteran players go, and so forth. It isn't like it isn't done under the current structure.

Ideally, you want something that not only rewards good management but doesn't punish adequate management that has disadvantages beyond their control. Reality says that all 30 teams aren't going to have great managers, and even that your good managers will be equally successful under every possible circumstance.

None of the proposed solutions are sufficient standing alone. A steeper luxury tax just squeezes out some of the borderline haves and leaves the very richest franchises still able to do what they do. A hard cap alone doesn't help offset non-salary aspects of player movement. A franchise tag system alone doesn't keep "have" teams from stockpiling superstars.

Since86
05-06-2011, 12:44 PM
Businesses who offer a good product fail everyday. Is that fair? No, but that's life.

The owner of any franchise should be responsible for how that franchise is run, not anyone else. It's THEIR franchise. It's THEIR responsbility.

pacer4ever
05-06-2011, 12:54 PM
Businesses who offer a good product fail everyday. Is that fair? No, but that's life.

The owner of any franchise should be responsible for how that franchise is run, not anyone else. It's THEIR franchise. It's THEIR responsbility.

But when buying an NBA team you agree to give up some of that. You have to abide by the rules of the league

Eleazar
05-06-2011, 01:04 PM
Businesses who offer a good product fail everyday. Is that fair? No, but that's life.

The owner of any franchise should be responsible for how that franchise is run, not anyone else. It's THEIR franchise. It's THEIR responsbility.

So you are saying you should only pay taxes if you want to right?

Or the USA shouldn't help NATO, but NATO should help the US no matter what?


Organizations have certain rules and standards in order to be part of those organizations. If you refuse they can kick you out. The NBA is no different. If these teams want to be part of the NBA they have to abide by the NBA's rules and standards.

BillS
05-06-2011, 01:05 PM
Businesses who offer a good product fail everyday. Is that fair? No, but that's life.

The owner of any franchise should be responsible for how that franchise is run, not anyone else. It's THEIR franchise. It's THEIR responsbility.

That's true if you want the sole purpose of the franchise to make a profit.

In the case of a sports franchise, you want the goal to be the quality of the product as well as the profit - you yourself have said that.

If you disconnect the quality of the product from the profit - either in your worst-case scenario where revenue sharing means owners don't invest in the teams in order to keep the money, or in my worst-case scenario where owners lose money in order to invest in their teams - you aren't producing what people expect from professional sports.

There will always be room for failure, but a good franchiser wants to reduce the risk of that, not sell franchises on the basis of "oh, by the way, life isn't fair and we aren't going to give you any tools to try to even it out".

It all boils down to this - does the NBA (the franchiser) want franchises that can be consistently profitable outside the markets with the most individual team profit potential?

If the answer is "yes", then they HAVE to provide those markets with tools to be successful. If the answer is "no", they need to quit beating around the bush and just shuffle the franchise locations.

Since86
05-06-2011, 01:12 PM
So you are saying you should only pay taxes if you want to right?

Yes, because our tax dollars don't go back to the community or anything. :rolleyes:

Tax money is used on roads, for schools, public safety like police and fire departments. It's used for emergency healthcare, national security, defense, regulating businesses. I can come up with a list a mile long on how I benefit directly from paying taxes.


Revenue sharing doesn't go back to benefit the entire NBA, as a whole, like taxes do the community. They go directly into the coffers of another owner who doesn't have the ability to turn a profit. They can spend that money on a new arena, or they can simply pocket it. There aren't any rules on how you must spend all your money. All the NBA can do is make sure you spend a minimum amount to field a team.

If your ceiling leaks in your arena, because you'd rather pocket the profits and not fix the leak, then there's nothing the NBA can do about it.

If a team spends the minimum in salary on 10th men types and get beat by 30pts every game, there's nothing the NBA can do about it.

Are we really arguing whether or not independent financially stability is worse, or atleast equal to, dependent financially stability?

Being responsible for how you run your organization, and whether or not you turn a profit, is a HUGE incentive to run your franchise well. If you are gauranteed a profit, what is going to stop you from only spending the minimum? Nothing.

The comparison between revenue sharing and tax dollars is a horrible one.

Since86
05-06-2011, 01:15 PM
That's true if you want the sole purpose of the franchise to make a profit.

I don't want it to be that way. But at the same time I recognize that some people are simply greedy.

If they see the ability to turn a profit by owning a sports team, then they're going to try.

See the Pittsburgh Pirates. Their owners don't care. They get to sit back and collect a massive check each year just for being part of the club.

BillS
05-06-2011, 01:31 PM
Being responsible for how you run your organization, and whether or not you turn a profit, is a HUGE incentive to run your franchise well. If you are gauranteed a profit, what is going to stop you from only spending the minimum? Nothing.

Well, nothing except the conditions the league legally can put upon owning a franchise, which are substantial because it is a franchiser/franchisee relationship.

But it seems to boil down to this - your argument essentially leads to the conclusion that sports franchises should only exist in profitable markets, and that small markets should get no help from the league in order to exist because a profit-oriented owner could take that help and just pocket it.

Of course, there's nothing to stop an owner in New York or LA from doing the same thing with the money they are more-or-less guaranteed by only having to appeal to a small percentage of a huge population base.

Since86
05-06-2011, 01:39 PM
But it seems to boil down to this - your argument essentially leads to the conclusion that sports franchises should only exist in profitable markets, and that small markets should get no help from the league in order to exist because a profit-oriented owner could take that help and just pocket it.


Heaven's no....

Another conclusion would to have a hard cap in place at a level at which a small market team could survive, and stop paying one player 20mil per year just to put an orange basketball through a hoop. The level of pay for players is downright absurd. So instead of keeping the absurdity, why not try and lower it down to a lower level, which would still leave it at an absurd level.

Big market teams shouldn't have the ability to dish out cash and overpay for players. The NBA should be working on the lower end of the spectrum, instead of trying to raise the bottomfeeders to the top.

Force the Lakers to spend more in-line with the rest of the league, instead of trying to get the rest of the league to spend like the Lakers.

The soft cap is what causes the gap in competition. It allows big market teams to raise more revenue, and then spend more, all while making a profit. LA doesn't care that they spend over the luxury tax, they don't care because they can get away with charging a couple grand per game for a courtside seat. Indianapolis doesn't have that luxury.

The system should be based around how the rest of the league works, you know in medium sized markets, rather than trying to get them to work and stay competitive with rules in place for larger markets.

I think there should be SOME revenue sharing, but I think the best fix is a hard cap situation.

I know others don't but that's my opinion.

RWB
05-06-2011, 04:09 PM
Just some financial info on the Pacers if someone has not seen it.

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Indiana-Pacers_322134.html

Since86
05-06-2011, 04:19 PM
Just some financial info on the Pacers if someone has not seen it.

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Indiana-Pacers_322134.html

Anyone notice the gate receipts for Indiana? 15mil.

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Los-Angeles-Lakers_320250.html

LAL gets 96mil from gate receipts.

Gate receipts are already shared 60-40. But an 81mil dollar difference? Geesh.

NapTonius Monk
05-06-2011, 04:21 PM
Anyone notice the gate receipts for Indiana? 15mil.

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Los-Angeles-Lakers_320250.html

LAL gets 96mil from gate receipts.

Gate receipts are already shared 60-40. But an 81mil dollar difference? Geesh.Is that because our tickets were so deeply discounted?

Since86
05-06-2011, 04:25 PM
Is that because our tickets were so deeply discounted?

It says that Indiana's ticket prices dropped by 30%, but that would only be an extra $9 per ticket, making the average ticket $39. The Wizards average ticket is $38 and they bring in 25mil from gate receipts.

Obviously attendance has some to do with it, but the Lakers' average ticket price is $113, so it seems like it's more about the difference between living in Indiana rather than LA.

Here's a link to all the different teams, if anyone wants to go through different team's numbers.

http://search.forbes.com/search/find?tab=searchtabgeneraldark&MT=nba+team+valuations

Bball
05-06-2011, 11:29 PM
Businesses who offer a good product fail everyday. Is that fair? No, but that's life.

The owner of any franchise should be responsible for how that franchise is run, not anyone else. It's THEIR franchise. It's THEIR responsbility.

Is the business each individual team or is it the league as a whole?

speakout4
05-07-2011, 12:05 AM
Did you read my article talking about the Pit. Pirates? Obviously not.

I don't know why someone would do it, but they do.
Don't use the exception as the general. Yes there are the pirates and perhaps the clippers but lack of incentive to improve will not be contagious or the entire sport would deteriorate. Revenue sharing hasn't hurt incentive in the NFL.

it's not as if the lakers ability to make money is independent of what the other teams do. The lakers need league and nba competition if they are to make money. Otherwise it's wrestling.