The NBA is one of the most successful professional sports leagues in the world today. Proof of this is the lucrative TV deal that was signed last year, which translated to a significant increase in the salary cap and allowed a lot of players to sign bigger contracts. However, a confidential report showed that nearly half of the 30 teams lost money last season.
According to Brian Windhorst and Zach Lowe of ESPN, 14 franchises were on the negative when it came to earnings before collecting revenue-sharing payouts, which goes to show that the gap between small and big market teams continue to widen. This has prompted the league office to have a dialogue on September 27-28, in order to address this and make necessary changes to the revenue-sharing system if needed.
“Some teams in smaller markets struggling to keep up with a fast-rising salary cap have pushed the league's richest franchises to share more of their profits, according to ownership sources. Some have argued that the expanding profitability gap could warp competitive balance: If big-market teams can earn fat profits even while paying the luxury tax, they could in theory hoard more stars.”
“The nine teams that lost money, by the league's accounting for net income (which includes revenue sharing and luxury tax payments), were the Atlanta Hawks, Brooklyn Nets, Cleveland Cavaliers, Detroit Pistons, Memphis Grizzlies, Milwaukee Bucks, Orlando Magic, San Antonio Spurs and Washington Wizards. Sources pointed out that by a different accounting measure the league tabulates — operating income, which discards various debt obligations — only 10 teams (rather than 14) lost money before accounting for revenue sharing.”
This is definitely not good news for the NBA, as the parity and level of competition is once again in danger. This could mean that bigger market teams will most likely be the only ones who can afford to pay multiple stars in their team, giving them a distinct advantage in contending for the title.
Adam Silver and company have been very busy this summer trying to address a number of issues the league is facing. Now, this topic has the makings of becoming a very big problem, but addressing revenue gaps is very tricky, with a lot of factors that needs to be considered. However, Silver, together with team owners and the NBPA, are expected to work hand-in-hand to make things work and find a solution that will benefit all parties, including the fans.
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