How The NBA's New Money Changes Everything And Nothing

NEW YORK - MAY 18: (EXCLUSIVE) Nets owner Mikhail Prokhorov with cultural icon and Nets investor JAY-Z celebrate Prokhorov's purchase of the team at lunch today at JAY-Z's 40/40 club on May 18, 2010 in New York City. Prokhorov is representing the Nets tonight at the NBA Draft Lottery in which the team could secure the first pick. (Photo by Larry Busacca/Getty Images for New Jersey Nets)

The NBA has seen an influx of new money in the past two years. Does it change anything? Also, ranking the NBA Alexes.

The NBA is full of new owners; when Alex Meruelo officially becomes the new majority owner of the Atlanta Hawks(and assuming Joshua Harris of the Philadelphis 76ers precedes him) he'll be the seventh new owner in the league since the start of 2010. That's a lot of new blood.

But there seems to be an assumption that all of the new blood comes in with stacked pockets relative to the old guard, that the new collection of owners is uniformly flush and as such can both afford to lose money to win and can raise the tide of the NBA.

Is that true?

The Venn diagram below sorts the NBA's team owners by how long they've owned their team (low tenure can be found north and west, long tenure south and east) and their reported net worth (lower end to the south and west, higher end to the north and east). This diagram is not to scale, but is a reasonable representation of rank. The 'dividing line' for tenure is, oddly enough, 1998, or the date of the last lockout. The dividing line for net worth is around $500 million. We only took the net worth of the majority owner into account.

Owners_tz_medium

I've termed that owners above the $500 million net worth line who have purchased their team in the last 13 years to be "New Money." We didn't include Meruelo in this graphic because there have been no reports as to how much he's worth, and I won't hazard a guess. Of the other six new NBA owners, five fall into the "New Money" category and the other one -- Golden State's Joe Lacob -- comes pretty close. (Net worth figures are obviously fuzzy. One source claims Jerry Buss is worth less than $300 million, which is laughable.)

Of course, Larry Ellison (worth about $20 billion, or roughly what Paul Allen and Mikhail Prokhorov are worth) bid for the Warriors and almost captured them; he tried to bid more than Lacob's $450 million, but the firm handling the deal for old Warriors soulsucker Chris Cohan shut down the bid window. In that alternate reality, all six of the last sales would have been to upper echelon (in terms of wealth) new owners. 

But what's that actually mean for the league? What's it mean for fans?

  • Having a wealthy owner is not a guarantee of unlimited spending. Sure, there's Mark Cuban and Paul Allen, billionaires who act like billionaires. But the Kroenkes refuse to go over the luxury tax threshold willy-nilly, and the Simons, despite carrying a top-tier payroll, cry poor on the regular.
  • Debt shouldn't be an issue. Mikhail Prokhorov is worth $19 billion or so. He shouldn't have had to finance the measly Nets. No clue on whether he did or not, but assuming that he did not, that removes interest payments from the league's expenses. If more owners owned their franchises outright, the league's annual interest payments would be far lower than they are. And perhaps the league could shrink its credit facility, which is now a mammoth $2.3 billion.
  • Public arena financing becomes less palatable. Trust me, I know from experience: it's hard to sell the citizenry on new taxes for a gym when the owners carry a perception of, uh, billionaire playboys. Imagine Tom Gores (net worth $2.4 billion) asked the residents of Detroit to help finance a new downtown arena. Dave Bing might spit his coffee out on the spot.
  • Annual profits become less of a concern. This is the tricky assumption to make: if the Nets represent 1 percent of Prokhorov's holdings, does he need to generate profit off of that, a glorified video game? The percentages run a little different -- the Wizards might be about 30 percent of Ted Leonsis' portfolio (excluding debt). Are profits on this chunk of the portfolio a priority, or can the value increases seemingly all sports franchises see be enough to make owning an NBA team a solid proposition for billionaires?

That's the question that will truly decide how this new crop of ultra-rich owners affects the NBA, and I fear we're getting our answer right now: profits and losses still matter ... a lot. Right now, NBA franchises are good value buys that run the risk of annual losses. You don't "win" in many markets until you sell. Instead of accepting that, the owners are pushing to eliminate even that comparatively small risk and make owning an NBA team lucrative in the small and long terms. Owners don't want to sit on their investment and watch its value grow over time. They want to extract an annual income in addition to that.

And they seem willing to kill an entire season of basketball to win that concession, which is no way to treat their paying customers.

So in the end, all the New Money in the world isn't helping. Replacing the old guard with billionaires and near-billionaires doesn't change the fact that the NBA refuses to play another game without guaranteeing profits for its billionaires and near-billionaires (and the other poor saps too).

Star-divide

ALEX POWER RANKINGS

In honor of the Hawks' new owner, here are the authoritative Alex Power Rankings.

1. Alex English
2. Alex Hannum

English over Hannum, a two-time NBA championship and one-time ABA championship coach, will be controversial to some. It was English, David Thompson and Dr. J who brought back the stylish scoring small forward trope. And now, a highlight video narrated by Nick Van Exel:

3. Cory Alexander

As you can see, the Alex Power Rankings are not very deep.

4. Alex Groza

An original NBA player who only lasted two seasons, but later coached a bit in the ABA and ran the Rockets' front office for a spell.

5. Alexis Ajinca
6. Alex Acker

Don't make me regret this, Alexis!

7. Joe Alexander
8. Alex Tyus
9. Alex Oriakhi

Told you they weren't deep.

10. Courtney Alexander

Star-divide

The Hook is a daily NBA column written by Tom Ziller that runs on SBNation.com Monday through Friday. See the archives.

X
Log In Sign Up

forgot?
Log In Sign Up

Forgot password?

We'll email you a reset link.

If you signed up using a 3rd party account like Facebook or Twitter, please login with it instead.

Forgot password?

Try another email?

Almost done,

By becoming a registered user, you are also agreeing to our Terms and confirming that you have read our Privacy Policy.

Join SBNation.com

You must be a member of SBNation.com to participate.

We have our own Community Guidelines at SBNation.com. You should read them.

Join SBNation.com

You must be a member of SBNation.com to participate.

We have our own Community Guidelines at SBNation.com. You should read them.

Spinner.vc97ec6e

Authenticating

Great!

Choose an available username to complete sign up.

In order to provide our users with a better overall experience, we ask for more information from Facebook when using it to login so that we can learn more about our audience and provide you with the best possible experience. We do not store specific user data and the sharing of it is not required to login with Facebook.