Five years ago, the NBA had itself a lockout. The league claimed its teams were losing $300 million per year due to extraordinary player salaries. Once the dust settled, the players agreed to give up roughly $300 million in aggregate player salaries to get back on the court. In retrospect, it all seems rather neat: The teams were $300 million shy of break-even, so the players gave them $300 million.
And so it was of great interest a year ago when Adam Silver said that “a significant number” of NBA teams continued to lose money. When we dug into the numbers, it became clear that some combination of three problems were causing the issues: Non-player expenses are out of control, the league’s revenue sharing system is too weak, or certain teams are acting outside the interest of making money.
These were the same apparent problems to any who looked hard enough in 2011. The difference back then was that if there were indeed gross losses of $300 million — well, you can’t revenue-share your way out of that. But if you erase that deficit, you should be able to lift lower-revenue teams out of the muck through revenue sharing. This appeared to be the case for teams like the Pelicans, who struggle to generate as much local revenue as other franchises.
The league’s share of revenue exploded in 2011 thanks to the concessions from the players’ union. It exploded again in 2016 as the new national television broadcast deal kicked in. That deal pays the league roughly $1.6 billion per year more than the previous contract. The revenue split between the league and players means — in rough numbers — $800 million of that increase goes straight to players through a higher salary cap and $800 million of the increase goes to teams. Meanwhile, there are no specific new expenses associated with the boosted revenue. This is as close to free money as a business can get.
If the $300 million in player concessions erased the NBA’s aggregate losses in 2011 but left some teams still in the red by 2015, surely this new $800 million in direct aggregate team revenue in 2016 means that all teams can easily turn a profit now.
Surely that means the league can avoid a divisive collective bargaining process, presuming one of the sides opts out of the current deal by Dec. 15.
Surely that means the league can resist locking out the players on July 1, 2017.
When Mike Conley is making $30 million and Evan Turner is making $17 million and even Solomon Hill is signing for $12 million — this is when the franchise owners know they have leverage. Silver even nodded to this fact a year ago in his from-the-gut comments on the league’s financial health, pointing out how much more than teachers or doctors NBA players make.
Getting an extra $800 million to split between the 30 NBA teams is nice. You know what would be better? Getting an extra $1 billion to split between the 30 NBA teams. Or $1.5 billion. Or a hard salary cap. Or lower player maximums. Or universally non-guaranteed contracts. Or a complete restructuring of how revenue is divvied up, incorporating certain expenses (like arena costs) into the calculations. Or any number of lucrative passion projects the league might want to pursue in the new collective bargaining agreement.
After all, there’s no better time to grab for more cash than when the party you’re trying to take it from is feeling flush. After the summer NBA players just had, the league has lots of ammunition for a public war with the union. On paper, it’s plainly obvious that the NBA can no longer reasonably claim teams are losing money because of player salaries. But that doesn’t mean the NBA can no longer reasonably claim it deserves a bigger share of the pot.
Considering the eternal built-in advantage the league has once these lockouts start — both in public perception and in the basic power dynamic involved in withholding someone’s paychecks — there is real incentive for the NBA to be as aggressive as ever. The numbers have changed, but the basic contours of the battle remain the same.
Over the past three decades, the NBA is undefeated against the players’ union. Do we really believe they won’t even show up for the next game in the series?