clock menu more-arrow no yes

Filed under:

Sacramento Kings Win Second Life, And NBA's Economic Inequity Has Never Been More Important

New, comments

Unless the NBA fixes its grand revenue gap, messes like the one the Maloofs have gotten the Sacramento Kings into will multiply.

Getty Images

The Sacramento Kings won new life on Monday, as the Maloof family, owners of the franchise for the past decade, announced that the team would stay put in California's capital for the 2011-12 NBA season. The Maloofs had been pursuing a relocation to Anaheim, but Sacramento drummed up new financial support for the team, and the NBA --possibly at the behest of Los Angeles Lakers owner Jerry Buss -- told the franchise that support for a move would be hard to come by.

In the Maloofs' statement confirming the new, the family made a point to emphasize that this is a temporary concession, that if the city of Sacramento -- a city coming off the worst economic downturn since the Great Depression, hit particularly hard by the housing bust and the associated disapperance of construction jobs and with a deficit in the millions -- doesn't come up with an arena in the next year, the NBA will support a Kings relocation.

That drops a huge responsibility in the hands of Sacramento mayor Kevin Johnson, who is working on a feasibility study on a new downtown gym. But it also puts new focus on the NBA's labor situation and the remarkable inequity in the league's revenue distribution.

Why did the Maloofs want to move to Anaheim, becoming a third team in the Los Angeles basin and becoming tenants of the Honda Center? In Sacramento, the Kings are the only game in town in major league sports and the Maloofs own their own arena. But you don't make money by being the only fish in a small pond in the NBA -- this isn't the NFL, where you can build a mint on the Moon, if you could afford the zero-gravity dome. In the NBA, it's all about television revenue.

That's because NBA teams don't share local TV revenue -- only the big national pie. That's how you end up with a team like the Lakers signing a 25-year, $5 billion TV contract -- that's $200 million per season -- while the Kings plod through a deal that pays out $11 million per year. You want to know why the Lakers can support a $100 million payroll while the Kings stick below $50 million? Look at the disparity in TV money.

The inequity in revenue creation is without question what drove the Maloofs' eyes south, and it's what puts Sacramento -- a city that sold out the first 11 seasons of Kings basketball despite awful records year after year -- in continued peril. If the NBA were like the NFL, where teams share television revenue, there'd be no reason to move the Kings to Anaheim -- Sacramento would be just as lucrative, if not moreso, given the lack of competition.

So while NBA owners are hoping to shrink the players' cut of leaguewide revenue, the Kings' saga illustrates how important the third rail of NBA finance -- revenue sharing -- will be. Players support better revenue sharing because it makes more teams viable; if the Kings got a cut of the Lakers' local TV revenue, Sacramento might be more active in free agency. The hope in Sactown is that the Maloofs' intention of diving into the Lakers' territory to peel off some of their local revenue will spur frightened big markets to be open to a paradigm shift in terms of revenue sharing.

Because, after all, so long as there is this sort of NBA economic inequity in the NBA, small market teams like the Kings are going to be looking toward the greener pastures of L.A, of Chicago, of New York. Extracting a pound of flesh from players will grow the pie, but the NBA must understand that unless it fixes how that pie is divvied up, more Maloofs are going to look lustily at the major markets, and the league will be left cleaning up mess after mess, just as it now must help the Maloofs clean up Sacramento.

It's a vicious cycle to be in, and David Stern's got to muscle the NBA's way out of it.