The NBA’s financial stability relies on a steady stream of gate receipts, billion dollar broadcast deals, and a collective bargaining agreement that controls spending on players. Ticket sales account for roughly a third of the league’s total revenue, but they still pay the bills for teams. A league-wide revenue report obtained by Ken Berger at CBSSports.com reveals that fifteen teams suffered declines in gate receipts last season. Here’s an excerpt:
The league’s assertion in its news release that basketball-related income (BRI) — upon which the salary cap is based — actually increased 2.5 percent during the 2008-09 season doesn’t tell the whole story.
A memo sent to all 30 teams warned that a reduction of between 2.5 percent and 5 percent in BRI is anticipated next season, which would send the 2010-11 salary cap plummeting as low as $50.4 million — a level not seen in five years. A 5 percent reduction in revenue would set the ‘10-11 luxury tax threshold at $61.2 million.
The 5 percent scenario is in line with what many teams already were projecting, and is significantly better than the doomsday prediction of a 10 percent decline that commissioner David Stern floated (to little fanfare) during the NBA Finals.
Analysis of a league-wide revenue report for the 2008-09 season obtained by CBSSports.com helps to explain how and why the dollars are eroding.
Regular-season gate receipts — the money generated by individual ticket sales and all forms of season-ticket plans — declined $2.66 million league-wide in 2008-09. That’s a minuscule 0.2 percent in a business that generated $1.1 billion in gate revenue the previous season.
But the results varied widely among the 30 teams, reflecting a growing chasm between haves and have-nots.
To read Berger’s column, click here.
