The collective bargaining agreement won’t expire until after the 2010-11 season, but the struggling economy has convinced the NBA’s Labor Relations Committee and Players Union to begin talking this week. The revenue split between the players and owners remains the biggest issue facing the league. The owners want a larger percent of BPI (Basketball Related Income), while the players union has indicated they will lobby for a more comprehensive revenue sharing plan.
As Ken Berger points out in his column for CBS Sports, NBA teams share revenue from sponsorships, merchandising and national television rights, but they do not split gate receipts. Large markets like New York, Los Angeles, Chicago, and Boston can earn double and triple that of the smallest markets, which explains why owners like Jerry Buss and James Dolan have little to gain by sharing their revenue with the Grizzlies. Berger writes:
Revenue sharing has not been included in previous collective bargaining negotiations because both sides view it as an internal issue for the owners. But that attitude has changed this time around, given concern on both sides about how the sagging economy could affect business. With the salary cap expected to decline in the last two seasons of the current CBA and owners asking for a greater share of revenue in the next agreement, the union is concerned that players’ movement and earnings will be further restricted by the growing number of teams unable to compete financially.
“We think it’s important for them to address the disparity in revenue from the high-end to the low-end teams,” a players association source said. “But I haven’t heard anything about what they plan to do.”
That’s the problem. High-rollers like Dolan and Buss aren’t eager to share their riches with the Grizzlies and Timberwolves of the world. For one thing, why mess with a model that’s working for them? For another, owners in prime markets paid a premium to own those teams because of their lucrative revenue streams. When you throw in the fact that successful teams don’t want to be on the hook for franchises that spend foolishly — Mr. Dolan, I think your limo just pulled up — the battle lines are clear.
“Most owners think it’s pretty farcical that they need to support a New Orleans team that’s used the full mid-level exception four years in a row,” said a front-office executive whose team is among the top generators of ticket revenue. “The other owners are like, ‘Why am I going to help you when you’ve been spending money you don’t have?’”
Berger also reveals that nine teams accounted for roughly half the ticket revenue last season.
Splitting local television and gate receipt revenue will help some of the smaller market teams, but I’m not in favor of a system that rewards self-destructive franchises for losing money. There needs to be some sort of checks and balances system in place that determines how revenue-sharing funds are distributed.
