NBA Economics 101: NBA Ownership, hidden revenues and the plight of fans
The New Jersey Nets were officially introduced to Brooklyn today by none other than BK’s Marcy Project survivor, Jay-Z. After a year of searching for a name and an angle to re-brand the struggling franchise with, it looks like the team will stick with their original name; the Brooklyn Nets.
But that’s not what we’re here to talk about. The Nets did make a big splash today in the blogosphere and twitter but not because of their more than obvious name announcement. They made headlines due to the fact that a well know and respected writer finally stepped up to dismiss the myth of NBA teams losing serious amounts of money.
Malcolm Gladwell dropped a must-read post on Grantland today titled ‘The Nets and NBA Economics’, essentially touching on same points that fellow bloggers like @JonesOnTheNBA, @HPBasketball, @KBergCBS and myself have been championing for months.
Read Gladwell’s piece. Read all of it and understand it. It’s got numbers in there that will make turn your insides and set fire to your heart. Perhaps it will burn off the wool that’s been pulled over the eye’s of the majority and it will be loud and clear; NBA OWNERSHIP IS A PROFITABLE BUSINESS. I can not express this enough.
NBA teams make a ton of revenue that doesn’t fall into the typical BRI (Basketball Related Income). Sure, NBA owners are mostly all billionaires and have various businesses and streams of income, but that’s not what we’re talking about here. We’re talking about business opportunities that only present themselves to the very select few that own a basketball team.
Whether it’s Jerry Buss teaming up with AEG to build LA Live, Dan Gilbert leveraging his Cavaliers’ ownership to open Casinos in Ohio, Mark Cuban’s HDNet television networks and many, many more including the Nets moving to Brooklyn and helping fund the Atlantic Yards project, which will make millions for not only their current owner, Prokhorov, but also for the Nets’ previous ownership group.
I could go on for days on the various ‘side projects’ that were given birth by NBA ownership yet not a single dime has come to the players via their BRI Revenue Sharing model in the CBA. Not one dime. It’s not “basketball related” owners will argue. Those concerts that sell out and bring in revenue for the 200+ days that the NBA doesn’t have games, the off-season events that take place in your favorite team’s arena, all of the television stations launched around your home town teams, all of that revenue, not a single dime goes to the players yet not a single dollar would have been realized if it weren’t for the NBA and those same players.
What city would approve hundreds of millions in funding for an arena if it were to only host concerts? What taxpayer would willingly pay more for beer if they weren’t able to have a home town team to cheer for? We, the people, the fans, give millions to billionaires for the promise of a team to cheer for, to die with and to celebrate with and in return we give them millions in unaccounted revenues.
I am a believer in capitalism and I see no harm in making a profit, even if that profit is extravagant, and that profitability would be perfectly fine with me and millions of other sports fans if the owners weren’t lying to us. Telling us that their businesses are crumbling and that the fan can no longer get their daily fix of the NBA until the players give them something back. But haven’t we given them enough? They’ve leveraged our abiding loyalty to our teams and cashed those chips in for billion dollar stadiums and matching net worth’s. Imagine a homeless man begging for quarters on the street corner, most of us would have no issues with handing that man a quarter. Now imagine after giving him that quarter, the man steps into his Ferrari and drives off to his mansion in Beverly Hills. That’s the what the owners are doing yet until today, most weren’t hadn’t seen the car or the house. For this, I applaud Gladwell, Grantland and ESPN, for finally shinning light on the grim, dark secrets of NBA ownership.
The sad thing is that we will happily continue the financing their empires so long as they give us our sports. Entertainment for equity; that’s the ultimate price you pay as a sports fan.
More NBA Economics 101 posts.