It's a sentiment that most NBA owners seem to getting further and further away from, more than likely because their outside businesses aren't doing as well in the modern economy as they used to be. With their initial money-making pursuits lagging a bit, the owners look to something they can control — skimming more money from an NBA featuring all sorts of superstars and increasing revenue. So they lock the players — and, by extension, the thousands surrounding the players that take in needed revenue in the hundreds of other jobs that rely on NBA games to secure paychecks — out, and try to secure something that is never a given in a free market. Profits.
And they get away from what they knew or should have known heading into their purchase of an NBA team. That rolling in the riches from the team, itself, was never going to happen. It was something to break even with or, in a tax maneuver, lose a little on. Along the way, it was a lot of fun, it aided in pumping up those competitive juices that may have been lacking as they strayed further and further from the battle lines in their own particular businesses, and it left them in good civic standing. Miami Heat owner Micky Arison, in an interview with Darren Rovell at CNBC, made a good point on Monday that reminded us all of this reality:
"This is a hobby of passion," Arison told Rovell, "it's not a business."
Of course, this is easy for Arison to say.
Arison, who made his money as the CEO of Carnival Cruise Lines, is in a good position to point to his team as some sort of passion play. After all, he's a fortnight removed from hoisting his second Lawrence O'Brien trophy after his team's second championship in seven seasons. And, he's in the catbird seat of being able to enjoy quite the season while also losing a little money along the way. He's Warren Buffett, NBA-style, talking about giving back. Even if he did vote last winter to give back less, in raising his hand against the NBA's new collective bargaining agreement.
The Heat owner claims that each year spent in his team's 12-year-old arena has turned out to be a money loser save for the 2010-11 season; a campaign that featured the lone appearance of his team's Big Three while under the rules of the collective bargaining agreement that was put together during the harmonious summer of 2005. And though the Heat don't pay rent at their arena, thanks to a sweetheart deal designed at the height Miami's run with Pat Riley as coach of an Alonzo Mourning-led outfit, the team still managed to finish in the red save for the tumultuous 2010-11 season.
"The reality is we're not a big market team," Arison told CNBC. "Minnesota is a larger market than Miami. Where we find ourselves struggling is our local TV revenue is smaller than big markets and despite sellouts we're only seventh or eighth in gate revenues. Obviously our payrolls are up and our revenues are not because of the limitations of our market."
Rovell goes on to note that the Heat's ticket prices rank far lower than those of their payroll-similar ilk in New York and Los Angeles, and Arison reminds that the team's local TV revenue is just a fraction of what the Lakers and Knicks roll in. Miami might come off all glitz and glam, but it appears the team's fan base is just as top-heavy as the Heat have been since devoting just about all of its salary cap space to three superstars.
These specific notes about the Heat, though, take away from the larger point. NBA owners didn't buy these assets worth hundreds of millions of dollars with very public finance figures as a lark, but not one of the NBA's 30 owners took to their team as a startup either. With revenues falling elsewhere, though, NBA owners are attempting to make money off of their teams — something that seems like an inalienable right from on high as you chant "U-S-A" and put another hot dog on the grill, but it's an idea that seems completely laughable once you get into the finances of running NBA squads.
They're not money-making outfits. Not even close. Not unless you keep payroll tidy and don't pay rent or even finish off contracts for employees making a scout's salary (like the Los Angeles Clippers have been rumored to do), or take in boffo local TV ratings with a string of sellouts that even sustained when you were having to sign players just to make minimum payroll (like the Chicago Bulls have, in the years since Michael Jordan's retirement).
This isn't to say the increased revenue sharing and stricter luxury tax penalties are a bad thing, not when they'll keep teams in deserved outposts like Memphis and Indianapolis. It's just something to keep in mind, during a free-agent run that is an inevitable year-to-year prelude until the next time the owners lock out the players (and thousands of others) from paychecks in order to save themselves from themselves.
If the owners and the GMs they hired would run their businesses like actual businesses? Smartly competing for assets and taking advantage of a market that is still exploitable? Things would be different. You wouldn't have the Phoenix Suns attempting to buy back (at nearly eight figures per year) the services of a guard in Goran Dragic they once traded away with a first-round selection for a player in Aaron Brooks that had more or less been revealed as a one-year wonder, a year removed from winning the Sixth Man Award by shooting a lot. Danny Ferry wouldn't be put in a position of having to clean house in Atlanta.
But NBA owners can't be as smart as they were when building their businesses as they attempt to construct an NBA team because of myriad factors that take so many influences out of their hands. On top of all that is the competitive tinge, the same one that puts them at the top of their business, which often dominates a free-agent summer when every team is tied for first. Or last. Because even Mark Cuban, rife with all his metrics, still signed Evan Eschmeyer.
It's when they turn into fans, arguing away the latest move. Because they're passionate, and business be damned.
Until the next lockout, at least.
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