Having the NBA’s best all-round player on your team apparently provides no guarantee of financial success, as the Cleveland Cavaliers are finding out.
A report by ESPN shows 14 NBA franchises lost money in the 2016-17 season. Nine of those teams made losses even after revenue-sharing was taken into account.
Those teams include the Cavaliers, who reached the NBA Finals for the second year in a row in June, losing to the Golden State Warriors. The Cavaliers made a net loss after revenue-sharing and the luxury tax were factored in.
That almost half of the league’s teams are loss-making even in the wake of a new $24 billion television deal presents a headache to the NBA as it attempts to balance the desire for parity and the development of smaller-market teams with the league’s behemoths. ESPN notes that smaller-market teams like the Memphis Grizzlies (and the Cavaliers) are struggling to keep up with a rising salary cap because their local television deals are worth far less than the bigger-market franchises.
The report also highlights how financial success in the NBA often fails to correlate with on-court performances. The Los Angeles Lakers finished next-to-bottom of the NBA’s Western Conference in 2016-17 but made a profit of $115 million even after they shared out $49 million to the rest of the league. The Grizzlies, meanwhile, took around $140 million less in local television rights than the Lakers. Four teams, the Warriors, Lakers, Chicago Bulls and New York Knicks, doled out 71.9 percent of the league’s revenue-sharing payments. Only the Warriors, the eventual NBA champions, and the Bulls made the playoffs.
The NBA’s owners are going to review the league’s revenue-sharing agreement at a Board of Governors meeting in New York from September 27-28, according to ESPN. There are arguments on both sides. As the salary cap rises, so smaller-market teams need a larger slice of revenue-sharing in order to stay financially viable. But the Lakers and their counterparts in the United States’ biggest television markets will continue to bristle at sharing the benefits of their popularity with teams who then make the playoffs ahead of them. The NBA’s business continues to boom—but that doesn’t mean there aren’t bumps along the way.
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