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NBA’s Board Of Governors To Examine Revenue Sharing System

September 19th, 2017 at 12:15pm CST by Luke Adams

ESPN’s Zach Lowe and Brian Windhorst have published an expansive and well-researched report on NBA teams’ finances, providing details on the league’s revenue sharing system, the impact from national and local television deals, and how a lack of net income for NBA franchises could push the league toward considering relocation or expansion.

The report is wide-ranging and detailed, so we’re going to tackle it by dividing it up into several sections, but it’s certainly worth reading in full to get a better picture of whether things stand in the NBA. Let’s dive in…

Which teams are losing money?

  • Nine teams reportedly lost money last season, even after revenue sharing. Those clubs were the Hawks, Nets, Pistons, Grizzlies, Magic, Wizards, Bucks, Cavaliers, and Spurs. The latter two teams – Cleveland and San Antonio – initially came out ahead, but paid into the league’s revenue sharing program, pushing them into the red.
  • Meanwhile, the Hornets, Kings, Pacers, Pelicans, Suns, Timberwolves, and Trail Blazers also would have lost money based on net income if not for revenue sharing, according to Lowe and Windhorst.
  • As a league, the NBA is still doing very well — the overall net income for the 30 teams combined was $530MM, per ESPN. That number also only takes into account basketball income, and doesn’t include income generated via non-basketball events for teams that own their arenas.
  • The players’ union and its economists have long been skeptical of NBA teams’ bookkeeping, alleging that clubs are using techniques to make themselves appear less profitable than they actually are, Windhorst and Lowe note. The union has the power to conduct its own audit of several teams per season, and it has begun to take advantage of that power — according to ESPN, the union audited five teams last season, and the new CBA will allow up to 10 teams to be audited going forward.

How does the gap between large and small market teams impact income?

  • Even after paying $49MM in revenue sharing, the Lakers finished the 2016/17 with a $115MM profit in terms of net income, per ESPN. That was the highest profit in the NBA, ahead of the second-place Warriors, and could be attributed in large part to the $149MM the Lakers received from their huge local media rights deals.
  • On the other end of the spectrum, the Grizzlies earned a league-low $9.4MM in local media rights, which significantly affected their bottom line — even after receiving $32MM in revenue sharing, Memphis lost money for the season. The Grizzlies will start a new TV deal this year that should help boost their revenue, but it still won’t come anywhere close to matching deals like the Lakers‘.
  • The biggest local TV deals help drive up the NBA’s salary cap, with teams like the Lakers and Knicks earning in excess of $100MM from their media agreements. According to the ESPN report, the Knicks made $10MM more on their TV deal than the six lowest-earning teams combined.
  • As one owner explained to ESPN, “National revenues drive up the cap, but local revenues are needed to keep up with player salaries. If a team can’t generate enough local revenues, they lose money.”
  • Playoff revenue from a big-market team like the Warriors also helps push up the salary cap. Sources tell Lowe and Windhorst that Golden State made about $44.3MM in net income from just nine home playoff games last season, more than doubling the playoff revenue of the next-best team (the Cavaliers at about $20MM).

How is revenue sharing affecting teams’ earnings?

  • Ten teams paid into the NBA’s revenue sharing system in 2016/17, with 15 teams receiving that money. The Sixers, Raptors, Nets, Heat, and Mavericks neither paid nor received any revenue sharing money. Four teams – the Warriors, Lakers, Bulls, and Knicks – accounted for $144MM of the total $201MM paid in revenue sharing.
  • While there’s general agreement throughout the NBA that revenue sharing is working as intended, some teams have “bristled about the current scale of monetary redistribution,” according to ESPN. “The need for revenue sharing was supposed to be for special circumstances, not permanent subsidies,” one large-market team owner said.
  • The Grizzlies, Hornets, Pacers, Bucks, and Jazz have each received at least $15MM apiece in each of the last four years via revenue sharing.
  • However, not all small-market teams receive revenue-sharing money — if a team outperforms its expectations based on market size, it forfeits its right to that money. For instance, the Thunder and Spurs have each paid into revenue sharing for the last six years.

Why might league-wide income issues lead to relocation or expansion?

  • At least one team owner has raised the idea of expansion, since an expansion fee for a new franchise could exceed $1 billion and it wouldn’t be subject to splitting 50/50 with players. A $1 billion expansion fee split 30 ways would work out to $33MM+ per team.
  • Meanwhile, larger-market teams who aren’t thrilled about their revenue-sharing fees have suggested that small-market clubs losing money every year should consider relocating to bigger markets, sources tell ESPN.
  • As Lowe and Windhorst observe, the Pistons – who lost more money than any other team last season – are undergoing a relocation of sorts, moving from the suburbs to downtown Detroit, in the hopes that the move will help boost revenue.

What are the next steps? Are changes coming?

  • The gap between the most and least profitable NBA teams is expected to be addressed at the NBA’s Board of Governors meeting next week, per Lowe and Windhorst. Team owners have scheduled a half-day review of the league’s revenue sharing system.
  • Obviously, large- and small-market teams view the issue differently. While some large-market teams have complained about the revenue sharing system, they’re outnumbered, with smaller-market teams pushing those more successful clubs to share more of their profits, according to ESPN.
  • Trail Blazers owner Paul Allen is one of the loudest voices pushing for more “robust” revenue sharing, sources tell ESPN. Some team owners have argued that the system should ensure all teams make a profit, while one even suggested every team should be guaranteed a $20MM profit. There will be “pushback” on those ideas, Lowe and Windhorst note. “This is a club where everyone knows the rules when they buy in,” one owner said.
  • On the other end of the spectrum, some teams have floated the idea of limiting the amount of revenue sharing money a team can receive if it has been taking payments for several consecutive years.
  • Any change to the revenue sharing system that is formally proposed at the NBA’s Board of Governors meeting would require a simple majority (16 votes to 14) to pass.
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Boeheim: Phil Jackson Should Have Traded Anthony

September 17th, 2017 at 11:49am CST by Arthur Hill

Carmelo Anthony‘s college coach says Phil Jackson should have traded the Knicks star before being fired in June, relays Adam Zagoria of Zagsblog. “I think in reality it would’ve been better if they let Phil make the trade and then got rid of him,” said Jim Boeheim of Syracuse. “Now the new guys are going to be held responsible for the deal and nobody’s going to give much up [for Anthony in a trade]. So they’re going to end up not getting a lot for him and it’s really because of what Phil did in poisoning the air.”

  • In his latest mailbag, ESPN’s Kevin Pelton examines Anthony’s rating of 64th in the network’s list of top 100 players and explains why it’s justified. He shows that the Knicks forward’s usage and efficiency rates have declined steadily since 2012/13.
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Knicks Sign Jarrett Jack To Non-Guaranteed Contract

September 15th, 2017 at 12:17pm CST by Austin Kent

SEPTEMBER 15, 12:17pm: Jack has officially signed his one-year, non-guaranteed contract with the Knicks, sources tell Ian Begley of ESPN.com (Twitter link).

SEPTEMBER 14, 4:10pm: The Knicks have agreed on a deal with veteran point guard Jarrett Jack, Michael Scotto of Basketball Insiders writes. The deal is said to be a one-year, non-guaranteed pact.

We wrote just last week that the Knicks were in the market for a veteran point guard, supposedly considering a number of options ranging from Jack to Trey Burke and Archie Goodwin. Already rostered on the squad are Ramon Sessions and promising – but raw – lottery pick Frank Ntilikina.

Where Jack slots into the Knicks’ plans remains to be seen. The deal that Scotto reports is non-guaranteed, so it’s possible that the club will simply gauge Jack’s effectiveness through training camp. The 33-year-old has been ravaged by injuries since the first half of the 2015/16 season.

If Jack can establish himself as reliably healthy – a potentially significant “if” – he could potentially slot into the starting position ahead of Sessions, a career backup. If Jack ends up getting released, Sessions and second-year man Ron Baker could share the role until Ntilikina is ready to assume the top spot, which may not happen this season.

Through 12 seasons, including 343 starts, Jack has averaged 11.0 points and 4.5 assists per game. Aside from a two-game stint with the Pelicans last season, Jack’s last stint saw him post 12.2 and 5.4 across two seasons with the Nets.

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15 Two-Way Contract Slots Remain Open

September 13th, 2017 at 1:15pm CST by Luke Adams

With NBA training camps just a couple weeks away, most teams are putting the finishing touches on their respective rosters. In addition to having secured at least a dozen players on guaranteed contracts and perhaps a handful of camp invitees, each NBA club has also signed at least one player to a two-way contract.

As we explain in depth in our FAQ, two-way contracts – a new concept under the league’s latest Collective Bargaining Agreement – allow NBA teams to carry two extra players in addition to the 15 on their regular season roster. These players spend most of their time with the club’s G League affiliate, but are eligible to join the NBA roster for up to 45 days per season, and remain under team control — they can’t be poached by rival franchises.

Teams have been signing players to two-way contracts since July, so we’re starting to get a better idea of what players on those deals will look like — some are late second-round draft picks; some are undrafted rookies; others are G League or international veterans, or former NBA players looking to work their way back into the league.

Every NBA club has signed at least one player to a two-way deal, but only half of those 30 clubs have filled both spots, meaning that there are still 15 two-way openings around the league. With the help of our two-way tracker, here’s a breakdown of the teams that still have an open two-way slot:

  • Atlanta Hawks
  • Cleveland Cavaliers
  • Dallas Mavericks
  • Golden State Warriors
  • Houston Rockets
  • Los Angeles Clippers
  • Los Angeles Lakers
  • Miami Heat
  • Milwaukee Bucks
  • Minnesota Timberwolves
  • New York Knicks
  • Oklahoma City Thunder
  • Orlando Magic
  • Philadelphia 76ers
  • Portland Trail Blazers

While the Suns and Jazz technically could be included on this list, they’ve reportedly reached agreements – with Alec Peters and Nate Wolters, respectively – to fill their second two-way slots, so unless those deals unexpectedly fall through, they won’t have any openings.

Although some of these two-way openings figure to be filled in advance of training camp, many of the clubs listed above have signed camp invitees to Exhibit 10 contracts, which can later be converted into two-way deals. So rather than signing someone new and waiving a camp invitee, a handful of teams may simply convert an Exhibit 10 contract to a two-way contract before the regular season begins.

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Knicks Notes: Anthony, Porzingis, Doncic, Value

September 12th, 2017 at 4:57pm CST by Arthur Hill

Whether we’ll see it during the season remains uncertain, but Carmelo Anthony, James Harden and Chris Paul were all on the same team Monday. The three stars joined forces in a pickup game in New York, relays Jonathan Feigen of The Houston Chronicle, who links to some video of the event. Other NBA players such as Russell Westbrook, Enes Kanter, JaVale McGee and Kenneth Faried were also involved, but the focus was on Anthony, Harden and Paul.

Anthony has made no secret of his desire to join the two All-Star guards in Houston, reportedly telling Knicks management that he will only waive his no-trade cause if he can join the Rockets. New York’s front office tried to accommodate him, but talks have slowed recently. The Rockets have been unable to find an additional team to facilitate a deal to the Knicks’ liking, and it appears Anthony may not be traded before training camps open in two weeks.

There’s more basketball news from New York City:

  • ESPN’s Chris Herring examines whether Anthony should still be considered an elite player at age 33. He finished 64th in the network’s rankings of the top 100 NBA players that were released today, dropping 33 spots from a year ago. Anthony’s rating has been hurt by four straight non-playoff seasons, Herring explains, and the Knicks’ desire to trade him and build around Kristaps Porzingis.
  • Knicks officials were very interested in today’s EuroBasket matchup that pitted Porzingis’ Latvia team against 18-year-old Luka Doncic and Slovenia, writes Marc Berman of The New York Post. The Knicks have a large group of scouts and other representatives at the game and have a strong interest in Doncic, a 6’7″ forward who is considered among the top prospects for the 2018 draft.
  • The Rockets sold for a record $2.2 billion last week, but the Knicks could easily top that if they ever hit the market, tweets Ian Begley of ESPN. One analyst has estimated the team’s worth at $3.5 billion.
  • The Knicks are doing the right thing by rebuilding around young players, but there’s not much hope for the upcoming season, according to the staff at Basketball Insiders. In their season preview, all five writers forecast New York to finish fourth or fifth in the Atlantic Division.
  • Earlier today, we passed along details on Charles Oakley‘s civil suit against James Dolan and MSG.
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Charles Oakley Files Suit Against Dolan, MSG

September 12th, 2017 at 2:24pm CST by Arthur Hill

2.24pm: The Knicks have issued a response to Oakley’s suit, calling it “frivolous” and a way to get attention, tweets Ian Begley of ESPN.

1:39pm: Former Knicks star Charles Oakley filed a civil suit today relating to his removal from Madison Square Garden in February, according to Victoria Bekiempis and Stephen Rex Brown of The New York Daily News. The suit accuses Knicks owner James Dolan and MSG of defamation and discrimination, saying they falsely smeared him as a drunk in the wake of the incident.

“One person who could not abide by Mr. Oakley’s refusal to meekly submit to people in positions of power was Defendant James Dolan,” the suit alleges. It also claims Dolan wouldn’t shake hands or make eye contact with Oakley, refused to invite him to fan appreciation gatherings and made him pay for tickets to games. Oakley was a frequent critic of Knicks management and had a strained relationship with Dolan before the public incident.

Their feud reached a boiling point February 8 when Dolan ordered security guards to remove Oakley from Madison Square Garden. Oakley resisted and claimed in the suit that he was “treated like a common criminal.” The clash was caught on camera and turned into a huge public relations fiasco for the team.

Oakley was arrested and charged with assault, but that was dropped in an August plea agreement that requires him to stay out of trouble for six months and avoid Madison Square Garden for a year. Dolan issued a lifetime ban from MSG for Oakley that was later rescinded and accused him of having a drinking problem.

“Dolan and MSG have caused irreparable harm to his name and career and discriminated against him based on the false perception that he is an alcoholic, all in a transparent attempt to denigrate his standing among Knicks fans,” the suit reads. “However, as he did throughout his playing career, Mr. Oakley has refused to walk to the bench in shame. Instead, holding his head up high, Mr. Oakley files this complaint to set the record straight.”

The suit filed in Manhattan Federal Court cites defamation, assault, battery, false imprisonment and abuse of process claims. Oakley is also suing under the Americans With Disabilities Act, along with city and state human rights laws, claiming Dolan and MSG denied him entrance to the Garden “based on their perception that he suffers from alcoholism, a disability.”

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Magic Johnson Turned Down Warriors, Pistons, Knicks

September 12th, 2017 at 10:21am CST by Arthur Hill

Magic Johnson passed on front office positions with three teams before becoming president of basketball operations for the Lakers, he said this morning on ESPN’s First Take (Twitter link).

The Hall of Famer claimed the Warriors, Pistons and Knicks all made offers that he turned down because he had a sense of loyalty to the Lakers.

“My good friends Peter and Joe Lacob bought the Golden State Warriors. They came to me. ‘I want you to be an owner, be a partner with us.’ I said no, I’m a Laker,” Johnson recalled. “My friend bought the Detroit Pistons, Tom Gores, and a Michigan State guy. ‘Come on home. It’ll be a great story.’ I can’t; I’m a Laker. I could have owned other teams.”

The panel also brought up the Knicks, who reportedly expressed interest in Johnson.

The Lakers hired Johnson to serve as team president in February after a front office purge that resulted in the dismissal of executive Jim Buss and GM Mitch Kupchak.

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Damian Lillard Talks Carmelo, Blazers, Rivals

September 11th, 2017 at 2:28pm CST by Luke Adams

The Trail Blazers have had one of the NBA’s quietest summers, having not made a single free agent signing until officially inking Archie Goodwin to a camp deal today. On the trade front, Portland’s only major move involved dumping Allen Crabbe‘s exorbitant contract on the Nets — the Blazers acquired Andrew Nicholson in that trade, but subsequently waived him.

Of course, while the Blazers’ cap situation limited their ability to pursue impact free agents, the team’s star guards – Damian Lillard and C.J. McCollum – made an effort to recruit a trade candidate. Carmelo Anthony has been unwilling to waive his no-trade clause to join the Blazers, but it wasn’t for a lack of trying from Lillard and McCollum.

Speaking to Marc J. Spears of The Undefeated, Lillard admitted that he doesn’t love “doing all the extra recruiting” adding that he didn’t want to press Anthony. Despite the fact that Carmelo “didn’t seem opposed” to the idea of playing in Portland, according to Lillard, there has been no indication that a trade between the Blazers and Knicks is a viable possibility.

Lillard expanded on that subject and addressed a few other topics in his conversation with Spears, which includes details on his community work and is worth checking out in full. Here are some of the highlights from the Blazers’ point guard:

On recruiting Carmelo Anthony to waive his no-trade clause for the Trail Blazers:

“I guess they call it tampering or whatever. It’s not against the rules for us to interact with each other. We all peers, we all play in the same league and everybody hints at playing with each other. ‘What you think about this?’ ‘What do you think about that?’ All that matters is whether it got done or did not get done. Or hasn’t got done, and it hasn’t got done. So, it is what it is …

“I’m not giving up on anything. I just think I’ve done what I can do. And camp is a few weeks away. And you have to focus on getting ready with who we are, plan on going in as we are. Whatever changes, the front office will be the ones making that change, with the Knicks and our front office or whatever. But I get my mind focused on what I can control at a certain point.”

On the offseason upgrades made by division and conference rivals:

“It’s tough. The West is tough as always. I think a lot of teams in the West got better on paper, and at the end of the day, things have to work out. A lot of things look good, but it still got to work out. You got to make it work. So, we’ll see how that go.”

On the Trail Blazers’ outlook for 2017/18:

“I got a lot of confidence with everybody on our team. We still got a young team. Obviously, we could improve in a lot of areas as a group. With all the struggles we had last year, we still found a way to get it done and to get into the playoffs, which is what every team goes into the season and tries to get done. So, we make the improvements that we need to make collectively on the defensive end, and just being able to do things at a high level consistently. We should be pretty good.”

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Anthony Sending Messages To Knicks Teammates

September 9th, 2017 at 2:13pm CST by Arthur Hill

Is Carmelo Anthony resigned to the prospect of heading to training camp with the Knicks? David Pick tweets that he has begun interacting with some of his teammates on social media. Anthony has been sending encouraging texts to Kristaps Porzingis, Mindaugas Kuzminskas and Willy Hernangomez and following their progress in the EuroBasket competition.

Anthony and his representatives have made it clear throughout the summer that his first choice is a trade to the Rockets, where he could join forces with James Harden and Chris Paul on one of the best teams in the Western Conference. Knicks management has expressed a willingness to move Anthony, but won’t take on the three years and $61MM remaining on Ryan Anderson‘s contract. Houston hasn’t found another team to help facilitate the deal, and with camp just 17 days away, Anthony appears to be preparing to remain in New York for a while.

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Knicks Notes: Jack, Burke, Dotson

September 7th, 2017 at 6:05pm CST by Austin Kent

When the Knicks drafted Frank Ntilikina, they expected to bring him along slowly so that he could develop from a raw prospect into a dangerous core piece down the road. The loss of Derrick Rose via free agency, however, suddenly cleared room on the depth chart.

With nobody standing between Ntilikina and a significant workload early, New York went out and signed veteran reserve Ramon Sessions. It turns out, however, that there a few more playmakers the Knicks have been keeping their eye on. Per Ian Begley of ESPN, the club views Jarrett Jack and Trey Burke as potential adds as well.

This isn’t the first time that Jack’s name has been brought up by the New York media – in August Ohm Youngmisuk, also of ESPN, linked the Knicks to Jack and Archie Goodwin.

While Jack had a solid season across town with the Nets as recently as 2014/15, he has been besieged by injuries ever since.

Burke, in contrast, has simply seen his role decrease from season to season as his four-year career has drawn on. Though the former NCAA Tournament star is still just 24 years old, it’s hard to imagine that he’ll be anything but a bit player for the next team that he finds himself on.

If the Knicks are going to make a move to shore up their playmaking corps, they may want to act sooner than later. Begley’s tweet actually came in response to the news that the Trail Blazers had signed the aforementioned Goodwin to a training camp deal.

There’s more from the Knicks:

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