Economy

Nine NBA Teams Lost Money in 2016-17 After Revenue Sharing

Nine NBA Teams Lost Money in 2016-17 After Revenue Sharing”

It seems like everyone's happy, and the league will only continue to grow.

While franchises across the league that do not make as much money receive money from league revenue sharing, it still does not account for the massive gap between National Basketball Association teams.

Fourteen of the NBA's 30 teams lost money during the 16-17 season before collecting revenue sharing payments.

At the heart of the matter: The NBA's richest are still getting rich, but they're having to share more of their profits with teams in smaller markets that are having a hard time keeping up with a rapidly escalating salary cap.

According to Windhorst and Lowe, league owners will review the revenue-sharing system during the Board of Governors meeting on September 27-28. League officials pointed out that by a different accounting measure the league tabulates - operating income, which discards various debt obligations - only 10 teams (rather than 14) lost money before accounting for revenue sharing. Cleveland features the league's biggest star in LeBron James and reached its third straight NBA Finals but still lost money after revenue sharing.

For example, per ESPN's report, the Lakers, even in a bad season, pulled in a $115 million profit even after revenue sharing, while the Grizzlies, who made the playoffs for the seventh straight season, lost nearly $40M before revenue sharing.

The talent level is at an all-time high, they just recently signed a massive TV deal worth $24 billion, the value of franchises is soaring (see Rockets, Houston), and there's a budding dynasty in Golden State. If these aren't rising in lockstep (Spoiler alert: They're not) teams then are forced to deficit spend, especially those who are over the luxury tax threshold. Consider the Warriors, who have become a business juggernaut.

It is notable six of those nine teams made the playoffs last season, including the Cavaliers. The big drag, of course, is that luxury tax payments do not adjust for market size. Only four teams even came within $100 million of the Lakers' local media revenue.



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