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A look at the NBA’s new revenue-sharing program

Aug 17, 2012, 2:04 PM EDT

Kobe Bryant Getty Images

This morning, we briefly mentioned the NBA’s expanded revenue-sharing program that was ushered in following the basketball lockout. If you’re curious about how the new program works (since the NHLPA is pushing ahrd for more revenue-sharing between NHL owners), this SportsBusiness Daily article from January (via PBT) explains it well.

An excerpt:

[The revenue-sharing program] was fueled by a plea from eight small-market teams in 2007 and grew into one of the league’s most contentious issues, running parallel with the league’s collective-bargaining agreement negotiations.

When fully phased in by the 2013-14 season, it will see a stunning $140 million in additional revenue sharing coming into play compared with last year, moving money through a complex formula that shifts some of the financial wealth of big-market NBA teams to the league’s neediest teams, each of which could receive up to $16 million a year as part of the plan.

Some team executives said that while the system does not completely close the financial gap between high- and low-revenue teams, it is the most progressive form of revenue distribution in the league’s history.

“Whenever you have 30 teams in 30 different markets, you have 30 different goals and needs,” said one team executive, addressing the sensitivity of the issue among owners. “It’s not perfect, but I think it will show that it will be a success.”

When it comes to an expanded revenue-sharing program in the NHL, the most reluctant owners will obviously be the ones that have to cut the checks.

Why would teams like the Leafs, Rangers and Flyers want to subsidize their weaker brethren?

The Los Angeles Lakers are one of the NBA’s high-revenue teams, and this is how team executive Jeanie Buss put it: “Any business operator wants to keep their revenue. That’s the nature of the business, but we also understand the bigger picture and we want a league with teams that are economically viable so that every team has the opportunity to compete. It makes for a healthier league.”

  1. madtolive5 - Aug 17, 2012 at 3:02 PM

    If the NHL was smart, they would do the complete opposite of everything NBA

    • manchestermiracle - Aug 18, 2012 at 11:00 AM

      Yeah, ’cause the very last thing you’d want to do is emulate a highly-successful business model….

  2. gmsalpha - Aug 17, 2012 at 3:09 PM

    Revenue sharing sounds a lot like Socoalism to me.

    • kingfooj - Aug 17, 2012 at 4:33 PM

      people are downing your comment because they dont fully understand it, there are some parallels tho.

      • manchestermiracle - Aug 18, 2012 at 11:07 AM

        Agree about the similarities, but the thumbs-down are more likely because of the knee-jerk reaction by a lot of people that any aspect of any type that might vaguely resemble a socialist bent must inherently be bad.

        Technically speaking, taxation is a form of socialism. Social security is a form of socialism. Medicare is a form of socialism. Facebook is certainly socialist, as it brings folks together to socialize. Hell, that town-sponsored dance from last week lets people socialize, so it must be somehow anti-capitalist.

        There are few, if any, obvious demarcations in the world. Everything is a blend, and in many cases there is nothing at all wrong with blending capitalism and socialism. The trick is to take the best of both and not toss the baby out with the bathwater. Have there been bad governments that labeled themselves socialist? Of course, but just like bad governments that labeled themselves capitalist (or progressive or conservative or any other label you’d like to identify) they merely took advantage of what most people desired in order to gain power. Hell, the Nazis called themselves the National Socialist Party even though they were obviously on the other end of the political spectrum.

  3. imleftcoast - Aug 17, 2012 at 4:02 PM

    What, SoCalism? Down with the Chili Peppers.

    • awickler - Aug 17, 2012 at 11:02 PM

      i am…

  4. bcsteele - Aug 17, 2012 at 4:10 PM

    While this round I’m really siding with the players, if something like this would solve the problem then lets get working on it. At the end of the day as a fan, I really just want to watch hockey, and I’d prefer to watch it ON TIME.

    Not to preach to the choir, but as many people have put on these post, the NHL will have grave losses in fan base if there is lockout. I’ll give a good example though. I have a group of friends and out of them I’m the only true hockey fan. However, I’ve since gotten them involved and they enjoy going to games now even though they’re not die hard fans. If a lock out happens, without me re-introducing them to the sport they will likely not remember how much fun they’ve had. The NHL knows a portion of it’s fan base will always be intact. But have they really considered the what I’d call “tertiary” fans that get brought in and will disperse if a lock out occurs? What would the financial outcome of that be now considered what happened back in 2004?

    I don’t claim to know it all, or state the obvious, nor would I jump out on a limb and tell them what they need to do…but I think the owners need to really start having the attitude of the players and recognize that a deal needs done and it needs done without a lock out for the sake of everyone involved…the owners, the players, and most importantly the fans.

  5. shilo221 - Aug 17, 2012 at 5:44 PM

    Easy for basketball to say when they have billions in revenue and the AVERAGE NBA player who is nowhere near beibg a superstar (Luke Walton of the Lakers pre lock out made 5 million a year to sit at the end of the bench) and their superstars like Kobe making 25mil, Lebron taking a pay CUT to make almost 17 and the best player in the NHL just signed for around 8mil a year. In the grand scheme of sports NHL pkayers who I woukd say play the most dangerous sport that requires the most skill (speed, hand eye, hitting, playing on ice on sharp and dangerous skates opposed to running on wood or grass). I love the fact that NHLers are known as the most laid back and most like “average” people in the sports world and I am slightly worried that more money circulated may change that but if any sports athletes deserve more money it’s by far and away NHLers.

    @Shilo221

    • manchestermiracle - Aug 18, 2012 at 11:12 AM

      Except in a supply-and-demand world there has to be a large enough demand before you can supply that kind of money. There is a high demand to see the entertainment that the NBA has to offer, thus there is a large supply of money with which to “compensate” the entertainers.

      That said, it is simply too bad that the powers controlling the NHL (on both sides of this issue) don’t seem able to identify the proper context with which to build their business model. A lockout can only hurt their ability to make money. It took awhile for fans to come back to every sport that has had a lockout and the NHL will be no different. In fact, it could be said that many fans (those the hardcore like to call bandwagoners, but who help fill arenas) will never come back.

      • emoser - Aug 18, 2012 at 12:32 PM

        I think you’re partially right, but another huge factor is the size of rosters and the style of play. NBA only has a roster size of 15, the majority of which hardly see any playing time. NHL needs to pay 23 guys, almost all of which see significant ice time. It’s a lot easier to pay out huge salaries when 2-3 stars can carry a team.

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