Since the NBA owners locked out its players a week ago, the media has poked around at the league’s claims that it is losing hundreds of millions of dollars a year.
Deadspin published a report on how the New Jersey Nets used a tax loophole to make a $6 million profit look like a $27 million loss.
ESPN then published their own, more owner-friendly analysis of the Nets and New Orleans Hornets financial statements.
And yesterday the New York Times’ Nate Silver gave the NBA financials the Nate Silver treatment, and concluded that the NBA is “fundamentally a healthy and profitable business.”
Today the owners are pushing back.
Forbes prepared the financial estimates Silver used in his analysis. But NBA spokesman Mike Bass told the AP that Forbes, “does not have the financial data for our teams and the magazine’s estimates do not reflect reality.”
Silver used data compiled by Forbes and Financial World magazines to estimate that the NBA had an operating income of $183 million in 2009-2010, and made a 5 to 7 per cent profit during the last collective bargaining agreement.
The NBA begs to differ. They projected a loss of $300 million last season and similar losses in each season since 2005, according to the AP.
So they are a bit perturbed that journalists are taking a closer look at their financials.
“Precisely to avoid this issue, the NBA and its teams shared their complete league and team audited financial as well as our state and federal tax returns with the players’ union. Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several years,” Bass said.
Much to the dismay of Silver and others, these financials have not been made public.
The NBA is using its alleged financial disarray to argue that player salaries must be scaled back to 45 per cent of total revenue. Currently, they sit at about 58 per cent, which is comparable to the other major professional sports.
The NBA is in financial trouble on some level. Even Silver estimated that 17 of the league’s 30 teams lost money last year (Bass says it was actually 23).
But this disparity between the league’s haves (the Lakers, Knicks, etc.) and have-nots is a revenue sharing issue, not a player salary issue. Not matter how you tweak the financials, it’s hard to argue that player salaries — which Silver estimates have only increased by five per cent since 2004-2005 — are leaving the league in financial ruin.
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