The NBA claims that 22 teams lost money last season, with a total loss of $370 million. And to fix the problem, the league wants to rein in player salaries. But a closer look at the numbers suggest the problem does not lie with the players’ paychecks.
On the surface, this should be obvious. Since the NBA and the players ratified the most recent Collective Bargaining Agreement prior to the 2005-06 season, player salaries have been fixed at 57 per cent of league revenue.
And if we adjust player salaries for inflation (via Nate Silver), salaries are only up 5.4 per cent since the beginning of the previous CBA that the NBA owners happily agreed to. In that same time period, revenue was up 5.3 per cent.
However, league income in the last five years is down 31.1 per cent. Why? Because spending by the owners on everything else besides player salaries is up 12.7 per cent, outpacing league revenue growth.
Still, in the end, according to the data from Forbes.com, the league is still making money. It is making less money, and certainly the owners want to make more. But the idea that the league is losing money may not be accurate. And even if they are losing money, they only have their own spending habits to blame.
Orange: Data from 1996-97 through 1998-99 is incomplete; Blue: The NBA’s previous CBA was instituted prior to the 2005-06 season.
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