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Lakers cut big check to rest of League (subsidize Cavs and Spurs)


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#1 UKUGA

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Posted September 20, 2017 - 09:04 AM

The nine teams that lost money, by the league's accounting for net income (which includes revenue sharing and luxury tax payments), were the Atlanta Hawks, Brooklyn Nets, Cleveland Cavaliers, Detroit Pistons, Memphis Grizzlies, Milwaukee Bucks, Orlando Magic, San Antonio Spurs and Washington Wizards. Sources 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.

 

http://www.espn.com/...season-now-what

 

If I followed the logic of this article correctly, the Lakers make the most money of any team in the league, driven largely by the TV deal (that is the big separator).  The check we cut, however, doesn't just help the Pistons and Bucks (who aren't bad, actually), but also benefits the Spurs and Cavs.

 

I'm sorry, but the Cavs not making money is ridiculous.  But, if you connect dots, which aren't connected in this article, the Cavs pay luxury tax due to player payroll, but this is subsidized by the profit-sharing they receive, which is funded largely by the Lakers.

 

 


Edited by UKUGA, September 20, 2017 - 09:07 AM.

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#2 bigfetz

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Posted September 20, 2017 - 09:25 AM

The NBA has always ignored economics. I get that having a competitive league is essential to drive revenue but they failed on that front with max contracts and giving these small market teams the ability to sign multiple top tier players with little to no consequences. Now golden state is not a small market. If there is a super team thats a not a bad place to have one but Clevland has been horrible for the NBA. I can't think of a single team that has caused more issues and taken away from big market teams than Cleveland. The point of the tax is to prevent big market teams from being able to outspend small market teams so easily. But all it did was give the ability for small market teams to be subsidizes by the big market teams. 

 

I truly believe the only way to fix it is let each team get one no limit contract. There is no reason that Lebron james should be making only a few more mill than Millsap, Hayward, or Lowery. That is a joke. Make a team spend over 50% on one player and it will prevent these super teams and pay the super stars what they are actually worth and prevent non all stars from getting ridiculous max contracts. 


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#3 lakerfan98

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Posted September 20, 2017 - 10:35 AM

I didn't believe when the league said teams were losing money in 2011 so I damn sure don't believe they're losing money now.  The government subsidizes the arenas they play in and they get huge tax breaks as well.  Just a ploy to implement an even stricter and owner friendly CBA.  As if the player's union didn't just get taken to the woodshed last time around.  Going back two CBAs the BRI has gone from 57% to the players to a 50-50 split, massive new national tv deal, increased revenue sharing, and a more punitive luxury tax.   Can only cry wolf so many times.  Ten, definitely twenty years ago you could have a legit labor debate about the NBA.  Now even the most ignorant fans understand that the owners are completely full of it.       


Edited by lakerfan98, September 20, 2017 - 10:46 AM.

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#4 LAkerFan85

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Posted September 20, 2017 - 11:44 AM

This is socialism. Lakers being penalized for being smart and the other teams have no incentive to improve because the NBA will keep taking money from the Lakers to cover the other teams. If a team that just made the NBA finals is losing money maybe they should shut it down.


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#5 UKUGA

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Posted September 20, 2017 - 12:06 PM

This is socialism. Lakers being penalized for being smart and the other teams have no incentive to improve because the NBA will keep taking money from the Lakers to cover the other teams. If a team that just made the NBA finals is losing money maybe they should shut it down.

 

It's funny, the article talks about "local revenue." 

 

Why can't the CAVS generate enough local revenue to be profitable?   Makes zero sense. 


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#6 Jody Smokes

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Posted September 20, 2017 - 03:38 PM

You serious? The entire city of Los Angeles and surrounding areas vs Cleveland?  You realize CLE is in the rust belt right? Ain't exactly a lot of money there

 

It's funny, the article talks about "local revenue." 

 

Why can't the CAVS generate enough local revenue to be profitable?   Makes zero sense. 


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#7 DanishLakerFan

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Posted September 20, 2017 - 09:50 PM

I dont have much patience for the league [expletive]ing about losing money.

 

FACT: Teams that lose money often are very poorly run.

FACT: If the owner sell their team, they will earn hundreds of millions compared to what they paid for the team.

 

Biologically speaking (i'm a biologist) if a species is introduced to changes in their environment, they have four options: tolerate the change, adapt to the change, relocate or die. That goes for business as well and no businesses in the world are entitled to earning a profit. Most of the owners are ruthless business men who would laugh at the idea that a company is entitled to earning a profit, so why the hell do they believe THEY are entitled to earning a profit?



#8 manaro90

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Posted September 20, 2017 - 10:13 PM

can someone explain to me whats the issue here?


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#9 dazz

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Posted September 21, 2017 - 12:17 AM

can someone explain to me whats the issue here?

 

People are throwing a hissy fit because a very rich organization has agreed to share some of it's revenue with another rather wealthy organization so that there's an actual competition in which both organizations can compete and make money, because apparently that's "socialism", and everybody knows that socialism is bad, whatever it is


Edited by dazz, September 21, 2017 - 12:20 AM.

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#10 Tensai

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Posted September 21, 2017 - 01:57 AM

The NBA is trying to make it a fair competition but, like some others have said, ignoring the economics is bad for both teams and players.

 

IMO, there should be one common salary cap which is capped around $80m, and 1+1 free spending slot for players that qualify to a criteria (e.g. makes allstar game 3 times, OR, win MVP, OR make All-NBA two times)

 

It will be a similar outcome for a lot of teams, but teams and players who truly deserve spend/earn money will benefit from it, which should be the case.


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#11 UKUGA

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Posted September 21, 2017 - 05:34 AM

can someone explain to me whats the issue here?

 

Issue 1: Roughly half the league's teams lose money, according to this report.

Issue 2: The Lakers, one of the worst teams in the NBA over the last 4 years, are subsidizing 2 of the league's most dominant teams, including the team featuring the league's best and most popular player.

Issue 3:  This is propaganda.  These teams supposedly are losing money annually, however, the franchise value continues to increase dramatically.  This indicates that those performing the franchise valuations see the opportunity to purchase the revenue stream that is an NBA franchise as a strong investment opportunity, which is a more than subtle indication that these teams aren't really losing money. 


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#12 Jody Smokes

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Posted September 21, 2017 - 07:16 AM

Revenue sharing w/I the league is a good thing, as long as it doesn't encourage terrible behavior.  A team like the Bucks will never ever bring in the financials that a team like the Knicks will.  Mainly due to things that are totally outside of the NBA's control. 


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#13 DanishLakerFan

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Posted September 21, 2017 - 08:10 AM

Revenue sharing w/I the league is a good thing, as long as it doesn't encourage terrible behavior.  A team like the Bucks will never ever bring in the financials that a team like the Knicks will.  Mainly due to things that are totally outside of the NBA's control. 

I agree. Revenue sharing is fine. But poorly run teams shouldn't be guaranteed a profit and if a well-managed team still isn't profitable it should be re-located.



#14 manaro90

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Posted September 21, 2017 - 09:55 AM

Issue 1: Roughly half the league's teams lose money, according to this report.

Issue 2: The Lakers, one of the worst teams in the NBA over the last 4 years, are subsidizing 2 of the league's most dominant teams, including the team featuring the league's best and most popular player.

Issue 3:  This is propaganda.  These teams supposedly are losing money annually, however, the franchise value continues to increase dramatically.  This indicates that those performing the franchise valuations see the opportunity to purchase the revenue stream that is an NBA franchise as a strong investment opportunity, which is a more than subtle indication that these teams aren't really losing money. 

okay now i am clear about everything there..

thank yiu


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#15 GCMD

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Posted September 21, 2017 - 10:05 AM

The nine teams that lost money, by the league's accounting for net income (which includes revenue sharing and luxury tax payments), were the Atlanta Hawks, Brooklyn Nets, Cleveland Cavaliers, Detroit Pistons, Memphis Grizzlies, Milwaukee Bucks, Orlando Magic, San Antonio Spurs and Washington Wizards. Sources 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.

 

http://www.espn.com/...season-now-what

 

If I followed the logic of this article correctly, the Lakers make the most money of any team in the league, driven largely by the TV deal (that is the big separator).  The check we cut, however, doesn't just help the Pistons and Bucks (who aren't bad, actually), but also benefits the Spurs and Cavs.

 

I'm sorry, but the Cavs not making money is ridiculous.  But, if you connect dots, which aren't connected in this article, the Cavs pay luxury tax due to player payroll, but this is subsidized by the profit-sharing they receive, which is funded largely by the Lakers.

 

 

If you have LeBron on your team and go to the NBA Finals 3 years in a row, you should NOT be given anything from revenue sharing.


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#16 Busty Bluth

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Posted September 21, 2017 - 10:22 AM

The Wish advert garbage will make up for any lost revenue. Never even heard of Wish. When I saw this it made me sick. DHgate knock off crap.


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#17 bfc1125roy

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Posted September 21, 2017 - 11:13 AM

Spurs only lost money after revenue sharing, I believe. Not sure about the Cavs. 



#18 Jody Smokes

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Posted September 21, 2017 - 06:12 PM

Do yall really give a [expletive] about this?  At the end of the day none of us are getting a check from the Lakers.  It has 0 effect on their ability to build a good bball product.


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#19 kray28

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Posted September 21, 2017 - 09:19 PM

It's funny, the article talks about "local revenue." 

 

Why can't the CAVS generate enough local revenue to be profitable?   Makes zero sense. 

 

 

The issue with the Cavs is due to the luxury tax, I believe. The tab to keep LeBron happy is pretty expensive. Plus, they're in Cleveland....no way will they get a broadcast deal like the one the Lakers have. That is their small market handicap. 

 

Keep in mind that the Lakers' huge profit is mostly driven by their broadcast deal with Time Warner. They still made $115 million even after writing a huge $49 million revenue sharing check to the rest of the league. They also made that profit paying no luxury tax and staying well nicely under the cap while tanking. 


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#20 UKUGA

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Posted September 22, 2017 - 04:08 AM

The issue with the Cavs is due to the luxury tax, I believe. The tab to keep LeBron happy is pretty expensive. Plus, they're in Cleveland....no way will they get a broadcast deal like the one the Lakers have. That is their small market handicap. 

 

Keep in mind that the Lakers' huge profit is mostly driven by their broadcast deal with Time Warner. They still made $115 million even after writing a huge $49 million revenue sharing check to the rest of the league. They also made that profit paying no luxury tax and staying well nicely under the cap while tanking. 

 

Right.  Cleveland has a huge payroll and the Lakers help subsidize it.  Lakers wanted Lebron a few years ago, but he chose to go to Cleveland.  Lakers help pay his salary. 

 

 

 

 

Now, all that said, while the NBA, in itself, is a capitalistic organization, that operates within the free market; the teams are not.  The teams operate within the league.   Salary cap, rookie contract scales, max salaries, different markets, etc., all reflect that the teams and players are not operating within a "free market" system.   Technically, that's okay.    Could the Lakers exist on their own?   No, they'd be the Globetrotters.   Part of their profitability is tied to having teams to compete with around the league. 

 

However, keep this in mind.  Why does the league expand into markets where it can't turn a profit?  In theory, expansion is designed to increase revenue and interest (and create more jobs - including roster spots) in new markets around the country/continent/globe.   If so many NBA teams are losing money, why doesn't the league contract?  Why do the Lakers cut a check to teams in losing markets?  Why not eliminate some of those teams?

 

Is the league really better off with a team in Charlotte?  Would the fans there not turn on the TV and support another team?   Of course they would, and have in the past, and will in the future.

 

 

Now, all that said, I actually like the NBA being in so many markets.  In my lifetime, I've lived around the south/southwest and mid-Atlantic, and have had the opportunity to see the Lakers play 15 different teams on the road.   And if you go to Lakers games on the road, you know that frequently, their fans represent a significant portion, if not a majority, of the fans in attendance.   Which, maybe, at the end of the day, is part of the point.  The Lakers drive the league and fan interest all over the country.  The increased markets lead to more fan interest, and larger TV deals, of which all the teams, including the Lakers benefit.   Even though the Spectrum deal is primarily a local deal, it is still the network that airs on League Pass, which (Lakers) fans from all over the country have been subscribing to for over 20 years, largely/primarily to see the Lakers.   

 

So, yes, I think the Lakers (namely Jeannie Buss) see a value in having all these teams in so many markets.  What I don't believe is that A) so many teams are losing money, B) the Lakers need to be sending a bigger payout, and/or C) the Lakers should be subsidizing teams that are paying the luxury tax. 

 

 

As far as the Lakers TV deal.  They get that deal, in large part, due to their popularity.  Absolutely the market matters, but the Clippers don't have that same deal.  Nothing close to it. 

 

My concern is that the Lakers' ownership at one time had the foresight to tap into the LA market.   Other teams could have done it, or could leave for a more attractive market now.  For some reason, they choose not to.  They get beautiful, new, tax-subsidized arenas in various mid-size markets around the country.   And the Lakers cut the check. 

 

Something doesn't add up.

 

Personally, I don't think these teams lose money.  And while the profit sharing may be okay, I think the owners should sell their teams and reap their billions, rather than place further restrictions on the Lakers' ability to more fully utilize the advantage of the market they staked a claim to (and have willingly shared) over 50 years ago.


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