Financial Issues
Although the fight appears to be between billionaire owners and millionaire players, the true financial issues are hidden from the fans because the "books" are not open and if they were, the content would require expertise to comprehend.
The owners, I believe, are relying on the fact that a player's earning period is limited and that many of them have been profligate with their money. Case in point: Eddy Curry. And relatively few of the players have made enough money to set them up for life even if they never play again.
I would like to get numbers that reflect the gross proceeds each team earns a season. There is television money for nationally televised games. Is that money split evenly among all the teams? There is revenue for tickets for each home game. How is that split? There is related income from beer, peanuts etc sold at the games. How is that split? Each team has deals with local television and radio. Is each team on its own with that revenue? There is revenue from the sales of jerseys and all sorts of NBA basketball related items. At least some of that is shared, but more Kobe jerseys are sold than Timofey Movgov jerseys.
In any event, each team grosses a certain amount of revenue each year. Those numbers are easy enough to establish. It's the expenses that cause problems. Players' salaries and benefits are simple enough to calculate. What is left over?
If we take the what is left over after players' salaries and benefits are deducted and call that a "gross margin," there is probably a significant difference in the gross margins for the individual teams with the big market teams having the most left over.
But what about other expenses that are to be deducted from gross margin to produce a net? If a billionaire owner pays more for his team than is reasonable as a business proposition because he has a lot of money and wants this toy, should he be able to expense his debt service for the purchase price and then claim he is losing money because he paid too much for the team?
The billionaire owners even if they have the money to buy in their back pockets, would prefer to use what they have to earn additional money. Believing they can do better than the interest they would pay on loans, they borrow to buy the teams.
How efficiently do they run the teams? How many family members are on the payroll? Who uses the team's plane or planes in the off season? What is the cost for using the stadiums? Some teams probably have better deals with the host cities than others. Some teams might even own the facilities. If so, what expense is attributed to the team's use of the facdilities?
The "gross margin" -- gross revenue minus players' 'salaries and benefits -- in my opinion is the most significant number. The other expenses make or break a team and those other expenses may be the result of gross mismanagement or simply putting friends and family on the till. The owner of the corner convenience market who feeds his family and friends from the store shelves and or pays them unwarranted salaries, will "net" less than an owner who charges everyone and hires without nepotism. But both stores, others things being equal, will have the same gross margin, in this case, gross revenue less cost of goods sold.
My guess is that all the teams have an adequate gross margin. If some teams do not, then the teams are not being supported by the fans and should consider another market. It is my belief, though I do not have the numbers to back it up, that the players are the ones actually getting short-changed. This is generally the way capitalism works.
