It's almost becoming a weekly NBA press release. "[Insert game] was the NBA's highest rated in 15 years." The league's popularity is reaching incredible highs. Behind young starpower, an exciting product and an intriguing rumor mill, the NBA is soaring.
And yet, the league isn't making money. Deputy commission Adam Silver explained in Orlando.
"The league will not make money this year," Silver says. And next year? "Maybe."
Don't forget, and I'm sure you haven't, there was a lockout this season. Over exactly this stuff. As a result, the NBA reduced Basketball Related Income from 57 percent to 51.1 percent for the players. The system was tweaked and changed to benefit owners. By all accounts, there was really no excuse for the league to not make money. Especially with the rising popularity of the game.
So what's going on? Henry Abbott of TrueHoop explains:
The explanation from the league is that the cuts in player costs roughly match the losses from last year. But this year the league says there were an additional $200 million in losses related to the lockout, for instance due to lost ticket revenue and corporate sponsorships that didn't happen.You can't take a shortsighted view of the new collecive bargaining agreement. It's a 10-year deal and as Silver said after one negotiation in the fall, he believes the league will eventually be proven right with this deal. It's not about the present. It's about the future.
More importantly, popularity only equals big changes in revenue over years. The most obvious way that happens is with more lucrative national TV deals, but the old deals are still in place for two more years. High TV ratings have not meant new TV revenues for the league. Corporate sponsorships similarly take time to develop.
And according to the league, the popularity is nice, but not yet a cure for the league's financial distress.
But there certainly is a difference in the game being healthy and popular and it being profitable. With all the concessions the owners got in the last negotiation though, if they aren't making money when the league is at all-time highs in popularity, then there's really nothing left to do than look in the mirror.