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NBA owners not going to make profit this season, league says

Feb 29, 2012, 8:01 PM EDT

David-Stern-all-star-2012

If you believe the league’s numbers — and we’re still skeptical, to put it kindly — the NBA was a long way from turning a profit, they predicted a $300 million loss last year.

A few months into the new collective bargaining agreement that is far more favorable to the owners (no matter what Mark Cuban thinks), the league has not turned those losses around. At an All-Star Weekend press conference Deputy Commissioner Adam Silver said that the league will not turn a profit this year and may not next year.

It seems odd to say that at a time when NBA television ratings are skyrocketing and attendance is up overall. The players have taken pay cuts to lower costs. So costs are down, the NBA’s popularity is booming and profits are not?

Henry Abbott went into more detail and shows why there is some logic to that at TrueHoop.

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.

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.

Where the popularity will really show is in local television and other media deals, particularly the national broadcast rights which are up in 2016. But the league is right, it’s a year or several years before those eyeballs can be converted to cash. Now, if we’re having this same discussion if five years, if the league can’t turn all those additional eyeballs into profits, then they are doing it wrong.

  1. natsattack - Feb 29, 2012 at 8:29 PM

    Good

  2. kinggw - Feb 29, 2012 at 8:32 PM

    I dont believe the owners’ math. Even if they are losing money, are we really supposed to feel sorry for multi-millionaires who are “losing money” on their toys.

  3. philliphernandez - Feb 29, 2012 at 9:46 PM

    “Now, if we’re having this same discussion if five years, if the league can’t turn all those additional eyeballs into profits, then they are doing it wrong.”

    Hit the nail on the head there Kurt.

    • pudgalvin - Feb 29, 2012 at 11:04 PM

      A good start on that would be me being able to see a game like Philly/OKC. Couldn’t believe that game wasn’t on anywhere tonight. My options after my Bulls are generally the Celtics, Lakers and Heat. They might be able to market teams like OKC better if they were on TV once in a while.

  4. deadeyedesign23 - Mar 1, 2012 at 12:18 AM

    So I’m supposed to feel bad because they’re not turning a profit because they lost 200 million dollars because of a lockout they wanted?

  5. glink123 - Mar 1, 2012 at 12:53 AM

    Only in the USA do you find a company that generates $3 billion dollars annually, selling a product in which they control a nearly-global monopoly, while they claim more than half of their franchises are losing hundreds of millions of dollars per year. Name one other corporate industry where the CEO isn’t fired in a heartbeat? Yet this CEO (David Stern) is worshiped by league ownership? Imagine if Exxon or BP were losing billions of dollars annually operating their oil empires. Very unlikely that they would keep their CEOs for 25+ years. Stern is a pathetic liar.

  6. diegosegui - Mar 1, 2012 at 1:36 AM

    Dirty liars or inept idiots?

  7. bearsstillsuck - Mar 1, 2012 at 3:37 AM

    You guys will feel bad when they keep losing money then have to fold the league. This eventually will happen in all sports; players prices can’t keep going up at this rate, they’re up too much as it is. In fifty years, I think things will have to change drastically, for players and owners.

  8. iplaybad - Mar 1, 2012 at 6:16 AM

    The NBA will contract before it will ever fold. Since the NBA’s voodoo math doesn’t seem to add up ever, I won’t hold my breath…..

  9. glink123 - Mar 1, 2012 at 8:00 AM

    Hey, genius. Nobody has EVER forced an owner to give out a contract against his will.

  10. rooney24 - Mar 1, 2012 at 8:35 AM

    Oh my God! Is there an address where I can send a check? I feel so bad that some owner might slip from the ranks of billionaire down to only multi-millionaire. This travesty cannot be allowed to continue. Can Congress please get to work on bailing them out, like they did with the car makers and financial companies? If Congress can’t prevent billionaires from losing money, how will they ever get more lobbyist money from other billionaires? Our entire political system is at stake here.

  11. lastdukestreetking - Mar 1, 2012 at 10:38 AM

    Anyone who believes the owners financial numbers is an idiot.

    • southbeachtalent - Mar 1, 2012 at 12:56 PM

      You are correct, a lot of “creative accounting” goes into reaching those figures. I don’t care what anyone says, these guys are turning a profit. A billionare doesn’t get to be a billionare if he’s losing hundreds of millions of dollars.

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