Jul 21, 2012, 11:30 AM EDT
When the New York Knicks told Jeremy Lin “don’t let Raymond Felton hit you in the backside on the way out,” the talk was a cacophony of shock. Whether you agreed with the move or not, it was a huge surprise that the Knicks wouldn’t match the offer sheet for Lin. If you thought Lin was worth it, you were shocked the Knicks would let a star like Lin walk after everything he did for the franchise last year. If you thought he wasn’t worth it, you were surprised Dolan actually made a decision with consideration for the money.
More than anything, people on both sides were shocked that Dolan let Lin’s marketing potential head to the Lonestar State. Lin was a huge center of attention, which meant money, last season, and merchandise for Lin sold out everywhere. How could the Knicks let something with that kind of marketing potential go? ESPN, in a five-part series this week, noted that that element was considered by the Knicks and it sheds some light on how the league’s financial structure affects these things.
Furthermore, the Knicks calculated that Linsanity might not be worth as much as assumed. While the value of the Lin phenonemon has been much discussed, the Knicks saw it differently from most observers. Their season-ticket sales were strong and their sponsorships were stronger. Any money from the sale of Lin jerseys or Knicks’ merchandise around the world goes into a leaguewide pool, with the Knicks getting the same portion as any other team, according to revenue-sharing rules. Likewise, their share of the league’s TV contracts would not change whether Lin was on the team or not, no matter how many people in New York or Asia were watching.
Essentially, Lin wasn’t going to help MSG sell tickets. The Knicks already sell out. It’s the gift and curse of Knicks fans. They’re great, in that they show up no matter how bad the team is and go bonkers when the team is any good and/or has any stars. But it also means the Knicks don’t have to make moves with consideration to selling tickets, because they don’t have to worry about it. But a lot of teams make bad moves trying to sell tickets. The Brooklyn Nets just spent $300 million on a team that isn’t a title contender in order to push ticket sales. And that’s the right move for them, but MSG isn’t in the same bucket.
Likewise, not being able to make any money off the revenue stream of merchandise, and in fact subsidizing the other teams has to have very little appeal to the Knicks. Yes, there are other revenue streams involved with Lin’s popularity that don’t get put into the league pool. But again, the Knicks have already maximized those streams. That’s the real problem. It’s like trying to get someone who’s loaded a gift for their birthday. What do you get the team that has everything (except a title, an offense, and a star willing to relinquish control)?
Houston, on the other hand, can use Lin’s star power. His fame will help them sell sponsorships and put butts in seats. The only person that really loses money in this configuration is Lin, who won’t make as much in Houston off his fame and that trademarked “Linsanity” term as he would in New York. But he got a great deal, and that marketing money will dry up eventually.
So maybe this deal, while not all about the money at all, as ESPN’s feature illustrates, wasn’t so bad on the financial end for anyone. But it’s interesting to see the dynamics in play.
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