League’s new TV deal will change how everyone does business
The Associated Press will periodically look at the changing landscape of the NBA during the upcoming season from varied perspectives: A player’s viewpoint, from the bench, and from the business side. A look at how the new television contracts will impact the economics of the league is the third installment of the series:
For the longest time the cash infusion that the NBA was expected to gain from a renegotiated television contract was nothing more than a whisper, a mythical figure that would generate wild guesses about the total.
This month, the numbers finally were identified — $24 billion, nearly tripling the league’s revenues on an annual basis.
No one is quite sure exactly how the stunning total is going to impact how the NBA and its players conduct business.
Sure, everyone involved in the league has long grown accustomed to the turnover that comes every summer. Players change teams. Coaches are hired and fired. General managers overhaul rosters or make a big splash in free agency.
But with the NBA regular season opening Tuesday night, owners, general managers, players and agents are all grappling with the unprecedented change to the fundamental economic picture.
”There will be a lot of decisions that will need to be made strategically, from how to design a contract to decisions you’re going to make on when to put yourself into the marketplace based upon how you project the cap is going to be affected by the revenue,” veteran agent Mark Bartelstein of Priority Sports told The Associated Press. ”Those are all things I’ll be watching very closely and having a lot of conversations about during the course of the next few months as we head into the next spring.”
One thing that is certain: The NBA will never be the same after the contracts with ESPN and Turner fully kick in for the 2016-17 season.
”It’s a game-changer for the league,” said Flip Saunders, president of basketball operations and coach of the Minnesota Timberwolves, who also is a minority owner. ”It’s one of those things that helps everybody. If you’re in the league, or you’re a coach or a player or an owner and have more money coming in, that’s a benefit.”
It also brings with it complications.
Right now, the TV deals are set to kick in for 2016. The one-time revenue spike would drive the salary cap, the amount of money a team can spend on player salaries, up by tens of millions of dollars and flood the free-agent market with available cash. The players who would most benefit from the new money would be those who happen to be free agents that summer.
LeBron James, set to earn about $20.6 million this year before league revenue nearly triples, is one of several players who structured his contract with the Cavaliers to account exactly for that possibility.
But not everyone is looking forward to one-time pay raises for select players, some want to spread it around.
Commissioner Adam Silver, the owners and NBA Players’ Association executive director Michele Roberts are currently examining ways to phase in the fiscal surge so that players under contract for the summer of `16 can also benefit, and so teams can prepare for the changes that are coming.
One of the ideas being discussed is to not raise the cap, which is directly tied to basketball-related income, on the same scale as the revenues dictate in 2016. Because the players are entitled to 51 percent of that revenue, the league would cut the union a check to make up the difference. The extra money could be distributed evenly to all players and not just those who cash in on the free agent market.
As complicated as it all may be, it’s becoming simple for the players. The $24 billion price tag is crystallizing a new negotiating position in 2017, when either side can opt out of the CBA.
”Last year, the fans didn’t really get to know exactly what was going on as far as revenue,” said Oklahoma City star Kevin Durant, who can become a free agent in 2016. ”But now that (the TV deal is done), it feels like we have a little bit of leverage, I guess, as players.”
In the last lockout, players had their share of the pie cut from 57 percent, thanks in large part to a disjointed union. But the tide appears to be changing with the mega television deal and the record $2 billion price tag of the Los Angeles Clippers.
”Now I think the players have said, `Whoa look at the revenue that’s coming in here,”’ Bartelstein said. ”’We made a deal last time that was no question a bad deal for us. And because we made a bad deal, franchise values have skyrocketed. So the owners have reaped the benefits of that past deal and it’s happened because we weren’t prepared and we were sleeping at the wheel and we didn’t go into it properly. And we’re not going to let that happen again.”’