Donald Sterling won't share his profits with anyone - but if they want to share with him, he won't object
The NBA’s board of governors is meeting today (Thursday, Sept. 15) to discuss revenue sharing among NBA teams. The idea of revenue sharing is that some teams are able to make plenty of profits, while other teams in smaller markets may not be able to avoid losing money because they either aren’t as competitive or they just don’t have a big enough fan base.
There are many issues both for and against revenue sharing. For example, some teams make money because they are better run than others. Take, for example, the Lakers (high revenues/profits) and Clippers (low revenues/profits). LA Lakers tickets are going to sell easier and at a higher price than Clippers tickets. TV and advertising contracts are going to be higher for the Lakers than for the Clippers. But both are in the Los Angeles market – they even play in the same arena – so the market size isn’t the difference. However, the Lakers have been much more successful and are always competitive, while the Clippers are more often than not near the bottom of the league. It’s because the Lakers have made good choices and built a loyal fan base. The Clippers can’t keep up because they are not as well run.
So should the Lakers be penalized and have to share their profits with less successful teams like the Clippers? That doesn’t seem fair. As you can see in ESPN’s Henry Abbot’s recent article about revenue sharing, the owners are looking at a plan that will set standards for each NBA market, and revenue sharing will depend on this standard, whether the team did as well as expected or not. This would also prevent cheap owners like Donald Sterling from simply profiting from the system, forcing them to put effort into running their franchise successfully.
Although this will likely help the problem, I think that the luxury tax could also help level the playing field. It’s unlikely that the new CBA will include a hard salary cap, so there will still need to be a luxury tax for teams that like to spend a lot on players. If this tax was taken and given to teams that are struggling at turning a profit, it would help the smaller market teams have a chance to compete with the Lakers and Knicks.
Any thoughts? Post them below.
