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Sports Business

Pacers fans should root for NBA owners to take hard line

October 27, 2011
KEYWORDS Sports Business

So much progress was made between NBA owners and players union officials during marathon negotiations this week that there is renewed optimism a full 82-game season can be salvaged.

A great chorus of hurrays is erupting among vested parties everywhere—not the least of which is ESPN.

However, one small detail is being overlooked. The two sides have made no progress on the biggest issue—the revenue split between players and owners.

In the old deal—the one that was bankrupting about two-thirds of the teams—players got 57 percent of basketball revenue. In the new deal, the owners are demanding a 50-50 split. That’s a deal I’d like to broker with the owner of the company I work for.

NBA players are dug in with their demand for 52.5 percent of all basketball revenue. Each percentage point in the split equates to $40 million annually, so this is no small matter. The 2.5 percentage points at stake would mean $100 million annually that could be spread around among the 30 NBA teams.

With the Indiana Pacers losing anywhere from $15 million to $30 million annually, local fans who would like to see the blue and gold remain anywhere near financially viable for the long-term must be rooting for an agreement with a hard cap—at least much stiffer than it is now—and a 50-50 split.

And while the N.Y. Knicks are coming off one of their best financial years ever and the Chicago Bulls made somewhere in the neighborhood of $55 million last year, teams like the Pacers must be wondering how much longer they can stand to hemorrhage without considering major changes.

Already, the city’s Capital Improvement Board has approved a three-year $33.5 million forgivable loan (subsidy in more common parlance) and local officials have warned that writing checks from the city coffer can’t be a long-term solution.

Yes, the owners are working hard to increase revenue sharing, with hopes of more than tripling the current pot to about $155 million.

But that won’t be nearly enough to erase the red ink on the Pacers ledger, and if NBA Commissioner David Stern and team owners don’t hold fast during the 11th hour of these negotiations, teams like the Pacers and the city officials who back them will have some very difficult decisions ahead of them.

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