In a lengthy discussion of how some NBA teams have lost money last season, Brian Windhorst of ESPN revealed that nine franchises have spent more than they profited over the entire 2016-17 campaign before gathering their revenue-shares.
It may puzzle ordinary fans to know that there are that many teams that were unable to generate profit despite a summer filled with lucrative mega-contract offers to players. That seems counterintuitive on paper.
But it is what it is and most of those teams that lost money were small-market franchises that rely on revenue shares to get them out of the red. Determining how much teams get is a tricky process, which takes into consideration how good a potential recipient of revenue shares had performed.
Enter LeBron James, whom Windhorst used as an example of how complex the process could be when a team such as the Cleveland Cavaliers go from being the league’s whipping boys into an instant title contender in just one offseason.
For instance, the NBA documents showed the remarkable LeBron James effect. In their last season without James, 2013-14, the Cavs received $10.8 million in revenue sharing. Over the past three seasons, the Cavs have paid a total of $29 million into the system. The Cavs made $21.7 million in net income before revenue sharing last season but moved into the red after paying $24.8 million in luxury taxes and $15.2 million in a revenue-sharing check they wrote.
If a team overperforms expectations based on market size and past data, it effectively forfeits some of its revenue-sharing bounty.
LeBron James’ impact on every team he’s played for in his career has been undeniably been big, and that’s strictly speaking only of the performance of a team on the basketball court. But this report from Windhorst also brings into the light just how transcendent of a star James is outside of the hardwood. An average player can’t be an impetus for a million-dollar shift on a team’s finances, but James is way above being average, as highlighted by this report. Only kings can move mountains of money like that.
