Arturo Galletti is the Co-editor and Director of Analytics for the Wages of Wins Network. He is an Electrical Engineer with General Electric on the lovely isle of Puerto Rico, where he keeps his production lines running by day and night (and weekends) and works on sport analysis with his free time.
In Part 1, I used all available public sources to break down the finances of every NBA Team (check it out for the full explanation)
The truth of the matter is that the bottom five teams come out as losers for their owners on the bottom line. For the most part this is is a function of location (7 of the bottom 10 are in my list of franchises in overextended markets), which again is not the player’s fault even though their being asked to pay for it.
Let’s talk new deals.
The owners wanted a 47/53% BRI split in their favor. That looks like so:
Weird, the league makes money as whole here, but 17 teams lose money on their tax returns.
Let’s try the current proposal, the proposed 50% split:
Huh. I still get 19 teams in the red. Something must be wrong; why in the world would the owners propose something that costs them money? Oh wait, I only used the Tax Return Numbers!
If I go by league claims the numbers make no sense. Add in all the other benefits to the equation and everything suddenly does. A 50/50 split sees 29 teams in the black.
The one question left on my mind is: how would this table look like at the players’ proposed 51/49 BRI split?
That still leaves 29 of 30 teams in the black. Add in some relocation and some revenue sharing and you are done (but this also is not up to the players). Relocation, I’ve already explained. Revenue sharing is a tougher cookie, which I’ll get to tomorrow.
-Arturo
Disclaimer: I do not have access to the NBA’s books. Everything in this article is put together from public statements or logical inferences. I do not claim to have this perfectly right. However, I do feel like I am in the ballpark. The sources I used are listed, please update me if there is a better location to get my data.
Wages of Wins Journal 
brgulker
November 9, 2011
Revenue sharing seems like the only option if the real issue is profitability for each team….which of course indicates that this isn’t the real, underlying issue.
mettaworldpiece
November 14, 2011
You made a big mistake. BRI is not based on net income. It’s based on BRI. Owners deduct some $650 million of revenues before dividing the money 50/50 (or 57/43 in the previous CBA). This is why you keep getting everyone in the red.
As a specific example, players only get to split a portion of luxury suites, not all of it.
Also, luxury tax money goes to non-tax payers, in an already sort of revenue sharing program. That isn’t included here, either. I also believe dividing the expenses for non-players evenly makes it worse, too. Certain leases cost more, certain owners (Cuban) spend more, etc. I think some of the teams at the bottom are spending less and thus losing less.
But getting the actual income wrong is what is making the numbers so off. Actual League revenues are closer to $4.5 billion than $3.8 billion. The claimed $300 million losses include those numbers.