Hate to keep harping on the Bobcats’ finances, but Charlotte’s fiscal health is directly tied to the financial health of the local NBA franchise. More importantly, there are many teams besides the Bobcats who now have and will continue to have financial trouble given the league’s current revenue and expenses framework. In sum, the NBA might just be a very bad investment for all but the very largest cities.
A story from the Indiana Economic Digest lays out the details as to why that might be. First, a few facts. The Bobcats have the NBA’s lowest player payroll at $38 million, far below the salary cap number of $65 million and no where near the brain-dead Knicks with a whopping $117 million under contract.
Yet, all available evidence is that Bob Johnson is still losing money on the team. Now, NBA commish David Stern and the various league flunkies he has installed in the Bobcat front-office may convince Johnson to spend some of that cap room on free agents and improve his on-court product next year. Another lottery pick should also help.
But here is the bottom-line: The Bobcats need to start winning and becoming a draw sooner rather than later. A $50 million payroll that still does not fill seats is still going to lose you money. Lots of it. The Minnesota Timberwolves could lose $30 million this year, for example. Johnson will not stand for that, especially not for several more years.
However, the NBA current collective bargaining agreement runs through 2010, meaning any new revenue-sharing deal probably cannot wait until then. Here’s where things get interesting.
Suppose Johnson spends the next year doing exactly what the NBA tells him to do in terms of marketing and trying to improve the team; he spends some money and maxes out other revenue sources like the concert and other events biz, something the Bobcats may or may not be doing because the organizaiton is under no obligation to share that data with the public.
And the Bobcats still lose money. What does the NBA do then? Can the league possibly come after the city for failing to live up to its part of its deal with NBA?
I don’t know. But I bet there are a lot of people wondering about the fine print of that agreement right about now.
