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Basketball Business (TV Deals & D-League Restructuring)

As far as I'm concerned, the oddest part of this lockout thus far has been watching bloggers and fans trying to switch gears from basketball analysis to big business analysis. We are used to breaking down pick and roll defense, rotations, and even some statistical analysis. What we are not used to is understanding revenue sharing, BRI (basketball related income), and balance sheets.

Thankfully there are a few folks that are adept in both worlds and can shed some light on otherwise murky subjects. J.A. Sherman of Welcome to Loud City is one such person. In a couple of posts, he looks in depth at a subject that I just briefly touched upon in my quick look at the owners' perspective: TV deals.

2011 NBA Lockout: The Problem With TV

In a twist of fate, it is as if the NBA is caught in its own little game of SAW. The more they work to increase the value of the game, the less money they will make over the next five years. This is because in order to operate, teams have to endure rising operating costs (fuel, security, etc). And yet, with a fixed TV revenue comprising a huge percentage of their total operating income, the league does not have the ability to see its TV revenues rise proportionately. The league's success squeezes the profit margin.

Bottom line: The league signed up for a deal that looked sweet in 2007 but is limiting their profitability in the present day. But the National TV deals are not the end of the story. Each team has its own local TV deals, some of which are a lot more lucrative than others.

2011 NBA Lockout: National TV Revenue vs Local TV Revenue - Welcome to Loud City

So on one end of the spectrum, we have the Lakers pulling in $30 million in local TV (assuming the same or similar TV deal was still in place in 2004), and on the other, the Nets were pulling in less than 10% of that.

No wonder the Buss family seems completely content living with the status quo. I have no idea what kind of deal the Celtics have with CSN, but I'm guessing from Wyc's hard line that they aren't pulling in the kind of dough that the Lakers are.

On another front, this lockout might be just the blessing in disguise that the D-League needs to revamp the way the teams use that league (something many fans - myself included - have been hoping for since the inception of the league).

The NBA Lockout, And How New Labor Deal Can Help The D-League -

here are currently slated to be 21 big league teams sharing just seven D-League squads next season. This is due to the new-found interest that's come from NBA teams buying D-League counterparts, and while it's not an easy fix, the groundwork should at least be put in place before the owners and players are done at the negotiating table this summer. First up on that docket should be to find a way to lure more talent to the Development League, ultimately upping the product on the floor and making it possible to even field 30 minor league teams stocked with -- at worst -- players with the ridiculous upside necessary to make an NBA roster down the road.

I think we're still years away from a true minor league system, but something along those lines (eventually) would be music to my ears.

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