OT Caitlin Clark's WNBA rookie contract breakdown released

[tmorgan]

Am I the only one who thinks she's good enough to play in the actual NBA? Like she'd be picked in the first round.

In this draft? Quite possibly, but not for basketball reasons. Owners want to make money, and she’d deliver that. Merch merch merch.

She can’t play with boys, though. She’d get abused defensively, her handle would go from very good to very bad, and she couldn’t get her shot off without some seriously obvious screens that could be game-planned against. I do think her passing is good enough, though. Seriously elite passer.

[ellobo]

"But the league doesn't make money," and speculation about how much revenue Clark might generate, miss an important point about the economics of professional sports. Most of the value of a professional sports franchise is not in operating revenue or profits. It's in tax benefits.

Here's an analysis of some of the relevant issues (with some of my key takeaways summarized below).

https://www.propublica.org/article/the-billionaire-playbook-how-sports-owners-use-their-teams-to-avoid-millions-in-taxes

When an owner buys a team, most of the purchase price is deductible/amortizable as an operating expense and/or depreciating asset. That includes franchise fees, player contracts, and media rights. Player contracts can be deducted twice, once as an operating expense, and once as a depreciating asset. Team owners can shelter an enormous amount of taxable income, whether it's from the team itself or other businesses controlled by the team owner.

And that's not even including appreciation of the franchise itself, which historically has been astronomical.

The article linked above harps a lot on the "fairness" of owners reaping these tax benefits, while for players salaries are ordinary taxable income, but that's not really my point, and you can draw you own conclusions about that issue. My point is that more often than not, team owners benefit from operating losses (within reason), and will do anything they can legally get away with to minimize profits and maximize losses on paper, and shelter them from taxation.

When it comes to collective bargaining, haggling over salary caps and percentages of BRI is not the most critical issue in determining franchise value. From an owner's point of view, a collective bargaining agreement is just a way of colluding to control costs, but in a way that is sanctioned by agreement with the players. And from a player's point of view, it's a way of defining a salary pool and ensuring a baseline for player salaries. But it's in no way an actual partnership, and the exact numbers or even the actual profitability of the league are of secondary importance to the owners.

If WNBA teams were independent entities that were the sole source of income for their owners, then net profitability would be more important, but that isn't the case.

[One_and_Done]

"But the league doesn't make money," and speculation about how much revenue Clark might generate, miss an important point about the economics of professional sports. Most of the value of a professional sports franchise is not in operating revenue or profits. It's in tax benefits.

Here's an analysis of some of the relevant issues (with some of my key takeaways summarized below).

https://www.propublica.org/article/the-billionaire-playbook-how-sports-owners-use-their-teams-to-avoid-millions-in-taxes

When an owner buys a team, most of the purchase price is deductible/amortizable as an operating expense and/or depreciating asset. That includes franchise fees, player contracts, and media rights. Player contracts can be deducted twice, once as an operating expense, and once as a depreciating asset. Team owners can shelter an enormous amount of taxable income, whether it's from the team itself or other businesses controlled by the team owner.

And that's not even including appreciation of the franchise itself, which historically has been astronomical.

The article linked above harps a lot on the "fairness" of owners reaping these tax benefits, while for players salaries are ordinary taxable income, but that's not really my point, and you can draw you own conclusions about that issue. My point is that more often than not, team owners benefit from operating losses (within reason), and will do anything they can legally get away with to minimize profits and maximize losses on paper, and shelter them from taxation.

When it comes to collective bargaining, haggling over salary caps and percentages of BRI is not the most critical issue in determining franchise value. From an owner's point of view, a collective bargaining agreement is just a way of colluding to control costs, but in a way that is sanctioned by agreement with the players. And from a player's point of view, it's a way of defining a salary pool and ensuring a baseline for player salaries. But it's in no way an actual partnership, and the exact numbers or even the actual profitability of the league are of secondary importance to the owners.

If WNBA teams were independent entities that were the sole source of income for their owners, then net profitability would be more important, but that isn't the case.

I'm afraid it's these arguments that always miss the point.

The fact that owners can take advantage of tax laws to offset losses etc is irrelevant, just like players being able to take advantage of tax loopholes is irrelevant. It's all stuff external to the actual business of the NBA. Salaries should be based on what revenue/profit the league can generate, not what owners/players can do outside of the business to offset losses.

It's the same reason the money players generate in sponsorships and endorsements isn't included when calculating revenue under the CBA. Imagine the player's reaction if Robert Sarver said "you boys should be glad to play for free, I made you millionaires with Nike. Without me, you'd never have gotten paid millions to commentate or work on TV!" That sentiment is as ridiculous as the 'you owners are getting a sweet deal no matter how much money you lose because you'll sell the team for a profit and offset your losses with tax shenanigans!' Good for the owners, just like endorsements etc are good for players. It's not how a businesses revenue should be distributed.

[D.Brasco]

I've been thinking, the WNBA may be on the cusp of profitability and the investment may finally pay off. Aside from Clark, the girls drafted this year have more of the media friendly look and preparedness that has likely been the main missing ingredient in the past.



Entities can indeed operate without a profit for years in the hope they finally reach it at some point. The UFC operated at a loss for most of its history and is now very profitable.

[ellobo]

"But the league doesn't make money," and speculation about how much revenue Clark might generate, miss an important point about the economics of professional sports. Most of the value of a professional sports franchise is not in operating revenue or profits. It's in tax benefits.

Here's an analysis of some of the relevant issues (with some of my key takeaways summarized below).

https://www.propublica.org/article/the-billionaire-playbook-how-sports-owners-use-their-teams-to-avoid-millions-in-taxes

When an owner buys a team, most of the purchase price is deductible/amortizable as an operating expense and/or depreciating asset. That includes franchise fees, player contracts, and media rights. Player contracts can be deducted twice, once as an operating expense, and once as a depreciating asset. Team owners can shelter an enormous amount of taxable income, whether it's from the team itself or other businesses controlled by the team owner.

And that's not even including appreciation of the franchise itself, which historically has been astronomical.

The article linked above harps a lot on the "fairness" of owners reaping these tax benefits, while for players salaries are ordinary taxable income, but that's not really my point, and you can draw you own conclusions about that issue. My point is that more often than not, team owners benefit from operating losses (within reason), and will do anything they can legally get away with to minimize profits and maximize losses on paper, and shelter them from taxation.

When it comes to collective bargaining, haggling over salary caps and percentages of BRI is not the most critical issue in determining franchise value. From an owner's point of view, a collective bargaining agreement is just a way of colluding to control costs, but in a way that is sanctioned by agreement with the players. And from a player's point of view, it's a way of defining a salary pool and ensuring a baseline for player salaries. But it's in no way an actual partnership, and the exact numbers or even the actual profitability of the league are of secondary importance to the owners.

If WNBA teams were independent entities that were the sole source of income for their owners, then net profitability would be more important, but that isn't the case.

I'm afraid it's these arguments that always miss the point.

The fact that owners can take advantage of tax laws to offset losses etc is irrelevant, just like players being able to take advantage of tax loopholes is irrelevant. It's all stuff external to the actual business of the NBA. Salaries should be based on what revenue/profit the league can generate, not what owners/players can do outside of the business to offset losses.

It's the same reason the money players generate in sponsorships and endorsements isn't included when calculating revenue under the CBA. Imagine the player's reaction if Robert Sarver said "you boys should be glad to play for free, I made you millionaires with Nike. Without me, you'd never have gotten paid millions to commentate or work on TV!" That sentiment is as ridiculous as the 'you owners are getting a sweet deal no matter how much money you lose because you'll sell the team for a profit and offset your losses with tax shenanigans!' Good for the owners, just like endorsements etc are good for players. It's not how a businesses revenue should be distributed.

A lot of "should be" in there. The people who own the teams certainly think it's relevant.

The fact is that the tax benefits are why people pay so much to own teams and why the purchase prices are worth it to them. That's more of the value of the business than running the actual business. If the tax advantages weren't there, franchises would be worth a lot less and billionaires wouldn't be standing in line to buy them.

[Jabroni Lames]

I've been thinking, the WNBA may be on the cusp of profitability and the investment may finally pay off. Aside from Clark, the girls drafted this year have more of the media friendly look and preparedness that has likely been the main missing ingredient in the past.



Entities can indeed operate without a profit for years in the hope they finally reach it at some point. The UFC operated at a loss for most of its history and is now very profitable.

When the name of the game is attracting eyeballs, it definitely helps to be easier on the eyes.

[One_and_Done]

"But the league doesn't make money," and speculation about how much revenue Clark might generate, miss an important point about the economics of professional sports. Most of the value of a professional sports franchise is not in operating revenue or profits. It's in tax benefits.

Here's an analysis of some of the relevant issues (with some of my key takeaways summarized below).

https://www.propublica.org/article/the-billionaire-playbook-how-sports-owners-use-their-teams-to-avoid-millions-in-taxes

When an owner buys a team, most of the purchase price is deductible/amortizable as an operating expense and/or depreciating asset. That includes franchise fees, player contracts, and media rights. Player contracts can be deducted twice, once as an operating expense, and once as a depreciating asset. Team owners can shelter an enormous amount of taxable income, whether it's from the team itself or other businesses controlled by the team owner.

And that's not even including appreciation of the franchise itself, which historically has been astronomical.

The article linked above harps a lot on the "fairness" of owners reaping these tax benefits, while for players salaries are ordinary taxable income, but that's not really my point, and you can draw you own conclusions about that issue. My point is that more often than not, team owners benefit from operating losses (within reason), and will do anything they can legally get away with to minimize profits and maximize losses on paper, and shelter them from taxation.

When it comes to collective bargaining, haggling over salary caps and percentages of BRI is not the most critical issue in determining franchise value. From an owner's point of view, a collective bargaining agreement is just a way of colluding to control costs, but in a way that is sanctioned by agreement with the players. And from a player's point of view, it's a way of defining a salary pool and ensuring a baseline for player salaries. But it's in no way an actual partnership, and the exact numbers or even the actual profitability of the league are of secondary importance to the owners.

If WNBA teams were independent entities that were the sole source of income for their owners, then net profitability would be more important, but that isn't the case.

I'm afraid it's these arguments that always miss the point.

The fact that owners can take advantage of tax laws to offset losses etc is irrelevant, just like players being able to take advantage of tax loopholes is irrelevant. It's all stuff external to the actual business of the NBA. Salaries should be based on what revenue/profit the league can generate, not what owners/players can do outside of the business to offset losses.

It's the same reason the money players generate in sponsorships and endorsements isn't included when calculating revenue under the CBA. Imagine the player's reaction if Robert Sarver said "you boys should be glad to play for free, I made you millionaires with Nike. Without me, you'd never have gotten paid millions to commentate or work on TV!" That sentiment is as ridiculous as the 'you owners are getting a sweet deal no matter how much money you lose because you'll sell the team for a profit and offset your losses with tax shenanigans!' Good for the owners, just like endorsements etc are good for players. It's not how a businesses revenue should be distributed.

A lot of "should be" in there. The fact is that the tax benefits are why people pay so much to own teams and why the purchase prices are worth it to them. That's more of the value of the business than running the actual business. If the tax advantages weren't there, franchises would be worth a lot less and billionaires wouldn't be standing in line to buy them.

And alot of players are motivated by the lucrative endorsements and post-career benefits too. If those don't count, neither does external stuff like tax offsets.

I'll likely regret adding this aside, but I don't even think your assessment is accurate RE: owner motivations. There are easier ways for owners to make money (or to find tax offsets) than buying an NBA team. These things are bought as toys for the mega rich like Ballmer, or as Civic pride acquisitions like the OKC ownership purchase. Money is relevant, but you can see from how many owners run their teams that there are alot of other considerations at play.

[ellobo]

I'm afraid it's these arguments that always miss the point.

The fact that owners can take advantage of tax laws to offset losses etc is irrelevant, just like players being able to take advantage of tax loopholes is irrelevant. It's all stuff external to the actual business of the NBA. Salaries should be based on what revenue/profit the league can generate, not what owners/players can do outside of the business to offset losses.

It's the same reason the money players generate in sponsorships and endorsements isn't included when calculating revenue under the CBA. Imagine the player's reaction if Robert Sarver said "you boys should be glad to play for free, I made you millionaires with Nike. Without me, you'd never have gotten paid millions to commentate or work on TV!" That sentiment is as ridiculous as the 'you owners are getting a sweet deal no matter how much money you lose because you'll sell the team for a profit and offset your losses with tax shenanigans!' Good for the owners, just like endorsements etc are good for players. It's not how a businesses revenue should be distributed.

A lot of "should be" in there. The fact is that the tax benefits are why people pay so much to own teams and why the purchase prices are worth it to them. That's more of the value of the business than running the actual business. If the tax advantages weren't there, franchises would be worth a lot less and billionaires wouldn't be standing in line to buy them.

And alot of players are motivated by the lucrative endorsements and post-career benefits too. If those don't count, neither does external stuff like tax offsets.

I'll likely regret adding this aside, but I don't even think your assessment is accurate RE: owner motivations. There are easier ways for owners to make money (or to find tax offsets) than buying an NBA team. These things are bought as toys for the mega rich like Ballmer, or as Civic pride acquisitions like the OKC ownership purchase. Money is relevant, but you can see from how many owners run their teams that there are alot of other considerations at play.

Right, but this isn't inconsistent with my point. Owners can afford to treat their teams as playthings because they're making a **** ton of money regardless of how actually profitable or competitively successful their teams are. It's actually a super easy way to make money if you have the capital and other sources of income. There are a lot of toys they could buy with cheaper price tags, but not a lot that will put more money in their pocket while they play with them.

[One_and_Done]

A lot of "should be" in there. The fact is that the tax benefits are why people pay so much to own teams and why the purchase prices are worth it to them. That's more of the value of the business than running the actual business. If the tax advantages weren't there, franchises would be worth a lot less and billionaires wouldn't be standing in line to buy them.

And alot of players are motivated by the lucrative endorsements and post-career benefits too. If those don't count, neither does external stuff like tax offsets.

I'll likely regret adding this aside, but I don't even think your assessment is accurate RE: owner motivations. There are easier ways for owners to make money (or to find tax offsets) than buying an NBA team. These things are bought as toys for the mega rich like Ballmer, or as Civic pride acquisitions like the OKC ownership purchase. Money is relevant, but you can see from how many owners run their teams that there are alot of other considerations at play.

Right, but this isn't inconsistent with my point. Owners can afford to treat their teams as playthings because they're making a **** ton of money regardless of how actually profitable or competitively successful their teams are. It's actually a super easy way to make money if you have the capital and other sources of income. There are a lot of toys they could buy with cheaper price tags, but not a lot that will put more money in their pocket while they play with them.

And the above isn't inconsistent with my point; there are easier ways for the mega rich to make money.

There is a long list of owners we know have lost money; and not "fake losses", we're talking "lost so much money my fortune is in danger" money. Bob Johnson is a good example. He had to sell the Bobcats on a dime because he was bleeding so much money and the team had so much debt. The NBA actually had to step in and buy the Hornets/Pelicans because George Shinn literally couldn't keep paying their bills. Bruce Ratner needed to bring in a Russian billionaire to bail out his investment in the Nets because they were losing so much money. Mark Cuban was sued by his minority owner because of his decision to take financial losses. If it was so easy to just offset those with tax etc then Perot would never have sued. The Warriors are spending a crazy amount of money this year. The Clippers do most years. They aren't doing it because of profitability, they just don't care too much how big they spend on their toy. I could go on. If the teams had been cash cows there'd have been no need for some of those owners to sell them.

Now that was under an earlier, less fair CBA, and if you're the Knicks you make money regardless, but the idea that a team is easy money is a little off the mark.

[Mirotic12]

The WNBA players have been going to Europe to play every year for a long time. The top players make like €1 million euros net income, and I think Taruasi at one point made like €2 million euros net income.

Clark will be able to do the same.

[azcatz11]

The WNBA players have been going to Europe to play every year for a long time. The top players make like €1 million euros net income, and I think Taruasi at one point made like €2 million euros net income.

Clark will be able to do the same.

She signed a huge Nike deal. She’s not going to slum it in Europe man.

[Mirotic12]

The WNBA players have been going to Europe to play every year for a long time. The top players make like €1 million euros net income, and I think Taruasi at one point made like €2 million euros net income.

Clark will be able to do the same.

She signed a huge Nike deal. She’s not going to slum it in Europe man.

Pretty much every single good WNBA player plays in Europe. It also is used to gauge how good their overall careers were and for things like HOF standing.

And laughing at €1-€2 million euros net income being "slumming it up in Europe".


Yeah, OK.

[LLJ]

I would never rule out anything, but I'd be surprised if Clark plays any significant length of her career outside the U.S., unless she ends up being a disappointment in the pros and she loses endorsements or some rich international billionaire throws a stunning contract in front of her. Every good WNBA player plays in Europe because they want or need the extra income. This will obviously not be a problem with Clark.

[DonaldSanders]

I would never rule out anything, but I'd be surprised if Clark plays any significant length of her career outside the U.S., unless she ends up being a disappointment in the pros and she loses endorsements or some rich international billionaire throws a stunning contract in front of her. Every good WNBA player plays in Europe because they want or need the extra income. This will obviously not be a problem with Clark.

Clark is competitive, she'll play at least some at some point in here career abroad because she'll be bored considering how short the WNBA season is.

[Doctor MJ]

I would never rule out anything, but I'd be surprised if Clark plays any significant length of her career outside the U.S., unless she ends up being a disappointment in the pros and she loses endorsements or some rich international billionaire throws a stunning contract in front of her. Every good WNBA player plays in Europe because they want or need the extra income. This will obviously not be a problem with Clark.

I think you also need to consider that because the WNBA season is short, you do yourself a disservice if you're not playing competitive ball the rest of the year.

So, I think it likely Clark plays in Europe as well, just in the name of being the best player she can be.

[Doctor MJ]

The WNBA players have been going to Europe to play every year for a long time. The top players make like €1 million euros net income, and I think Taruasi at one point made like €2 million euros net income.

Clark will be able to do the same.

I haven't been following the details here, but it's important I think to at least bring up the fact that traditionally the big money came specifically from playing in Russia, and I expect Putin has killed that for a long time.

Now, other owners can certainly pick up the slack shell out huge money that cannot possibly make them profit for the bragging rights of having women act as court jesters for them, but it's also possible that money for women in Europe goes back to more justifiable levels without Russian oligarchs throwing money.

[inquisitive]

Man if I were her I would have gone to the Big 3 for 5 million.

She's getting $10mil in endorsements so why play Big 3? She is on the big WNBA stage.

Are you saying Nike would have no interest in her if she played in the Big 3? She's still losing the 5 million even if she's getting 10 milloin in endorsements UNLESS she can't get them outside the WNBA. I see no reason she couldn't. She's a commodity Nike would still want her in the Big 3, and she'd have 15 million instead of 10 million. And like I said she doesn't have to make a lifelong commitment to Big 3 just do it for one year and Ice Cube even said they'd work around her schedule to do both. She could have 10 mil + 5 million from Big 3 + the peanuts WNBA gives her. Win win win.

Would she be getting the $10mil if she joined the big 3? It seems to me like Nike is aligned with the WNBA and not big 3 though i could be wrong. The WNBA is where she gets the most exposure which Nike would want. Now if she could play in both leagues at the same time, then it will be fine.

[shrink]

The Athletic polled NBA players, and asked them who their favorite non-NBA athlete was?

Lamar Jackson was #1, but I was surprised Caitlyn Clark was #2.

[Doctor MJ]

She's getting $10mil in endorsements so why play Big 3? She is on the big WNBA stage.

Are you saying Nike would have no interest in her if she played in the Big 3? She's still losing the 5 million even if she's getting 10 milloin in endorsements UNLESS she can't get them outside the WNBA. I see no reason she couldn't. She's a commodity Nike would still want her in the Big 3, and she'd have 15 million instead of 10 million. And like I said she doesn't have to make a lifelong commitment to Big 3 just do it for one year and Ice Cube even said they'd work around her schedule to do both. She could have 10 mil + 5 million from Big 3 + the peanuts WNBA gives her. Win win win.

Would she be getting the $10mil if she joined the big 3? It seems to me like Nike is aligned with the WNBA and not big 3 though i could be wrong. The WNBA is where she gets the most exposure which Nike would want. Now if she could play in both leagues at the same time, then it will be fine.

Right. I think people have a lot of things backwards with the WNBA because of the comparison to the NBA and the concern of profitability.

The reality is:

- The WNBA generates drastically more revenue than Big3.
- Whatever women's pro league represents women's basketball at its highest level in the USA, giants like NBA & Nike want to have controlling interests in it.
- The WNBA is that. Period.

Now, I could always be wrong in my assessment...but it's naive to think that Nike wasn't in close communication with Clark the entire time, and if they had wanted her to play in Big3, I'd expect that that's what we would have seen her do. Since it didn't happen, expect that that's also what Nike wanted.

Now, could Clark have possibly pushed to do something here Nike didn't want? It's possible, but the idea that Nike doesn't care where she plays next and isn't working to make sure it happens isn't realistic. Nike isn't in the business of just letting these things happen.

All this then to say, from my perspective:

If you weren't factoring Nike into all this from the beginning, you didn't understand the situation.
If you're surprised Nike wanted her to play in the WNBA and not the Big3, you still don't understand the situation.

[wco81]

The WNBA players have been going to Europe to play every year for a long time. The top players make like €1 million euros net income, and I think Taruasi at one point made like €2 million euros net income.

Clark will be able to do the same.

She signed a huge Nike deal. She’s not going to slum it in Europe man.

It's a $28 million deal, the largest in WNBA history. Maybe more than the career earnings of any previous WNBA players.

I listened to a podcast and someone pointed out that it's mostly white WNBA players who've gotten big shoe endorsement deals.

A'ja Wilson, who's won the WNBA MVP twice, also been a WNBA player, considered one of the best or the best player in the league, doesn't have a Nike deal anywhere near close to it.

OTOH, if she does bring increased ratings to the WNBA, Nike is probably calculating that white suburban families are more likely to spend $200 or more on a Signature Caitlin Clark Nike shoes for their daughters than black families spending that kind of money on an A'ja Wilson shoe.