Windhorst: "players have no idea about the capwave that's about to hit them"

[The Rebel]

They can afford to do it, yes, in perpetuity. Wanna bet that if owners have to subsidize player contracts, billionaires still continue to line up to own NBA franchises? Because it's crazy profitable, and would continue to be so, even if that margin is cut into a little bit to continue to pay the workers that create all the value in the league.

You do realize if the situation comes where the owners will have to keep the cap artificially high in perpetuity, the league won't be profitable and the values of the franchise will drop as well, so no, what you are saying is objectively not sustainable nor realistic.

No I do not realize that... In fact I am arguing the exact opposite. You think the like $15 million per team that is being talked about that each owner would subsizide would drop franchise valuations and take a huge chunk out of league profits? LOL!

I don't mean to be an ass, but I think you guys kind of have no idea how much money the NBA makes and how incredibly solid of an investment these franchies have been for the mega-rich for the last few decades.

Subzidizing $15 million or so per team per year to make sure that teams can actually be built properly and players get paid what they are now at least..... that is absolutely nothing.

LMAO these teams have been great investments for decades? 7 years ago it took a mayor putting together a group of 300 investors to keep a team in place. 10 years ago 1 team was sold at a $120 million loss and the other was turned over to the league for the debt the team owed the league. While people today scream about Seattle getting their team back, it was on the market for 2 years and only sold to a group who had every intention of moving the team.

Almost every one of these teams owes a lot of money that they spend yearly from a line of credit the NBA gives teams. That line of credit is based on a valuation of the teams. That value includes a very big national TV contract and their regional broadcasting deals as well as arena income. On top of the line of credit a lot of these teams owe private lenders and banks money.

Once you calculate the coaching staff, back office staff, front office staff, players, travel, and everything else a lot of these teams are lucky if they break even in cash flow. Some of the revenue sharing instituted in 2011 helped, the lower percentage payout to players in the 2011 CBA also helped, but a lot of teams still struggle to get anywhere.

What many do not understand is that in 2013 the NBA signed the national TV deal which almost tripled that income starting in 2014. The huge salary jumps in 2016 and since were a direct result of that deal. That deal expires in 2023, which means a deal should be signed 2 years from now. The TV networks broke off those contract talks this summer though, and after this finals ratings mess that deal is not likely to be anywhere close to where they were at in the current deal without a huge jump in ratings next year. I am not exaggerating when I say half the league could be sold or go bankrupt if that national TV deal gets cut in half, and nobody is going to pay billions to get into a league losing half their teams.

[Stillwater]

the real question is what orgs in position by design to get key fa signings wont be able too

[The Rebel]

the real question is what orgs in position by design to get key fa signings wont be able too

Nah, I think the real question is which teams borrowed too much money and cannot afford their payroll? They will be the ones dumping major salary in a hurry. Would anybody be shocked to see the Rockets cut their salary cap to the minimum salary floor this season? What other teams are in financial trouble?

[Stillwater]

the real question is what orgs in position by design to get key fa signings wont be able too

Nah, I think the real question is which teams borrowed too much money and cannot afford their payroll? They will be the ones dumping major salary in a hurry. Would anybody be shocked to see the Rockets cut their salary cap to the minimum salary floor this season? What other teams are in financial trouble?

well that is a given and you already have that answer

[The Rebel]

the real question is what orgs in position by design to get key fa signings wont be able too

Nah, I think the real question is which teams borrowed too much money and cannot afford their payroll? They will be the ones dumping major salary in a hurry. Would anybody be shocked to see the Rockets cut their salary cap to the minimum salary floor this season? What other teams are in financial trouble?

well that is a given and you already have that answer

We know the Rockets but we don't know which other ones. Outside of the Lakers, Knicks, and Bulls which teams do we really know are in good shape financially?

[spikeslovechild]

Nah, I think the real question is which teams borrowed too much money and cannot afford their payroll? They will be the ones dumping major salary in a hurry. Would anybody be shocked to see the Rockets cut their salary cap to the minimum salary floor this season? What other teams are in financial trouble?

well that is a given and you already have that answer

We know the Rockets but we don't know which other ones. Outside of the Lakers, Knicks, and Bulls which teams do we really know are in good shape financially?

The Clippers

[Parataxis]

Isn't it going to just be smoothed?

So 109m for a few years until revenue is fully recovered.

If there's significant lost revenue next season "smoothing" would require significant losses for the owners. Not all of them are likely in a position to withstand that, especially with their other businesses likely hurting as well.

No, that's what the escrow is for. Player salaries are tied to league revenues - they only get their full salaries if revenue reaches a certain point.

Keeping the cap where it is, and increasing the escrow would help protect league profits, and player salaries.

[PaulieWal]

Nah, I think the real question is which teams borrowed too much money and cannot afford their payroll? They will be the ones dumping major salary in a hurry. Would anybody be shocked to see the Rockets cut their salary cap to the minimum salary floor this season? What other teams are in financial trouble?

well that is a given and you already have that answer

We know the Rockets but we don't know which other ones. Outside of the Lakers, Knicks, and Bulls which teams do we really know are in good shape financially?

The Raptors are definitely not going to be hurting for cash with their ownership group.

[baldur]

windhorst usually has no idea what he is talking about.

[Texas Chuck]

well that is a given and you already have that answer

We know the Rockets but we don't know which other ones. Outside of the Lakers, Knicks, and Bulls which teams do we really know are in good shape financially?

The Raptors are definitely not going to be hurting for cash with their ownership group.

The Toronto Raptors Basketball Club* probably will be. Now the owners can invest some more capital back into the business easily enough, but my guess is it would be in the forms of loans that would be re-paid and probably with interest. Almost every team outside of the Lakers and maybe the Knicks are likely to suffer over the next year plus. We've already seen teams do a lot of tightening of the belts with many employees losing their jobs or taking pay cuts.

I think Toronto faced a difficult off-season with so many key players free agents and them really wanting to pursue Giannis in 21 while trying to stay competitive knowing Lowry probably doesn't have a lot of high level seasons left. My thought was they probably keep FVV, see which of Gasol/Ibaka will take the cheapest one year deal(almost certainly Marc) and view the 2nd round as a good result with a plan of adding Giannis and Lowry taking a big paycut after next season.

Now I think it more likely FVV walks and they let both bigs go--unless Gasol stays really cheap, and use their cap space to pick up assets from tax teams looking to trim payroll. Maybe even look for a Lowry trade if he wants to go play for a contender.

I definitely think they are impacted here.


*I don't actually know the official name of the organization

[PaulieWal]

We know the Rockets but we don't know which other ones. Outside of the Lakers, Knicks, and Bulls which teams do we really know are in good shape financially?

The Raptors are definitely not going to be hurting for cash with their ownership group.

The Toronto Raptors Basketball Club* probably will be. Now the owners can invest some more capital back into the business easily enough, but my guess is it would be in the forms of loans that would be re-paid and probably with interest. Almost every team outside of the Lakers and maybe the Knicks are likely to suffer over the next year plus. We've already seen teams do a lot of tightening of the belts with many employees losing their jobs or taking pay cuts.

I think Toronto faced a difficult off-season with so many key players free agents and them really wanting to pursue Giannis in 21 while trying to stay competitive knowing Lowry probably doesn't have a lot of high level seasons left. My thought was they probably keep FVV, see which of Gasol/Ibaka will take the cheapest one year deal(almost certainly Marc) and view the 2nd round as a good result with a plan of adding Giannis and Lowry taking a big paycut after next season.

Now I think it more likely FVV walks and they let both bigs go--unless Gasol stays really cheap, and use their cap space to pick up assets from tax teams looking to trim payroll. Maybe even look for a Lowry trade if he wants to go play for a contender.

I definitely think they are impacted here.


*I don't actually know the official name of the organization

Good points. BTW isn't Gasol going back to Europe?

Also, MLSE, the ownership group of Raptors has been one of the most profitable in the league and is majority owned by two of the biggest companies in Canada. There will be some pain for sure but overall they can definitely weather a 2 or 3 year downturn like a Ballmer. But most teams won't have that luxury was my point.

[HollowEarth]

This is all speculation, but I wonder if there's a situation where some of the role playes follow Mirotic over to Spain if the pandemic is still disrupting North American sports. Is Australia doing regular arenas yet?

[DoItALL9]

Make the cap drop happen 5 years out where no contracts have been written yet.

Sent from my LM-G710 using RealGM mobile app

[vxmike]

If it means players can't go form their own teams, I hope this is true

Players are going to go where they want regardless. If the cap drops to 90 million and a guy like Gallo is looking at a minimum contract wherever he goes, where do you think he's going?

Yeah this makes it easier for top teams to get better talent when there’s no cap space. It’s why the decent minimum guys always end up on contenders. When everyone but the tankers only has the MLE it’s going to net a good player.

The Lakers will probably get the best MLE player on the market and it’s a guy who probably would have signed for $15m with a larger cap.

[Fencer reregistered]

Apologies for not reading the thread, but:

All the recent reporting has said the cap will stay artificially flat and the players just won't get all that money, via an escrow mechanism. Why, after all that, did Windhorst come out with this contrary take?

[Warriorfan]

Different teams have different financial situations.

Jordans main business and source of valuation is the team.

Lacob of the Warriors only owns 26% of the team and has the highest pct.

I think NBA teams will be attempting to operate at 100 million just above the floor targetilting at 5hr 2021 free agency

[Midw35t]

NBA owners care if they lose money, and there’s no guarantee we get NBA ball in March or April. There’s no guarantee we get a 2021 season. Players don’t want to do a bubble and lots of owners can’t afford to pay the salaries with no revenue from ticket sales. COVID-19 spreads worse in the winter and as cases get better we loosen restrictions and then cases get worse.

You've lived through Covid-19 in the winter?

People just should accept that it is not as bad as you have been told.

https://www.google.com/amp/s/www.technologyreview.com/2020/10/08/1009650/winter-will-make-the-pandemic-worse/amp/

There’s lots of things I haven’t lived through, but I can still post about. I post about the NBA even though I’ve never played in the NBA.

Are you an expert in viruses?

It is fearmongering.

Less than 2% of our population have been infected. Less than 0.08% have died "due to covid" Not to mention hospitals and nursing homes falsely attributing deaths to covid to garner $.

The biggest rates of death fall on shutting down healthcare on other existing problems.

It is not this death sentence that you think. It is a distraction.

I would be more frightful of getting the annual flu this winter.

Super surprising that none of the prominent NBA figures who get tested daily have died, or have been even remotely dire and sick. Or that our 70 some year old president could be "cured" in a matter of days.

You have a better chance of dying tomorrow while driving, or falling and splitting your head, or having any fluke injury, than you do of covid.

Quick reminder to everyone to not derail this topic into a covid theory discussion. Find another board for that. Do not continue this discussion.
- jamaalstar21

[Saint Lazarus]

I personally think they should just let it ride out, and let the cap drop. Do we really care that owners and players will "lose money"? This is millionaires vs. billionaires. Let the cap go down, but they should keep the lux tax where it is.

As a Bulls fan, I am just bummed (but understand) if we don't see NBA ball again until March or April.

Imagine wanting a volatile cap scenario where a super team can snatch KD because the cap jumps up and down.

[Teal25]

The NBA lost so much money and will lose even more with no fans in arenas. The best thing for both sides is to come to an agreement. The projected salary cap for next season was 115 million. I think a fair agreement would be setting the salary cap at 86.25 million(25% of the projected salary cap) and cutting players salary by 25% to make it even.

[hippesthippo]

What like the owners havent put a ton of financial risk into the league already? Ya let's make it so the owners take the entire financial hit while the players don't get hit... All parties in this will see the consequences of a financial hit.

Lol owning an NBA team is not a risky investment. It's a surefire way to turn millions of dollars into billions of dollars over a decade or two. That's insane and has made a lot of megamillionaires/billionaires a lot of money. The narrative that owning an NBA team is some kind of huge risk is just not true.

That's why billionaires line up to own NBA teams...

Okay so you expect these businessmen to drop billions into a team, then have them be responsible to artificially inflate the salary cap so the players salaries dont get affected? How long should they be expected to do that? And guess what it wouldnt just be them putting money up to inflate the cap, they would be losing a ton more money in valuation for their team. Because guess what happens to the teams value for the league once revenue for the league begins to take a major hit, the valuation of the teams will begin to take a major hit. The main reason why we have seen such a sharp spike in NBA team value over the last decade, has been because the NBA saw a massive spike in revenue. Once that revenue arrow starts dropping, so does the teams value.

Franchise values aren't tied directly to revenue. They themselves are artificially inflated by the limited number available and the desire to own one.

Yes, that last TV contract played a part, but franchise valuations have never made any sense across all sports.