Category: Orlando Magic Blog

The following is an official release from the NBA:

The information from Forbes that serves as the basis for this article is inaccurate and we do not know how they do their calculations. Forbes does not have the financial data for our teams and the magazine’s estimates do not reflect reality.

Precisely to avoid this issue, the NBA and its teams shared their complete league and team audited financials as well as our state and Federal tax returns with the Players Union. Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several years.

The analysis that was posted this afternoon has several significant factual inaccuracies, including:

“(The NBA) is a fundamentally healthy and profitable business”

• The league lost money every year of the just expiring CBA. During these years, the league has never had positive Net Income, EBITDA or Operating Income.

“Many of the purported losses result from an unusual accounting treatment related to depreciation and amortization when a team is sold.”

• We use the conventional and generally accepted accounting (GAAP) approach and include in our financial reporting the depreciation of the capital expenditures made in the normal course of business by the teams as they are a substantial and necessary cost of doing business.

We do not include purchase price amortization from when a team is sold or under any circumstances in any of our reported losses. Put simply, none of the league losses are related to team purchase or sale accounting.

“Another trick…moving income from the team’s balance sheet to that of a related business like a cable network…”

• All revenues included in Basketball Related Income (“BRI”) and reported in our financial statements have been audited by an accounting firm jointly engaged by the players’ union and the league. They include basketball revenues reported on related entities’ books.

“Ticket revenues… are up 22% compared to 1999-2000 season”

• Ticket revenues have increased 12% over the 10 year period, not the 22% reported.

“17 teams lost money according to Forbes … Most of these losses were small…”

• Forbes’ claim is inaccurate. In 2009-10, 23 teams had net income losses. The losses were in no way “small” as 11 teams lost more than $20M each on a net income basis.

“The profits made by the Knicks, Bulls and Lakers alone would be enough to cover the losses of all 17 unprofitable teams.”

• The Knicks, Bulls and Lakers combined net income for 2009-10 does not cover the losses of the 23 unprofitable teams. Our net loss for that year, including the gains from the seven profitable teams, was -$340 million.

“Forbes’s estimates — a $183 million profit for the NBA in 2009-10, and those issued by the league, which claim a $370M loss…”

• Forbes’s data is inaccurate. Our losses for 2009-10 were -$340 million, not -$370 million as the article states.

“The leaked financial statements for one team, the New Orleans Hornets, closely matched the Forbes data…”

• This is not an accurate statement as operating income in the latest Forbes data (2009-10) is $5M greater than what is reported in the Hornets audited financials.

Read fan reaction and discuss your own opinion in this forum topic.

The AP reports:

“It’s an odd position, when the game is the best it’s ever been, when the ratings are the highest they’ve ever been, when the excitement is the greatest it’s ever (been),” Players Association attorney Jeffrey Kessler said last week. “It’s sort of odd to see the owners say we’re going to destroy this game unless you change this whole system. Players just want to play.”

Nobody can predict when they’ll get that chance again. When the Dallas Mavericks finished off the Miami Heat on Sunday night in Game 6, it sent the NBA into a most uncertain offseason.

Owners and players are nowhere close on a new collective bargaining agreement to replace the one that expires June 30. Without a new deal, players say they have been told by the owners they will be locked out.

The NBA was reduced to a 50-game season by a work stoppage in 1998-99, and the loss of games is a threat now. Citing leaguewide losses of about $300 million this season, the league hasn’t budged on its desire for significant changes to the financial structure, ranging from reductions in the length of contracts and the amount of guarantees, to an overhaul of the salary cap system that would prevent teams from being able to exceed it, as they can now under certain exceptions.

And Stern said the record TV ratings and all the other positive attention the league has received doesn’t make him any more motivated to get this settled, since he’d want to do it anyway.

“I don’t need any external prod to want to be able to make a deal,” he said…

The sides are scheduled to meet twice this week and say they hope for frequent discussions before the end of the month. Should those fail, the NBA could follow the NFL’s labor situation right into the court system, which both sides say they want to avoid. So although a work stoppage in July wouldn’t seem to have much effect since games aren’t going on, Stern insists “we very much feel the weight of the deadline.”