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Half the NBA Borrows Money to Offset Costs

Feb 26, 2009 – 1:35 PM
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Tom Ziller

Tom Ziller %BloggerTitle%

(See update at end of post. - TZ)

Last week, Sports Business Journal reported that the NBA is borrowing $175 million on behalf of 15 teams which have asked for help offsetting costs. While the league as an entity looks healthy, some teams are clearly suffering. Even Orlando, one of the new NBA darlings, needs cash and will take a $10 million loan from the pot.

The NBA has pointed at the ability to get a large line of credit as an indicator of the health of the league. But it's hard to ignore the fact that 15 teams need cash, even in a down economy. That's troubling.

Some, like my man Nate Jones, argue that the league needs stronger revenue sharing. The NBA lags far behind the NFL in revenue sharing. According to a 2008 report in the Indianapolis Business Journal, 75% of the NFL's revenue is sharing. Under the NBA's most recent plan, only 25% of revenue is shared.

It's good that the league is healthy enough to have credit as an option for teams waiting for a new arena (as in Orlando's case). But structural problems exist. I'm not sure increased revenue sharing is the solution, but the league should leave all options open. The NBA can't be at its best with so many teams in financial trouble.

UPDATE: The Associated Press published its story on the matter late Thursday, and the NBA noted that previous stories by SBJ and the Washington Times featured inaccuracies. According to the story, the NBA is expanding an existing credit store, and isn't meant specifically to help teams crawl out of the red in the short-term.
Filed under: Sports
Tagged: DavidStern