The entire world is under crisis right now, not just physically with the COVID-19 coronavirus killing nearly 275,000 people, but also financially. Companies are unable to stay open and are simply trying to stay afloat long enough until they can resume business as usual. No business is exempt from this, including professional sports.
We previously reported that Shaquille O’Neal believes that multiple NBA teams could be for sale during this crisis. Now, salary-cap expert Larry Coon is saying that expansion could be an even better way to reduce the strain on owners’ pocketbooks.
“The league has expanded its line of credit, and I assume teams are using it,” Coon told Bleacher Report. “Here’s an opportunity to erase that debt.”
ESPN’s Adrian Wojnarowski reported in mid-March that the NBA would raise its line of credit to $1.2 billion in order to “aid the league in handling its expenses through what is expected to be an extended shutdown.”
“You’re making a permanent solution to a temporary problem,” Coon said, adding that it “might help owners who are feeling the impact of the economic shutdown, outside of basketball.”
The old argument against expansion, of course, is that it’s splitting the pie into smaller pieces. Instead of owners getting 1/30 of revenue, they would be getting 1/32. “Long term, they’d be diluting their share of the national television deal and other revenue-sharing mechanisms, but that’s inevitable if the league eventually chooses to expand,” Coon said. My retort to that has always been, “but what if it’s a bigger pie?” Seattle would almost assuredly be a money maker.
As far as the NBA “eventually choos[ing] to expand,” Commissioner Adam Silver said all the way back in 2017 in an interview with Blazers guard CJ McCollum, that “it’s inevitable at some point, we’ll start looking looking at growth of franchises.” He also added that “Seattle will no doubt be on a short list of cities we’ll look at.”
Now could be the time for that inevitability. Even if owners will eventually be sharing that pie with two more mouths, they would get a windfall of cash right now, which could be a godsend for several teams. The average NBA team, according to Forbes, is worth $2.1 billion. It’s safe to say that an expansion fee would be at least that. That’s $126 million in each owner’s pocket.
What might the players say about this? Well, the Players Union famously fought for 50% of BRI, or Basketball Related Income, in the last CBA negotiations. Right now, BRI is almost non-existent and 50% of 0 is 0. Coon estimated the league could lose close to $1.5 billion in income this season alone. That’s roughly $750 million in lost revenue for the players. While the players wouldn’t see any of that expansion fee, there would be up to 34 (assuming the NBA expands by two) new roster spots open.
“Two more teams? That’s another 30 jobs,” one team executive noted. “That’s a win for the [players] union.”
As Coon said, this could be a permanent solution to a temporary problem. With the current state of things, expansion could be a way to stop the hemorrhaging.