Larry Coon (author of the excellent NBA Salary Cap FAQ) explains how far apart the players and owners are in the current NBA labor dispute, and uses the Nets’ books as an example:
In other words, $41.5 million of the Nets’ $49 million operating loss in 2005, and $40.2 million of its $57.4 million in 2006, is there simply to make the books balance. It is part of the purchase price of the team, being expensed each year. This doesn’t mean they cooked their books, or that they tried to pull a fast one on the players. It is part of the generally accepted accounting practice to transfer expenses from the acquisition to the profit and loss over a certain time period. However, it’s an argument that doesn’t hold water in a discussion with Hunter and the players association, who would claim that the Nets didn’t really “lose” a combined $106.4 million in those two years, but rather that they lost $7.5 million and $17.2 million, respectively.
The entire article is worth a read as we try to muddle our way through the posturing and get down to the real facts of the matter. But this excerpt pretty much explains why the NBA’s assertion (that 22 of 30 franchises are losing money) is misleading. Much of the ‘losses’ are costs associated with the transfer of ownership. Why should the players take on these costs? (Hint: They shouldn’t.)
