Revenue Sharing: Good for professional sports?
The central issue in the collective bargaining agreement (CBA) of every professional sport is how to share the revenues between the owners of the franchises and the players who play for them.
The owners will claim that they are assuming all of the financial risks and expenses with profit margins that are not proportional to the risks involved. The players will claim that they are risking their safety and future quality of life to perform for the owners. The reality is that without the owners, there would be no teams for the players to play for, and without the players, there is no product.
Within the framework of players’ compensation is the notion of guaranteed contracts. This is a critical piece of revenue sharing. Franchises in the NBA and MLB are losing revenue because of it. In the NFL, where only the very best players on teams are seeing significant revenue, there is clear financial solvency for each and every franchise. In addition, there are revenue sharing provisions among the 32 teams that minimize some of the risks for owners.
In the NBA, the players are fighting hard for 50/50 sharing on total revenues. This is a very fair division, but the main reason why the owners are reluctant to accept it has to do with the very viable risk of operating in the red with the even split. There are far more variables in the expense factors for the owners which creates a greater risk of losing money. Remember, the NBA’s richest franchises, the Knicks and Lakers, are not even worth what the NFL’s poorest franchise, the Bills, are worth. The NFL with the smallest profit margin is worth more than the richest NBA teams!
Follow Technorati