It changes everything. From player salaries to team valuations to the 2017 labor talks. With $2.7 million, on average, going into NBA coffers, that means each team will wind up with $89 million annually. That's up from $31 million in the current deal. For the Nets and the three other ABA teams --the Spurs, Pacers and Nuggets-- the annual take was less because of the legacy deal the former owners of the Spirits of St. Louis got off the top. Until this year, each of those teams got only $26.5 million. So for the Nets, the deal is more than three times larger.
Let's break it down...
The salary cap and the pursuit of KD
It is always difficult to draw conclusions from simply looking at how much salary the Nets will have on the books when the deal kicks in. Sure, Deron Williams is the only big contract currently on the books in 2016, the first year of the TV deal and the year Kevin Durant, among others, is available. But let's suppose Brook Lopez has a good year in 2014-15. Are the Nets going to let him walk if he opts out of his deal in July ... when they will have his Bird Rights?
Not to mention that if he does play well, Lopez now has much more incentive to opt IN to his player option with Nets this summer It would put him in the open market at 28 in the summer of 2016.
And a lot of people on the Nets think Mirza Teletovic is bound for a breakout year. If they're right, do you let him go? Moreover, how do you attract a superstar when your roster is bare? The roster is a dynamic thing, not static. It's affected by a lot of things, not just the desire to sign one player two years from now.
That said, the Nets should have flexibility over the next few years they don't have now. Will it be all about Durant? Maybe, but that's not the issue. The issue is being able to make deals, sign free agents, buy draft picks and otherwise work the angles to get what you want accomplished. The Nets already have a great owner (more on that soon), a great arena in the biggest market. What they don't have is flexibility. As one executive told us not long ago, "Are we upset that we don't have flexibility with Carmelo and Kevin Love available? Yes."
As for ownership, Mikhail Prokhorov is in a better position today than he was yesterday. Of course you could have said that every day since he bought the team for $223 million in cash on May 10, 2010! One NBA-savvy investor told us a few weeks back that the new TV deal was already priced into team valuations and so don't expect a big upswing ... unless the TV deal is a lot bigger than expected. Indeed, it is. With rising revenue from the national TV deal --and an expectation of more cash out of the local TV deal-- plus the desire to gain control of their payroll, even the Nets could become profitable!
If, as we are told by multiple sources, ownership's preferred way to gain value from the Nets, without losing control, is to combine assets with Guggenheim, then this helps in negotiations with the Dodgers owners. Simply put, as with any partnership, the breakdown of who gets what is dependent on what each partner brings to the deal ... and an agreement on how much each is worth. The Nets are now worth more, maybe that $1.7 billion we reported last week, meaning they could get a bigger piece of the final partnership. That should make the "combination of assets" --the merger-- more amenable, more likely. Guggenheim controls a number of high-priced assets --the Dodgers, Dodger Stadium, the land surrounding Dodger Stadium, the LA Sparks, a piece of Dick Clark Productions-- that would seem, on paper, to be more valuable than what Prokhorov and Bruce Ratner can throw in --the Nets, Barclays Center, a rehabbed Nassau Coliseum, etc. Every little bit helps in negotiations like these.
If Prokhorov ultimately wants to sell, then it's more cash. And in a weakening Russian economy, with the ruble in a steep decline and companies facing a liquidity crisis as western banks stop lending, cash is good.
What about the prospect of a lockout in 2017?
You'd think this would cure that, but the players union, now completely rebuilt with Michele Roberts replacing Billy Hunter, believes it got taken, badly, in the 2011 CBA talks and expects the owners will present a hard line again in 2017. Said Deron Williams after practice Monday, "I think before this happened [a potential work stoppage] was a possibility. I think it’s pretty much going in the same direction it was last time. I feel like we made a lot of concessions last time ... it’s going to be hard for us to do that again."
LeBron James even referenced Mikhail Prokhorov in his argument that it's time for the owners to stop pleading poverty.
“The whole thing that went on with the last negotiation process was the owners was telling us that they were losing money,” James said. “There’s no way they can sit in front of us and tell us that right now after we continue to see teams selling for billions of dollars, being purchased for $200 million, (selling) for $550 (million), $750 (million), $2 billion. And now (Mikhail) Prokhorov is possibly selling his majority stake in the Nets for over a billion. So, that will not fly with us.”
Well, the price of tickets continues to rise, as does the price of concessions. Will this slow that growth? It might. TV rights deals are the biggest source of revenue for any NBA team. Local TV deals, season ticket sales, suite sales, merchandising all come after that guaranteed money from ESPN and TNT. Do we expect prices to drop? Nope, especially if the team is good. Hopefully, the team is good.
Expect the Nets to be hard-line in their renewal talks with YES, now controlled by FOX. The Nets get a pittance compared to other NBA teams in big markets. While all the other metrics for the Nets --merchandising, sellouts, suite sales-- are on the rise, their ratings didn't really pop last year after a nice uptick their first year in Brooklyn. That needs to happen. Still, the potential is great and the Nets are pressing that case.
Here's what others think...
- What does the new NBA deal mean for the Nets? - Devin Kharpertian - The Brooklyn Game
- How the NBA’s New TV Deal Could Blow Up the Salary Cap - Zach Lowe - Grantland
- NBA’s New TV Deal Could Blow Up the Salary Cap - Mike Mazzeo - ESPN New York
- D-Will on CBA & 2017: Hope guys are preparing - Mike Mazzeo - ESPN New York
- NBA - Assessing impact of TV deals on salary cap, player salaries - Larry Coon - ESPN Insider
- Owners Can’t Line Their Pockets Now and Cry Poverty Later, LeBron James Says - Harvey Araton - New York Times
- Deron Williams says players should prepare for another lockout as NBA announces new $24 billion TV deal - Stefan Bondy - New York Daily News
- NBA reaps massive windfall in new TV deals - Tim Bontemps - New York Post
- Deron Williams Warns of Another NBA Work Stoppage - Alex Raskin - Wall Street Journal
- NBA's huge TV deal means more for players and owners to fight over - Jeff Zillgitt - USA Today