The N.B.A.’s revenues are apparently booming right alongside the broader economy.
During the negotiations that ended the lockout in December 2011, the players union and team representatives jointly created revenue forecasts for the league that extended from the 2012-13 season all the way out through the 2020-21 season.
Those forecasts are quite important because they form the basis off of which to determine how the league’s revenues earned in the years to come are split between the players and owners. Starting in 2012-13, players are guaranteed to receive 50% of those forecasted revenues, plus (or minus) 60.5% of the amount by which actual revenues exceed (or fall short of) those forecasts, with a lower limit of 49% of actual revenues and an upper limit of 51% of actual revenues.
When the accountants tabulated the results for the 2012-13 season last July, they determined that the league earned $4.293 billion in revenue, which, despite representing a massive 12% increase over the last full N.B.A. season in 2010-11, fell short of the initial forecasts by $15 million. That shortfall meant the players were only entitled to 49.96% of revenues.
On the basis of these stellar yet slightly disappointing results, the league issued official projections for the 2013-14 season in July, off of which the current salary cap and luxury tax are based, of $4.471 billion, a projected annual growth of 4.1% – again an impressive number, but $10 million short of initial forecasts. That shortfall, if it holds true when revenues are finalized in July 2014, would mean that the players are only entitled to 49.98% of revenues.
At the same time, the league issued preliminary guidance for the 2014-15 season, so as to help its member teams in planning for the future. Preliminary guidance is only meant to be illustrative, and is of no binding effect until it becomes an official projection one year later. The cap and tax guidance provided were $62.5 million and $76.1 million, respectively, which was based on a preliminary 2014-15 revenue projection of $4.672 billion, a 4.5% annual increase over the $4.471 billion projection for this season. That figure is actually $12 million greater than the initial forecast from December 2011. If it were to hold true when the numbers are finalized in July 2015, it would mean that the players would be entitled to 50.03% of revenues next season. But there’s a long way to go between now and then – almost two full years.
Just a week into the season, the league has already provided its first update. It’s good news. Projected revenues for the 2014-15 season have jumped from $4.672 billion to $4.700 billion, which is now a whopping $40 million higher than originally forecasted in December 2011. If that holds true when the numbers are finalized in July 2015, the players would be entitled to 50.09% of revenues for the 2014-15 season.
More importantly to Miami Heat fans, as the revenue estimates for the 2014-15 season increase, so too do the cap and tax projections, which are always based on revenue projections taken in the first week of July for the upcoming season. They started at $62.5 million and $76.1 million, respectively, in July. They’re now at $62.9 million and $76.6 million. That may not sound like such a big increase, but that slight boost alone could produce tax savings to owner Micky Arison of approximately $2 million or more. And things figure to only get better from here.
The salary for this season is $58.679 million, and the luxury tax level is $71.748 million. It would now appear that, despite the fact that the cap and tax figures were calculated based on 51% of revenues in the last collective bargaining agreement and are now based on just 44.74% of revenues, a 12.27% reduction, because league-wide revenues are rising so sharply, we are going to achieve all-time record cap and tax levels next season, shattering the old records by a massive 7% each.
The N.B.A. is certainly thriving. While individual teams like the Heat may choose to lose money in support of a winner, the league as a whole would appear to be a massive profit machine. And things figure to get a whole lot better in the near future. The N.B.A.’s national television contracts with ESPN/ABC and TNT, which pay an average of $930 million annually over the life of the eight-year contract, extends through the 2015-16 season. Some industry experts expect that figure to at least double when the new deal is finalized. That could add around a billion dollars in incremental revenues every season, which would have a profound impact on cap and tax figures down the road. At least for now, the future appears bright for the country’s greatest professional sports league.
Those among us who have been biding our time until the start of the 2013-14 NBA season by creating hypothetical machinations whereby the Miami Heat maintains and extends its current dominance into the 2014-15 season and beyond are quietly getting some good news.
League-wide spending is down.
Which means salary cap and luxury tax projections for next season are staying up.
The league is currently projecting a 2014-15 salary cap of $62.5 million and a tax level of $76.1 million. Pending league-wide revenue performance during the course of the season, these projections seem fairly safe for now.
The cap and tax levels are set by calculations based on projected amounts for revenue (termed BRI) and benefits for the upcoming season. The projected BRI is negotiated by the league and players’ association. Each year the sides meet to agree on an amount. Barring any adjustments that are necessitated, they typically use the projected revenues from national broadcast rights (which is determined in advance), plus the BRI for the previous season (other than national broadcast rights) increased by 4.5%.
The salary cap calculation takes 44.74% (53.51% for the tax level) of the league’s projected BRI, subtracts projected benefits and then divides the total by the number of teams in the league. Adjustments are then made if total salaries and benefits paid to the players in the season prior were significantly higher or lower, as a percentage of league-wide revenues, than was agreed in the CBA.
The current 2014-15 projections assume a 4.5% increase in revenues. They are based on an estimated $4.672 billion of projected BRI and $217 million in projected benefits (including $47 million of benefits, or 1% of BRI, to be allocated to the player benefits pool). They assume no salary-related adjustments.
The rest is basic math. Simply multiply the projected BRI by the respective percentages for the cap and tax threshold, subtract projected benefits, and divide the difference by 30. That’s it. Read more…
Update (10/26): The Heat did indeed sign Michael Beasley to a make-good, training camp contract on September 11 and Beasley has made the opening night roster. His contract remains fully non-guaranteed until January 10, which essentially means he gets paid by the day.
Who is Michael Beasley? Can he help a team win basketball games?
It’s all a matter of perspective.
The Phoenix Suns would tell you rather emphatically that he’s toxic.
They’ll point to his struggles off the court.
Beasley was arrested in August for suspicion of drug possession after an officer detected the smell of marijuana coming from his vehicle, the third of three serious legal issues this year alone for the troubled forward who has yet to be cleared in a sexual assault case being investigated by Scottsdale police. In January, a woman accused Beasley and another man of assaulting her in Beasley’s home. No one has been charged. Just two weeks after the claim was made, police cited Beasley for several offenses including speeding, driving on a suspended Arizona license, driving without a vehicle license plate, and driving with an expired registration. Beasley was reportedly traveling 71 miles per hour in a 45-MPH zone at 1:10 am in a Mercedes which had a gun with one bullet loaded inside the chamber.
They’ll point to his lack of production on the court.
Beasley’s production has declined in each of his five seasons in the league. He had his worst year yet for the Suns last season, scoring just 10.1 points per game on 40% shooting as the team’s projected number one scoring option and putting out virtually no effort on defense. His struggles individually contributed largely to the failures of the team as a whole, causing the Suns to spiral to the fourth worst record in the league, leading to the firing of head coach Alvin Gentry midway through the year, and when things had completely fallen apart by year’s end, resulting in the firing of General Manager Lance Blanks.
The Beasley free agent signing was a disaster for the Suns franchise. They waived him yesterday, less than 14 months after he signed his three-year, $18.0 million contract with a promise to turn his life around. He was set to make $6.0 million in 2013-14 and $6.3 million in 2014-15, although only $3.0 million was guaranteed in the latter year.
In conjunction with his release, Beasley agreed to a $7.0 million buyout. He will be paid $4.7 million of that total by the Suns this season, and an additional $778K for each of the next three seasons.
Suns President Lon Babby issued a statement upon Beasley’s release that read, “The Suns were devoted to Michael Beasley’s success in Phoenix. However, it is essential that we demand the highest standards of personal and professional conduct as we develop a championship culture. Today’s action reflects our commitment to those standards.”
New General Manager Ryan McDonough added, “We have high standards for all of our players. We expect them to represent the team and the community in a positive manner both on and off the court.”
It was the equivalent of the Suns telling Beasley directly “We don’t want you anywhere near our franchise anymore.”
Beasley has never lived up to his selection as the No. 2 overall pick in the 2008 NBA draft, either personally or professionally, nor has he lived up to the $28.0 million he’s guaranteed himself thus far into his NBA career. In this context, it would appear as if the logical choice would be for him to simply fade away from the league in a cloud of marijuana smoke.
The Miami Heat wanted James Ennis to play in the D-League. But he has his family to worry about.
Ennis, taken with the No. 50 pick by Atlanta in June’s draft and then traded to Miami, will play next season for the Perth Wildcats in Australia. But Ennis said Sunday that wasn’t the Heat’s preference.
The Heat wanted the swingman not come to training camp, and hopefully join the D-League’s Sioux Falls (S.D.) Skyforce. The Heat recently entered into a sole-affiliation agreement with the team, so that would have enabled them to look after Ennis closely with coaches they control while retaining his rights.
But through an odd twist in D-League player acquisition rules, there was no guarantee that Ennis would have been eligible to play for the Skyforce. Most D-League newcomers are required to go through the D-League draft, where they can be selected by any D-League team. While the Heat could still have monitored him, they would have had no influence over such things as playing time, position, or areas of focus for development.
There are exceptions in certain circumstances.
Players with N.B.A. contracts who are waived during summer league, if they first signs a standard D-League contract, can be directed to a team’s D-League affiliate utilizing the new affiliate player rules. However, this was not a viable option for the Heat because it would have required the team to relinquish his exclusive draft rights.
Players with N.B.A. contracts who are retained during the regular season can be assigned directly to the team’s D-League affiliate. But the Heat didn’t want Ennis to be in the D-League while making an N.B.A. minimum salary of $490,180, which would have counted against their maximum 15-player roster and led to them to pay additional luxury tax.
Ennis wasn’t interested in playing the D-League anyway, as such players don’t make more than $25,000 for a season unless they are on an N.B.A. contract. He will make much more money in Australia. His agent, Scott Nichols wouldn’t give precise figures, but said his client’s deal with the Wildcats is worth “six figures.”
“They wanted me to go the D-League,” Ennis said. “I basically put my family first. My family is struggling (financially), and I want to help support them. So that’s why I’m going (to Australia).” Read more…
Greg Oden will resume his NBA career as a welcomed member of the Miami Heat.
The No. 1 pick from the 2007 NBA Draft, who has been out of the league since a Dec. 5, 2009 appearance with the Portland Trail Blazers, agreed to terms with the two-time defending champions on Friday, ending months of suspense over where the center whose career has been decimated by a series of knee problems would be attempting his comeback.
The Heat were long perceived as the frontrunners to land Oden, and now have their coveted 7-footer to help them try for a third straight title. Oden has agreed to a one-year deal worth approximately $1 million.
Those who watched Oden during his one season at Ohio State need no reminder of what he’s capable of when healthy. His NBA career, limited to just 82 games over five seasons, has been far less substantive. But he has nonetheless dominated in his short bursts.
Through the first 21 games of the 2009-10 season, Oden’s most recent in the NBA, he averaged 22.3 points, 17.0 rebounds, and 4.6 blocks per 48 minutes while shooting 61% from the field, including a 13-point, 20-rebound, 4-block performance against Miami in his last full NBA game. He was looking very much like the game-changing talent he was supposed to be. He got into foul trouble a little more than he should have, but he showed enough flashes of brilliance in his modest playing time to convince most NBA observers that he was well on his way to living up to the burden of being a first overall draft pick.
That’s exactly the sort of production the Heat covets at the center position.
Oden wasn’t courted by the Heat because they wanted something more than the back-to-back championships to rub in everyone’s faces. They signed him because they need a center. They signed him because of Joakim Noah, Roy Hibbert, Brook Lopez, Marc Gasol, Dwight Howard, and Tim Duncan. They signed him because Chris Bosh is too frail and Udonis Haslem is too short. Oden has legitimate value.
Of course, even the most optimistic Oden fans will concede that the Heat are not getting the former Greg Oden. His past accomplishments hold little predictive value for his return to the court more than three years later. His injury history is unprecedented for a pro athlete.
Maybe it has just been a series of highly unfortunate events, connected to each other in a way that a small change – whether it be to his gait, to his weight, or whatever else – can fix. Or maybe they’re interconnected, the continued failings of a body that just can’t cope with the stresses professional basketball places upon it, dating back to a broken hip in his childhood and continuing indefinitely through a kinetic chain of side effects.
Most believe it’s the former. But if it’s the latter, the rest of the league is in serious trouble. Read more…
The speculation surrounding the fate of Greg Oden is intensifying.
One microfracture surgery is usually enough to scare most teams off, let alone three in less than five years. But the former No. 1 pick is not short of suitors as he attempts his latest comeback.
The 25-year-old worked out for Miami, San Antonio, New Orleans, Atlanta, and Sacramento in Indianapolis last week. He reportedly looked “lean” and moved “quite well.”
Teams will be asked to make formal offers early this week.
Oden is thought to be favoring Miami and New Orleans. New Orleans can offer as much as the $2.474 million remaining of its Non-Taxpayer Mid-Level exception. The Heat can offer up to the $3.183 million Taxpayer Mid-Level exception.
Miami would love to get him for the minimum, but they may be required to match a potential Pelicans bid. In Miami’s case, the actual cost would be much more than for the Pelicans. A $2.474 million offer would cost the Heat $8.659 million when considering the tax.
New Orleans could further attempt to out-muscle Miami by offering a guaranteed two-year contract. It would be a calculated gamble for the Pelicans, at a total cost of $5 million. For the Heat, the addition of a second year at those levels would cost, at the very least, another $10 million under the current construct. That’s two years and roughly $19 million.
That’s a lot for Miami to spend on a man who has thus far only ever proven that he is very tall, that he is very talented, and that his body has been unable to withstand the rigors of NBA play. There’s simply no way the Heat is going to offer it up without some key protections — among them that their obligations be reduced in the event of re-injury and that Oden be unable to opt out after just one season. But even if they do get those protections, even if they do offer up the contract, even if Oden does accept, and even if he does prove healthy, it’s still monumentally expensive for an owner trying desperately to keep his team together.
There is one clear way in which to lower the team’s total cost no matter what type of contract the Heat offer – trade Joel Anthony. Read more…
To some extent, the Miami Heat’s back-to-back NBA championships validate the organization’s “position-less basketball” approach. Success is sports’ ultimate argument-ender. It sets everything right.
But Pat Riley knows what everybody else does. If the Heat want to win a third straight NBA title, it might be important to get some size.
His primary target is Greg Oden, because he knows a true center – particularly a dominant inside presence – still has a place, even here. He witnessed what Indiana and then San Antonio did to the Heat in the playoffs, to push Miami to seven games last season largely because of low-post presence and bigger frontcourts. He knows what Chicago could do.
Despite the clear need for depth at the center position, it has been a quiet offseason for Miami. It has felt at times that the Heat have thus far moved at a glacial pace to start the summer. Fans have been waiting for some action, something to celebrate.
In recent summers, Miami has been able to attract notable free agents such as Shane Battier and Ray Allen despite their limited cap space, but they have yet to ink even a single outside free agent yet this summer. Thus far, the team’s biggest addition has been second-round pick James Ennis, who was acquired in a trade on draft night.
The tension in South Florida surrounding Oden’s fate is palpable. The idea of Oden signing with the Heat has been a dream for some for many months, if not years.
Acquiring Oden would be a major development. But it won’t be easy.
Other teams in the mix include Atlanta, Dallas, New Orleans, Sacramento and San Antonio. Boston, Charlotte, Cleveland, Indiana and Memphis have since fallen away as contenders. That more than one-third of the league has shown interest in Oden speaks volumes not only as to the level of talent he once had, but also to the contributions those in a position to know still believe he may be able to provide. Read more…
Mike Miller is now a member of the Memphis Grizzlies. He has reportedly committed to sign a one-year, minimum salary deal with the Grizzlies.
Despite his role in helping Miami win back-to-back championships, Miller was waived via the amnesty provision last Tuesday in a financially motivated move that saves the Heat $16.4 million on luxury-tax payments next season, and upwards of $40 million over the next two seasons.
After clearing waivers, Miller became a rather hot free agent target. The Denver Nuggets, Houston Rockets, Oklahoma City Thunder and Memphis Grizzlies, among others, were all said to be competing for his services. Most, if not all, were offering a minimum salary contract but pitching the opportunity to take on a prominent role as a perimeter specialist on a championship contender.
From a financial perspective, the Heat would have preferred that Miller be claimed on amnesty waivers. Doing so would have reduced the Heat’s obligations dollar-for-dollar by the amount of any partial bid.
Rumblings began to circulate last Wednesday that Cleveland was interested in claiming Miller, followed conspicuously by reports of the veteran small forward needing back surgery or even contemplating retirement. The Cavs were thought to be eyeing Miller as a further inducement for close friend LeBron James to sign a free agent contract in summer of 2014. The back surgery rumors appear to have been a smokescreen in order to make sure he cleared waivers. Miller wanted to play for a contender. The Cavs aren’t likely to be a contender.
It was inevitable. But it is still painful.
He made a ridiculous seven 3-pointers against the Oklahoma City Thunder in the clinching game that gave the Miami Heat the 2012 NBA championship. He made one of the most iconic 3-pointers, shoeless, in an elimination game and an incredible 11-18 overall against the San Antonio Spurs that ultimately gave the Heat their second consecutive title a year later.
Now the Heat’s affable 3-point marksman is gone, essentially gone for good, after three seasons of playing alongside LeBron James, Dwyane Wade and Chris Bosh in Miami.
The Heat invoked their one-time right to waive a player through the NBA’s amnesty provision, electing to utilize it on 33-year-old Mike Miller in advance of Tuesday’s 11:59 p.m. deadline.
It had to be done. Despite his clutch and mechanically perfect shooting stroke, Miller was the fourth highest paid player on the Heat’s roster behind James, Bosh and Wade. But there were many months during Miller’s three years in Miami when he wasn’t even the eighth man in the rotation.
The Thunder trade of James Harden, the New York Knicks refusal to match the offer sheet of Jeremy Lin, the Memphis Grizzlies trade of Rudy Gay, and now the Heat amnesty of Miller were all done for the same reason: the new CBA in operation. Read more…
The Bird is back!
Chris Anderson will receive a one-year minimum salary deal worth approximately $1.4 million from the Miami Heat, with a player option on a second year.
When the Heat originally signed Andersen last January, they were hoping for an extra body off the bench who could bring energy, rebounding and defense. The veteran forward/center gave them much more than that.
Andersen’s “Birdman” infectiousness helped energize the Heat during their franchise-record 27-game winning streak and throughout the playoffs. He has become known in South Florida for his shocking efficiency, wildly athletic dunks and reckless intensity. What he lacks in unpainted skin he more than makes up for with a floor-burn-inducing style of play and an arsenal of eccentricities that have won over fans across the region. The decibel level at home games soared when he checked his human-wrecking-ball act into the game.
Fans spiked their hair mohawk-style, fake-tattooed their bodies. The level of detail – from the neck tattoo to the earlobe stars to the headband to the sleevework – was, at times, jaw-dropping. They imitated his signature Birdman hand gesture by interlocking their thumbs and flapping their fingers whenever Andersen threw down one of his high-flying dunks. He averaged just five points and four rebounds on the year, in less than 15 minutes of playing time, but seeing that toothy grin after he crashed into the stands trying to save a ball he had no shot at saving was always worth the price of admission.
Fans showed their love. The Birdman returned the favor, accepting a reduced salary while he certainly could have commanded better deals elsewhere. He simply couldn’t bear to leave such a good situation in Miami.
“It feels like as soon as I got into the city, I had nothing but big support for me,” he said. “Everywhere I was going, they were rooting me on. To be able to come in here midseason and collaborate with these guys and play for such an extraordinary, talented team and play with some of the best all-time players, it’s amazing.” Read more…