The Milwaukee Bucks and One Hell of a Dangerous Precedent

January 9, 2013; Oakland, CA, USA; Golden State Warriors vice chairman Vivek Ranadive (left) and recording artist MC Hammer (right) at Oracle Arena. You can’t touch this, Seattle. Mandatory Credit: Kyle Terada-USA TODAY Sports

When the NBA’s committee on relocation announced last week its recommendation that the Sacramento Kings be sold to a group that would keep the Kings in California’s capital city, it was bad news for the Bucks. It left thirsty a team with a definite NBA interest, an arena plan, and a well-heeled investor’s group on the prowl for a team. The Bucks, on the other hand, have the double whammy of a less-than-glamorous financial outlook and no concrete plans for an arena.

Today, the bad news got even worse.

According to the Sports Business Journal and the Sacramento Bee, Vivek Ranadive, the leader of the group to keep the Kings in place, made concessions in the deal with regard to the NBA’s revenue sharing agreement. In other words, they willingly ceded the one last remaining thread that gives the Sacramentos and Milwaukees of the league a pseudo-level playing ground on which to compete with the Dallases and New Yorks.  From the Sacramento Bee:

The Sacramento group, led by software tycoon Vivek Ranadive, told the NBA it would accept fewer revenue-sharing dollars while the team was still playing at Sleep Train Arena. Once the team moves into the proposed downtown arena, the Kings would take no money at all. The arena is supposed to open in 2016.

And what do you know?  The NBA was perfectly okay with this arrangement! Of course they were.

Part of the reason the collective bargaining agreement took so long to hammer out is that the interests of the NBA and its heavyweights were vastly different from those of the smaller-market teams. To end the lockout and get the league operating again, those cash-heavy outfits had to agree to share revenue with their cash-strapped cousins — and do it at historically high rates.  But by picking Sacramento over Seattle, and re-negotiating the CBA’s financial terms with Ranadive, the other teams of the league could potentially get a little bit of that money back.

Some estimates of the collective bargaining agreement put the amount distributed to the lowest-revenue teams at $16 million per season.  It’s a safe bet that the Bucks will be near that level, and that figure of $16 million represents about one-quarter of the payroll for a team near the salary cap.  The Bucks are a franchise that likely needs those dollars to meet its most basic operating costs.

It’s a dangerous precedent.  IF the Bucks face a future situation like the Kings’ current predicament where they need both new local ownership and a modern arena to replace the BMOHBC, and if Seattle or some other city steps up with a counteroffer, the Milwaukee side of the deal could feel the pressure to match Sacramento’s self-castrating gesture in order to sweeten their own proposal.  Egad.

But maybe in a small way, could it perhaps help Milwaukee?  If the revenue levies are pooled at the same rates, and if there is one fewer baby bird, mouth agape, on the receiving end, would the Bucks could get a higher portion of payout?  As it turns out, the CBA has a clause covering such undistributed funds, and the Bucks wouldn’t get a sudden windfall from such an arrangement.

Per the NBA CBA, parts II.B.4-5 on revenue sharing,

(4) Each non-taxpaying team will receive a 1/30th share of the tax payments.

(5) The remaining tax funds (“undistributed funds”) may be distributed to all teams in equal shares or used in such other manner (not payroll-based) as may be determined by the NBA (e.g., to fund a league program).

So that extra money may or may not float it’s way back to the other 29 teams, and if it does, it would go to ALL teams, not just the non-taxpayers.

All in all, it’s a disheartening revelation for the small-market teams, and most of all, for the Bucks.

 

Topics: Milwaukee Bucks, Sacramento Kings

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