According to projections made by sources familiar with the league's new revenue-sharing system, the Memphis Grizzlies are projected to be the top recipient of shared revenue in the 2013-14 season. They are said to earn as much as $22 million in shared revenue.
With the league coming off its first year of their newly-minted 10-year collective bargaining agreement, in which a new revenue-sharing system was put in place, the small market teams -- who don't actually have the capacity to ink the same massive television or marketing deals that their big market counterparts do -- are given a piece of the revenue pie, if you will, as a way to level the playing field. A field which, in all honesty, will never actually be leveled, but really it doesn't hurt to throw small market teams a bone or two.
Here's how the top recipients and top givers of 2013-14 are projected out:
The explanation as to how the amounts are figured out is best explained by John Lombardo of Sports Business Daily:
According to the new, widely expanded revenue-sharing plan, each team puts into a pool roughly 50 percent of its total annual revenue, minus certain expenses such as arena operating costs. Teams then receive an allocation from the pool that is equal to the average team payroll for the season.
So, if a team’s contribution to the pool is less than the league’s average team payroll, that team is considered a revenue recipient. If a team’s contribution to the pool is more than the average team payroll amount, the team is deemed a contributor to the system.
Teams are assumed to have achieved certain revenue thresholds based on market size when calculating the full revenue results. Teams that are payers into the revenue-sharing system also are protected to where their contributions to the plan will be no more than 30 percent of their total operating profits.
Again, given the fact that the Grizzlies, or I should say Memphis -- the team's market -- doesn't actually have the capacity to distribute the same amount of marketing and broadcasting revenue that a team like the Lakers or the Knicks do, this sharing is put in place as almost a pay-off to keep small market teams in place.
"Oh, so you're thinking about packing up the team and moving it to a big market where you can earn more operating revenue? Well, before you go and do that, why don't you enjoy this briefcase full of cash and sleep on it, literally, and let us know if you're still interested in moving the team tomorrow. Thanks! Love, the NBA."
In all fairness, it is nice to see that the revenue-sharing system does help small market teams like ours. It really would be a shame to see the Grizzlies one day up and move to Chicago because they can double their revenue based solely on the size of the market. So, while on a base level it seems "unfair," it actually is a system that works for teams like ours.