The reality behind a $75M contract (Partially edited)
by lee3022 on Aug 7, 2009 12:53 AM PDT
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The signing of Brandon Roy today heralds the cornerstone of the franchise for years to come. Some think the likely max contract of around $75M is too much for any player. Others think Brandon got jobbed by a down economy. Most of us have never even met someone being paid $75M over 5 years except in a fan line. What is the reality of this contract?
I did some digging and found a good summary of the NBA salary cap and its history at Wikipedia.com. Using their history I worked out what a 5 year max contract (25% of cap) would have looked like over the years. The first year of the cap was 1984-1985 set at $3.6M. That cap would yield Brandon a total 5 year salary of $5.4M under today's rules. In 1988 Paul Allen purchased the Blazers when the cap was set at $7.2M. Taking 5 year intervals here are the estimated totals:
| Salary Cap | 5-Yr Contract | |
| 88-89 | $7,200,000 | $10,890,000 |
| 93-94 | $15,100,000 | $22,838,750 |
| 98-99 | $30,000,000 | $45,375,000 |
| 03-04 | $43,900,000 | $66,398,750 |
| 08-09 | $58,700,000 | $88,783,750 |
| 09-10 | $50,000,000 | $75,625,000 |
| 09-10 | $65,400,000 | $98,900,000 |
The 09-10 Salary Cap will not be official until July 2010 but NBA officials have indicated the $50M is a reasonable presumption per various news stories.
The 09-10 year at the bottom of the table calculates from an estimate of 8.43% average increase in the period 03-04-through 08-09 what might have been expected when Brandon joined the league. With $23M less, it would seem he did get jobbed by the economy, but wait -
A player given a max contract in 88-89 would get less over the 5 years total than any single year in Brandon's contract.Compared with the superstars who have gone before, Brandon has a gravy train.
On to Part 2 - the impact to the fans:
Ken Berger has written an interesting piece on CBSSportsline.com about the ticket revenue from last season in the league. In there he says this:
Portland, New Orleans and Orlando are great examples of why a better revenue sharing model is needed. All three teams were above the league average in total ticket sales but below average in ticket revenue simply because those markets can't support high enough prices. The Blazers are the most blatant example, selling an average of 17,872 tickets per game (third in the league) but generating only $813,809 per game (15th).
Berger makes the case for revenue sharing to lighten the load. It would seem to help but are the votes there to change ownership practice?
With max contract to Brandon and with LMA likely close behind the Blazers need more money from ticket sales. Hang onto your wallets because the next few years will likely bring significant increases each year. We have seen it before and it will price some fans out of the arena.
I do know the prevailing theory is Paul Allen can afford to lose money. That misses the point. Paul has invested many millions (maybe closer to $1B) in the Blazers. There needs to be a return soon. It is partly about ego - who wants to brag to their friends that you are losing $50M per year (as reported in the past) on an investment. If the Blazers can turn the corner and become profitable and steady in the profits then the fun is multiplied for Paul Allen.
So what do we glean from all this? The question are we willing to be patient with management regarding extensions? Are we willing to pay more to Comcast and for tickets to support these huge salaries?
Storyteller's correction for 2008-2009 is made above. His formula has not been incorporated (more later?).
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Good info, thanks
And good thoughts on the impact on fans.
When I rule the world, everyone will know how to use Excel.
Are we willing to pay more?
I had this discussion yesterday with a friend about the ridiculous salaries athletes are making these days. To answer the question, yes of course we are still willing to pay more to Comcast, and for tickets, and for parking, and as I usually mention and for that hot dog and coke that is already over inflated at 1000% cost mark-up.
Why is this? We idolize these guys. We put them on the pedestal and throw our love, devotion and money at them in order to fill our lives with a glimmer of excitement on an every other night basis for 7 months a year.
Trail Blazer fans should feel darn lucky to have had an owner like Paul Allen, who has tried many times to give the team’s fans a chance at total elation, and all out of his pocketbook. I guess in comparison to Paul’s losses, that lone dog ain’t so bad a price.
Everything comes gradually and at its appointed hour--Ovid
I'm not willing to pay at all.
That’s why I’ve only been to one game in the past few years. If ticket prices were half, I’d go a lot more.
Disclaimer: everything I know about basketball I learned on Blazersedge.
the upper level tickets
are pretty darn cheap. Of course, you’re basically watching it on tv with a bunch of fans.
"Fernandez, to my eyes, is the Blazer who walks that walk most comfortably. A lot of Portland's fans (egged on, dare I say, by their local broadcasters) lament things like how Ron Artest or Yao Ming get to hit Brandon Roy's arms.
But I suspect Fernandez sees all that and thinks: We get to hit arms! Cool!"
http://myespn.go.com/blogs/truehoop/0-39-135/On-Playoff-Experience.html
I like sitting up there
You can get a pretty good view up there and you get an interesting mix of folks. That being said, moving to Green this year (best seats in the 300 level) will be nice.
"Good evening Blazer fans, wherever you may be!"-Bill Schonely
I'm close to my pain point actually
on my tickets. I could deal with a slight increase if i had to but more than that would make me question whether they’re worth while. Part of my pondering of this is “can i sell my tickets at that price.” I don’t go to all games, so I need to be able to sell tickets to offset that. If others don’t purchase, then there’s no way I’ll purchase.
"Fernandez, to my eyes, is the Blazer who walks that walk most comfortably. A lot of Portland's fans (egged on, dare I say, by their local broadcasters) lament things like how Ron Artest or Yao Ming get to hit Brandon Roy's arms.
But I suspect Fernandez sees all that and thinks: We get to hit arms! Cool!"
http://myespn.go.com/blogs/truehoop/0-39-135/On-Playoff-Experience.html
This is why the Blazers
Did not increase upper deck prices at all, they knew folks like you and me could not afford it. The folks downstairs could and so those went up.
"Good evening Blazer fans, wherever you may be!"-Bill Schonely
I believe you're correct
about rising ticket prices in Portland. Sad, but true…..
As for your numbers of a ‘max’ contract, your calculations are slightly off on the current numbers because maximum contract amounts are not based on a percentage of the actual salary cap, but a different base number.
The salary cap is determined by this formula:
(( B * 0.51 ) – A ) / 30
Where B represents projected Basketball Related Income and A represents an adjustment figure – the sum of player benefits and also a percentage of any ‘deficit’ from the previous season if projected Basketball Related Income was higher than the actual Basketball Related Income.
However, the maximum salary amounts are not (under the current CBA) a percentage of the actual salary cap. They are a percentage of a base number that is calculated using the following formula:
(( B * 0.4804 ) – A ) / 30
A smaller number than the actual salary cap. So, for example, the maximum contract possible for a player of Roy’s experience (25% of the base number) in 2009-10 is not $87.3 million but rather $81.8 million.
(BTW, you have 2009-10’s salary cap figure listed as 2008-09)
The overall point is good
yes.
"Fernandez, to my eyes, is the Blazer who walks that walk most comfortably. A lot of Portland's fans (egged on, dare I say, by their local broadcasters) lament things like how Ron Artest or Yao Ming get to hit Brandon Roy's arms.
But I suspect Fernandez sees all that and thinks: We get to hit arms! Cool!"
http://myespn.go.com/blogs/truehoop/0-39-135/On-Playoff-Experience.html
Another Reality
in 1988 you could by a house for 100,000 today that same house is worth 225,000 the value of a dollar is alot less then it was back then.
Draft Cole Aldrich 2010
Sure although a $600,000 house last year
is selling not selling for $395,000 this year.
The rate of inflation does not account for much of the ramp up of salaries in the NBA.
Which is one reason I am surprised
That LeBron is not singing an extension right now with CLE since it is likely the cap will drop and if anyone is a max player, he is.
"Good evening Blazer fans, wherever you may be!"-Bill Schonely
Doesn't matter.
If he signs a max contract in 2010, it’ll be the same money as a max extension now (assuming he signs with Cleveland either way). And if he signs with another team in 2010, he’ll get 8% increases instead of 10.5%, so that’s less money too.
You can measure skill and talent with your eyes, but productivity is shown through statistics.
I believe it does matter
I did a fanpost a couple of weeks ago to illustrate.
Basically the dropping cap has reduced the amount available for a new contract below what LeBron can get with extension. The reason is he can get a 10.5% increase from his old contract on extension but drops down to 30% of cap (slightly less) if he becomes a free agent.
One other difference is that signing with the team with bird rights allows for an extra year as well as the 10.5% increase.
So my hypothesis was that all of the max contract free agents would elect to stay with their own team rather than forfeit upwards of $25 million dollars (assuming a $50M salary cap). He can wait until June 30 to sign that extension.
With all the money LeBron makes, a ring might be more important
in 2007 lebron made $40M of which only $12M was salary and $28M was endorsement deals. [Dont have 2008 numbers]. At some point $5M a year may be worth passing up if it gets him a ring. Even from a purely fiscal standpoint, wouldn’t be surprised if winning a ring will actually net him back more than he loses in salary.
If anyone moves I think it will be Bosh and he will go to Cleveland or Miami to pair for a ring
LeBron is the premier talent who does not have to leave and forfeit the money. Wade has already won a ring in Miami and thus is entrenched there. Carmelo is not likely to leave Denver. Toronto is trying hard with a remade roster including Hedon’t, Nesterovic, DeRozen, Evans, Belinelli and Jack added to Bosh, Calderon, Bargnani and company. Bosh may want a ring more than the money but he is with a team that does not seem to worry about cash and is committed to building a contender.
The whole point of the option was to bump the contracts to 30% of the cap. That means they put their teams through the wringer to get a small bump in a new contract for that last year. That would have meant only a small part of the $28M they would now lose by opting out.
Yesterday LeBron held a press conference and carefully worded his response when he was asked if he will sign the offered extension. He shook his head and said why would I forfeit my option now when the whole point it to see what the possibilities are next year? Note he did not say I will not extend my contract, only that he will not accept an extension now.
I am persuaded by the argument that LeBron can derive his endorsement money anywhere he plays. My thought is that growth in endorsement money is most likely to come from China and China does not care if it is NYC or Cleveland. It is likely why so many of the stars have spent time in China this summer (at least Kobe and Wade).
Finally Shaq is not limited in Cleveland in a new contract and should he win a ring for LeBron or even if he plays well next year Cleveland will resign him should LeBron stay. His Bird rights are held by Cleveland and they can give him far more money than anyone else (current salary plus 10.5%).
Still think for LeBron it wont be just about his salary
Once LeBron is locked up, no more pressure on Cleveland to spend more and bring in the necessary talent to win a ring. Not signing with Cleveland is powerful leverage. Sort of “If you dont get the other players, I’ll go somewhere else like New York where they want to win a ring”. Because LeBron is making so much in endorsements the threat is real — he can easily forfeit the extra salary to pursue a ring.
Whoever gets LeBron is getting him for the max they can afford. No way around that. He knows that Cleveland knows that. So what options is he keeping open? Delaying signing allows LBJ to force the Cavs to pay big bucks and get a Chris Bosh or whoever else it takes to get the ring.
He can just easily rope in Chinese endorsement in New York, as in Cleveland. So the partnership with the Chinese group may not be enough, unless the Cavs offer him part ownership in the team — is that even allowed in the NBA?
Does he have a better chance to win in NY?
Cleveland will own Shaq’s Bird rights at the end of the year making them the favorites to resign him if he works out there. That team had everything but the big man to play D-Howard and now may be LeBron’s best chance to win a ring. It seems like NY is starting over with LeBron and a mostly new team. Gallinari and Chandler might be legitimate pieces but this year will have to prove it. Same for the rookies. Eddie Curry is not the answer nor is Jared Jeffries. With or without Shaq Cleveland cannot sign Bosh if the cap is $50M (Storyteller has them with $51.4M already with $6.9M partially guaranteed or team option). It would need to be a sign and trade (which is possible if Bosh wants to leave).
We seem to agree that the endorsement money is likely the same wherever he goes so leaving his hometown for less money, less established teamwork, for the dubious privilege of playing in NYC? If LeBron is the best player in the league then respect means someone else has to come to him. I also think Cleveland is doing its best to get him the players. This franchise loses all it air like a punctured balloon if they lose LeBron.
I don’t know of he can own some of the team while still a player. As I remember it MJ owned a piece of Washington and had to relinquish it to resume playing. Part of the bitterness was when he stopped playing he did not get his job or his ownership back. But my memory may be faulty there.
It's going to be interesting to see where the lines of fandom and economic reality intersect
No matter how much one loves the team, at some point one isn’t going to be able to afford to go watch games in person. That’s assuming the economy doesn’t rebound of course, which I do not believe will be the case.
I do think though that once this ‘economic storm’ clears that there will be some new practices for the average American regarding how much money he considers ‘disposable’. At least I hope.
I think in the end I forecast a slightly more responsible NBA and I think it will be more entertaining because of it.
Blazer Fan
I wonder if success breeds the kind of prices LAL gets and the kind of fans that can afford them
leading to a relative lack of passion in the arena?
I'd say yes
The blazer arena SUCKED in 2000. I had a number of free tickets and would stand up and cheer and I’d be glared down for ruining the nice quiet atmosphere.
"Fernandez, to my eyes, is the Blazer who walks that walk most comfortably. A lot of Portland's fans (egged on, dare I say, by their local broadcasters) lament things like how Ron Artest or Yao Ming get to hit Brandon Roy's arms.
But I suspect Fernandez sees all that and thinks: We get to hit arms! Cool!"
http://myespn.go.com/blogs/truehoop/0-39-135/On-Playoff-Experience.html
When prices go very high
more of the tickets are purchased by corporations who used them for entertaining clients (not necessarily fans). Whne there are inexpensive seats the blue-collar fans are able to enjoy the game. What is needed is a different pricing structure for indiviuals and corporate buyers of tickets. But for this to work there muct be a cap on the number in each class of buyer. Sure the corporate seats would be good, but they don’t get the whole 100 level to themselves, intermix some fans at a reduced price so that we don’t get all cordoned off in the 300 level.
kind of like prices in hawaii
one price for locals and a different price for outsiders…
Yes
I would pay more. Frankly our entry ticket prices are cheap (although they make it up on merchandise and food sales).
"Good evening Blazer fans, wherever you may be!"-Bill Schonely
the entry level tickets are VERY cheap
if i’d known they were that cheap i might ahve purchased years ago.
"Fernandez, to my eyes, is the Blazer who walks that walk most comfortably. A lot of Portland's fans (egged on, dare I say, by their local broadcasters) lament things like how Ron Artest or Yao Ming get to hit Brandon Roy's arms.
But I suspect Fernandez sees all that and thinks: We get to hit arms! Cool!"
http://myespn.go.com/blogs/truehoop/0-39-135/On-Playoff-Experience.html
would not more money be generated
if Direct tv was able to broadcast also? So also Dish network?
I think that would help Comcast and not Blazers as the 10 year contract is already set
And I am not sure Comcast sees it as helping more than it hurts its exclusive in Portland.
Actually Comcast isn't exclusive in Portland
FiOS also has CSN. A DTV and Dish deal would help Comcast more than hurt them ……as long as the deal included the right pay structure. Where Comcast (and by extension The Blazers) is getting hurt right now is outside of Portland……and that falls to Charter (ironically Paul Allen is a major stockholder). If Charter were to sign a deal with CSN, it would build up the customer base for both The Blazers and Comcast (ad revenue), but Charter doesn’t seem willing to do a deal similar to Bend Broadband or FiOS, which seems weird cause they would then have an advantage over Dish and DTV in the Charter makets.
If and of the 3 (Charter, DVT, or Dish) were to sign …..then, I suspect , the other 2 would follow.
"I'm tired" -Me
Yeah
The restructuring kind ……not the going outta business kind. In fact I believe Paul had to give up some stock to pay off some debt….but they are still in business.
"I'm tired" -Me
by 92wastheyear on Aug 7, 2009 11:28 PM PDT up reply actions
At what point does the market collapse?
An NBA superstar has been a sound investment for many years. When folks outbid each other for sound investments, eventually the last guy pays too much, reality sets in and the market declines.
When do we expect that to occur?
The cowards never started
The weak died along the way
Only the strong survived
They were the Trailblazers
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