FanPost

The reality behind a $75M contract (Partially edited)


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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