Billy Hunter and David Stern: Fact Check

Mike Francesa of WFAN radio in New York interviewed Billy Hunter this past Wednesday, then interviewed David Stern on Thursday. Each interview is about a half hour long and is available to be heard via podcast.

I listened to both interviews last night with a critical ear, wondering if either man could be accused of ‘bending’ or ‘skewing’ the facts in an attempt to promote his point of view. Zach Lowe of Sports Illustrated and others have written about some of the questionable ‘facts’ presented by Commissioner Stern and I don’t want (or need) to duplicate their efforts. At the same time, I thought it would be appropriate to evaluate the numerical claims made by both men.

I don’t want to imply that most of what both Hunter and Stern isn’t true – I do believe that most of what they said during these interviews is indeed factual. That being said, though, I found that each of them said things that don’t seem to jive with what has been reported elsewhere. Find out what I mean after the jump:

BILLY HUNTER’S STATEMENTS

We’ll take these in chronological order, so since Hunter's interview was first...In his interview with Mike Francesa on Wednesday, the head of the NBPA said the following:

Claim: Basketball Related Income (BRI) was about $4.6 billion last season. The league subtracted about $600 million of this amount and then gave 57% of the remainder to the players.

My reply: Basketball Related Income was $3.817 billion last season. This seems to be indisputable. The players did get 57% of this amount ($2.176 billion) in salaries and benefits. Some ‘revenue’ is indeed subtracted to get to this figure and whether it was $600 million as stated by Hunter or $400 million as reported elsewhere, there is good reason why it doesn’t ‘count’ as BRI. Take, for example, an automobile dealer who puts up a sign for advertising at the Rose Garden. Let’s say that they pay $1,000 for this ad. The previous CBA said that $400 of that amount counted as BRI, which makes sense because the dealer pays the full amount to advertise not only at Blazer games, but also at other RG events. So, that other $600 is part of the amount subtracted from ‘total revenue’ to reach the actual amount of Basketball Related Income. Other sources of revenue, such as money coming from luxury suites and proceeds from naming rights, also included a designated percentage to be included as part of BRI because only a certain percentage of that money is actually linked to NBA basketball.

 

Claim: Luxury tax is paid by teams that are over the cap. There were 7 teams over the cap last year and paid luxury tax.

My reply: Mike Francesa is probably guilty of starting this misperception in the interview, but Hunter certainly didn’t clear things up. The truth is that, under the previous agreement, two different lines were created. The first line was the salary cap itself and the second line – about 21% higher – was the tax threshold. By my count, 26 teams ended the season over the cap, while 7 were over the tax threshold. This comes into play in the debate over proposals about more punitive luxury tax rules. If those punitive measures are perceived by the general public (or even the players themselves) to be imposed on any team over the cap, they will be interpreted differently than if they are perceived to be imposed on any team over the higher tax threshold.

 

Claim: 7-8 teams lost money last year, not 23 like the league says. All teams combined lost about $160-170 million last year, not $300 million like the league says.

My reply: Really? The profits of 22 or 23 teams were not enough to compensate for the losses of 7 or 8 teams? I could understand Hunter holding to one of those two statements, but trying to promote both as the truth? They just aren’t compatible. After all, even the highly debated figures on Operating Income from Forbes say that in 2009-10, 17 teams were in the red but that the league as a whole was $182.6 million in the black. In other words, lots of teams lost a little money but overall the league had a positive operating income. [I’m not saying these numbers are entirely correct – Forbes themselves admits that the figures don’t include interest, depreciation, taxes and amortization - just using them as a point of reference] Hunter wants us to believe that actual profits in 2010-11 were $350 million less than Forbes’ figure for 2009-10, but that only 7 or 8 teams actually operated in the red? C’mon, Billy…..

 

DAVID STERN’S STATEMENTS

Claim: The owners project that, under their proposal, the average player salary would go from the current $5.5 million to over $7 million by the end of the next CBA.

My reply: Stern uses the phrase ‘average player salary’ to his advantage. When he says ‘average player salary’, he is referring to a number whose calculation was established in the previous CBA. This number is not the mean salary, nor the median salary. By my numbers, the mean salary (which is calculated by taking the total amount of player salary and dividing by the number of players who were paid) for 2010-11 was $4.216 million ($2.045 billion divided by 485). I also show the median salary was the $2.331 million earned by Brandon Jennings. However, the ‘average player salary’ was calculated under the previous CBA by taking the total amount of player salary ($2.045 billion in 2010-11, including the payment of $26 million by the owners after the completion of the season) and dividing by 30 (the number of teams in the league) and then dividing further by 13.2 (an estimate of roster size) and then multiplying by 1.08 (to account for yearly increases in the next year’s player salaries). So, the calculated ‘average player salary’ was $5.576 million by my numbers for 2010-11. This would have been the amount of this coming season’s MLE under the previous rules and would have come into play in other significant ways as well.

 

Claim: The players’ propose that a team that is $10 million over the tax threshold should only have to pay about $11 million in luxury tax.

My reply: Both sides have reportedly suggested a tax system that would become more punitive the higher that a franchise is above the tax threshold. The players have offered a system that would charge $1.25 in tax for each of the first $5 million over the threshold, $1.50 for each of the next $5 million over the threshold, $1.75 for each of the next $5 million and so on. The owners have suggested a system that would charge $1.75 in tax for each of the first $5 million over the threshold, $2.25 for each of the next $5 million over the threshold, $2.75 for each of the next $5 million, and so on. In other words, a team that was $10 million over the threshold would pay $13.75 million in tax under the players’ proposal and $20.00 million in tax under the owners’ proposal. Not quite how the Commissioner painted it.

 

Claim: The NBA had $72 million in revenue sharing in 2010-11.

My Reply: This is another issue brought up originally by Francesa but this time it was Stern who made no dispute or correction (thus he appears to agree with it). This $72 million is the amount of money distributed through the luxury tax system. I would argue strongly that, although it could be called many things, the luxury tax system should not be called ‘revenue sharing’. Commissioner Stern refers to revenue sharing as a system necessary because of a need to re-distribute money from the franchises that are making the most revenue to franchises who are making less in revenue. Is this what happened through the $72 million last year? Is this what happened in any year under the previous CBA? Consider that Chicago – the franchise with the 3rd highest revenue stream – never paid a dime under this so-called ‘revenue sharing plan’, but did receive well over $15 million in checks during the last 6 years. Consider that Detroit – the franchise with the 4th highest revenue stream – also paid out zero and also received over $15 million through this ‘revenue sharing’. Consider that teams like Orlando, Denver and Portland had significantly lower revenue streams during the last 6 years, but their money sometimes went to franchises like the Bulls and the Pistons in the name of ‘revenue sharing’? I could bring up more examples, but you get the point (and are probably getting bored). Yes, some high revenue teams like the Knicks and Lakers were often taxpayers, but not because of how much revenue they brought in – they only paid out because of how much they spent in salary. Like I said, a system that tries to discourage teams from paying too much in salary through punitive means can be called a lot of things, but ‘revenue sharing’? Please……

 

FINAL VERDICT

In my opinion, both Billy Hunter and David Stern were a bit loose in their use of numbers this week.

Agree?  Disagree?

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