Phoenix Suns

NBA’s Board Of Governors To Examine Revenue Sharing System

ESPN’s Zach Lowe and Brian Windhorst have published an expansive and well-researched report on NBA teams’ finances, providing details on the league’s revenue sharing system, the impact from national and local television deals, and how a lack of net income for NBA franchises could push the league toward considering relocation or expansion.

The report is wide-ranging and detailed, so we’re going to tackle it by dividing it up into several sections, but it’s certainly worth reading in full to get a better picture of whether things stand in the NBA. Let’s dive in…

Which teams are losing money?

  • Nine teams reportedly lost money last season, even after revenue sharing. Those clubs were the Hawks, Nets, Pistons, Grizzlies, Magic, Wizards, Bucks, Cavaliers, and Spurs. The latter two teams – Cleveland and San Antonio – initially came out ahead, but paid into the league’s revenue sharing program, pushing them into the red.
  • Meanwhile, the Hornets, Kings, Pacers, Pelicans, Suns, Timberwolves, and Trail Blazers also would have lost money based on net income if not for revenue sharing, according to Lowe and Windhorst.
  • As a league, the NBA is still doing very well — the overall net income for the 30 teams combined was $530MM, per ESPN. That number also only takes into account basketball income, and doesn’t include income generated via non-basketball events for teams that own their arenas.
  • The players’ union and its economists have long been skeptical of NBA teams’ bookkeeping, alleging that clubs are using techniques to make themselves appear less profitable than they actually are, Windhorst and Lowe note. The union has the power to conduct its own audit of several teams per season, and it has begun to take advantage of that power — according to ESPN, the union audited five teams last season, and the new CBA will allow up to 10 teams to be audited going forward.

How does the gap between large and small market teams impact income?

  • Even after paying $49MM in revenue sharing, the Lakers finished the 2016/17 with a $115MM profit in terms of net income, per ESPN. That was the highest profit in the NBA, ahead of the second-place Warriors, and could be attributed in large part to the $149MM the Lakers received from their huge local media rights deals.
  • On the other end of the spectrum, the Grizzlies earned a league-low $9.4MM in local media rights, which significantly affected their bottom line — even after receiving $32MM in revenue sharing, Memphis lost money for the season. The Grizzlies will start a new TV deal this year that should help boost their revenue, but it still won’t come anywhere close to matching deals like the Lakers‘.
  • The biggest local TV deals help drive up the NBA’s salary cap, with teams like the Lakers and Knicks earning in excess of $100MM from their media agreements. According to the ESPN report, the Knicks made $10MM more on their TV deal than the six lowest-earning teams combined.
  • As one owner explained to ESPN, “National revenues drive up the cap, but local revenues are needed to keep up with player salaries. If a team can’t generate enough local revenues, they lose money.”
  • Playoff revenue from a big-market team like the Warriors also helps push up the salary cap. Sources tell Lowe and Windhorst that Golden State made about $44.3MM in net income from just nine home playoff games last season, more than doubling the playoff revenue of the next-best team (the Cavaliers at about $20MM).

How is revenue sharing affecting teams’ earnings?

  • Ten teams paid into the NBA’s revenue sharing system in 2016/17, with 15 teams receiving that money. The Sixers, Raptors, Nets, Heat, and Mavericks neither paid nor received any revenue sharing money. Four teams – the Warriors, Lakers, Bulls, and Knicks – accounted for $144MM of the total $201MM paid in revenue sharing.
  • While there’s general agreement throughout the NBA that revenue sharing is working as intended, some teams have “bristled about the current scale of monetary redistribution,” according to ESPN. “The need for revenue sharing was supposed to be for special circumstances, not permanent subsidies,” one large-market team owner said.
  • The Grizzlies, Hornets, Pacers, Bucks, and Jazz have each received at least $15MM apiece in each of the last four years via revenue sharing.
  • However, not all small-market teams receive revenue-sharing money — if a team outperforms its expectations based on market size, it forfeits its right to that money. For instance, the Thunder and Spurs have each paid into revenue sharing for the last six years.

Why might league-wide income issues lead to relocation or expansion?

  • At least one team owner has raised the idea of expansion, since an expansion fee for a new franchise could exceed $1 billion and it wouldn’t be subject to splitting 50/50 with players. A $1 billion expansion fee split 30 ways would work out to $33MM+ per team.
  • Meanwhile, larger-market teams who aren’t thrilled about their revenue-sharing fees have suggested that small-market clubs losing money every year should consider relocating to bigger markets, sources tell ESPN.
  • As Lowe and Windhorst observe, the Pistons – who lost more money than any other team last season – are undergoing a relocation of sorts, moving from the suburbs to downtown Detroit, in the hopes that the move will help boost revenue.

What are the next steps? Are changes coming?

  • The gap between the most and least profitable NBA teams is expected to be addressed at the NBA’s Board of Governors meeting next week, per Lowe and Windhorst. Team owners have scheduled a half-day review of the league’s revenue sharing system.
  • Obviously, large- and small-market teams view the issue differently. While some large-market teams have complained about the revenue sharing system, they’re outnumbered, with smaller-market teams pushing those more successful clubs to share more of their profits, according to ESPN.
  • Trail Blazers owner Paul Allen is one of the loudest voices pushing for more “robust” revenue sharing, sources tell ESPN. Some team owners have argued that the system should ensure all teams make a profit, while one even suggested every team should be guaranteed a $20MM profit. There will be “pushback” on those ideas, Lowe and Windhorst note. “This is a club where everyone knows the rules when they buy in,” one owner said.
  • On the other end of the spectrum, some teams have floated the idea of limiting the amount of revenue sharing money a team can receive if it has been taking payments for several consecutive years.
  • Any change to the revenue sharing system that is formally proposed at the NBA’s Board of Governors meeting would require a simple majority (16 votes to 14) to pass.

Suns Sign Alec Peters To Two-Way Contract

SEPTEMBER 16: The Suns have finally made their agreement with Peters official, having formally signed him to a two-way contract earlier this week, according to RealGM’s log of NBA transactions.

Phoenix has now filled both two-way slots on its roster, with former Lamar standout Mike James occupying the other one.

JULY 6: The Suns will sign Alec Peters to a two-way contract, league sources tell Chris Reichert of 2 Ways & 10 Days (Twitter link). Peters was selected by Phoenix with the No. 54 pick in the 2017 draft.

Players on two-way deals will spend most of their season in the G-League since they cannot spend more than 45 days with an NBA club, as our glossary page on two-way contracts shows.

Peters spent four years at Valparaiso and won the Horizon League Player of the Year award during his senior year. He scored 23.0 points while grabbing 10.1 rebounds per contest last season.

Suns Sign Peter Jok

SEPTEMBER 14: The Suns have formally signed Jok, according to RealGM’s official log of NBA transactions.

AUGUST 24: Undrafted shooting guard Peter Jok has reached an agreement on a partially guaranteed contract with the Suns, reports Chad Leistikow of The Des Moines Register (hat tip to Sportando). Guardian Mike Nixon tells Leistikow that Jok had three other offers, but opted for a deal with Phoenix.

“I feel like it’s a great opportunity for myself because it puts me in a position to earn a spot on the team,” Jok said in a text message to the Register. “And if I don’t, then I’ll be playing for [the Suns’] G League team to work on my game, which I see as a positive.”

With 14 players officially on NBA contracts and two more on two-way deals, the Suns currently have 16 players on their roster. That number increases to 18 with the additions of Jok and Alex Len, who remains a restricted free agent.

Although Phoenix is approaching its 20-man offseason limit, the club still has just 12 players on fully guaranteed contracts, so Jok could have an opportunity to compete for a regular-season roster spot. If the 23-year-old doesn’t break camp with the Suns, he’ll likely join the Northern Arizona Suns, Phoenix’s G League team, as an affiliate player.

In his final year at Iowa, Jok averaged an impressive 19.9 PPG to go along with 5.5 RPG and 2.6 APG. The 6’6″ guard had a shooting line of .467/.380/.911. Jok joined the Pelicans for Summer League play last month, but only had a part-time role in three games with the team, averaging 9.0 PPG in 17.9 MPG.

Five Teams Carrying Just 12 Guaranteed Contracts

As our list of offseason roster counts shows, most NBA teams currently have at least 13 players on guaranteed salaries on their respective rosters, with many teams carrying 14 or 15 such players. However, there are a handful of clubs that haven’t reached that threshold, creating some potential intrigue about what their eventual 15-man regular season rosters will look like.

Of course, not every team needs to carry the maximum 15 players, but every club must have at least 14, so the teams with 12 or fewer guaranteed salaries on their books right now will have more than just those players on their roster for opening night.

Here’s a breakdown of the five teams currently carrying 12 players on guaranteed contracts:

Dallas Mavericks
Fully guaranteed salaries: 12
Non-guaranteed or partially guaranteed salaries: 7

With 19 players on NBA contracts and one two-way player, the Mavs have a full roster, but only 12 of those players have fully guaranteed deals. Still, there may not be many surprises when Dallas eventually makes its cuts for the regular season. Devin Harris and Dorian Finney-Smith don’t have full guarantees, but I wouldn’t expect either player to be waived.

If the Mavs carry 15 players, I’d give Jeff Withey the upper hand for the final roster spot, though Maalik Wayns, P.J. Dozier, Gian Clavell, and Brandon Ashley are also in the mix.

Houston Rockets
Fully guaranteed salaries: 12
Non-guaranteed or partially guaranteed salaries: 5

The Rockets stockpiled players on non-guaranteed contracts this offseason for trade purposes, but haven’t ended up dealing most of them. Troy Williams has a significant partial guarantee and should make the team’s opening night roster, but the final two roster spots could be up for grabs. Tim Quarterman, Shawn Long, Isaiah Taylor, and Cameron Oliver are candidates, and I might give the latter two the edge, since they signed outright with the Rockets, rather than arriving as trade pieces.

Minnesota Timberwolves
Fully guaranteed salaries: 12
Non-guaranteed or partially guaranteed salaries: 1

No team was carrying fewer players on NBA contracts entering Tuesday than the Timberwolves, who have indicated for about two months that they intend to add three more veterans, likely on guaranteed deals. Shabazz Muhammad became the first of the three, reaching an agreement today to return to the club and bringing the club’s total guaranteed salary count to 12. If the Wolves add two more vets, as planned, players like Dante Cunningham, Anthony Morrow, and Jason Terry would be candidates to sign.

If Minnesota doesn’t get up to 14 guaranteed contracts, players like Marcus Georges-Hunt and Melo Trimble (who reportedly agreed to sign with the club) could compete for roster spots.

Philadelphia 76ers
Fully guaranteed salaries: 12
Non-guaranteed or partially guaranteed salaries: 4

While a non-guaranteed salary would mean a precarious grip on a roster spot for most players, that’s not the case for three Sixers with non-guaranteed deals — Robert Covington, Richaun Holmes, and T.J. McConnell will eventually have their contracts guaranteed, barring some unexpected turn. Adding those three players to the 12 Sixers with fully guaranteed contracts already would fill up the 15-man regular season roster, leaving James Blackmon Jr. and any other camp invitees as the odd men out.

Phoenix Suns
Fully guaranteed salaries: 12
Non-guaranteed or partially guaranteed salaries: 2

The Suns currently only have 12 players with fully guaranteed salaries, but a handful of incumbent players may end up filling out the rest of the roster. Alex Len remains a restricted free agent, and seems like a good bet to return to Phoenix, which would bring the team’s roster count to 13. Derrick Jones and Elijah Millsap may also have an inside track on roster spots, having spent time with the franchise last season. Peter Jok – who has a reported agreement with Phoenix – and any other camp invitees could push for consideration with a strong preseason, however.

Note: The New Orleans Pelicans technically have just 12 guaranteed salaries on their books at the moment, but reached an agreement on Monday with Tony Allen, whose deal will increase the club’s guaranteed contract count to 13.

Contract information from Basketball Insiders was used in the creation of this post.

Signing QO A Real Possibility For Alex Len

  • Another restricted free agent, Suns center Alex Len, remains in limbo and there’s an expectation that he may end up signing his qualifying offer, according to Kyler. League sources tell Kyler that an initial offer extended by Phoenix early in the free agent period didn’t meet Len’s expectations. A multiyear offer was still on the table as of mid-July, but it’s not clear if that offer remains available for Len now.

Hoops Rumors Retro: Antonio McDyess To The Nuggets

Before the chair, before Grandpa Pierce, before DeAndre Jordan‘s infamous change of heart and the Emoji War that inspired it, there was Antonio McDyess. McDyess, obviously, but then of course French-Canadian ice hockey legend Patrick Roy, an impromptu charter flight across the southwest, dozens of unanswered pager calls and a good old-fashioned Rocky Mountain blizzard.Antonio McDyess vertical

In January 1999, a 24-year-old with jetpacks for calves and long sinewy arms found himself at an emotional fork in the road. Fresh off of his third season in the NBA and his first in the desert, Suns power forward Antonio McDyess had the choice between re-signing with the team he just won 56 games with or returning to the basement-dwelling franchise that shipped him out of town less than 18 months prior.

After playing his first two seasons with the Nuggets and establishing himself as one of the most satisfyingly athletic big men in the game, McDyess enjoyed his first taste of team success following his arrival in Phoenix. The trade that sent him from Denver to the Suns prior to that 1997/98 season was precipitated by the fact that McDyess and his representative, Arn Tellem, were seeking a six-year, $100MM contract extension back when the club’s front office refused to go any higher than $70MM.

I guess they had no choice but to trade me,” he said at the time, adding shortly thereafter that he didn’t think there was any possible way he would return to the Nuggets when he hit free agency seven months later.

Of course it was seven months later when things got unprecedentedly interesting.

Read more

NBA Draft Rights Held: Pacific Division

When top college prospects like Markelle Fultz or Lonzo Ball are drafted, there’s virtually no doubt that their next step will involve signing an NBA contract. However, that’s not the case for every player who is selected in the NBA draft, particularly for international prospects and second-round picks.

When an NBA team uses a draft pick on a player, it gains his NBA rights, but that doesn’t mean the player will sign an NBA contract right away. International prospects will often remain with their professional team overseas for at least one more year to develop their game further, becoming “draft-and-stash” prospects. Nikola Mirotic, Dario Saric, and Bogdan Bogdanovic are among the more notable players to fit this bill in recent years.

However, draft-and-stash players can be former NCAA standouts too. Sometimes a college prospect selected with a late second round pick will end up playing overseas or in the G League for a year or two if there’s no space available on his NBA team’s 15-man roster.

While these players sometimes make their way to their NBA teams, others never do. Many clubs around the NBA currently hold the rights to international players who have remained overseas for their entire professional careers and are no longer viewed as top prospects. Those players may never come stateside, but there’s often no reason for NBA teams to renounce their rights — those rights can sometimes be used as placeholders in trades.

For instance, earlier this summer, the Pacers and Raptors agreed to a trade that sent Cory Joseph to Indiana. Toronto was happy to move Joseph’s salary and didn’t necessarily need anything in return, but the Pacers had to send something in the deal. Rather than including an NBA player or a draft pick, Indiana sent Toronto the draft rights to Emir Preldzic, the 57th overall pick in the 2009 draft.

Preldzic is currently playing for Galatasaray in Turkey, and at this point appears unlikely to ever come to the NBA, but his draft rights have been a useful trade chip over the years — the Pacers/Raptors swap represented the fourth time since 2010 that Preldzic’s NBA rights have been included in a trade.

This week, we’re taking a closer look at the players whose draft rights NBA teams currently hold, sorting them by division. These players may eventually arrive in America and join their respective NBA teams, but many will end up like Preldzic, plying their trade overseas and having their draft rights used as pawns in NBA trades.

Here’s a breakdown of the draft rights held by Pacific teams:

Golden State Warriors

  • Mladen Sekularac, G/F (2002; No. 55): Retired.

Los Angeles Clippers

Los Angeles Lakers

Phoenix Suns

  • Ron Ellis, F (1992; No. 49): Retired.
  • Milos Vujanic, G (2002; No. 36): Retired.
  • Cenk Akyol, G/F (2005; No. 59): Playing in Turkey.
  • Dwayne Collins, F (2010; No. 60): Retired.

Sacramento Kings


Information from Mark Porcaro and Basketball Insiders was used in the creation of this post.

Where Things Stand On Kyrie Irving Blockbuster

It has been eight days since both the Celtics and Cavaliers announced the completion of a trade that sent Kyrie Irving to Boston in exchange for Isaiah Thomas, Jae Crowder, Ante Zizic, and the Nets’ 2018 first-round pick. However, more than a week later, we still can’t classify the deal as “completed.”

As first reported last Friday by ESPN, the Cavaliers expressed concern after their own doctors conducted a physical exam on Thomas’ injured hip. That concern has pushed the Cavaliers to re-engage the Celtics about acquiring further compensation in the blockbuster deal. Although it took a few days for the two sides to make contact again, that reportedly happened on Tuesday.

Here’s a breakdown of what we know about the situation, and when we can expect resolution:

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RFA Alex Len Opts Out Of EuroBasket

Knight Undergoes ACL Surgery, Out For Season

As expected, Suns guard Brandon Knight will miss the entirety of the 2017/18 NBA season. The 25-year-old underwent successful ACL surgery on Friday, Sam Amico of Amico Hoops writes, after initially tearing the ligament last month.

While Knight’s name has been a mainstay in trade rumors over the course of the past few seasons, he remains a relatively valuable reserve asset. Last year Knight posted 11.0 points per game, shy of the 15.2 point career mark he’s posted across stints with the Pistons, Bucks and Suns.

Per Amico, the Suns could look to apply for an injury exception in order to free up room for a new backcourt option behind Eric Bledsoe and Devin Booker.

  • The Suns have doubled down on their young core but aren’t exactly sure what they’re going to get out of it, Shaun Powell of writes. The scribe also wonders if the club may have put too much stock in fourth-overall pick Josh Jackson, refusing to include him in a possible Kyrie Irving trade package.
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