Get used to hearing this talked about. Basketball Related Income. The NBA owners and NBPA are headed for a likely lockout at the next round of CBA negotiations and it’s going to center around the definition of BRI. If you’re going to hear it, you might as well understand it, right?
If you have any desire to read the legalese that is the CBA (I do), then go here and you’ll find BRI on page 86. I’d love to just quote the BRI definition for you here and parse it out piece by piece, but that’s a large bit of text, with the inclusions and exclusions for BRI going on for about 10 pages.
There are many longer articles and websites that can help break down what all of this means.1 My favorite is CBA FAQ, run by the very intelligent and insightful Larry Coon. He’s done what I was not too keen on doing and parsed out the bits and pieces of what BRI is under the CBA defintion.
- Regular season gate receipts, minus taxes and certain charges including those related to arena financing
- Broadcast rights
- Exhibition game proceeds
- Playoff gate receipts
- The value of all complimentary tickets, minus “excluded complimentary tickets” (1.6 million tickets in 2011-12, increasing by 50,000 each season thereafter)
- Novelty, program and concession sales (at the arena and in team-identified stores within proximity of an NBA arena)
- Proceeds from team sponsorships
- Proceeds from team promotions
- Arena club revenues
- Proceeds from summer camps
- Proceeds from non-NBA basketball tournaments
- Proceeds from mascot and dance team appearances
- Proceeds from beverage sale rights
- 40% of proceeds from arena signage
- 40% of proceeds from luxury suites
- 50% of proceeds from arena naming rights
- 50% of the proceeds from team practice facility naming rights
- Proceeds from other premium seat licenses
- Proceeds received by NBA Properties, including international television, sponsorships, revenues from NBA Entertainment, the All-Star Game, and other NBA special events.2
One source you’ll see in there is broadcast rights. This has been a big issue with the cap jump associated with the huge revenue spike brought on by the new nine-year, $24 Billion – I italicized that B on purpose – contract with ESPN and Turner Sports. That’s all well and good for the players, but the devil is in the details.
As noted by Deadspin, the NBA can use some clever broadcast contracts to hide some money from the NBA players’ share of the revenue. They’d never get away with hiding more than a small percentage or else the NBPA would throw a bigger fit than expected, not to mention the CBA limitations, but here is the language that allows for the loophole that I will explain below:
‘Basketball Related Income’ (‘BRI’) for a Salary Cap Year means the aggregate operating revenues . . . received for or with respect to such Salary Cap Year by the NBA, NBA Properties, Inc., including any of its subsidiaries . . . , any other entity which is controlled, or in which at least fifty percent (50%) of the issued and outstanding ownership interests are owned, by the NBA, Properties, Media Ventures, and/or a group of NBA Teams.
What’s the exact loophole? Teams accept ownership rights in broadcasting networks for regional television contracts in lieu of exact payment. A deal that was worth an even $1,000,000 may only be worth $800,000, saving the owners $200,000 in BRI by accepting anywhere from 10%-30% usually in ownership rights to that network. As long as they stay below the 50% threshold, the profits are not a part of BRI.
The players didn’t completely lose out on the 2011 CBA, but it doesn’t look pretty. The dysfunction at the top of the NBPA for so long with Billy Hunter certainly contributed to it, unless you’re a believer that he was on the owners side the whole time. The players earned things like a higher team minimum salary – something that is currently bugging the Philadelphia 76ers of recent years – and an escrow system that pushed the burden of an imbalance in the 50-50 revenue split onto retired players, not active players, which the NBPA more directly represents.
Getting novel bonuses are great, but going from 57% of the overall BRI to 50% to earn those small concessions was far too much. Hunter may not have had a better choice if the players showed a lack of commitment to not playing and creating “battle chests” worth of money to live off of while they are locked out.
The NBPA has been fairly disorganized in recent memory and Michele Roberts will be a welcome face leading the charge now. Will BRI be redefined? Will the players go back to a higher percentage of the revenue split? We will see. But one thing is for sure, the owners won’t go down without a fight as they’ve already started the rhetoric of claiming financial troubles. Heated negotiations will begin in earnest.