Sport Financing Discussions

Respond to the following two discussion statements. You must cite references in the response. One of the references must be from the book chapter 3 Financing Sport by Howard ISBN:9781935412427 3rd edition. Each response must have one of the references from the book. Statement 1:For the NFL the specific details in their player salaries and contract shows a labor peace agreement until 2020, so we should be seeing the new contract negotiations soon, along with the current revenue sharing at 52% owners and 48% for players. The revenue split is now based on all revenues, before owners were allowed to deduct expenses from the revenue total. Each team has a salary cap to abide by of $142.4 million, $120 million on players and $22 million on player’s benefits like health insurance. In 2012, the salary cap was determined by the revenue sharing off of 55% from media revenue, 45% of NFL Ventures revenue, and 40% of local team revenue (Howard & Crompton, 2014, p. 101). In addition to NFL salary caps, teams are required to pay players a minimum salary, as well, and must spend no less than 89% of the salary cap each year. The NFL also has a rookie payment system that helps owners not pay rookies as high as the past. The new system sets limits on payments based on the average veteran salaries at that player’s position (Howard & Crompton, 2014, p. 102). The NBA owner’s reported that they have had annual losses of $300 million for several years. The current agreement was from 2012 and ends in 2021. NBA has what is know as a BRI spilt, which stands for Basketball Related Income. BRI is made up from every revenue stream that is generated by the teams, along with income made from the league’s NBA Properties and NBA Media Ventures. The current split of the BRI for players is a range from 49% to 51% (Howard & Crompton, 2014, p. 104-105). The NBA owners were able to lower the maximum contract from 5 year deals to 4 years deals and have a provision in contract lengths called the “Bird Exception”. It allows teams to sign players even if by adding to their salaries the team’s payroll goes over the salary cap. It helps teams keep their star veteran players. When comparing an example of salaries of “Bird” and “Non-Bird” contracts, the Bird player that ends up with 5 years with a team can make a total of $95 million over those years versus the Non-bird player making $70 million in those years (Howard & Crompton, 2014, p. 106-107). The NBA also has what is called a Luxury Tax, where teams will pay a penalty when they go over the salary-cap. Currently, about 2/3’s of team pay this tax. The tax is broken down by paying a dollar amount per million dollar range they go over. For example, teams that go over $1 million to 5 million will pay $1.50 for each dollar over, $5 million to $10 million will pay $1.75 for each dollar over, all the way to anything over $20 million will pay $3.75 for each dollar over. The LA Lakers lead at $93.5 million, paying an additional $23.13 million in luxury tax. Teams that are under the tax level collectively split half of the tax among themselves to better help their efforts in retaining players (Howard & Crompton, 2014, p. 109).