In Grantland's newest Zach Lowe column, he broke out a very shielded bombshell: NBA team net gains and losses.
Lowe's scoop headlines his story about how the Nets are a massive mess bleeding money out of every ticket gate and emergency gate, to the tune of $144 million, $131 million more than the next team. As Lowe says, "That is what happens when you pay $90 million in luxury tax for an aging roster and play in a market so large you are ineligible to receive any revenue sharing help." The memo Lowe obtained was reviewed and verified by six sources.
Buried in the middle of the piece are some words about the Hornets' previous season's fiscal problems, which are perhaps blush-inducing were you Michael Jordan.
The then-Bobcats had racked up nearly $34 million in the red and the $22 million benefit of a boosted revenue sharing plan couldn't bring them close enough to sniff an overall profit in basketball operations. Overall, they had a $12 million loss. Forbes, however, estimated they had were $7 million plus in operating income, their first time out of the red in Forbes' calculations since 2008. It should be noted Forbes says their numbers are based off 2012-13 finances, for some reason. I'm not sure where Forbes gets their information from, but perhaps that's from the arena side income.
I don't have the exact definition of what basketball operations income is, but I think it can be assumed to be close to Basketball Related Income (BRI) from the CBA, which Larry Coon defines as "essentially any income related to basketball operations received by the NBA, NBA Properties, NBA Media Ventures, or any other subsidiaries. It also inclused income from businesses in which the league, a league entity or a team has an ownership stake of at least 50 percent."
With that association pretty fairly tied, it looks like basketball operations income can include ticket sales (regular season, exhibition and playoff games), broadcast rights, novelty/program/concession sales, parking, sponsorships, promotions, arena club revenues, summer camps, non-NBA basketball tournaments, mascot and dance team appearances, and more that you can read at in Larry Coon's CBA FAQ page.
Edit: For clarification reasons, I'll add in the note that arena revenues is not included. For NBA teams like the Hornets, who are also responsible for booking music and other entertainment events for the arena, those revenues are not included in these numbers, as Lowe notes in the 13th paragraph. Arena revenue might help the Hornets' overall fiscal numbers, but the basketball operations are going to be more influential on their margin.
Sure, it should be noted there are some mitigating factors here. It makes little sense for some fans to buy soon-to-be-defunct Bobcats jerseys when they could save their money for just a few months to buy a Hornets jersey. In 2012 the team had a season ticket promotion offering "Buy One, Get One Free" in which fans purchasing season tickets in select sections would get their 2013-14 season tickets free.
Of course then there are the facts that the Hornets ranked 25th overall in home attendance. Or you could consider the sponsorship and broadcast rights problems that their previous season might reckon with. Even in the midst of their best season in years, the Bobcats' previous season only went from dead last to next-to-dead-last in audience size. Per Sports Business Daily, they averaged just 9,000 homes per game in the last season. The prior season's numbers was somewhere between 6,000 and 7,000 per game. Last season was the first time in five years the Bobcats hadn't been the worst in the league at home viewership.
The playoff series did much better for home viewership, gathering almost 130,000 in Game 1, a little over 60,000 in Games 2 and 3, and 86,000 in Game 4.
Still, it can't be easy to leverage broadcast rights into great income with poor viewership. And poor attendance isn't helping, either.
With any luck, the rebranding effort turns Charlotte's sponsors and fanbase into a consistent turnaround behind the Hornets name and much better basketball decisions. Because if that doesn't help, I'm not sure what will.