The Business Of Basketball

There is an uprising going on in the National Basketball Association. Owners of small-market franchises are telling Commissioner David Stern that they can’t make money.

“Our current economic system (whereby local television revenue and gate receipts are not shared among the league’s 30 franchises) works only for larger-market teams and a few teams that have extraordinary success on the court,” says a letter sent by eight owners to Stern this fall. Owners from all of the league’s smallest markets, including Charlotte, N.C., Memphis, Milwaukee, Wis., and New Orleans, signed the letter.

There was one glaring absence: Peter Holt and the San Antonio Spurs--the best-run franchise in the NBA. Despite playing in the league’s third-smallest market, the Spurs are worth $390 million, 11% higher than last year and $37 million above the league average. Thanks to the team's on-court success and the first-rate AT&T Center, the Spurs turned an operating profit (in the sense of earnings before interest, taxes and depreciation) of $11.7 million, compared with $6.9 million for the average NBA franchise.