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A Case Against NBA Revenue Sharing

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Adam Fusfeld of Business Insider (HT: True Hoop) used the Indiana Pacers as an example of why revenue sharing isn't the cure-all for small market teams. Although, if he was trying to make the case that revenue sharing wouldn't help level the financial playing field he failed miserably.

The argument is that several small market teams have thrived through smart efficient management. Fusfeld forgets to mention a little luck that helps land a top tier talent like David Robinson and Tim Duncan, but the general point is irrefutable. Any team in the NBA can succeed by making the right decisions across the organization, with the Spurs held up as the gold standard. I couldn't agree more.

But this also makes my point that the playing field is far from level a la the NFL. Fusfeldsays, "Small-market teams will always rely on efficient roster building to compete with the biggest spenders." A little condescending, no? Keep trying real hard little fella and if you do real well you can have a seat at the big boys table.

In other words, in a league where all of the teams are competing for the same prize, some teams have to be "efficient" with no margin for error, while other teams can absorb mistakes and keep making money to try to fix their problems. The Chicago Bulls weathered some down years in the recent past with a full UC and other big-market revenue while the Pacers' market struggles to support the down years.

The part of this article that made me laugh out loud though, was this comment on the Pacers payroll. Check it out after the jump.

Washington, in the nation's ninth largest media market, had a nearly identical won-loss record to Indiana over the five-year span, but earned $87 million more in operating income. The Wizards generated slightly more income, but also spent $7.6 million less each year on player expenses. If the Pacers simply reduced their payroll to equal that of the Wizards, their $26 million loss would transform into a $12 million profit.

In this five-year span, eight franchises – Phoenix, San Antonio, Denver, Detroit, New Jersey, New Orleans, Chicago, and Utah – finished with more wins than Indiana despite paying substantially less in player salaries between 2005 and 2009. Of those teams, only the Nets lost more than $1 million per year.

I absolutely love the term, "simply reduce their payroll" as if no one ever thought of that as an option. This has nothing to do with revenue sharing but with another CBA issue, that being the guaranteed contracts which are nearly impossible to shed or simply reduce.

But the laugh out loud part is the point about teams that won more with less payroll from 2005-2009. Um, can we have a little context here. I'll give you more than $26 million in losses that saddled the Pacers with nothing but grief. How about $18 million in center that couldn't stay on the court nor appear any sense of urgency to get back on the court? Oh, and what about the roughly $12 million in back court players who couldn't seem to stay out of court (the kind with a judge)? I don't even need to mention the brawl ramifications.

The Pacers would've been happy to simply shed those salaries but couldn't in large part due to the NBA's trade rules and the guaranteed contracts. The Pacers organization is definitely the poster child for not committing to long-term contracts, but again that's a different issue from revenue sharing intended to balance the resources available to each team.

One thing is for sure: this summer is going to be brutal. I just tried to discuss one issue up for bargaining and ended up touching on several contentious issues that have little to do with the ball going through the hoop.