NBA Lockout: NY Times, NBA disagree on profits

Famed New York Times number-cruncher Nate Silver turned his eye Tuesday to the NBA lockout, analyzing the league's estimated profits using numbers compiled by Forbes and Financial World Magazine. His take? The owners may be crying wolf:

Whereas there was almost no doubt that the N.H.L. was in fact losing money in advance of its lockout — player salaries had mushroomed by more than 400 percent from 1994 to 2004, according to independent estimates — the N.B.A.’s claims of financial hardship should be viewed more skeptically.

Instead, independent estimates of the N.B.A. financial condition reflect a league that has grown at a somewhat tepid rate compared to other sports, and which has an uneven distribution of revenues between teams — but which is fundamentally a healthy and profitable business. In addition, it is not clear that growth in player salaries, which has been modest compared to other sports and which is strictly pegged to league revenue, is responsible for the league’s difficulties.

Silver backs this up with tables upon tables of numbers (I advise you to read/skim the whole article), eventually coming to the conclusion that the league as a whole actually finished $187 million in the black this season, not $340 million in the red. Not surprisingly, the NBA disagreed with Silver's analysis, rightfully pointing out that Forbes' numbers, while well intentioned, are in fact mere guesses.

Tim Frank, the NBA's senior VP of communications, issued a statement to the Times:

The information from Forbes that serves as the basis for this article is inaccurate and we do not know how they do their calculations. Forbes does not have the financial data for our teams and the magazine’s estimates do not reflect reality.

Precisely to avoid this issue, the N.B.A. and its teams shared their complete league and team audited financials as well as our state and Federal tax returns with the Players Union. Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several years.

Frank proceeded to go all Fire Joe Morgan on Silver's analysis, dissecting the arguments point by point. Feel free to take whichever side you want -- unless the league's audited financials are eventually shared with the media, this is an argument based on public relations, not facts and figures.

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