NBA’s Incorrect Loss Projection Hurts Its Case

NBA’s Incorrect Loss Projection Hurts Its Case

The NBA projected it would suffer great losses during the 2009–2010 season, but it actually came away with $183 million in operating income.

Published July 7, 2011

The NBA may have made a mistake in projecting major financial losses during the 2009-10 season, but it was all the opening the players’ union needed to doubt any numbers the league may throw out.

 

We have hit Day 7 of the NBA lockout and it looks like both sides are digging in deep after the players union released numbers Wednesday that showed the league projecting a loss of $340 million during the 09-10 season. But in actuality the NBA had an estimated operating income of $183 million that year, according to the Associated Press.

 

The NBA has seemed to have more of a leg to stand on than the NFL when it comes to needing to slash salaries, rework revenue sharing and perhaps strengthen its salary cap guidelines. The league has projected that 22 of its teams are operating in the red, which is a clear indication restructuring needs to be done.

 

But when the league makes a mistake like it did for the 09-10 season it gives pause for concern about how honest owners are willing to be.

 

"In 2009-10, the NBA repeatedly offered projections that league revenues would decline as much as 5 percent, or $180 million, while also projecting losses of $370 million,” Union spokesman Dan Wasserman told the AP. “Revenues were actually up in '09-10 and the revenue projections were off by as much as $200 million. Yet, the loss figures were only adjusted by $30 million. So yes, we feel there is more than adequate basis for questioning their projections and financials.”

 

Obviously, the league was forced to admit those projections were incorrect while offering  projections were made well before an unexpected windfall came from the Los Angeles Lakers-Boston Celtics seven-game NBA Finals that year.

 

But that didn’t stop the NBA from firing back at the union for what it perceived as misrepresenting the truth.

 

"For Dan Wasserman to suggest that the league's future revenue projection, made before the start of the 2009-10 season during the worst economy in 80 years (which, by the way, turned out to be off by only 3.5 percent) somehow relates to the veracity of our year-end audited financials is absurd," NBA spokesman Mike Bass said. "Mr. Wasserman's questioning of the league's audited financials based on this missed projection is a complete non-sequitur."

 

Contact Terrance Harris at terrancefharris@gmail.com or follow him on Twitter @Terranceharris

 

(Photo: Doug Pensinger/Getty)

Written by Terrance Harris

COMMENTS

Latest in news