The NBA formally began a lockout at 12:01 a.m., and Celtics owner Wyc Grousbeck is reportedly a driving force behind the NBA’s insistence on a hard cap. According to Yahoo! Sports’ Adrian Wojnarowski, Grousbeck calls the lockout “an investment.” He is willing to lose the entire season if it means re-working the Collective Bargaining Agreement in the owners’ favor.
Grousbeck’s willingness to lose the whole season—if true—is an unforgivable sin to Celtics fans. The Celtics have one championship run left in them, maybe. A lost season would mean the end of the Big Three era, or at least end the Big Three’s run as contenders. Hell, a lost season might even call the Grim Reaper to polish off Kevin Garnett or Ray Allen’s career. Grousbeck, worth a reported $360 million in 2005, owner of the now-worth-$452 million Celtics, one of the owners who still makes money, is willing to risk losing the greatest Boston Celtics era since Larry Bird, all to save a few million more dollars.
The owners claim to have lost money this past season, and bushels of it, but as Tommy Craggs cautions on Deadspin, those claims don’t explain everything. In many cases, NBA owners don’t just own NBA franchises; they also own companies or real estate in the surrounding area. Craggs calls these “interconnected wealth-generating mechanisms.” Even when the team itself loses money, the owners can still benefit financially from owning them. NBA teams create a boon for an owner’s local businesses, so a franchise’s real value can’t be known without also taking into effect its value on the owner’s other assets.
Additionally, Craggs noted how creative bookkeeping can make a $7 million profit look like a $28 million loss. He secured the New Jersey Nets’ financial statements from 2004, when the Nets claimed a huge loss but really made money.
“There are certain baked-in advantages to owning a team,” wrote Craggs. “You have both the relevant labor law and the tax code firmly on your side. You are making money you didn’t exactly earn from the moment you sign the paperwork, and you are making more money for your other businesses — your shopping mall across the street from the arena, your legal practice, your broadcast holdings — and then, come tax time, you are allowed by law, and even encouraged, to pretend you are not making any money at all. Remember this the next time David Stern says the NBA’s economic system is broken. ‘The bottom line about the bottom line,’ says Fort [Ronnie Fort, a sports economist at the University of Michigan], ‘is that even if it looks like they’re losing money, it doesn’t mean they’re losing money.’”
The owners want to pay for their own mistakes by taking money from the players’ pockets. The union said the owners’ most recent offer—which guaranteed the players $2 billion annually over a 10-year agreement—amounts to a 12% pay cut for the players. Meanwhile, the owners are unwilling to develop an effective revenue sharing plan. The Los Angeles Lakers just signed a 20-year television deal with Time Warner Cable that some value at $3 billion. But unlike the NFL, which equally shares its television revenue, the NBA allows teams to keep the money from their regional television deals. Spread that $3 billion around (and Boston’s regional television deal, and Chicago’s, and other big-market deals) and the owners would likely have many fewer complaints about losses.
The Celtics make money. They play in a big market. They are owned by two local millionaires who supposedly care more about winning than making millions. Yet at least one of those owners reportedly would not mind seeing the Big Three era collapse under the weight of an NBA lockout. If the report is true, Grousbeck’s nothing but a fraud.