National Basketball Association owners aren't crying wolf when they say their league is in serious financial trouble.
A look at the books drives home that message ever so painfully.
* It has been learned that only seven of the league's 23 teams made money last season. And the NBA admits to losses of between $15 and $20 million, with comparable losses anticipated this season.
* The average NBA salary is $246,000, making the average team's 12-player payroll $2,952,000. The Bullets, counting Spencer Haywood on the roster, average $167,000. The Indiana Pacers have the lowest average salary at $100,000. The 76ers have the highest, averaging $400,000 a player. The NBA minimum salary is $40,000.
* League sources say the average team pays out an additional $975,000 for coaches' salaries and money due players who are no longer with the team and another $240,000 in such benefits as insurance, pensions and health and medical coverage for the players. That comes to $4,167,000 a season.
While the NBA says it does not keep such figures, a team-by-team breakdown of ticket prices shows that the average NBA ticket price is $9.88, and with an average attendance of 10,114 for 41 home dates (through March 6), the average team would take in $4,096,979 in gate receipts. The league takes 7 percent of the gate, leaving the teams with an average of $3,810,191. That means salaries and player benefits eat up an average of $286,788 more per team than the average team takes in at the gate.
* League sources say at least four teams, the Utah Jazz, Indiana Pacers, Cleveland Cavaliers and San Diego Clippers, are in such precarious financial positions they could possibly be folded or merged. Cleveland owner Ted Stepien is now talking about moving the franchise to Toronto.
* Owners are having difficulty working out a new collective bargaining agreement with the players and the players have set an April 2 strike date if a settlement isn't reached by then. Each team stands to lose approximately an additional $2.5 million if there is a strike. How can a league with perhaps the best athletes in the world be in such a jam? Who is to blame and how does the rat get out of the maze?
"We have seen the enemy and he is us," a comic strip character once said. He could have been an NBA owner.
"The reason the NBA got itself in this predicament is simple," says Bob Woolf, one of the league's top player agents. "It's the avarice and greed of the owners who submitted to all of these large salaries that caused it.
"Otis Birdsong, for example, was making $150,000 with Kansas City and he became a free agent and someone came along and offered him $1 million. He didn't ask for it; they offered it. The owners set the market value and now they are asking the players to protect them from themselves.
"The insanity of this whole thing is that the owners can't put restraints on themselves. They can't even agree on when to adjourn a meeting."
Bob Bass, general manager of the San Antonio Spurs, says, however, that in standing up against the players now, "this is the first time the owners have been so together on anything."
Sam Schulman, the owner of the Seattle SuperSonics who was once one of the most progressive owners in the league, now says the players "are highly overpaid. The salary structure in the league is horrendous. If they want to strike, let them. It'll help return the league to normalcy."
Schulman pays each of his players an average of $380,000 a season, second only to the 76ers.
The league has taken some steps to help itself.
Commissioner Larry O'Brien last month established a committee "to focus on problem franchises." The committee is charged with identifying those franchises in difficulty, the severity of their problems and the problems those franchises are creating for the league. The committee is to report to O'Brien in three weeks. O'Brien also formed a committee to come up with ideas for strengthening the league through things like revenue sharing, scheduling changes and other methods of increasing revenues and reducing operating expenses.
O'Brien, whose favorite word the past three seasons has been "upbeat," has finally admitted that things aren't well in the NBA.
"We must face up to the fact that a few of our teams are in financial trouble," he said. "The condition of those teams is not only a hardship for their owners and their fans, but also has a negative impact on every other NBA franchise and the league as a whole."
It takes money to make money in the NBA.
The 76ers, for example, lost more than $1 million last season when they made it to the NBA finals, where they lost to the Los Angeles Lakers. It was the third time the 76ers had been runners-up in the last six seasons. Owner Harold Katz then signed free agent center Moses Malone to a six-season, $13.2 million contract.
"It's one of the best investments I ever made," Katz said. "We'll realize a return on our investment." And possibly win the championship, as well.
The 76ers have a payroll of approximately $4.8 million, but with an average attendance of 15,311, at an average of $13 a ticket, the 76ers will bring in $8,160,763 in the regular season. Less the NBA's 7 percent, that leaves them with $7,589,509, or about $2,789,509 million more than they are spending on salaries.
The 76ers drew an average of 12,362 last season, so at an average of $10 a ticket for 41 regular season games, they took in only $5,068,420. Minus the NBA's 7 percent, they were left with $4,713,631.
There are no shared gate receipts in the NBA and there are only three teams that make that much of a difference at the gate anyway--Philadelphia, which draws a league-leading 15,492 on the road, Los Angeles, which draws 14,614, and Boston, which attracts 13,817. No other team is within 3,000 of the Big Three.
At the bottom in attractiveness is Cleveland, 8,209, which is about twice as many as it draws at home, and Indiana, 8,556.
At home, 13 teams are drawing fewer fans than they did last season and through games of March 6, or 74 percent of the regular season, NBA attendance was down 2.4 percent from a year ago, from 10,366 a game to 10,114.
Los Angeles leads the league in home attendance at 15,345, and Philadelphia is next at 15,311. The poorest attendance is at the Cavaliers' home games, 4,059. The biggest increase from a year ago is in Detroit, where the Pistons went from 9,460 to 13,038. The biggest decline was in Houston, where without Malone the Rockets are drawing 3,689 fewer spectators.
There are other NBA expenses.
Air travel and hotel accommodations range from $300,000 to $500,000 a season, plus there are per diems to pay, uniforms to buy and clean, and arena rentals and nonplaying personnel to pay which totals an average of about $2.5 million per team in expenses.
The teams do have other forms of revenue besides the gate. This is the first season of an $88 million contract with CBS that pays the league $22 million a season for the next four seasons. That comes to $950,000 a team per season.
Each team also gets another $240,000 from the league's contracts with USA and ESPN cable companies, and anywhere from $100,000 to $1 million more per team from local radio, television and cable contracts.
The seven teams that made money last season were Boston, New Jersey, Phoenix, Milwaukee, San Antonio, Portland and Los Angeles.
The 76ers and SuperSonics will make a profit this season and Denver owner Red McCombs said that if his team gets past the first round of the playoffs, it will make money. If not, it will lose about $650,000.
Most of the other teams are bunched in the minus $1 million to $3 million category. At the bottom are Cleveland, San Diego, Utah and Indiana.
The Cavaliers are a classic example of bad management.
Owner Ted Stepien lost $7.5 million last season and is losing about that much again this time around. He has been trying to sell the team and almost did so last week, to John Ferchill, a Cleveland real estate developer. Ferchill was to pay Stepien $650,000 and assume all of the team's debts, but he backed out when Stepien kept changing the terms of the sale.
There are reportedly two other prospective buyers.
Building a winner, a financially successful winner, in the NBA is relatively simple, theoretically. Only three things are needed: an owner with money, a willingness to spend the money and someone to make the right decisions on how to spend it. It takes all three.
Stepien had the money and the willingness to spend it, but no one to tell him how to do it right.
He went after high-priced free agents. He offered Birdsong $1 million, but lost him to the Nets. He did get Bobby Wilkerson for $300,000, James Edwards for $800,000 and Scott Wedman for $700,000, and then couldn't even draw 6,000 people a night to the arena to pay them.
No victories. No fans. No money.
There are four types of owners in the NBA. Jerry Buss of Los Angeles, Katz of the 76ers and Harry Mangurian of the Boston Celtics, for instance, have the money, and when a particular player the coach or general manager says he needs comes along, the player is acquired, virtually no matter what the price.
That's how the Lakers got Bob McAdoo.
"I want him," said Coach Pat Riley.
"You got him," said Buss.
Result: NBA title for Lakers.
Coach Billy Cunningham of the 76ers said he needed a strong, dominating center to win the title. Katz got him Malone.
Midway through this season, with the best record in basketball, Cunningham said he needed a backup center and a shooting forward.
Katz gave General Manager Pat Williams approval to get Reggie Johnson and Cleamon Johnson, the two best available at their positions.
Then there are owners such as Stepien and Donald Sterling of San Diego, who don't know what the NBA is all about.
"They got new owner-itis," said one fellow owner. "Some franchises have been run like they were yachts or summer resorts, not like you'd run a business. I think some of the owners just want to show off, like Lyndon Johnson showing everybody his scar."
Then there are such owners as Sam Nassi of Indiana and Sam Battistone of Utah, who are sticking to a strict budget, win or lose.
Finally, there is a group consisting of such men as Abe Pollin of Washington, Donald Carter of Dallas and Richard Bloch of Phoenix, who put restraints on salaries, don't go after high priced free agents and encourage their fellow owners to control themselves.
"We all have a right to say no," said Bloch, "and in Phoenix, that's what we've done."
Pollin, chairman of the NBA's labor negotiations committee and one of the league's most influential owners, has been a longtime proponent of controlled spending and he has made his franchise a successful one without going after high priced free agents.
The most he has ever spent on a free agent is the $300,000 a year he is paying Ricky Sobers.
"He's building his team the way he feels it's best to build his team," said Red Auerbach, Boston Celtics president and general manager. "Everybody's situation is different and what works for some doesn't work for others."
Pollin became so disillusioned by the high salaries and mounting losses two years ago that he considered selling the team.
Pollin said he simply doesn't believe in paying exorbitant salaries. When Mitch Kupchak was offered $750,000 as a free agent to play with the Los Angeles Lakers, Pollin's best offer was $600,000. The highest paid Bullet ever is believed to be Elvin Hayes, who made $450,000 in his last season with the team.
The highest paid player on this year's team is believed to be Kevin Grevey, who makes $350,000 a season, that because of an offer sheet he signed with Indiana last year. It was matched by the Bullets.
"Something has to be done to help add financial stability to the league and controls of some kind have to be put on spending, or we are all in trouble," Pollin said.
It isn't known how financially successful the Bullets are, but sources say that, like most teams in the league, if they get past the first round of the playoffs, they'll make a small profit or at least break even.
"I'm an optimist," said Pollin. "That's why I'm still in this business."
But can a price be put on winning? The winners the last four years have been the big spenders, Philadelphia, Boston, Los Angeles and Seattle.
One respected player agent, who didn't want to be identified, said the difference between the haves and the have nots in the NBA is that "the haves don't really have a budget. If they need something, they make it become available. The have nots have a budget and stick to it, no matter what."
In the 1979-80 season, the average salary in the NBA was $173,500. In 1980-81, it increased to $189,000, to $218,000 last season, and $246,000 this season. The reason for the rise is free agency, made possible by the Oscar Robertson suit settlement in 1976.
The Robertson settlement established the right of first refusal in which a free agent can negotiate with every team in the league and then present the best offer to his old team. The old team then has 15 days to either match the offer or allow the player to leave.
That is also a major stumbling block in the current negotiations between the league and the NBA players association.
The league has suggested a guaranteed compensation plan, which will put a ceiling on salaries and give the players a share of league revenues. The players have agreed in principle to the plan, but don't want it to go into effect until after the Robertson settlement expires after the 1986-87 season. The owners want the players to give up what they got in the Robertson settlement and adopt the guaranteed compensation plan.
The players are against it because some teams, which are above a certain salary limit, would be prevented from signing any free agents.
The Indiana Pacers lost $1.9 million last year and promptly went on a budget. They let free agents Don Buse, Johnny Davis and Louis Orr go and they traded Cleamon Johnson, who will become a free agent at the end of the season.
Buse made $150,000 last season and the Pacers offered him $90,00 this season.
Bob Salyers, Pacers' general manager and team counsel, said not signing the three was a sound business decison.
"We would have liked to have had each of them back, but we were working on a budget," he said, "and these franchises have to be run like you'd run any other business. To sign them would have increased our payroll by $800,000 and we would have had, essentially, the same team we had last year when we didn't make the playoffs, so why do it?"
Johnson was making about $110,000 and had a stipulation in his contact that if he played 24 minutes a game, he'd get an additional $50,000. When he was traded to Philadephia Feb. 15, he was playing 23.8 minutes a game.
The Pacers, because of their poor record, may be in a position to draft Ralph Sampson; Salyers said the budget would be adjusted to accommodate him.
"Only four or five players can really make a difference night after night and Ralph is one of them," he said.
A further illustration of the plight of the Pacers is that their attendance is only 4,806 a game.
"We have some problems to work out, but this is not a trouble franchise," said Salyers. "I think we made some business decisons that were contrary to what would work in the marketplace, like increasing ticket prices, but all the bad decisions were ones that can be reversed."
If only all the owners could say that.