Adam Silver: The Billion Dollar Trade

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Friends,

Here’s a wild stat for you — the NBA season, which is typically a 9-month affair, tipped off on October 22nd and ended almost a year later on October 11th.

The most interesting part?

It was a no-brainer.

Sports Business Journal released numbers yesterday that indicate the NBA spent $180 million to “operate 100 days of basketball in its Disney bubble,” but the Orlando investment allowed the NBA to stop bleeding revenue—$1.5 billion in total—mostly comprised of TV broadcast fees and league-wide advertising & sponsorship commitments (Source).

Spending $180M to stop a potential $1.5 billion loss?

Yeah, that’s a good trade.

(📸 / NBA)

Don’t get me wrong, the NBA still lost a ton of money.

About 40% of annual NBA revenue comes from ticket purchases and in-game spending, which amounts to an estimated loss of over $1 billion in 2020 — still a far cry from the potential $2.5 billion in losses that would have occurred without the Orlando bubble, not to mention the messy legal battles that would have ensured with TNT, ABC, and others for not fulfilling multi-year long TV agreements.

In simple terms — when the NBA audits all 30 teams this summer and puts together final revenue figures, they should settle north of $7 billion, which is similar to league-wide revenue numbers in 2017.

Not terrible considering the circumstances, which brings me to my next point.

When it comes to the best commissioner in U.S. professional sports, you can’t change my mind — it’s Adam Silver and it’s not even close.

Let’s run through a few reasons why…

(📸 / NBA)

Despite public opinion, the role of commissioner is not exactly easy.

They’re essentially the CEO of their respective league, constantly balancing short term financial and competitive goals against the longer term valuation vision of team owners and executives. Not to mention you need to keep fans, players, coaches, executives, media, and more happy — all of whom care about different things.

Adam Silver has been excellent at that.

Since taking over for the late David Stern in 2014, Adam Silver has had an unbelievable impact on the finances of the NBA.

Here are the facts:

• NBA annual revenue is up 83% ,from $4.8 billion to $8.7 billion.

• The average NBA franchise valuation is up 234%, from $634 million to $2.1 billion.

• The NBA salary cap has increased by 90%, up from $58 million in 2014 to almost $110 million in 2019.

For illustration, here is how an increase in salary cap has increased NBA salaries.

Top 5 highest-paid NBA players in 2014:

1. Kobe Bryant (Lakers) - $23.5M

2. Amar’e Stoudemire (Knicks) - $23.4M

3. Joe Johnson (Nets) - $23.1M

4. Carmelo Anthony (Knicks) - $22.4M

5. Dwight Howard (Rockets) - $21.4M

Top 5 highest-paid NBA players in 2019:

1. Stephen Curry (Warriors) - $40.2M

2. Russell Westbrook (Rockets) - $38.5M

3. Chris Paul (Thunder) - $38.5M

4. Kevin Durant (Nets) - $38.2M

5. James Harden (Rockets) - $38.2M

Sure, the finances might seem obvious—every major professional sports league, to some degree or another, appears to be increasing revenue, driving team valuations up, and paying players more—but what makes Adam Silver special are his intangible qualities of leadership, compassion, and foresight.

What am I talking about?

People often forget, but one month into his new role as Commissioner, Adam Silver was faced with a career-defining moment — the Donald Sterling saga.

It might seem like an obvious choice now, but banning Donald Sterling, a team owner for over 25+ years, from the league for racist remarks was anything but obvious at the time.

Silver took decisive and unprecedented action by banning Donald Sterling for life — a move that instantly gained him the utmost respect and credibility among fans, players, coaches, and executives. Those type of leadership decisions have only continued in his 5+ years at the helm of the NBA’s most important position.

Adam Silver has perfectly toed a fine line between upholding NBA traditions of old and ushering in a new era of revenue-driven and digitally fan-centric basketball. For example, although the acceptance and adoption of sports betting seems like a recent trend among professional sports leagues, Adam Silver was ahead of his time.

In 2014, Adam Silver wrote an op-ed in The NY Times saying, “It’s good for business, I don’t want to hide from that” and “I’m not pro sports gambling. I’m just a realist.”

In the end, whether it’s been his decisions around sports betting, owner punishment, increasing revenue, or the NBA bubble, one thing has remained clear — Adam Silver is the best person for the job.

P.S. It’s no secret there are rumors of NFL owners reaching out to gauge Silver’s interest in switching leagues.

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