How an NBA executive stole $13 million dollars

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The Rise And Fall Of NBA Executive Jeff David

Today’s article is a 2019 investigative piece on the multi-year fraud spearheaded by former Sacramento King’s executive Jeff David, written by Kevin Arnovitz of ESPN.

The Short Of It

Jeff David, former Chief Revenue Officer of the Sacramento Kings, put together a multi-year scheme where he intentionally directed sponsorship payments meant for the Sacramento Kings to his own private entity, Sacramento Sports Partners, defrauding the Kings out of over $13 million dollars. From private entities, to secret phone calls, and even multiple luxury California mansions - this story reveals it all.

Regardless of sports, if you enjoy the inside story on white collar crimes this article is for you.

The Compounding Growth Of NBA Revenue

Given the premise of today’s article, let’s dive a little deeper into the total revenue makeup of the NBA. Currently, the NBA generates more than $8 billion dollars of revenue per season, an average of around $290 million per team (Source: Statista).

The NBA makes money in four main ways:

1. Television - Similar to the NFL, this is the largest part of the NBA’s revenue stream. The NBA nationally televises around 275 games per year, which TNT, ABC, and ESPN pay a combined $2.7 billion a year to host (they signed a nine-year $24 billion extension in 2014). Another 1000+ games are sold through local tv network contracts, bringing in another $150 million yearly . To put this in perspective, with around 400 active NBA players and the average annual salary being $5mm, the TV revenue alone easily covers the yearly salary of NBA players.

2. Merchandising - Merchandising accounts for over a billion dollars in annual revenue for the NBA. In 2015, the NBA ended it’s longstanding partnership with with Adidas and signed an eight-year, $1 billion contract with Nike. In all, this constituted a 245% increase per year over the previous deal (Source: ESPN).

3. Sponsorship - Individual teams are allowed to sell sponsorships for a variety of things including naming rights to their arena, practice, medical center and stadium lounges. Most recently, the NBA has allowed sponsor logos to be displayed on the uniform, driving over $150 million in yearly revenue for the league. Though these deals vary in size, it’s rumored that Rakuten pays the Golden State Warriors around $20 million per year through their uniform sponsorship deal.

4. Tickets - It may be surprising that tickets are a smaller part of the NBA’s overall revenue but it’s still not exactly “small”. According to TicketIQ, the NBA is set to lose over $1.6 billion during the COVID-19 pandemic with the remainder of the regular season and playoffs being closed to fans.

How much do NBA Owners Value Adam Silver?

I’d say a whole lot - Since Adam Silver (current NBA commissioner) took over in 2014, average franchise valuations have skyrocketed from $634 million to $2.1 billion (Source: Statista). Click here for the Forbes yearly list of individual team valuations.

Team owners aren’t the only ones benefiting from an increase in NBA revenue, the average NBA players salary has increased from $4.9 million in 2014 to $7.7 million in 2020 . As the salary cap has expanded, the most talented players have benefited even more - Look at how the top 10 NBA salaries have changed during the same time period.

In the 2019-2020 NBA season, there are 46 players making more than the $23.5 million Kobe Bryant led the league with in 2014-2015.

Extra Credit

With players arriving in Orlando for the NBA restart, Philadelphia 76ers rookie Matisse Thybulle is using his Youtube channel to give the public a behind the scenes look inside the bubble.

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