Coming off of one of the most intriguing NBA seasons in League history, it remains hard to fathom that a lockout in now in place.
It’s one of the reasons people have a hard time wrapping their heads around the idea that the NBA team owners are bleeding money, which has led to a number of publications disputing those claims (and, to be fair, some pretty strong rebuttals.)
The NY Times published the most damning piece to date yesterday, basically accusing the NBA of having lied about its financial picture (largely based on calculations done by Forbes.)
And last night, the League released a long statement in an effort to fight back:
The information from Forbes that serves as the basis for this article is inaccurate and we do not know how they do their calculations. Forbes does not have the financial data for our teams and the magazine’s estimates do not reflect reality. Precisely to avoid this issue, the NBA and its teams shared their complete league and team audited financials as well as our state and Federal tax returns with the Players Union. Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several years.
The analysis that was posted this afternoon has several significant factual inaccuracies, including: “(The NBA) is a fundamentally healthy and profitable business” • The league lost money every year of the just expiring CBA. During these years, the league has never had positive Net Income, EBITDA or Operating Income. “Many of the purported losses result from an unusual accounting treatment related to depreciation and amortization when a team is sold.”
• We use the conventional and generally accepted accounting (GAAP) approach and include in our financial reporting the depreciation of the capital expenditures made in the normal course of business by the teams as they are a substantial and necessary cost of doing business. We do not include purchase price amortization from when a team is sold or under any circumstances in any of our reported losses. Put simply, none of the league losses are related to team purchase or sale accounting.
This labor war will be fought by accountants and finance majors, and this is only the beginning.
The NBA Players’ union has yet to issue a response. They’re apparently content to let bloggers fight the PR battle on their behalf for now.