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NBA AM: Is Expansion In The NBA Next?

With the TV deal out of the way, could expansion in the NBA be on the horizon?

Steve Kyler

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Is Expansion Next?:  It’s been long believed that after the NBA reached its new rights deal with ESPN/ABC and Turner that domestic expansion would become possible, or at least that’s the narrative those seeking to obtain a team have been spinning.

While expansion, specifically domestic expansion, isn’t completely out of the question at some point in the future, in the short-term it’s not something that’s going to happen.

As they say, don’t shoot the messenger.

The problem with expansion is that what a new member team/market puts into the pie in terms of an expansion fee and revenues is often radically less than they take out of the pie over a significant span. The NBA has learned this lesson the hard way both in some of its relocation decisions over the last two decades and the expansion into Charlotte.

The NBA just closed a media rights package said to be worth $24.4 billion over nine seasons. Divided among the 30 current member teams, that comes out to roughly $813 million per team. Expand that out to 32 teams and that number drops to $762 million per team. Said differently, each teams loses $51 million from the current nine year deal by allowing two more mouths at the table.

For argument’s sake, let’s say a new team in an expansion scenario costs $1 billion, which is a massive number for a new team, divided out among the 30 existing teams, that’s an expansion fee worth $33.3 million per team.

So, let’s call it two new teams or $66.6 million per existing team in money coming in, in exchange for $51 million per team going out. That’s a gain of $15.6 million per team. Sounds like a good deal right? The problem is that’s $66.6 million coming in one time, but $51 million going out over the span of this current nine-year deal.

Those two new mouths get to eat from the pie forever, obtain players, hire coaches, poach ad dollars and national TV appearances. They’re competing franchises when it comes time to sell your franchise.

Now the argument for expansion is that it would increase the value of the league. Really? The NBA just closed a $24.4 billion rights package and the Clippers sold for $2 billion. The league doesn’t seem to be having a valuation problem.

Would adding a franchise in Seattle be good business? Maybe. A new arena and a renewed fan base that cares about the team could be profitable. The problem is it was not profitable the last time the NBA played in Seattle, so there is no guarantee that it will be this time even with a new amped up owner and the right kind of revenue generating amenities.

Charlotte was the flag pole in NBA attendance for almost a decade, and now that same formerly rabid fan base is ho-hum about the NBA at best. It is getting better, but the belief that Charlotte would return to its glory days with a new owner and an expansion team still has not materialized, even after an ownership change.

Those are just the top line numbers in an expansion scenario, that’s not taking into account the supply of quality players to fill those 30 new roster spots. There has been a long-held belief that the NBA doesn’t have enough star players now, is adding two more teams going to help the competitive balance? Or would the league be inviting in two more lottery teams for the foreseeable future?

Expansion is great to talk about. There are markets like Seattle, Las Vegas, Anaheim, San Diego, Louisville and Kansas City that would love to have the NBA in their market. There are backers and supporters in those markets that would pony up the dollars, but is adding more teams really good for basketball in the long-term?

The answer there is still likely no.

The NBA and its players had a brutal labor fight in 2011 over the economic state of basketball. Twenty two teams were said to be losing money then. Much of that has changed with new the revenue split between the players and owners along with revenue sharing between owners, increasing across the board in the business side of basketball and this new rights deal, but that does not mean the NBA is ready to trip over itself to expand.

If expansion is going to be considered, it’s likely going to happen after 2017, when the players and the owners fight out the next labor deal.

But if expansion is not considered, as the NBA has said time and time again it’s not open to, it’s because they have learned lessons about what new markets mean, and while having a bigger league may sound good on the surface, one-time expansion payments and new markets are generally money losers in the long-term. With $24.4 billion locked in over the next nine years, it’s more likely that the owners pocket most of that cash rather than look for more mouths to feed.

Expansion is not out of the question, it’s just not nearly as likely as some in those would-be markets would like to make out to be.

Flattening The Cap?:  With yesterday’s news of a new massive TV deal, there was immediate speculation on how that new money would impact the NBA both in the short-term and in the long-term.

Yesterday we gave you The Ten Things You Need To Know About The NBA’s New TV Deal.

But our good friend and contributor Larry Coon dropped a fun wrinkle in his break down of the deal for ESPN.

There has been a lot of talk about smoothing the transition from the current salary cap levels based on the current TV deal, to the new much larger cap levels expected when the new TV deal kicks in.

Apparently what’s been suggested and is being weighed by both the Players’ Association and the NBA is rather than one large increase in July of 2016 that some teams may not be able to fund immediately, is to install a more gradual increase in the cap and a possible lump sum payment to all players.

Under the current labor deal the players are guaranteed a fixed percentage of revenues. In their case, given the size of the new rights deal, it would 51 percent of revenue. If the cap were mutually agreed to be “smoothed’ it’s likely that a shortfall between what is paid out in salaries and benefits is less than 51 percent of the new revenue stream. In this case the NBA would be required to pay the balance to the Players’ Association, who would then disperse the shortfall equally to all its members.

There has been some concern that doing a massive increase in 2016 would be problematic, as it might unfairly benefit those players eligible for free agency in 2016 and in essence penalize players who take long-term deals between now and 2016, including players currently negotiating rookie scale extensions.

Any smoothing of this nature would require the Players’ Association’s consent. Allowing the cap to be gradually phased in spreads the free agency benefits equally, while giving every player a bigger chunk of the pie even if they are under contract, by virtue of the shortfall payment.

This far from decided, but it is an interesting wrinkle to the problem.

Stay tuned for more on this as it develops.

More Twitter:  Make sure you are following all of our guys on Twitter to ensure you are getting the very latest from our team: @stevekylerNBA, @AlexKennedyNBA, @LangGreene, @EricPincus, @joelbrigham, @SusanBible @TommyBeer, @JabariDavisNBA , @NateDuncanNBA , @MokeHamilton , @JCameratoNBA and @YannisNBA.

Steve Kyler is the Editor and Publisher of Basketball Insiders and has covered the NBA and basketball for the last 17 seasons.

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NBA PM: Hornets Rookies May Become Key Contributors

Some key injuries may force Charlotte’s rookies into becoming effective role players earlier than expected, writes James Blancarte.

James Blancarte

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As the NBA finally gets underway tomorrow evening, the 2017 rookie draft class will get their first taste of regular season action. Teams reliant on young rookie talent might produce an exciting brand of basketball but that rarely translates into a winning formula. Having rookies play a key role for a team hoping to make the playoffs can be a risky endeavor.

Out West, the Los Angeles Lakers are relying on both Lonzo Ball as well as Kyle Kuzma, who may have worked his way into the rotation with his surprising preseason play. However, the Lakers are, at this point, not realistic contenders in the competitive Western Conference. In the East, the Philadelphia 76ers have more realistic playoff hopes. The team is relying on this year’s top overall draft pick, Markelle Fultz, and 2016’s top pick, Ben Simmons, for meaningful production. Although Simmons has been in the league for over a year, he is still classified as a rookie for this season since he didn’t play last season.

The Charlotte Hornets are looking to return to the playoffs after narrowly missing the cut this past season. The team will likely feature not one, but two true rookies as a part of their regular rotation. Like the Lakers, the Hornets feature a highly touted rookie with the talent and poise to contribute right away in Malik Monk. The team also features Dwayne Bacon, a rookie that has flashed scoring potential as well as maturity — key attributes that will allow him to quickly contribute to the team.

Both players will be given the opportunity to contribute as a result of the unfortunate and untimely injury to forward Nicolas Batum. Batum tore a ligament in his left elbow in an October 4 preseason game against the Detroit Pistons. Initial speculation was that the injury would require surgery. However, it was announced on October 10 that surgery would not be necessary, and that he is projected to return in six to eight weeks. Assuming that there are no setbacks in Batum’s recovery, the Hornets will be looking to replace his perimeter scoring, playmaking abilities and perimeter defense. Enter Monk and Bacon.

Monk and Bacon have both shown the ability to score the ball, which is not exactly a common trait in Hornets rookies. Bacon, the 40th pick in the 2017 NBA draft, has made it a point to look for his shot from the outside, averaging 7.8 three-point shots per game while knocking down 33.3 percent of his attempts. As Bacon gains more experience, he presumably will learn how to get cleaner looks at the basket within the flow of the team’s offense. Doing so should help him increase his shooting percentage from beyond the arc, which would turn him into an even more effective contributor for Charlotte.

Bacon spoke to reporters after a recent preseason game against the Boston Celtics. Bacon was placed in the starting lineup and went 4-4 from three-point range in 34 minutes of action.

When asked what are some of the things he wanted to work on, Bacon focused on one end of the court in particular.

“Definitely defense. I’m trying to perfect the defensive side, I want to be one of the best two-way players to ever play the game,” Bacon stated. “I feel like I got the offensive side so just keep getting better on defense, I’ll be fine.”

Lack of consistency and defense are key factors that prevent many rookies from playing and being successful on winning teams right away. Based on Bacon’s size (6-foot-6, 221 pounds with a long wingspan) and physicality, he has the physical tools necessary to play passable defense. Combine that with his ability to score (he led the team in scoring in three of its five preseason games) and the unfortunate injury to Batum, it’s apparent that Bacon will get an opportunity to make the rotation and contribute.

Reliable two-way players on the wing are crucially important, but are not always readily available and are even less common on cheap contracts. The Los Angeles Clippers went through the entire Chris Paul/Blake Griffin era swapping small forwards on a nearly annual basis, struggling to find this kind of contribution from the wing. With little cap flexibility, the Clippers were unable to acquire a forward that could effectively and consistently play both end of the court, which caused issues over the years. As a second round pick, Bacon is set to make $815,615 in his first year. If Bacon is able to contribute at even a league average level, that will be a major boost for the shorthanded Hornets. Bacon is smart to focus on improving as a defender as Steve Clifford is a defensive-minded coach who will leave talented players on the bench if they aren’t making a positive impact on the defensive end of the court.

In fact, Clifford offered some strong simultaneous praise and criticism of Monk when it came to his scoring and defense.

“He can score, he can score, he can score [speaking of Monk],” Clifford stated. “I think his defense will come because he’s willing, he’s a good guy. I think that being a good player is very important to him.”

It’s apparent in Clifford’s comment that he values scoring, but that defense is also extremely important and essential to any player that wants to be a “good player.”

“He knows and understands that the way he has played in the past [in college], he can’t play in this league if he wants to be a good player,” Clifford said about Monk. “The big thing is, I told him, when people say, ‘he’s a talented offensive player’ that is a lot different than somebody saying, ‘he’s a talented NBA player.’”

Point guard Michael Carter-Williams also suffered an injury (bone bruise in his left knee), which received less attention than Batum’s injury. While Carter-Williams is not the same caliber of player as Batum, the Hornets are alarmingly thing at backup point guard. Without Carter-Williams, the team was going to lean on Batum to act as a playmaker more than he has in the past, which would have, at least in part, addressed the lack of an established backup point guard. But with Batum sidelined, Coach Clifford has given Monk time at the point guard position. If Monk proves capable of playing both guard positions and playing alongside Walker, that could go a long way towards mitigating the loss of Batum and Carter-Williams. It’s not reasonable to expect Monk (or Bacon) to produce as consistently as a seasoned veteran, but having them contribute at a league average level would constitute a big win for a Charlotte team with serious playoff aspirations.

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Teams Refuse To Back Down To Stacked Warriors

Golden State got better over the summer, but that didn’t stop others from trying to stop them from repeating as champions

Spencer Davies

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Opening week is finally upon us.

Appropriately enough, the new-look Cleveland Cavaliers and Boston Celtics will kick off the 2017-18 NBA season tomorrow night, as will the defending champion Golden State Warriors when they host the improved Houston Rockets.

The clear-cut favorites to win the league title are the ones who have done so two out of the past three years, and rightfully so. Warriors general manager Bob Myers has done a masterful job of assembling a juggernaut. They’ve kept their insanely talented core intact and—aside from Ian Clark and Matt Barnes—haven’t lost any of their key bench pieces to free agency.

In fact, Golden State has added to that dangerous second unit. Jordan Bell was bought from the Chicago Bulls and will bring another Draymond Green-esque impact almost immediately. Nick Young and Omri Casspi were brought in to fill the void of backup wings, which is an improvement at the position anyway. With the same roster as last year and better reserves to give the starters a breather, there’s no reason Steve Kerr and company can’t repeat if they stay healthy.

Knowing what the Warriors are capable of and how well they are set up to truly be a dynasty, there are some league executives out there who are hesitant to make significant moves that could potentially flop against such a powerhouse.

ESPN’s Zach Lowe reported back in middle June that select teams don’t want to risk a big play because of it. What that basically translates into is: We’re throwing in the white towel until that ball club disbands.

But luckily for fans and for parity’s sake, there was a handful of general managers that refused to take that path. Just looking down the list in the Western Conference, there were organizations that swung for the fences this summer.

The aforementioned Rockets are one of them.Daryl Morey pieced together multiple trades to allow him to land Chris Paul to play next to James Harden and form a dynamic backcourt tandem. Houston also signed a pair of veteran two-way players in Luc Mbah a Moute and P.J. Tucker to provide depth and defense.

What about the Oklahoma City Thunder? Just when we thought Russell Westbrook’s MVP season was enough to maybe build off, the unthinkable happened. Sam Presti unloaded Victor Oladipo and Domantas Sabonis to Indiana after just one season with the team to add All-Star forward Paul George, who is in a contract year.

That blockbuster move was followed up with another two months later, as Presti decided to deal fan favorite Enes Kanter and Doug McDermott to the Knicks in exchange for Carmelo Anthony. The creation of a Westbrook-George-Anthony big three forms an elite trio that is determined to prove championship worthiness.

Top tier Eastern Conference counterparts did their due diligence as well. The Cavaliers and Celtics are essentially rivals and became trade partners in an attempt to re-tool their respective rosters, in addition to gaining important pieces outside of that.

Boston inked Gordon Hayward to a maximum contract to create a bolstered starting unit alongside Isaiah Thomas, Avery Bradley, and Al Horford until madness happened.

Firstly, Bradley got moved in a swap with the Detroit Pistons for Marcus Morris to address the hole at power forward. After that—with reports of Kyrie Irving’s unhappiness in Cleveland swirling around the basketball universe—Celtics general manager Danny Ainge acted immediately and swung a deal for the All-Star point guard in exchange for his All-Star point guard, a vital member of his team in Jae Crowder and the coveted Brooklyn Nets first-round pick.

It’s almost a brand new squad, but Brad Stevens has a versatile group to work with to try and finally dethrone the conference champions of the last three years.

As for the East’s cream of the crop, the Cavaliers moves are well known because wherever LeBron James goes the spotlight follows. Thomas and Crowder were huge gets for first-time general manager Koby Altman, especially after the outside growing doubt in the franchise’s front office. The rookie executive was also instrumental in signing Derrick Rose, Jeff Green, and Dwyane Wade to veteran minimum contracts.

Rose and Green have plenty of motivation because their critics think they’re washed up, meaning Tyronn Lue won’t have to give them a reason to play their hearts out. Wade simply made the decision to come to Cleveland because he can play with his best friend and potentially add to his collection of championship rings.

Ante Zizic, Cedi Osman, and Jose Calderon are also now a part of the roster that all-of-a-sudden is now deep at almost every position. It’s a new flavor for a team that may have only one year left to compete for a title with James’ pending free agency next summer.

Those four teams feel great about their chances to get in the way of the Warriors. It doesn’t stop there though. The West in general loaded up.

The Minnesota Timberwolves executed the first big move of the year when they traded for Jimmy Butler. The Denver Nuggets signed Paul Millsap to provide leadership and a veteran voice in a young locker room full of talent. The San Antonio Spurs lost Jonathan Simmons but brought in a very capable Rudy Gay under-the-radar as Kawhi Leonard’s backup.

Nobody expected the league to completely fold and hand Golden State another championship, but it was surprising (and relieving) to see so many teams have the fortitude to pull off the moves that they did. There was definitely risk involved for some of them, however, one thing is for certain.

The Warriors will not have a cakewalk to the NBA Finals. They will have to go through a rigorous set of teams in the West throughout the regular season and the playoffs.

If any team is up to the task, it’s Golden State. But we’ll see how it plays out starting about 24 hours from now.

See you at tip-off.

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NBA League Pass Debuts for 2017-18 Season

NBA League Pass has launched for the 2017-18 season. Basketball Insiders has the details.

Ben Dowsett

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The NBA and Turner Sports have launched NBA League Pass for the 2017-18 season, with several new features and pricing options available. NBA League Pass, a subscription-based service, will be available to users across 19 different platforms, from television and broadband to tablets, mobile and a plethora of connected devices.

In addition, an important note: As of Monday, NBA League Pass subscribers who have already purchased their access through a TV provider (Comcast, DirecTV, Dish, etc.) are now able to link their account to the NBA’s streaming service at no additional charge. The link to do this can be found here.

Basketball Insiders has you covered with a breakdown of all the new details immediately available. We will also be bringing you a detailed breakdown of certain important technological areas later in the week.

Features

New or improved features of NBA League Pass include:

  • Improved video quality for streaming League Pass content developed by iStreamPlanet, a high-level video streaming entity working in partnership with NBA Digital. Included among these improvements are faster delivery time for live feeds, reducing notable lag time present in previous versions. More detail on these video quality improvements will be featured in our breakdown later this week.
  • A new premium package that includes continuous in-arena coverage, even during commercials. This allows fans to view team huddles, live entertainment and other venue features that make them feel closer to the experience.
  • A season-long virtual reality subscription package via NBA Digital and NextVR, available to all premium and traditional NBA League Pass subscribers (also available to international subscribers and single-game purchasers beginning in week two of the NBA season). Access will be available across Samsung Gear VR, Google Daydream and Windows Mixed Reality.
  • Coverage of pre-game warmups and other in-arena events.
  • Spanish-language video coverage for select games, as well as Spanish-language audio continuing for select games.
  • NBA Mobile view will contain a zoomed-in, tighter shot of game action that’s optimized for mobile devices.

Pricing

Pricing for NBA League Pass has not changed for traditional access, and will remain at $199.99 for the full season. New monthly-based subscriptions are now also available, both for the full package and for individual teams. Full pricing will be as follows:

  • Traditional NBA League Pass (full league): $199.99
  • Premium NBA League Pass: $249.99
  • NBA Team Pass: $119.99
  • Single Game Pass: $6.99
  • Virtual Reality package: $49.99
  • Premium monthly subscription: $39.99
  • Traditional League Pass monthly subscription: $28.99
  • NBA Team Pass monthly subscription: $17.99

Notes

As previously reported by Basketball Insiders, upgrades are also expected on the TV side of NBA League Pass, particularly through Comcast, which has had the largest share of customer issues for this product in recent years. While only a single nightly HD channel was available via Comcast XFINITY League Pass previously, sources tell Basketball Insiders that all games will be available in HD through Comcast’s Beta channel package by the end of November (or earlier).

This Beta package does have limitations, however, including users’ inability to record, pause or rewind games. The package that was available in previous season will continue to be available until (and after) the Beta package is active, and subscribers will get access to both for no additional charge.

Check back with Basketball Insiders later in the week for a full rundown of the technological improvements being made to NBA League Pass.

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