The Los Angeles Lakers brought in two future Hall of Famers this summer. They already had two on their roster. That sort of talent doesn’t come cheap. Heading into the 2012-13 season, this squad’s payroll stands at about 101 million – highest in the NBA. Presuming Dwight Howard re-signs next summer, that figure will balloon up even more.
Obviously the Lakers are fortunate enough to play in the second biggest media market in America, and clearly they carry a certain notable reputation that other franchises in the league don’t have. That said, even they can’t afford to keep spending money like this, right?
In an interesting new report, the Los Angeles Times points out that the Lakers’ financial situation is actually a lot better than you would think – despite all their expenses. Even though they will pay an exorbitant amount in luxury taxes on top of their salaries, and even though they need to pay almost $50 million revenue-sharing dues, they are still great position thanks to their new TV deal.
The team makes up to $90 million in annual ticket sales and is starting the first year of a TV deal with Time Warner Cable that pays them $120 million more this season.
The Lakers received about $60 million total in local broadcasting rights from KCAL and FS West last season, a number that doubled in the first year of the Time Warner deal. Annual raises bring the deal to about $3.6 billion through 20 years, and the Lakers hold an option to extend to 25 years, potentially pushing the total over $5 billion.
Yes, the same TV deal that is currently preventing Lakers fans from watching preseason games. But that’s the tradeoff. For the right to bring in Dwight Howard and Steve Nash to play with Pau Gasol and Kobe Bryant, and for the right to possibly get LeBron James in 2014, fans need to put up with the inconvenient delays that come standard during cable TV wars.
All things considered, it’s a pretty fair swap.
So, to answer the original question: no, despite all of their ridiculous expenditures, the Lakers are not in bad financial position. They’re still in great position, and likely will be for a long, long time.
(Kudos Los Angeles Times)