Net Profits

Tracking Salaries in the NBA



Eddie Jones plays guard for the Memphis Grizzlies for 20-30 minutes a game. His salary this season is $15,680,000, the highest on the team

That's a lot of money for a 14-year veteran who averaged 11.8 points and 3.7 rebounds per game last year and didn't make the All-Star team or lead his team to a playoff victory. And his stats are down so far this year. In another era, he might have been known as "Steady Eddie," with a salary to match.

But not in the modern NBA, where tracking salaries is as much a part of the game as keeping stats. As my colleague at The Memphis Flyer, Grizzlies reporter Chris Herrington, says, "You can't understand what teams need to do to stay competitive without understanding the salary structure. What players are paid and the team payroll as a whole has an impact on what players can be traded, when they can be traded, and who they can be traded for."

Under the NBA's collective bargaining agreement, players are guaranteed at least 57 percent of total revenues. Strictly speaking, salaries aren't public information in the same sense as the salaries of public officials and executives of public companies. Agents, players, and team officials leak them to the media. Web sites such as HoopsHype.com post them. The Grizzlies payroll this season is listed at $64.2 million, with Jones at the top, even though the last time he averaged 20 points a game was 1999-2000.

"The figures are not 100 percent reliable but I'd say they are very reliable," says Jimmy Sexton, an agent in Memphis who has represented several professional athletes including former Grizzlies player Antonio Burks.

The agent's maximum cut in the NBA is 4 percent. Take off another 35 percent for federal income taxes, and Jones's $15.6 million salary becomes $9.6 million. Tennessee, like Texas and Florida, has no state income tax, which is an attraction for players on teams in those states.

The NBA's salary cap is an attempt to keep teams in large and small markets reasonably competitive with each other. Although the "soft cap" is complicated and riddled with almost as many exceptions as the IRS code, it is basically the reason why the Grizzlies got journeyman Jones from Miami for flashy Jason Williams and retread Stromile Swift from Houston for the immensely popular Shane Battier. The teams were trading contracts as much as players.

Should fans care about huge salaries?

"They can't do a whole lot about it unless they quit going to the games," says Sexton. "Tom Hanks can do a motion picture and get $27 million and nobody says anything about it. Really, an actor and a professional athlete are both entertainers."

The other reason salaries matter is less esoteric and more relevant to Memphis. And it has to do with the long-term viability of the Grizzlies franchise and the publicly financed FedExForum.

The Grizzlies get 85 percent of their revenue from ticket sales, broadcasting revenue, and sponsorships, according to Andy Dolich, president of business operations. Whether majority owner Michael Heisley sells the team to Brian Davis and his group or to the team's current minority owners, that's not going to change much. For the Grizzlies to succeed, they have to keep fans in the seats.

"If you have a small-market team with a high payroll that does not get far in the playoffs that can be trouble," Sexton says. "To put 65,000 people in a football stadium eight times a year is realistic. To put 18,000 fans in an arena 45 times a year is tough."

The Tennessee Titans and other NFL teams share lucrative national television contracts. Major league baseball's 2006 World Series television ratings bombed, but three-fourths of its revenue comes from local streams, suggesting it can thrive as a regional sport. The Grizzlies hope to emulate the success of small-market teams such as San Antonio, Sacramento, and Utah by signing and keeping one or two star players and a solid supporting cast.

Eddie Jones is not that player. But getting rid of his contract when it expires next year could enable the team to sign a true star. In the logic of today's NBA, Jones' bio should say "scores a little, gets along with teammates, and creates cap room." 

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