The WNBA is NOT in Financial Trouble.

And it is time reporters stop believing every story the NBA tells about profits!

On Friday afternoon I spent more than an hour talking to a reporter about the current state of the WNBA.  After the interview concluded, I decided to take a walk across the beautiful Southern Utah University campus.  As I walked, I came across one of my colleagues on campus.  When I mentioned my interview, he asked this question:

“Can the WNBA survive given that it doesn’t make a profit?”

This person is not one of the trolls we mention in Slaying the Trolls.  He is actually a casual fan of the WNBA.  But he has definitely heard the league is not profitable.  And this has caused him some concern.

It did not take me long to convince him the WNBA is doing quite well.  But this comment suggested that it was once again time to explain that everyone should be very skeptical whenever the NBA makes a statement about profitability.

First of all, let’s be clear that these statements are likely coming from the NBA.  As we note in Slaying the Trolls, the NBA shares ownership of the WNBA with the twelve team owners.  But as Suzanne Abair – the CEO of the Atlanta Dream – said, power isn’t really equally shared:  

“If the 12 WNBA owners say they want to do something and the NBA says no, the answer is no.”

Given this reality, it is reasonable to suspect the recent comments of the WNBA’s profitability is coming from NBA sources.  The first of these comments was published in the New York Times a few months ago.  At that time, sources claimed the WNBA was going to lose $50 million this year.  Then a few days ago, the New York Post reported the losses were $40 million.  In both cases, the reporters did not say they saw actual financial statements.  They simply reported what a league source told them, and they reported this assertion as a fact. 

Let me repeat this point.  The New York reporters have no objective evidence supporting what they reported.  A source simply asserted something, and these reporters told their readers that this claim was clearly true.  It is important to remember that if most people told a reporter anything they would likely demand some evidence before they rushed to report the news.  But when the NBA asserts the WNBA isn’t profitable, New York reporters abandon the basic principles of journalism (not surprisingly, I am not linking to these articles).

In Slaying the Trolls, we devote an entire chapter to the NBA’s claim the WNBA is not profitable.  Obviously, we prefer everyone go read that chapter!  For this piece, I want to review a story I learned about after our book was published (while I was writing No One Got Paid What They Are Worth).

Back in 1972 (yes, this was more than 50 years ago!), the NBA was being challenged by the American Basketball Association.  The competition for players had begun to bid up the price of playing talent.  This gave the NBA and ABA an incentive to merge.  Oscar Robertson and the NBA players, though, didn’t want to lose the leverage the ABA provided. 

The U.S. Senate decided to get involved and held a hearing on whether this proposed merger violated antitrust laws.  As part of this hearing, the NBA released financial statements.  These statements appeared to indicate the NBA wasn’t profitable.

Unfortunately for the NBA, Roger Noll – an economist at Stanford – was hired to review these statements.  In this review (which Noll graciously shared with me), Noll said the story told by the financial statements wasn’t quite true.

In a section of this report titled “The Profitability of Pro Basketball”, Noll noted that there are a variety of ways a team can take profits from their franchise.  For example, owners can pay themselves a salary.  Or if the owners also own the arena where the team plays, they can simply charge the team a very high rent to use the owner’s facility.

There are additional methods Noll identified.  And Noll noted that there are examples in the financial statements from NBA teams of all the strategies Noll listed.  He then makes this statement:

“Because of the differences in practices among teams in how the owners take their profits, and because of the difficulties with the data, the stated book profits are virtually meaningless.”

Obviously the key part of that quote is “… the stated book profits are virtually meaningless.”

Noll does note that the NBA’s reported book profits indicate that in the late 1960s and early 1970s the NBA was not profitable.  However, as Noll examined the data, he noted that different approaches to reporting the financial data transformed those losses into profits.  As Noll pointed out: “… the method one chooses to calculate the profitability of teams can make as much as a $20 million difference in the final estimate.”

This statement echoes a comment from Paul Beeston (an executive with the Toronto Blue Jays) reported by Andrew Zimbalist in the 1991 book Baseball and Billions.

"Anyone who quotes profits of a baseball club is missing the point. Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and get every national accounting firm to agree with me."

Let’s make it clear what this means.  If a sports league just tells you they are losing money, you have reason to doubt this story.  And even if the sports league provides you financial statements that indicate the league is losing money, you still have reason to doubt that story!

It is important to understand that professional leagues have a clear incentive to report losses.  A review of the NBA’s history makes it clear why this is an attractive strategy. In 1971-72, the NBA reported (according to Roger Noll) about $30 million in revenue.  Because of competition with the ABA for talent, though, the next season the Milwaukee Bucks were paying Kareem Abdul Jabbar $375,000 (according to Rodney Fort).  And Bill Bradley, Walt Frazier, and Willis Reed were each paid $300,000 by the New York Knicks. 

KAREEM — MORE THAN 50 YEARS AGO — WAS PAID MORE THAN EVERY WNBA PLAYER TODAY!

Picture Source: https://www.sportingnews.com/us/wnba/news/wnba-10-highest-paid-players-2024/1104a976fdfdbd322602b4c4

To put that in perspective, the highest paid player in the WNBA – with $200 million in revenue in 2023 – is Jackie Young.  The Las Vegas Aces only paid Young $252,450 this past year.   Let me emphasize this point.  The top player in the NBA more than fifty years got paid nearly $125,000 more than the top WNBA player in 2024.  And the NBA fifty years ago only had about 15% of the WNBA’s revenue today.

JACKIE YOUNG IS PAID LESS TODAY THAN KAREEM WAS MORE THAN 50 YEARS AGO!

Picture Source: https://www.jsonline.com/story/sports/nba/bucks/2023/02/07/kareem-abdul-jabbars-scoring-with-milwaukee-bucks-as-lebron-james-set-to-make-history-break-record/69878914007/

Of course, the NBA wasn’t thrilled its players were paid so much in the early 1970s. Consequently, the NBA wanted to merge with the ABA and hence reduce the players’ bargaining power. However, the players – led by Oscar Robertson – weren’t going to let that happen.  At least, not without some serious concessions.  In 1976, the players finally got what they wanted.  That year the players agreed to let the ABA and NBA merge if the players were granted free agency when their contracts expired.  With free agency in place, player salaries to continue to grow.

By 1983, the NBA had enough.  The NBA proposed a team payroll cap (i.e. a salary cap) to limit player salaries.  To make this happen, the NBA returned to its playbook from 1972.  In an article published in the Washington Post, the NBA once again claimed they were losing money.  Here is how David Dupree reported the NBA’s claims:

National Basketball Association owners aren't crying wolf when they say their league is in serious financial trouble. A look at the books drives home that message ever so painfully.

Dupree then proceeds to report the losses the league claims as if they are facts.  At no point did he note – as the economist Roger Noll made clear – that these losses may depend on how the team is reporting its financial information.  For Dupree, the NBA’s assertions were reported as the objective truth.

In the end, the strategy paid off.  The NBA’s players agreed to a cap on team payrolls.  As time went by, NBA players also agreed to a rookie salary cap and a cap on individual player salaries.  The players also agreed to a luxury tax to further limit player pay.

After all these changes, though, the NBA wanted more.   In 2011, the NBA asked the players to accept a pay cut.  Prior to 2011 the NBA players were getting 57% of basketball related income.  The NBA wanted that percentage lowered to 50%.  Once again, the NBA claimed it was losing money.  And at that time, I noted at the Huffington Post that we should all be very skeptical regarding the NBA’s claims.   

Despite this skepticism, though, the NBA got what it wanted.  After a lengthy lock out, the NBA players did agree to a pay cut and accepted just 50% of basketball related income.  Relative to where they were before the lockout, the NBA players clearly were worse off. 

Of course, relative to the WNBA today, NBA players were doing great.  WNBA players are likely get less than 10% of league revenue today.  Consequently, it is not surprising the WNBA players just opted out of the current collective bargaining agreement.

And given the history we reviewed; it shouldn’t be surprising that the NBA has once again claimed the WNBA doesn’t make a profit.  Again, this strategy has worked for the NBA for decades.  Reporters are more than happy to report the NBA’s claims about losses as facts.  This puts pressure on players to be happy with whatever the NBA is willing to pay.

At this point, though, it would be great if reporters learned some sports history and began to see the NBA’s pattern.  In Slaying the Trolls we note the NBA was claiming – when WNBA revenues were less than $100 million – that the WNBA was losing $10 million per year.  Now revenues have more than doubled, and losses per year are now $40 million?  This is simply not a believable story.  How can revenue go up dramatically and (without any real change in player salaries) losses go up four times?

Everyone should be very skeptical about these claims.  The NBA has a long history of pleading poverty whenever players want more money.  Once again, rising player salaries led the NBA to claim it was losing money in 1972.  Rising salaries also led to the same claim in 1983.  And when the NBA wanted players to take a pay cut in 2011, the NBA again claimed it was losing money.  The NBA has followed the same playbook for more than fifty years. 

So, here was my answer to my friend at SUU.  The WNBA is not in financial trouble.  The league is doing great.  But we can expect the WNBA and its NBA partner to tell a different story as they negotiate with its players in 2025.  The NBA playbook hasn’t changed in five decades.  It would be nice, though, if reporters finally caught on to the game being played.