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How a New CBA Would Impact Kings Ownership

Our fearless leader Tom Ziller writes The Hook for the mothership SBN page each weekday. If you aren't reading it daily, you're missing out. Today's Hook includes a quote from a Larry Coon article on the assumed added value a new CBA would bring to franchise prices.

How much will franchise values increase? It's hard to say. There are a lot of factors that go into determining the value of a business, and a number of ways to do the calculation. A conservative estimate might be a $3 million to $12 million average increase in franchise values for each percentage point in revenues the league wrests from the players. Decreasing the players' split of BRI from 57 percent to 50 percent therefore might be worth $21 million to $84 million per team.

Tom goes on to discuss how this impacts owners such as Phoenix's Robert Sarver, who are rumored to be underwater with team debt. My mind went somewhere a little closer to home.

The Maloofs have repeatedly stated that they will not sell the Kings. They've sold off various other family assets to remain afloat and maintain ownership of the Kings, including their beer distributorship and taking a significantly reduced stake in the Palms. Given the assets the Maloofs have lost to ensure they maintain control of the Kings, I do not doubt the legitimacy of their claims that they have no desire to sell the Kings.

At a certain point, desire can no longer carry you. I do not desire to work a 9-5 job, but I also do not desire to be evicted from my home. My landlord refuses to accept Zillerbucks as payment (those bastards!), so I continue my 9-5. Similarly, the Maloofs do not want to lose everything. The Kings are the last stronghold of the family's wealth. It is the last big thing they have. But at a certain point, their desire to avoid bankruptcy may overtake their desire to own the Kings (or at least we hope).

My hope is that they have been holding out until the new CBA is in place, to ensure they have leverage when negotiating a selling price. But while my hope lies in the new CBA increasing value, my concern remains firmly with the CBA as well.

The new CBA, based on the details we know of the proposed deal, all but ensures franchises will be profitable. Combined with more robust revenue sharing, the Maloofs might actually be able to afford to keep the Kings. The NBA has worked in these negotiations to unravel the mantra of "if you can't afford to lose money, you can't afford to own an NBA team." The new mantra is "if you can't afford to lose money, please join us in tomorrow's negotiating session and we'll see if we can't fix that problem."

The question becomes whether the new CBA will ensure league profitability, or the profitability of each franchise within the league. Will each franchise show a profit, or will the league as a whole have a net profit? The devil will be in the details of the new deal.

Of course, all of this is still dependent on whether or not the players will agree to the deal on the table, or if they'll reject the offer, decertify, and lose the season. Joy!