Revenue Sharing in the NFL, MLB, and NHL

According to the NBA's financial data, ten teams combined to make a profit of approximately $150 million in 2010-11. And the other 20 teams lost their collective shirts to the tune of a $400 million. Clearly, the league has to do a better job of revenue sharing to be successful going forward.

Of course, that's easier said than done. The league's wealthiest owners could stand to sit through a kindergarten-level lesson on sharing. For example, the Los Angeles Lakers recently signed a 20-year television contract with Time Warner Cable worth a reported $3 billion. The deal loses approximately 10 percent of its value if a third team moves into the Los Angeles market. When the Sacramento Kings started flirting with Anaheim and the Honda Center, Lakers owner Jerry Buss strongly opposed the potential move, and may have been instrumental in killing the deal.

Clearly, the NBA's richest teams - the Lakers, Knicks, Bulls and Celtics - aren't eager to prop up their weakest competitors.

Revenue Sharing and the NBA Lockout

The NBA's players union has sought to make a new revenue-sharing model part of this summer's collective bargaining discussions, but thus far the owners have resisted. As league commissioner David Stern has repeatedly pointed out, revenue sharing is not the sole solution to the league's problems; you can't share your way out of a hole. But Stern may have another motivation in keeping revenue sharing off the negotiating table; clearly, it is a "wedge" issue that might create cracks in the owners' unified front.

In that regard, the owners may follow the lead of the National Football League. The NFL's owners negotiated an updated revenue-sharing plan with each other while they were negotiating a new collective bargaining agreement with the NFLPA. Both were announced at the same time.

Revenue Sharing in Other Pro Sports

So how will the NBA's owners split their share of a $4 billion pie? Here's a look at how North America's other major pro sports leagues share revenues, and how the NBA might follow their lead.

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How Should the NBA Split Revenue?

Better revenue sharing won't solve the NBA's financial problems. As David Stern is fond of pointing out, you can't absorb a loss by splitting the money more evenly. But few would suggest the Association does a good job of splitting its $4 billion annual take between the owners and players or between the league's 30 teams.

Clearly, something must be done.

North America's other pro sports leagues have come up with a variety of solutions to the same problem.

The NFL is the undisputed king of revenue sharing, but the bulk of that league's money comes from national sources - TV contracts, primarily. Getting teams to share money they collect in their own markets, from local television deals, ticket sales and the like, is a very different challenge.

Major League Baseball teams all pay a set percentage of their local revenue into a fund that all franchises share, and lower-revenue teams get a larger portion of the proceeds from national deals and merchandising contracts, but that hasn't changed the fact that the Yankees' payroll is two-to-three times as large as most teams'. The NHL has a complicated system that takes a wide number of factors, including attendance and market size, into account.

The NBA's next revenue-sharing deal could very well combine elements from all of the above.

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