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Does the C’s new TV deal keep money out of players’ hands?

RedsArmyAdmin July 20, 2011 Uncategorized Comments Off

The Celtics recently struck a new TV Deal with CSNNE (a current partner of RedsArmy.com).  Part of that deal was 20% equity stake for the C's owners.  The significance of that?  It keeps money away from the players. 

Besides a big increase in its annual rights fee the Celtics would get up to a 20% equity stake in the regional sports network. The increase in the rights fee, which is expected to be about $20 million a season, will be included in the league’s Basketball Related Income and therefore part of the salary cap. But none of the income the Celtics owners will get from their equity stake in the profitable RSN will be included in BRI and, by extension, player salaries.

The new deal will enrich its owners more than a comparable deal comprised entirely of a rights fee. 

It's an interesting move, especially during a lockout.  The Celtics have certainly gotten a deal that gets the team a fair amount of money.  The $20 million per season goes into the pot that is split between owners and players.  But the 20% equity stake in the station isn't a rights fee directly paid for the right to broadcast C's games.  

It's a slick move by the owners.  Nothing illegal or underhanded about it… but it's definitely slick.  Instead of a significantly higher rights fee, which has to be divvied up, they get a chunk of the overall station that goes right into their own pockets. 

The significance of this during the lockout is this:  The Celtics will claim the $20 million on their balance sheet but they won't have to claim the equity stake income.  Let's just pretend for a second that's another $20 million.  And let's also pretend that the Celtics can work it out so they "lost" $5 million accounting-wise.  Will they have actually lost money? 

No.  And let me clear about something too:  this is nothing most people wouldn't do.  Hell, if I was an owner, I'd pull the same thing.  I'm not necessarily bashing the C's owners for doing it.  I'm just shedding light on a slick little maneuver that is an example of how a team and its owners can make money without having to show it on the books. 

This lockout is about splitting billions of dollars and people throwing crazy numbers out there.  But a lot of it is a smoke screen.  Once they get down to actual numbers and actual business… maybe we can get moving on these negotiations and get a deal done,.

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