If Revenue Sharing Is Important, Why Isn't There Linkage?
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12-11-2012, 12:34 PM
Join Date: Jan 2005
Originally Posted by
Not completely sure what you're arguing here? The total amount of league-wide revenue sharing is linked, but it has banding on it for minimum and maximum payouts. Even if a team only got 50% of their share due to not meeting growth figures that 50% amount is still linked to HRR.
High level synopsis of how the revenue sharing amounts were banded under the last CBA:
: tally up all the eligible team revenue sharing amounts that would be needed to lift the revenue sharing recipient team revenues up to $4m over the cap floor (halfway between the floor and midpoint).
: tally up all the eligible team revenue sharing amounts that would be needed to lift the team revenues up to $8m over the cap floor (the midpoint).
The league sets a target Revenue Sharing Pool amount of 4.5% of HRR. If that 4.5% is less than the Minimum Guarantee amount the league increases the size of the Revenue Sharing Pool to make it large enough to meet the Minimum Guarantee. This is where I suspect some years like 2008-2009 may have exceeded the 4.5%.
If 4.5% is larger than the Minimum Guarantee but less then the Maximum Guarantee then the eligible revenue sharing recipient teams receive an amount lifting them to somewhere between $4m and $8m over the floor so that the whole 4.5% pool is distributed.
If the Maximum Guarantee amount is less than 4.5% then the revenue sharing pool is capped at the Maximum Guarantee amount. I suspect this didn't happen during the past CBA, or if it did that the gap between the Max and 4.5% was pretty small.
p.s. Yes, kdb I left out some details to keep it simple.
The only significant thing left out is that this is only round 1 of revenue sharing.
There is a second round as part of Final Escrow Disbursement - if excess escrow funds are available (after a portion was used to fund the first round). Any team with an payroll (Actual Club Salary) below the midpoint can receive a distribution up to the amount they were below the midpoint. Note that all teams (even those disqualified from round 1) are eligible here. After that, any remaining escrow funds are split evenly - each team receives a 1/30 share.
Final Escrow Disbursement can result in the total revenue sharing being significantly higher than the targeted 4.5%.
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