The economics of most professional sports teams are relatively simple: Fill the stands, keep the player salaries under control and make your real profit by selling TV rights and corporate sponsorships.
But there's a new sports league in town, the Women's National Basketball Association, with a whole new set of economic rules.
All eight WNBA teams, including the L.A. Sparks, are owned by the National Basketball Association, which pays player salaries and the costs of national advertising. The NBA also gets national TV rights and all corporate sponsorships.
The arrangement reduces the financial risk for the eight NBA owners who are operating WNBA teams but also precludes them from making a big profit, according to Johnny Buss, president of the Sparks and son of Jerry Buss, who owns the Los Angeles Lakers and the Great Western Forum.
Although it doesn't have to pay player salaries, Buss said his father's California Sports Inc. expects to put up $2 million to field the Sparks this season. The budget includes:
- $420,000 to rent the Forum for 14 home games. The money is given to the Great Western Forum, owned by Buss but a separate company from California Sports. Basically, the cost of renting the arena is an even wash for Jerry Buss, because money isn't changing hands as much as it's changing pockets.
- $200,000 to $250,000 for local advertising.
- $250,000 for administration and the salaries of 14 employees including the coach.
- $200,000 for travel expenses, when the team goes on the road 15 games each year.
Because this is a new venture, Johnny Buss said he is not sure what the costs and revenues of the team will be. But he anticipates that California Sports will lose money on the Sparks, or at best break even, for the next several years.
As such, fans attending Sparks games shouldn't expect some of the things they are accustomed to getting at Lakers games, such as programs.
"We don't want to lose money on the programs," Buss said. "We're not the owners of the team, just operators so there's no use in taking a loss if we're not building equity."
So what's the upside?
David Carter, a private consultant who teaches a course on the business of sports at USC, said Jerry Buss will likely take a loss of between $500,000 to $1 million this year. But Carter notes that the WNBA is building a new business, and that Buss will one day have an opportunity to purchase the team.
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