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.
"The success of this league right now is not predicated on financial success," he said. "Jerry Buss has the NBA's financial backing to rely on. And once the league takes off, he'll be able to take over ownership. It's a good trade."
Johnny Buss agrees, saying that the team would be an ideal anchor tenant for the Forum should the Lakers and hockey's Kings leave for a new sports arena in downtown L.A. in 1999.
"We'd have a new franchise (if ultimately purchased) that will help fill up the Forum," Johnny Buss said. "At this point, the sky is the limit to how this sport might take off."
Buss said the team needs to sell about 4,700 tickets a game to break even. So far, the Sparks have sold 1,700 season tickets and the home opener last Saturday was declared a sellout at 7,666 seats. (Most seats at the 17,500-capacity Forum will be draped at WNBA games to make it appear as if the teams are playing to a full house).
But prospects for other revenues TV and corporate sponsorships are dim.
The league has banned all local franchises from negotiating local television rights on the same night any network WNBA game is on the air. This means lucrative television contracts are next to impossible to arrange, Buss said.
"We had (advertisers) lined up and ready to go, but then we found out how difficult it is to get us on any of the local channels this year," said Buss. "The national deal took all the energy away from trying to sell local packages."
Plus, Los Angeles will already be featured on many of the network broadcasts.
Buss has one major safety net: the NBA. Unlike other start-up leagues like roller hockey or soccer women's basketball has the financial security and backing of the NBA.
"There's an incredible amount of money being thrown at this league," said Barry L. Posten, an analyst with the sports marketing firm Event Marketing Inc. "The league certainly isn't in jeopardy of going under the NBA won't allow that. But there really isn't that much money in this for the team operators."
For reprint and licensing requests for this article, CLICK HERE.