For the third straight season, the Cleveland Cavaliers won the Eastern Conference title. But while the Cavs did plenty of winning on the court, the franchise wound up a loser on the balance sheet.
According to ESPN's Brian Windhorst and Zach Lowe, Cleveland was one of nine NBA teams to lose money during the 2016-17 campaign. A year prior, the Cavs lost $40 million in their 2016 championship season, according to Forbes.
The biggest culprit responsible for Cleveland's current financial predicament appears to be the NBA's revenue-sharing system, which punishes teams like the Cavs that possess higher payrolls.
The Cavs made $21.7 million in net income before revenue sharing last season but moved into the red after paying $24.8 million in luxury taxes and $15.2 million in a revenue-sharing check they wrote.
Cleveland owner Dan Gilbert's $21.7 million luxury tax bill was the result of the $126.5 million payroll the franchise possessed throughout the 2016-17 season, which was well above the $113.2 million luxury tax threshold. In 2016, Gilbert paid a $54 million luxury tax bill, the second-highest ever in NBA history.
In recent months, the Cavs have netted new revenue streams, including a jersey logo sponsorship with Goodyear and an extended partnership with the Cleveland Clinic. Another deep playoff run would also help matters, as according to Windhorst and Lowe, the team made $20 million during this past postseason.
Per the report, the other teams who operated at a loss were the Atlanta Hawks, Brooklyn Nets, Detroit Pistons, Memphis Grizzlies, Milwaukee Bucks, Orlando Magic, San Antonio Spurs and Washington Wizards. Despite finishing with the league's third-worst record, the Los Angeles Lakers led the NBA with a $115 million profit last season.
The apparent gap between the NBA's profitable teams and those losing money is expected to be a primary discussion point at the NBA's Board of Governors meeting at the end of this month.
