In the latest round of negotiations, WNBA players have made it clear they want more money. “Pay Us What You Owe Us” read their shirts at All-Star weekend, and fans threw their support behind them.
The owners have shared less about what they want, but in her Finals address, commissioner Cathy Engelbert gave us a clue.
“We want owners to have a viable business,” she said. “It’s important that [expansion team owners] coming in have a shot at a viable economic model for the future.”
“Give Us a Viable Economic Model For the Future” would not have been a cool T-shirt to wear courtside, but it is necessary, and the owners do deserve some of the spoils from the recent boom.
What are the spoils, exactly? They can be difficult to quantify: the WNBA often feels like a numberless abyss, where basic financials require 45 minutes of frustrated Googling.
One key number has been publicized, though: the recurring revenue stream from the WNBA’s new TV deals — bigger and better now that the league is more popular.
Starting in 2026, the deals should add around $220 million of annual revenue to the league.
Because of the league’s ownership structure, that number is both a game-changer and also not that much.
After the NBA and outside investors take their cut, each WNBA team will be left with an increase of $6 million annually through 2037. Not exactly Kawhi Leonard money, but meaningful in a league where the current salary cap is $1.5 million.
So: what do WNBA owners want with that $6 million?
On one end of the spectrum, an owner could say: give me the whole thing. I’ve mostly lost money in my 20 years of ownership. Now I want payback, and also, I still need to hire analytics personnel and a PR team and invest in a practice facility.
Such an attitude would mean no season in 2026 though; players won’t agree to any deal where their salaries increase by $0.
On the other end of the spectrum, an owner could say: let’s give the full $6 million to the players.
It will ensure we have a season, help attract the top foreign players, elevate the product, and though it’ll put me further into the red now, in 20 years I’ll be able to sell this team for 50x what I paid.
How utopian the second attitude sounds! It could even inspire an impulse to exile those WNBA owners who actually need revenues to fund expenses and leave the league in the hands of ultra-wealthy groups who don’t care about annual profits and own the team because it’s fun and will maybe be worth more in the future.
Surely nothing could go wrong from billionaires exclusively owning a social justice-oriented league!
In all seriousness, though: these two attitudes both reflect potentially viable economic models for a growing sports league.
Model #1: The business is viable as long as it generates annual profits.
Model #2: To hell with P&L, the business is viable as long as team valuations are going up.
Whether owners prefer Model #1, #2 or somewhere in between likely depends on their capacity to absorb losses and their beliefs about how big this boom really is.
Anyways, the world of women’s basketball got some new numbers last week, courtesy of Annie Costabile at Front Office Sports. She reported that the league is offering players a raise of 3.8 times current salaries at the low end ($300k), and 3.4 times at the high end ($850k).
A bit of algebra reveals that in this proposal, the total increase to player salary cap is $3.9 million, leaving owners with $2.1 million. In other words: a 65/35 split of the incremental TV revenue.
Is that a fair split? At the very least it doesn’t sound egregious.
But the fact that the players were not offered the full $6 million confirms we are not yet living in a Model #2 utopia.
Notes on Calculations:
- $220 million of incremental TV revenue: TV deals are expected to generate around $250 million of annual revenue for the WNBA through 2037. Subtract annual revenue from the TV deal in place during the 2020 negotiations — $33 million — to get $217 million, then round up to $220 to make it easier on the eyes.
- Incremental TV revenue of $6 million per team: Multiply $220 million by WNBA’s ownership stake of 42%. Divide by 15 teams in the league to get $6 million.
- 65/35 split of TV revenue: Multiply the current salary cap of $1.5 million by the midpoint between 3.4-3.8 to get $5.4 million, the pro forma salary cap. Subtract the current salary cap of $1.5 million from the pro forma salary cap to get the incremental addition of $3.9 million. Divide $3.9 million by $6 million to get the player share of 65% and owner share of 35%.