On the court, the Cleveland Cavaliers were successful last season in making a third straight NBA Finals. Financially, however, the Cavs reportedly didn’t fair quite as well.
According to a story from ESPN’s Zach Lowe and Brian Windhorst, the Cavs were one of nine NBA teams to lose money last season. Per the report, Cleveland’s financial shortfall stems from the NBA’s system that penalizes teams with higher payroll. From the story:
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.
Per Forbes, the Cavs lost $40 million during their 2015-16 title run. Per the ESPN story, Cleveland actually turned a profit the year before LeBron James returned.
Since James returned in 2015, the Cavs’ payroll has skyrocketed, so it’s not surprise that the team is paying hefty luxury tax bills. Such is the price of trying to win. In 2016, team owner Dan Gilbert paid a record tax bill of $54 million.
The topic of wage gaps between teams is expected to take center stage at the NBA’s Board of Governors meeting later this month. And the Cavs have incentive to try and change the system.