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Indiana Pacers co-owner Herb Simon has thrown his support behind an effort to pressure National Basketball Association Commissioner David Stem to implement more aggressive revenue sharing among NBA franchises.
The move, which coincides with declining attendance at Pacers games, is the strongest indicator yet that the local franchise is losing money or is on the brink of doing so.
Simon, who owns the team with brother Mel, joined seven other NBA owners in signing a letter to Stem pleading for more money for small-market teams.
"Small-market teams simply can't afford to make the types of mistakes large-market teams can in the NBA and remain financially viable," said Richard Sheehan, a University of Notre Dame economist and author of "Keeping Score: The Economics of Big-Time Sports." "The situation in a market like Indianapolis is unforgiving, and this letter shows the Pacers are hurting."
The highly paid players who absorb much of the Pacers' payroll aren't producing dividends in the form of better fan support, Sheehan said. With the team struggling, he said, central Indiana's relatively small sports-fan and corporatesponsor bases may be turning their attention to other sports and entertainment options, including the red-hot Indianapolis Colts.
Pacers officials have remained mum about revenue sharing since the letter and some of its contents were revealed in a Seattle Times article Nov. 19.
Herb Simon and Pacers CEO Donnie Walsh declined to talk to IBJ about the subject. Walsh said in a statement: "We do not comment on topics that may be being discussed at the [NBA] Board of Governor's level."
League officials also declined to comment.
But the letter to Stem indicates there are serious problems brewing in the league's small markets.
"We are asking you to embrace this issue because the hard truth is that our current economic system works only for larger-market teams and a few teams that have extraordinary success on the court and for the latter group of teams, only when they experience extraordinary success," the letter published in the Times states. "The rest of us are looking at significant and unacceptable annual financial losses."
The disparity among the league's 30 teams is largely a product of uneven distribution of revenue from local radio and television deals. Large-market teams, including...