Recent reports that the Oklahoma City Thunder cleared a sweet $29 million in profit for the 2013-14 season caused quite a stir. It’s an eye-popping number. It is significant. It should also be of little surprise to anyone who has been keeping tabs on such things.
According to Forbes, the franchise had a negative operating income of $9.4 million in 2007-08, the last season in Seattle prior to relocating to Oklahoma City. That number apparently does not take into account the $30 million relocation fee paid to the NBA, nor the $45 million settlement paid to the city of Seattle.
In subsequent seasons, Forbes reported positive operating income of $12.7 million in 2008-09, $22.6 million in 2009-10, $24.5 million in 2010-11, $25 million in 2011-12 (a season shortened due to a lockout), and $33.3 million in 2012-13.
Providing these numbers requires the usual disclaimer: the NBA often advises against treating numbers reported by Forbes as gospel. Even if the numbers aren’t rubber-stamped and certifiably authentic, it’s probably safe to say that business has been good for the Thunder.
Strategic salary cap management
The organization’s salary cap strategy plays heavily into this. Since the franchise was purchased by The Professional Basketball Club, LLC, the team has eschewed expensive and risky free agent signings and relied on a steady stream of young talent on inexpensive rookie scale contracts to build the bulk of the roster. Those that prove themselves worthy of lucrative extensions, both through their on-court play and their ability to buy into the team concept, are rewarded accordingly. Those that want out are shown out.
The reaction to the idea that the Thunder made money should be one of admiration. At minimum, the front office deserves a slow golf clap for putting together a perennial Finals contender in the league’s 27th largest market without spending recklessly (friendly reminder: the NBA has teams in 28 markets). Somehow, the narrative shifts back to the James Harden trade of October 2012 and the mistaken premise that the Thunder were “too cheap” to sign him to an extension. That oft-repeated idea runs afoul of the facts.
(Harden) we go again
The Thunder made numerous offers to Harden over the summer of 2012, including a final one reportedly worth $55 million over four years. Had Harden accepted the offer, as well as his role on the team and place in the team hierarchy, the Thunder would have almost certainly have been taxpayers the past two seasons. Many have assumed that the Thunder would have used the one-time amnesty provision on Kendrick Perkins to avoid any tax penalties under this scenario. The team still would have had to pay the remaining guaranteed money left on Perkins’ contract, minus any amount paid by another team had he been claimed via the amnesty waiver process. The more likely scenario is that Perkins would have remained, lest the Thunder attempt to compete with the likes of Cole Aldrich, Hasheem Thabeet or Daniel Orton patrolling the paint. To be fair, an argument can be made that the Thunder would have made additional money-saving trades if one wanted to venture down that rabbit hole.