The frenzied support of Cavaliers fans -- both in ticket sales and merchandise sales -- has helped the franchise withstand the economic downturn that has forced drastic measures with some NBA teams.CLEVELAND, Ohio -- It isn't an infallible rule, but quite often in professional sports winning can make a franchise recession proof. As the shockwaves from last year's financial meltdown slam the NBA -- the teams were insulated to a certain degree last season because season tickets and sponsorships had mostly been sold before the September crash -- the Cavaliers find themselves cautiously above water. The team is doing relatively well financially and officials are saying it is not planning any layoffs or salary reductions. In fact, over the last year the Cavs have been adding to their staff.
"We have been very fortunate, our fans have continued to show us tremendous support," said Len Komoroski, the president of the Cavaliers and Quicken Loans Arena. "We have seen it in many different levels from record ticket sales, television ratings and Web hits."
Komoroski said the team has also been helped by strong regional support, especially from the Pittsburgh and Columbus areas. Last season, 23 percent of the team's individual ticket sales came from out of state.
The Cavs are proving to be an exception. This week alone has provided significant poor financial news in the NBA.
The Miami Heat made it known that in addition to layoffs, their basketball operations staff all took large pay cuts -- including six-figure reductions by team president Pat Riley and head coach Erik Spoelstra.
Financial filings from its parent company showed the New Jersey Nets have lost $25 million in just the first half of this year.
The NBA and the referees union are currently at an impasse over a new contract and a lockout of the officials is possible, as the league reportedly is demanding a 10 percent reduction in costs.
Those are just the most recent details. In July, the league office warned the salary cap, which is tied to leaguewide revenues, may drop between 5-10 percent next year. Also this summer the players, as part of the collective bargaining agreement, gave back nine percent of their salaries to the owners when last year's revenues fell short of guaranteed projections.
Last season, according to various league sources, the Cavs just about broke even operationally. This was despite having a payroll that exceeded $100 million including luxury taxes, the highest in team history. It was more than offset by selling out 37 regular-season games and seven playoff games and huge apparel sales. The Cavs were also helped by getting a $6 million check as part of the salary rebate from the players.
This season, which starts in 10 days when the team reports for training camp, the Cavs' payroll is expected to be around $10 million less, while season ticket sales have increased over the last year.
However, the franchise is watching expenses. Former CEO Mark Stornes was not replaced after he resigned last year. Assistant coach John Kuester was not replaced when he became the Detroit Pistons' head coach. Responsibilities of each were spread to other executives and coaches. In addition, the Cavs will be scaling back the printing of media guides this year and will look to increase efficiency in other areas.
But the team is not planning any significant cuts and will continue to invest in game presentation, promotional giveaways and additions to the roster if needed.
"Our strong fan base put us in a more favorable position than others," Komoroski said. "Like everyone we're trying to be more efficient and that is good business. But we have a lot of great people and haven't had to make any adjustments."
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