WNBA Revenue Sharing Explained
Breaking down the misunderstood system of revenue sharing that is likely to activate in the next several seasons
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In the WNBA, there are a handful of ways for a player to earn direct compensation from the league and teams–base salary, bonuses, marketing agreements, and revenue sharing.
Of those four routes to league compensation, only three have been put into effect. Throughout the current CBA, which runs through the 2027 season (but could be opted out of in 2025), teams will combine to spend in the ballpark of $15-19 million annually on base salaries and time-off bonuses, the league will pay out around $1.2 million across playoff, award, Commissioner’s Cup, and all-star bonuses, while teams and the league will account for at least $1 million in marketing agreement compensation. The exact amount depends on the year.
That leaves only revenue sharing, the quickly-hyped but soon-overlooked piece of the CBA that was placed into effect in January of 2020. It appears that this mechanism hasn’t kicked in yet, but recent reporting surrounding potential increases in league revenue, paired with the uncertainty of prioritization rules and the potential fallout, means the ins and outs of revenue sharing are likely to be hot topics in the coming years.
With that in mind, this is the perfect time to break out our WNBA CBA Explained series to help sort out exactly how revenue sharing will work.
Does the WNBA CBA include 50-50 revenue sharing on all league revenue?
It does not. The system that the WNBA has put in place does not share all revenues 50-50, even once the league meets revenue growth targets. Instead, the WNBA has instituted incremental revenue sharing, where only revenue beyond growth targets is shared.
What are the requirements for revenue sharing to begin?
The short answer is that league revenue, which does not include sales of teams or capital raises, needs to hit certain targets for revenue sharing to kick in. Where it gets more complicated is that these annual targets are all added together to set the “cumulative” revenue target. This is used for the calculations of how much revenue is actually shared.
For revenue sharing to happen, the cumulative target, which is first calculated in the 2021 season but also includes 2020 figures, needs to be met. This means that in 2024, the cumulative revenue from 2020-2024 needs to exceed the cumulative revenue targets from 2020-2024.
What is the annual target revenue?
We can’t know for sure what the exact revenue targets are each season, but the formula is quite straightforward: The annual league revenue for 2019, which is unknown, is compounded by 20% each year for the annual target. As a hypothetical, this means if league revenue in 2019 was $50 million, then the annual target in 2020 would be 20% higher at $60 million. The annual target in 2021 would be another 20% from the previous year, making it $72 million.
What is the cumulative target revenue?
This is where it becomes more complicated. As mentioned before, the shared revenue isn’t merely the annual revenue that season minus the target. Instead, shared revenue is determined by the cumulative revenue and cumulative revenue targets. Going back to 2020, all revenues are added together to find the cumulative revenue, and all revenue targets are added together to find the cumulative revenue target.
In the previous example, the annual target in 2022 would be $86.4 million using the $50 million in 2019 assumption. As a result, the cumulative revenue target for 2022 would be $218.4 million.
Cumulative Revenue for 2022 = 2020 Revenue + 2021 Revenue + 2022 Revenue
Cumulative Revenue Target for 2022 = 2020 Target + 2021 Target + 2022 Target
How much do players get in revenue sharing?
The difference between the cumulative revenue and the cumulative revenue target is called the “cumulative overage”, but still is not the final number that is split. If the cumulative overage is negative, there can not be revenue sharing, no matter how significantly the annual target was exceeded. If it is positive, the league moves on to the next steps.
Cumulative Overage for 2022 = 2022 Cumulative Revenue - 2022 Cumulative Revenue Target
This number, starting in 2021, is then compared to the prior year’s cumulative overage, called the “prior overage”. If the prior overage was negative, it is replaced with 0.
Prior Overage for 2022 = 2021 Cumulative Revenue - 2021 Cumulative Revenue Target
The prior overage is then subtracted from the cumulative overage, which results in the “net overage”.
Net Overage for 2022 = 2022 Cumulative Overage - 2022 Prior Overage
If the net overage is negative, meaning the league didn’t meet that year’s annual revenue target, there is no revenue sharing, even if the cumulative revenue is still higher than the cumulative target. To put it another way, the league must surpass the cumulative and annual revenue targets in a given year for revenue sharing to occur.
That leaves just one final step. A 30% deduction is taken from the net overage, which the CBA describes as the “cost of revenue”, leaving us with the official shared revenue figure. That cost of revenue deduction seems to encompass the fact that the league has expenses and taxes to cover out of the base revenue. With shared revenue being split equally among the players and league, this means the players will get 35% of the net overage.
Shared Revenue = Net Overage * 0.7
Where does the shared revenue go?
Half of the shared revenue will go to the players, while the league retains the other 50%. Of the players’ share, half (25% of the total shared revenue) goes directly to player compensation. This is distributed to the teams, and the teams are then responsible for making payments to the players in a timely manner.
The exact rules for how much each player receives are decided by the WNBPA. Possible approaches the WNBPA might consider include flat payments relative to the number of games a player was on the roster, equal payments to everyone, or in proportion to players’ salaries for the year.
The other half of the players’ share goes to the league marketing agreement pool, increasing the minimum amount the league is required to pay to players through those agreements. The base minimum for league marketing agreements is $1 million per year with a maximum of $250,000 per player, and the per-player cap does not change in the event of revenue sharing.
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Feels (without knowing the numbers) like it's structured as a lofty target that, even when hit, doesn't pay off very well. Especially when you further chop up the player portion of the pot.