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One of the highlights of the Collective Bargaining Agreement that was agreed to in January of 2020 was the addition of a revenue-sharing mechanism. It was touted as one of many bets on the WNBA as Commissioner Cathy Engelbert carries out her vision to increase the valuation of the league.
It marks an attainable, concrete avenue to boost player compensation within the framework of the current CBA without having to wait years for the CBA to end or be revised.
With all of that said, it's important to have reasonable expectations of what revenue sharing will look like in practice. It is undoubtedly going to benefit the players, supplementing their base salaries in meaningful ways and allowing more players to remain in the United States rather than playing abroad. Understanding how things might play out is important in setting those expectations.
Yesterday as part of our CBA Explained series, we broke down exactly how the league’s revenue-sharing plan works. We highly encourage you to check that out if you enjoy detailed and intricate looks at WNBA rule minutia. If that doesn’t sound like your cup of tea, here are the Cliffs Notes:
Revenue sharing is split 50-50 on incremental revenue, not all revenue.
After a 30% deduction for “cost of revenue”, the players only get 35% of the net overage.
Of the players’ share, only half will come via direct payments to players.
A payout in one season does not ensure a payout the next season.
The wording in the WNBA’s announcement of the CBA seems to have led to some confusion, making it sound like there were thresholds to be met that would activate fully equal revenue sharing.
At least one agent was “envisioning maximum salaries around $1 million,” according to reporting from Howard Megdal at Sports Illustrated. The outlook depends on your definition of salary. If you include only base salary and revenue-sharing payouts, seven-figure compensation is unlikely. If you include every possible source of league and team compensation, then it gets much closer.
It bears repeating: Although a seven-figure compensation from salary and revenue sharing alone would require a massive growth in revenue, even a modest gain in revenue will still mean sizable increases in player compensation in a way that curbs a portion of overseas bag-chasing.
Just how big of a payday might be coming to the league’s players? Nobody without access to the WNBA’s books can say for sure, but let’s do our best to estimate by setting a few benchmarks.
The first piece to establish is the league’s total revenue in 2019. This is the basis for the annual revenue targets, as it is compounded with 20% growth each year to set those targets. In January of 2021, we roughly estimated a pandemic-free revenue of somewhere between $50-70 million.
The COVID-19 pandemic has thrown a wrench into growth since 2019, but we will go with $50 million as the 2019 revenue, holding steady at $50 million in the 2020 Wubble season and assume growth up to $60 million in 2021.
With 2019 starting at $50 million, the revenue target for 2020 would be $60 million, and the 2021 revenue target would be $72 million. Take these with a grain of salt, as these are just ballpark numbers for the sake of illustrating the potential effect of more concrete upcoming revenue sources.
With these hypothetical numbers, we can see that the league’s cumulative revenue from 2020 through 2021 would be $110 million, while the cumulative revenue target totals up to $132 million in that period. The comparison of these two numbers is the first step in determining if revenue sharing should kick in. Since the actual revenue didn’t surpass the target, there would have been no revenue sharing in 2021.
Then, as the pandemic continues to linger but arenas open up to full capacity, paired with extra revenue coming from WNBA League Pass and merchandise, let’s say the league brings in $90 million in 2022. That still isn’t enough to catch up to the cumulative revenue targets, but it exceeds the annual target of $86.4 million and closes some ground.
Maybe the growth continues and the league brings in $110 million in 2023 as the Commissioner’s Cup snags a larger sponsorship deal from Amazon Prime and fans flock to watch Aliyah Boston begin her career. The league gains a little more ground, but they’re still about $12 million short of the cumulative target of about $322 million.
Then things get really interesting. The league’s contract with ESPN ends after the 2025 season, marking a massive opportunity to vastly increase revenue right as NCAA superstars like Caitlin Clark and Paige Bueckers enter the league.
Howard Megdal also reported for SI that the WNBA has its sights set at $100 million per year, which frankly seems conservative given the buzz that could be around the league in that exact window. Knowing that the NBA is seeking to triple its current rights package and that the existing WNBA deal is certainly undervalued, a deal that increases four-fold is certainly reasonable.
If the league comes away with a $100 million contract, that alone boosts the annual revenue to $185 million (an incremental $75 million beyond the existing $25 million ESPN contract on top of 2023’s $110 million) compared to a target of $124.4 million
In our hypothetical timeline, the league’s cumulative revenue figure through 2024 would settle in at about $495 million. The cumulative revenue target would come out to $446.5 million. The resulting cumulative overage comes out to approximately $48.5 million.
As covered in our CBA Explained on this topic, the players’ share ends up at about $17 million after a 30% cut is removed and 50% of the remaining figure is for the players. Of that $17 million, half of it is redirected to league marketing agreements with players, where individual players can earn as much as $250,000 in a given year, while the other half goes directly to the players.
In all, that would increase the average compensation by an additional $117,892 for the year. How that is actually spread around is up to the league (for league marketing deals) and the WNBPA (for the cash payment).
Just how much could a top player make under these circ*mstances? If we assume the direct payments (which would total $8,488,200) are distributed according to salary, that would mean every player would receive a payment of approximately 48% of their base salary. Below is a list of reasonable compensation estimates for the league’s top player in 2024, based on our example numbers:
$241,984 supermax salary
$116,982 revenue sharing payout (about 48% of base salary)
$250,000 max league marketing agreement
$75,000 team marketing agreement (50% of team allocation)
$50,000 performance and playoff bonuses
$50,000 maximum time-off bonus
$30,000 Commissioner’s Cup winner bonus
All told, a player that has every domino fall their way could earn around $813,966. And to reach $1 million for this player? In our hypothetical, the 2024 league revenue would need to be in the vicinity of $262 million, $77 million higher than our $185 million hypothetical.
To put this another way, if the WNBA were to exceed annual revenue targets by $125.6 million in a given season and meet the cumulative revenue target in the previous season, that could bring the league’s very best player right around seven figures. That’s a tall task, but maybe the 2019 revenue is lower than our hypothetical, making it easier to keep pace with targets.
One final note that was mentioned earlier in this piece: A payout one season does not ensure a payout in the next season. For revenue sharing to kick in, the league needs to surpass the annual revenue targets and the cumulative revenue targets for that year.
This means if the league remained at $185 million in revenue following the 2024 season, the shared revenue would decrease slightly for the next two years before failing to reach the annual target in 2027. One way to account for this is if the TV contract included built-in increases throughout the length of the deal, rather than a flat $100 million.
This is exactly why the flashy gains are nice to have, but the league can’t just rest on its laurels after a big boost. The winning combination for the league is the large jump from the new TV contract, followed by consistent growth in subsequent years to keep ahead of the rapidly-growing annual targets.
This year’s $75 million fundraise should help kickstart the growth in the coming years, and hopefully, other partners follow suit with ESPN so that the WNBA can thrive in the long term too.
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