Everything to know about the WNBA revenue sharing debate

Above all else, one topic drew the most attention by a wide margin: revenue sharing. This isn’t anything new; since the CBA was signed in 2020, a few times each year, a player will bring up the players’ desire to increase their slice of the league’s revenue. Recent reports place it at around 9-10% — much lower than the 50% that NBA players earn that is built into the salary cap each season.

However, the topic has never been more relevant, and it will only become more pertinent as negotiations between the WNBPA and the WNBA continue. So, before exploring what each side is likely arguing for moving forward, let’s set a foundation by exploring something you may not even be aware of: the current CBA’s revenue-sharing rules.

Revenue sharing today

The reason you may not have heard about the current revenue sharing system until now — and the reason today’s players want to see it replaced by a different system entirely — is that it never kicked in, and even the hypothetical benefit for players was underwhelming.

For complete information on how the existing revenue-sharing system operates, you can read this explainer. The abridged explanation is that 17.5% of revenue beyond a specific target would be paid out to the players directly after the season. An additional 17.5% would be added to the pool of money that the league spends on signing players to Player Marketing Agreements, also referred to as PMAs or LMAs. The remaining 65% goes to the league and its teams.

From the players’ perspective, the problems with this system are numerous.

Though it was out of anyone’s control, the COVID-19 pandemic threw a giant wrench into how the system was supposed to work. Revenue targets for each season were based on the league’s 2019 revenue figure as a base. Targets were also cumulative, with each year adding 120% of the prior season’s goal.

This means that even if COVID-19 hadn’t gotten in the way, and league revenue had increased by 20% every year through 2025 to the point of being nearly triple that of the league’s 2019 revenue, not a single penny would have been distributed in revenue sharing.

Compare that compounding 20% growth with the WNBA’s salary cap itself, which rises by just 3% annually. This means that in the 20% annual increase scenario, total salaries would have risen by 19%, while total revenue rose by 199%.

For every dollar beyond the targets, the players would receive 17.5 cents directly and 17.5 cents via LMAs. In other words, surpassing the target by $10 million would guarantee $1.75 million directly in the pockets of players. That would work out to $10,294 per player if it were evenly distributed among the 170 players to see game action this season.

This leaves the players progressively further out of step with the improved finances the league benefits from, as the players’ share of the revenue actually shrinks as revenue rises. To borrow a term from taxes, this is a regressive revenue-sharing policy.

The league declined to comment on whether its current proposal retains the same revenue-sharing structure. The WNBPA did not respond to requests to clarify its own understanding of that proposal, among other key questions.

Without knowing the finer details of the proposal, one can still see how maintaining a split between revenue-sharing mechanisms and the salary cap would not be in the players’ best interests. Even as the sheer volume of revenue sharing may rise, players could still run the risk of moving in the wrong direction even in a healthy league.

The current system, beyond its mathematical shortcomings from the players’ perspective, is also less than ideal in terms of how and when payments occur. Revenue share payments are made at the end of the season at the discretion of the WNBPA, meaning players do not begin the season knowing what their revenue-sharing payment would be, another way that the current system limits transparency up front.

A new system

The players, as a result, would prefer a different system. Speaking to the media at All-Star weekend in Indianapolis, WNBPA president Nneka Ogwumike spoke to this priority in contrast to what the league was countering at the time.

“In terms of salary structure, we’re looking for a percent of revenue shared,” Ogwumike told the media on July 18. “They’re still offering a fixed [salary cap] for us.”

That same day, WNBPA vice president Napheesa Collier echoed that sentiment, referring to revenue sharing in the salary cap as something the PA is “holding firm on.” This also means sharing in the risk of salaries decreasing or plateauing with revenue due to unforeseen circumstances.

With a direct percentage of revenue determining the salary cap itself, the impact on transparency would be significant, and the risk of salaries falling further behind the league’s revenue would disappear.

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The league is on the precipice of having enough financial incentive to convince most, if not all, players to make the WNBA their first priority. Giving players more clarity about their yearly earnings would help players who are on the fence make that decision.

For the league’s bottom line, there are shortcomings to this system.

First, just about any professional sports league and its teams will cry poor when it comes time to open up the checkbooks. You’ve probably seen concern-trolling arguments across the internet referencing a report that the WNBA lost $40 million last season. This is largely coming from bad-faith actors with no skin in the game other than to denigrate the league and its players, but team owners are likely leaning on adjacent talking points for their own reasons.

The answer to both parties is the same: Accounting is a hell of a thing, and the new 11-year, $2.2 billion television rights deal throws history out the window. The impending TV deal brings an increase of more than $140 million per year, before additional TV partners like ION and CBS are taken into account. No matter how you slice it, this claim is rendered moot: $140 million is more than $40 million, if you can believe that.

The rank-and-file players would also prefer the revenue sharing to happen solely in the salary cap, as it ensures a balanced and transparent distribution of revenue, with figures known up front and applied more equally than it would be today.

Of the routes to earning league compensation outside of the salary cap, LMAs benefit a small subsection of the overall group of WNBA players each season. A single player can be paid upwards of $250,000, meaning LMAS could have zero impact on the rank-and-file players while a select few benefit. Circling back to prioritization efforts, allocating that money across the board would have a tangible impact on the caliber of player most likely to still be on the fence after the new CBA is in effect.

Finer details

Whether the league and the players agree to continue the current system with increased payouts to match the current business, switch to a direct percentage system, or even something in between, the devil will be in the details.

If the current structure wins out, many numbers would still need to be adjusted to reflect the current state of the league. The reason the players’ direct share of revenue is currently only 17.5% is that the league takes a 30% cut off the top for what the CBA refers to as “cost of revenue,” leaving just 70% to be divvied up. This isn’t inherently wrong, but that 30% reflects a time in the league’s history when margins were thinner. In the new era of the WNBA’s finances, that cost of revenue could decrease slightly.

It would also be in the players’ best interests to match the revenue target growth with the growth of the salary cap itself, to avoid another situation where the target quickly outpaces the salaries. And lastly, rank-and-file members of the PA should be pushing for the full players’ share to be direct payments rather than siphoning some off to the LMA fund that they may never benefit from.

If the players were to win out and the salary cap were directly determined by league revenue, the debate would then boil down to a single number: what percent of revenue should the players receive? Major salary-capped men’s leagues in the US typically allocate around 50% of their revenue to players, although these leagues historically operate on wider margins, making their cost of revenue negligible. You can also comfortably set a floor of 10%, as it is unlikely that the players would walk away where they started.

Perhaps the league’s precedent of 30% cost of revenue in the current CBA means they could compromise on splitting the remaining 70% equally. However, without access to league finances, it is unclear if that would be a win for the league, a win for the players, or a true, fair balance.

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