The Bottom Line -- Television Pays The Bills -- Sonics: Lost Money Until New NBC Contract

The scream of the fire engine startled Bob Whitsitt, causing the president of the Seattle SuperSonics to glance out the window of his Queen Anne office.

In a blur, like club money problems, the yellow truck was gone.

By the grace of robust national television contracts that began last year and run through 1994, the Sonics improved their financial health even as they drew the fifth-lowest attendance in the league.

Team documents filed by the NBA and obtained by The Times show the Sonics had an operating loss of $1,780,589 in the 1989-90 season. But new deals with NBC and TNT more than doubled each team's television cut last year and helped Seattle make a profit.

"We're probably a little in the black now," Whitsitt said.

Smaller-market clubs are better off than ever in the NBA, where increased revenue from national and international sources diminish the burden on local communities and a salary cap moderates player spending.

The Sonics were prime evidence last season, turning their first profit in three years. Financial statements for 1990-91 have not been completed, but a $6.74 million share from national TV allowed them to build one of the most expensive payrolls in the NBA and still make an estimated $408,000.

Whitsitt said most other revenues and expenses increased slightly from the previous year, when the Sonics ranked last in the NBA in local broadcast fees and placed near the bottom in gate receipts and playoff monies.

The salary cap is expected to jump another $1 million, to about $12.8 million per team, when figures for next season are announced this week. But the national television share will increase in lockstep, as designed, to $7.7 million.

"The Sonics are a well-managed team," said Gary Bettman, NBA senior vice president. "I know they'd like to get a new arena. But I'm not so sure any of our clubs are headed for trouble."

Without revenue from luxury boxes, parking or arena advertisements, the Sonics have avoided the financial ghetto of the cross-town Mariners, who make money from all three of those sources yet project operating losses of at least $5 million this season.

Team financial statements and information from other sources show how the Sonics did it:

-- They were frugal, spending below the league average on every major expense in 1989-90 other than coaches and trainers (tempered when Bernie Bickerstaff's $322,083 salary went to Denver last year).

The Sonics spent $15.6 million that season, half that of the Los Angeles Lakers and less than smaller-market teams such as San Antonio and Portland.

Until signing Benoit Benjamin and Ricky Pierce to rich contract extensions last February, the Sonics' $9.8 million player payroll was lower than every team except the Washington Bullets and three expansion clubs.

-- National and international income shared equally among NBA teams grew from 26 percent to at least 38 percent of the Sonics' revenue pie, easing the pressure on the local community to pay the club's bills. The monies allowed the Sonics to raise ticket prices only 5 percent.

Television provided most of the boost - nearly $4 million - but royalties from licensed merchandise and international marketing also developed into a primary source. The increase came at the right time for the Sonics, who made only $1.1 million the previous season from local broadcast contracts.

-- The club played three home games at the 21,728-seat Tacoma Dome last year, maximizing ticket revenue lost by the confines of the 14,250-seat Coliseum.

The Sonics, who averaged 12,443 fans a game last season, rarely sell out the Coliseum but are hurt when big draws come to town. To get closer to the NBA average of 15,245 last season, Whitsitt scheduled games against Chicago, Boston, Portland and the Los Angeles Lakers for the Kingdome next season.

"Smulyan's got a great upside," Whitsitt said, of Mariner owner Jeff Smulyan and the many empty seats at the Kingdome. "From our standpoint, the best we can do is 14,000 a night, and we're dealing at 90 percent capacity."

Sonics owner Barry Ackerley last year followed the example of the Portland Trail Blazers, who play in 12,884-seat Memorial Coliseum but made profits of $2.7 and $1.3 million even in the two years before the new television contract. He enhanced the product, increasing the payroll more than $2 million and leasing a charter airplane to improve their road record.

Making and winning in the playoffs is more important now than than two years ago, when the Sonics got $248,000 even though they missed the postseason.

Whitsitt said that as part of the new NBC and TNT deals, teams are no longer guaranteed playoff monies. The Sonics, who have not generated as much as $700,000 since the club made a second-round series in 1989, are looking to Benjamin and Pierce to rediscover that income.

The full effect of that gamble will begin to be felt next season, when the veterans' new salaries will put Seattle "over the cap regardless of what it comes out as," Whitsitt said. "We'll have the Lakers' payroll next year, but we don't have their revenues."

For many large-market teams, the salary cap serves as a license to print money.

The Lakers generated $42.8 million in revenues and $12.7 million in operating profit in 1989-90, both best in the NBA according to league documents. Their local television and cable contracts paid them more than three times the Sonics' deal, and their gate revenues were more than twice those in Seattle.

But the salary cap also keeps clubs like the Sonics in business. They raised only $13.8 million in 1989-90, but limited by how much they could spend on players, their expenses were only $15.6 million.

All but six clubs last year were over the cap, which allows teams to exceed the prescribed figure to sign their own free agents and rookies. But it prevented the Sonics and other smaller-market teams from raids by the richer clubs.

"It's tough to predict what we'll look like in '95," Bettman said. "But salaries are tied to revenues and that's important. If anything, I'm real optimistic about the future of our clubs."

So, this is how the situation shapes up for Ackerley, at least until the labor and national television contracts expire in 1994, and his arena deal is up in 1995:

The salary cap allowed them to make a profit, and limits how much money they can lose. But they do not have the growth potential of the Mariners, nor will they make as much money as the Seahawks anytime soon.

Shy of new arena revenues, they need to win big to enhance ticket and local broadcast revenues. Or, true to the tired refrain, find a better deal in another city.

"The only chance we're going to have to make it here is if we expand our (revenue sources)," Whitsitt said. "We could always put a team on the floor and pay our bills, sure. But we want to be profitable and we want to go for championships."

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SEAHAWK, SONIC LEDGERS

Balance sheets for the 1990 Seahawks and 1990-91 Seattle SuperSonics, with estimated operating revenues and expenses:

REVENUES Seahawks Mariners ================================================================= National TV and radio contract $ 26,501,000 $ 6,741,000. - - - - - - - - - - - - - - - - - Local TV contract 500,000 850,000. - - - - - - - - - - - - - - - - - Local radio contract 1,500,000 400,000. - - - - - - - - - - - - - - - - - Home gate receipts 8,558,000 10,100,000. - - - - - - - - - - - - - - - - - Road gate receipts 6,244,000 0. - - - - - - - - - - - - - - - - - Luxury suites 1,162,000 0. - - - - - - - - - - - - - - - - - Concessions 330,000 200,000. - - - - - - - - - - - - - - - - - National merchandise cut 877,000 750,000. - - - - - - - - - - - - - - - - - Local merchandise, programs, novelty 500,000 265,000. - - - - - - - - - - - - - - - - - International sales, broadcast 500,000 327,000. - - - - - - - - - - - - - - - - - Playoffs 0 350,000. ----------------------------------------------------------------- Total $ 46,672,000 $ 19,983,000. =================================================================

EXPENSES Seahawks Mariners ================================================================= Player payroll $ 18,400,000 $ 10,300,000. - - - - - - - - - - - - - - - - - Other player costs (1) 3,000,000 1,800,000. - - - - - - - - - - - - - - - - - Stadium rent (2) 1,160,000 860,000. - - - - - - - - - - - - - - - - - Stadium security, utilities 231,000 0. - - - - - - - - - - - - - - - - - Other game costs 300,000 350,000. - - - - - - - - - - - - - - - - - League fees 0 690,000. - - - - - - - - - - - - - - - - - Head coach salary 950,000 525,000. - - - - - - - - - - - - - - - - - Other coaches, trainers and aides 2,000,000 300,000. - - - - - - - - - - - - - - - - - Team travel 750,000 900,000. - - - - - - - - - - - - - - - - - Other team costs (3) 2,500,000 700,000. - - - - - - - - - - - - - - - - - Front office (4) 8,800,000 3,500,000. ----------------------------------------------------------------- Total $ 38,091,000 $ 19,575,000. ----------------------------------------------------------------- Operating profit $ 8,581,000 $ 408,000. =================================================================

(1) Pension, pre-pension, benefits, deferred severance and payments.

(2) Seahawks paid 7 percent admission tax to Kingdome; Sonics paid 8 1/2 percent to Coliseum.

(3) Equipment, medical, training camp, meals, other.

(4) Staff salaries, promotion, facilities, scouts, other.

Sources: National Football League, NFL Properties, NFL Players Association, Seattle Seahawks, Green Bay Packers, Kingdome and Seattle Center accountants, National Basketball Association, NBA Players Association, Seattle SuperSonics.

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SMALL-MARKET SAVIOR

National televison deals that began in 1990 guaranteed the Sonics $32.3 million through the 1993-94 season, and the Seahawks $130.1 million through the 1993 NFL season. Here is how the money will be disbursed, with a comparison to the final year of the previous contracts:

NBA total Sonics split NFL total Seahawks split ---------------------------- -------------------------------- $ 77 million $ 2.8 million $ 493 million $ 17.6 million . $ 182 million $ 6.7 million $ 736 million $ 26.3 million . $ 209 million $ 7.7 million $ 792 million $ 28.3 million . $ 248 million $ 8.7 million $ 966 million $ 34.5 million . $ 248 million $ 9.2 million $ 1.148 billion $ 41 million .