NBA owners are exploring options for how the league can better recruit and retain top executives at its central office, according to several people familiar with the plans.
Among the possibilities being considered is a pool of money to help boost compensation packages at the C-suite and VP levels, said the people, who were granted anonymity because the talks are private. Retention is a growing concern in leagues like the NBA and NFL, which don’t have the capital structure of other private companies, nor the ability to consistently offer limited travel or remote work options that are become more important in the post-COVID labor market.
NBA talks are still in their preliminary stages, the people said. An NBA representative declined to comment.
League offices are a desirable place to work – America’s five major leagues are all leading, multi-billion dollar businesses spanning live events, ticketing, old media, new media, technology, marketing, lobbying and legal. NFL commissioner Roger Goodell earns more than $60 million a year, but outside of the top job, league pay generally follows bids from private companies, which increasingly compete with they for talent, according to people who work in executive placement in sports, media and tech.
For one thing, there are no shares to offer, nor a public stock price that often forms the backbone of long-term incentive plans (LTIPs). Second, leagues are often less flexible regarding location and business travel requirements that the pandemic has brought to the forefront of many employment discussions.
Attempts to lure executives have reached the highest level. NBA commissioner Adam Silver has attracted interest in recent years from tech companies looking to steer him away from the league, according to one of the people.
“Especially in the times we live in, where leaders of hyper-growth companies, tech startups, or media companies are all locked in with some sort of capital or LTIP,” said Asher Simons, co- founder of CAA’s executive search division. . “Teams and leagues now have to fight this.”
Competing for talent with Apple, Amazon and Google is a relatively new thing for sports leagues and teams. Mark Gress Jr., a partner at Prodigy Search, said he was recently hired by an NHL team to take on a high-level leadership role in digital subscriptions. The team asked him to look outside of sports, to subscription companies like Netflix (Nasdaq: NFLX) and Peloton (Nasdaq: PTON), in his search for candidates.
“We went to all of these companies and asked people if they would be interested in working in sports on an NHL team, and when we learned the details of their compensation, we thought, ‘Holy cow’.” , Gress said in a phone interview. “They’re just two different animals.”
Apple CFO Luca Maestri, for example, received a $1 million salary plus a $4 million performance bonus last year, and currently owns 110,673 Apple shares, which were worth 17.4 million dollars on Wednesday afternoon.
Although they generally offer lower salaries, sports have historically benefited from their status as a top industry. That said, Simons and Gress said executives are starting to get more rational about how to weigh the allure of a job in sports against the realities of pay and benefits. To adapt, sports teams and the league are already changing the compensation structure — money is shifting from performance incentives to higher base salaries, they said.
The NBA has seen some high profile executive departures in recent years. In 2018, WNBA president Lisa Borders stepped down to become CEO of nonprofit Time’s Up. Last year, NBA Chief Financial Officer JB Lockhart left the league to take on the same role at television and film studio A24. Earlier this month, CMO Kate Jhaveri left for a new role that has yet to be announced. The league is currently in the process of replacing it.
Other leagues are also seeing the turnover. Kevin LaForce, who has played a role in NFL media and investment strategies, left last June to help manage technology, media and telecommunications (TMT) investments at RedBird Capital. Earlier this year, the NFL lost two C-suite leaders: Chris Halpin, its chief strategy and growth officer, and Michelle McKenna, its chief information officer. Halpin is now chief financial officer at IAC; McKenna founded his own sports and media consultancy. Other notable former NFL executives include SoFi CEO Anthony Noto and Super Group Chairman Eric Grubman.
The NBA central office is funded through revenue sharing. Teams keep 94% of their regular season home revenue, with the remaining 6% allocated to the league office to help fund its operations. (The rating goes up to 25% during the playoffs, and that money is used to fund the players playoff bonus pool.)
If NBA owners ultimately decide to set aside more money for executives, it’s unclear whether that money will be used to increase salaries, bolster signing and retention bonuses, or improve LTIPs.
“If I follow Netflix and try to hire an executive outside of a major league, I know I can absolutely smash every detail of benefits and compensation,” Gress said. He hopes that the “attractiveness of our industry” will remain a selling point, “and that the difference between a salary of $400,000 here and $500,000 elsewhere is enough to keep people in the sport.”
With help from Brendan Coffey.