NBA Executive Pay Under Review By Owners For Retention, Recruiting – Sportico.com
NBA owners are exploring options for how the league can better recruit and retain top executives at its central office, according to multiple people familiar with the plans.
Among the possibilities under consideration 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 at leagues like the NBA and NFL, which don’t have the equity structure of other private companies, nor the ability to consistently offer limited travel or remote-work options that became more important in the post-COVID job market .
The NBA discussions are still in their preliminary stages, the people said. An NBA representative declined to comment.
League offices are a desirable place to work—the five major US leagues are all high-profile, multi-billion-dollar enterprises that touch live events, ticketing, old media, new media, technology, marketing, lobbying, and legal. NFL commissioner Roger Goodell makes more than $60 million per year, but outside of the top job, league compensation typically trails the offerings from private companies, which are competing with them for talent, according to people who work in executive placement across sports, media and tech.
For one thing, there’s no equity to offer, nor is there a public stock price that often forms the backbone for long-term incentive plans (LTIPs). Secondly, leagues are often less flexible about location and business travel requirements that the pandemic has brought to the forefront of many job discussions.
Attempts to lure executives have reached the highest level. NBA commissioner Adam Silver has drawn interest in recent years from technology companies looking to pull him away from the league, according to one of the people.
“Especially in the day and age that we live in, where executives at hyper-growth businesses, tech startups or media companies are all locked in with some kind of equity or LTIP,” said Asher Simons, co-founder of CAA’s executive search division . “Teams and leagues now are having to battle that.”
Competing for talent with the likes of 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 fill a high-ranking executive role in digital subscriptions. The team asked him to look outside sports, at subscription-based companies like Netflix (Nasdaq: NFLX) and Peloton (Nasdaq: PTON), in his search for candidates.
“We went to all those companies and asked people if they’d be interested in working in sports at an NHL team, and when we learned their compensation details, we thought, ‘Holy cow,’” Gress said in a telephone interview. “It’s just two different animals.”
Apple CFO Luca Maestri, for example, was paid $1 million in salary plus a $4 million performance bonus last year, and currently 110,673 Apple shares, which were worth $17.4 million on Wednesday afternoon.
Despite typically offering lower pay, sports have historically benefited from their status as a high-profile industry. That said, both Simons and Grace said executives are beginning to be more rational about how to weigh the allure of a job in sports with the realities of compensation and benefits. To adjust, sports teams and league are already changing compensation structure—money is being shifted from performance incentives into bigger base salaries, they said.
The NBA has had some high-profile executive departures in the last few years. In 2018, WNBA president Lisa Borders stepped down to become CEO of nonprofit Time’s Up. Last year, NBA CFO JB Lockhart left the league to take the same role at TV and film studio A24. Earlier this month, CMO Kate Jhaveri left for a new job that has yet to be announced. The league is currently in the process of replacing her.
Other leagues also see turnover. Kevin LaForce, who played a role in the NFL’s media and investment strategies, left last June to help run technology, media and telecom (TMT) investments at RedBird Capital. Earlier this year, the NFL lost a pair of C-suite executives: Chris Halpin, its chief strategy and growth officer, and Michelle McKenna, its chief information officer. Halpin is now CFO at IAC; McKenna founded her own sports and media advisory company. Other notable former NFL executives include SoFi CEO Anthony Noto and Super Group chairman Eric Grubman.
The NBA central office is funded via revenue sharing. Teams keep 94% of their regular season home gate receipts, with the remaining 6% assigned to the league office to help fund its operations. (The assessment jumps to 25% during the playoffs, and that money is used to fund the player playoff bonus pool.)
If NBA owners ultimately decide to set aside more money for executives, it’s unclear if that money will be used to boost salaries, bolster signing and retention bonuses, or enhance LTIPs.
“If I’m Netflix, and I’m trying to hire an executive away from a major league, I know that I can absolutely crush all the benefits and compensation details,” Gress said. He hopes “the attractiveness of our industry” will remain a selling point, “and the difference between a $400,000 salary here and a $500,000 elsewhere is enough to keep people in sports.”
With assistance from Brendan Coffey.