Case Analysis

The Growth of a League

For many years, women’s professional basketball struggled for consistency in the United States.
Since 1978, when the Women’s Professional Basketball League (WBL) was formed, leagues have
had difficulty surviving beyond a few seasons. The WBL lasted for only three seasons, and it was ten
years before a second professional league, the Liberty Basketball Association (LBA), was launched.
The LBA folded after only one exhibition game. A year later, another league was created: the
Women’s World Basketball Association. Although this league was more successful than the LBA, it
too folded shortly into its first season. Finally, 1996 saw the launch of the American Basketball
League, and the Women’s National Basketball Association launched a year later. The ABL lasted for
two and a half seasons (Jenkins, 2009). The WNBA entered its 24th season in 2015.

The WNBA began as a single-entity league in 1996, with its first season starting in June 1997. It was
formed by the NBA Board of Governors and owned by the league. Since its founding, the number of
franchises and the franchise locations have fluctuated. The league’s first 16 players were dispersed
to the inaugural eight teams, and the rest of the players were selected by the teams via a draft
(“History of the WNBA,” 2015). The Women’s National Basketball Players Association (WNBPA) was
formed soon thereafter and negotiated its first collective bargaining agreement (CBA) with the
WNBA in 1999. This was the first CBA in women’s professional sports. Under this CBA, rookie
minimum salary increased by 75%, and veteran minimum salary doubled. Year-round health
coverage and a retirement plan were provided. Contracts became guaranteed, and players earned
a collective share of league licensing income (“About the WNBPA,” 2015).

The WNBA introduced a draft lottery in 2001, and in 2003 the league and the WNBPA signed a new
CBA. This CBA created the first free agency system in women’s sports (“About the WNBPA,” 2015).
The most significant change during this time frame, however, was the NBA Board of Governors’ vote
to allow individual team ownership, moving the league from a single-entity model to a distributed
club ownership model. Further, teams could be owned by non-NBA owners and could be located in
non-NBA markets. On January 28, 2003, the Mohegan Tribe, located in Connecticut, became the
first non-NBA owner in league history when it was awarded the Orlando Miracle franchise (“WNBA’s
greatest moments,” 2015).

In 2005, the Chicago Sky became the second WNBA franchise to be owned and run by a non-NBA
entity (the team’s first season was 2006), and the Washington Mystics were transferred from
Wizards owner Abe Pollin to Lincoln Holdings, LLC (“WNBA’s greatest moments,” 2015). Sheila
Johnson then became the first female owner in the league. The Los Angeles Sparks became
independently owned in 2006, as did the Houston Comets in 2007, although the Comets folded
prior to the 2009 season. The sixth independently owned team was the expansion team Atlanta
Dream, which began play in 2008 (“WNBA expands,” 2007). The Tulsa Shock became independently
owned, as well, when they relocated from Detroit.
The league also began to move toward profitability. Its first television agreement under which it
would receive a rights fee was an eight-year agreement (2009–2016) signed with ABC, ESPN, and
ESPN2. Teams including the Phoenix Mercury and Los Angeles Sparks sold sponsorship rights to
their uniforms, with LifeLock appearing on Phoenix’s uniform and Farmers Insurance on the Sparks’
uniform.

In 2008, as the league continued to move away from its single-entity status and closer to
profitability, the third CBA was signed. This six-year agreement set the WNBA salary cap at
$803,000 per team in 2009 and increased it to $900,000 by 2013. For players with three-plus years
of WNBA experience, the minimum salary was $51,000. The maximum salary for a player with six or
more years was $99,500. Rookies received a minimum of $35,190 (Women’s National, 2008). After
the 2009 season, the Sacramento Monarchs folded, and the league has played with 12 teams since
then. Seven of the 12 are owned by entities outside the NBA (Atlanta Dream, Chicago Sky,
Connecticut Sun, Dallas Wings, Las Vegas Aces, Los Angeles Sparks, and Seattle Storm).

The fourth CBA was signed in 2014 and continues through 2021. This CBA added a 12th roster spot
to each team. Maximum salary was set at $107,000 in 2014 and increases during the term of the
CBA. The minimum salary was set at $37,950, with veterans with over three years’ experience
receiving a minimum of $50,000. A soft salary cap of $750,000 per team was set. Teams can exceed
the cap by 4% (“WNBA salaries 2015,” 2015).

The league’s viability is still a subject of concern. The Sparks lost money each year after the team
was purchased from the league in 2006. The team was scheduled to lose more than $1 million in
2014, when it was put up for sale. Magic Johnson purchased the team after it had been on the
market for two months (D’Hippolito, 2014). Though ESPN and ABC extended the television
agreement with the league in 2016 through 2022 and Twitter also streamed 20 games per year from
2017 to 2020 the league still has tight budgets (“We got,” 2018). For example, teams fly coach and
player salaries average $70,000. With a new CBA due after the 2021 season, there have been calls
for greater financial transparency as star players push to see increased salaries, improved travel
conditions, and a season that is less condensed.
Case Questions

[Link] was the WNBA structured as a single-entity league when it was founded? What advantages
and disadvantages did the structure provide to the league?

[Link] impact did the first CBA have on the WNBA, and how did each of the CBAs affect the
league’s profitability?

[Link] factors have caused the WNBA to move away from the single-entity structure?

[Link] new leagues, why is the single-entity structure appealing? At some point, do start-up leagues
have to move away from this structure? Why or why not?