Multiple sources familiar with the negotiations told ESPN that the WNBA is projecting that a recent proposal from the WNPBA -- which would give players about 30% of gross revenue and is believed to feature approximately a $10.5 million salary cap -- would result in $700 million in losses over the course of the agreement. Such losses would jeopardize the league's financial health; they would be more than the combined losses of the league and its teams in the WNBA's first 29 years of existence.
The projection, sources said, was determined based on previously audited league financial information.
But the union believes its revenue sharing model still puts the league in a "profitable position," a separate source close to the negotiations said, and calls the league's projected loss figure "absolutely false," citing a discrepancy in whether expansion fees are factored in.
The league considers expansion fees a transaction that generates zero net revenue: New teams are out the expansion fee, but earn a fractional share of future league revenue, while pre-existing teams get a portion of the fee but lose a fractional share of future league revenue.
The union's proposal, meanwhile, accounts for expansion fees in its projections, seeing them as real money that still contributes to owners' bottom lines.
Sooooo...the expansion fees have been cited as thge justification for higher salaries
But the reality is that the expansion fees are a one-time infusion in which the league can't count on the revenue year after year as a steady revenue stream
As a financial professional, I view expansion fees as non-recurring capital inflows that can help offset short-term losses or fund growth investments, but not as sustainable operating revenue that should be baked into long-term salary caps or recurring compensation obligations.
The league is right