The Economics of the NBA Lockout

[Micah Foehammer]

If you believe David Stern, the league is in terrible shape. Losses of 300 million dollars spread over 30 teams. Or 8 teams that made 150 million while the other 22 LOST 450 million total. Is the NBA economic model THAT flawed? Are player salaries REALLY that much out of control? And will the NBA owners stance in the latest negotiations (i.e. that the current 57% of revenue allocated to the players be reduced to a 46% share of revenue) really solve the problem?

Next 48 hours will determine fate of NBA's future
By Ken Berger
CBSSports.com NBA Insider
Oct. 3, 2011

http://www.cbssports.com/nba/story/1...of-nbas-future

So where are we as we enter the most important 48 hours for the NBA since Stern became commissioner? As far as current bargaining positions are concerned, we are nowhere near a deal. We must remember that those bargaining positions can -- and will -- change. Deadlines and the threat of massive financial injury have a way of softening people's negotiating points and distilling them into actual beliefs. That better happen, and it better happen for both sides. For as fundamentally unreasonable as the owners' economic position is, so is the players' zealotry for antiquated buzzwords and supposed birthrights like five-year guaranteed contracts, mid-level (i.e. mediocre) players making more than $5 million a year (not to mention awful players making $15 million) and annual raises straight out of Gordon Gekko's Wall Street (8 and 10.5 percent, respectively, for free agents leaving and staying with their teams).

But do those numbers really reflect the actual economics?

http://nba-point-forward.si.com/2011...sct=nba_t11_a0

You can quibble with the desire for profit if you’d like. You can argue that sports teams should be viewed as trophies rather than businesses (an argument I’ve never found persuasive), or that owners are making boatloads of money from all the side benefits that come with owning an NBA team — money from operating arenas, the residential development deal in Brooklyn and those casinos Dan Gilbert is building in Cleveland after leveraging the Cavs’ LeBron-era popularity. (That is an argument I find much more persuasive.) But the reality is that the owners want profit, and they will not be satisfied with breaking even league-wide.

But are things really that bad? Not everyone buys into that notion and it all revolves around the issue of peripheral business.

The Nets and NBA Economics

David Stern would have you believe the Brooklyn-bound franchise embodies everything wrong with the league's finances. It's not true.

By Malcolm Gladwell POSTED SEPTEMBER 26, 2011

http://www.grantland.com/story/_/id/...-nba-economics

Let us recap. At the very moment the commissioner of the NBA is holding up the New Jersey Nets as a case study of basketball's impoverishment, the former owner of the team is crowing about 10 percent returns and the new owner is boasting of "explosive" profits. After the end of last season, one imagines that David Stern gathered together the league's membership for a crash course on lockout etiquette: stash the yacht in St. Bart's until things blow over, dress off the rack, insist on the '93 and '94 Cháteau Lafite Rothschilds, not the earlier, flashier, vintages.

Interesting articles and all three are worth a read.