Why The NBA Is Losing Sports Real Estate With The Lockout!

Posted: October 12, 2011 in NBA

So I was texting back and forth with a buddy and I joking with him that if I represented the players, I believe the owners – because they’re billionaires and players are millionaires, that owners always have an advantage. And I think the owners are resigned to this NBA lockout, to sit out for a long time – this is not like the NFL where everybody was making some money, like casinos. You’ve got the Mirage making good money, you’ve got MGM making good money and your Caesar’s making good money…they’re all making something. Like I mean, you open up a casino and it’s hard to lose a lot of money…maybe in the last few years in Vegas, but it seems to me that they more often than not make money. Banks generally make money as well, unless you have horrible management since we all put our money there, banks make money. In the NFL, everybody makes money! Yet, not the case in the NBA.

But the players have two great arguments- this is where the players and Billy Hunter have 2 great arguments. The players can always say “hey, all these big contracts, we didn’t put a gun to your head! You didn’t have to sign them…that’s a you problem!” You signed them; nobody said you had to sign Rudy Gay or Joe Johnson to those massive contracts, like how do you argue that? And the second thing is, David Stern wants to create a model – and economic model like the NFL’s, where every team makes a profit. My argument, if I’m Billy Hunter is, “What kind of business is that?” In what industry is everybody guaranteed to make a profit? That’s very rare.  Again, maybe Casino’s, perhaps the NFL…but in the history of both the U.S. and Canada….how many businesses are guaranteed to make a profit? That’s just not how commerce works!

So what your basically saying is that even if your Donald Sterling or what you consider to be a  below average Mike Brown of the Bengals owner…your still guaranteed to make a profit. I certainly don’t buy into that! If I’m an agent for the players…what kind of league is that? That you can be a stumbling bumbling moron running a franchise and you’re still making a profit? No thanks!! That’s not good for you the fans.  Now, the owners still have the advantage because the owners are richer and the owners have several revenue streams and for a player – you know, once that basketball money goes away, girlfriends, dads, moms, brothers, sisters, relatives and wife…they’ve got a Mercedes payment to make! It’s much tougher.

Now David Stern came out after the negotiations on Sunday night and said we’re cancelling the first 2 weeks of the NBA season and we are miles apart. “I’m sorry to report, particular for the thousands of people that depend on our industry for their livelihood, that the first two weeks of the season have been cancelled. We spent two days here, I think it’s fair to say that we established the positions of the parties with complete certainty of where each stood and we remain really really far apart on virtually all issues.” Virtually all issues is pretty ugly!  That’s not what anybody wants to hear.

Now as I said earlier though, the NBA has one huge advantage. David Stern and the owners have one huge advantage. I do not believe you’re going to have the bitterness, the widespread bitterness that you have in the NFL lockout because in that instance, you were taking football from us…you were taking something away from us and there was nothing to fill that void. It’s July, we want our camps, it’s August we want our camps, we’re bored, our baseball team is out of contention. I mean, the regular season in baseball goes on forever…we wanted football and you were taking it from us.

But right now, we’ve got football! Huge NFL and really popular college…you’re not really taking anything from us. We’re alright, we’re busy from Monday to Friday cause we have jobs and on the weekends we watch football….there isn’t a lot of room for the NBA. Now there are exceptions like Miami where their football season feels like it’s over, both college and pro, and they want their NBA team. There are certainly cities like Miami out there. But for a place like Dallas? That’s alright! I’ve got the Texas Rangers in the ALCS and the Cowboys….I’m okay! They don’t need their NBA. Los Angeles may miss it, Miami may miss it. But overwhelmingly in the U.S. – like Detroit right now, Michigan football is good, Lions are really good, Tigers are in the ALCS…that’s okay! Houston has got the Texans…their okay too!

In most of the U.S. right now, you don’t really miss your NBA team. Miami and LA are the big exceptions. Even in Dallas, where they won the title, their busy for the next 4 months. They’ve got the Cowboys, Sooner fans, college football, NFL, Rangers in baseball…they are good! David Stern went onto say that he’s looking at further reductions in the season. “You know, everyday that goes by I think we need to look at further reductions on what’s left of the season” The players have good arguments because any of those big ugly contracts, the players did not force the owners to sign them! Secondly, why should they ever sign a deal where every NBA team is guaranteed to make anything! It doesn’t happen in any other business. If you buy something, and you’ve got a big bank note, you better start billing! You’re not guaranteed to make it. I think the players have very legitimate arguments even though from the beginning I’ve always felt that the owners are the richer of the two and have other revenue streams and that they’ll be okay in the long term because they have the ultimate leverage. Players start missing cheque’s, families start complaining, players generally cave. NBA players historically have not exactly been Merrill Lynch

  1. Mike Crack says:

    I wonder what a fair % of revenues to give to the players would be. To me, that’s how it should work. No guarantees of profits for the owners, just a simple revenue percentage model.

    Anyway, good point about people not really needing the NBA. There are enough games that people don’t crave it like they do football, and with much less parity in the NBA compared to the NFL, not every fanbase is filled with optimism at the outset of each season. Once February hits and the NFL is gone, we may see people missing it, but not for awhile.

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