The Economy And The NBA

I doubt that I will need a long time to convince most of you that the economy is still far less than robust; but in case you need reminding, here is a single tidbit to consider. According to an article in the Seattle Times, the city of Tacoma, Washington advertised a job opening for a parking meter-reader; they intended to hire one person. Fourteen hundred people applied for the job. Cabeesh?

The economic situation continues to deliver blunt instrument trauma to the sports world. You know about the Yankees and the Mets attendance shortfalls. Consider that the Yankees and the Mets play in an area where their ardent fans had – past tense – more than a little disposable income to spend on baseball tickets. This year, both teams are in new stadia and neither team is close to selling out the place. If that message remains subtle, then someone is not paying attention.

The effect of the economy on the NHL will be seen in living color as the business related to the bankruptcy and sale of the Phoenix Coyotes proceeds. Gary Bettman – like his mentor David Stern – loves to proclaim great progress and success in everything his league does. Notwithstanding his proclamations, Game 7 of the Caps/Penguins series featuring the two biggest young stars of the league going head-to-head, the TV audience for that game nationwide was estimated at just under 650,000. Meanwhile, on that same evening, also on cable TV – - not network TV – - Game 6 of the Lakers/Rockets series attracted an audience of just over 6 million.

    Memo to Gary Bettman: Check the local ratings on that evening in Phoenix. How many fans watched basketball versus hockey in that city that night? Neither game had a local team involved. Those ratings might give you a clue about why your hockey franchise died on the vine.

However, lest you get the impression that the NBA is healthy, let me suggest ever so politely that it too is in deep yogurt – despite David Stern’s dismissal of any suggestion that there is anything to be concerned about. Pay no attention to the man behind the curtain… The rest of this rant will focus on NBA economic concerns.

Back in the first round of the NBA playoffs as the Cleveland Cavaliers were up two games to none on the Detroit Pistons in a series that produced exactly no drama or intrigue at all, the series was set to move north to Detroit. The Pistons could not sell out the place for the playoff game; in fact, they were not even close to selling out. So, the Pistons sent e-mail invitations to Cleveland Cavalier season ticket holders inviting them to come to Detroit (about a 3-hour drive) to see the playoff series continue there. Ladies and gentlemen, Detroit is a very good sports town; they support their teams very well even when the teams do not do very well. This is another bludgeon to the head for sports execs regarding the economic condition…

The NBA business model needs re-examination in the next collective bargaining agreement. There are several axioms of the NBA that may need to change and the first of them is the guaranteed contract. Nothing damages the product on the floor worse than a team signing a player to a large six-year contract only to have that player show up for games and give a nonchalant effort for the first five seasons. It kills the team; if the contract is a big one it can prevent the signing of other players; most of all, it annoys the fans. Other than that, it is just fine and dandy. Players need some degree of “protection” in their deals but a full guarantee of salary is no longer the answer. Review for just a moment the contract history of Stephon Marbury as an example of how a guaranteed contract just does not work.

The NBA is a league that lives on marketing its star players. There is nothing wrong with that – - so long as the star players are distributed around the league and each is surrounded by something other than rejects from the Washington Generals. Fans pay good money to see Kobe Bryant and LeBron James and Kevin Garnett and Chris Paul and etc. They do not pay good money to see “supporting cast players”. Nevertheless, without competent “supporting casts”, none of those stars would be nearly as exciting or as big a drawing card as they could be. So, perhaps there needs to be a formula derived regarding the distribution of salaries within a team salary structure?

The league and the union would do well to find a way to keep cohesive teams in place for more than a single season. NBA fans have been conditioned to identify with the star players and not the team jerseys; that is fine so long as the games are competitive and entertaining but when those conditions are not present, the fans need something to root for – or against. Teams that stay together over a period of several seasons are hardly the norm anymore. That does not help with fan interest and attention.

The league also needs to figure out how to reduce the season. This will reduce revenue and drive down whatever form of salary cap that the league has in place. That sounds like a bad idea but I do not think it is. Far too many NBA regular season games are “shoot-arounds” until the final 10 minutes when players begin to play hard. I do not read minds so I do not know if this is because the players are fatigued from the number of games and the travel arrangements or if this is because the players lose interest in an 82-game season. Or both.

Whatever the cause, a fan that pays anything near $100 a seat – assuming that fan knows anything at all about basketball – will not be happy to leave the arena realizing that he just watched 10 minutes of serious play and 38 minutes of “grab-ass”. At least 50% of the regular-season NBA games could be classified as “passion deprived”; the translation for that would be “boring”. I suspect that fewer games will make each game a better “entertainment value” and that is precisely what the NBA needs right now. Attendance is way down in several cities and down enough for other teams to notice. Part of that decline is due to the fact that people now are looking at how to spend discretionary income and some are deciding that regular season NBA games are not worth the money. In far too many instances, they are absolutely right.

I have to mention here something I have been in favor of for at least the past decade. The NBA needs to consider contraction. Recall, the league had to take out a loan of approximately $200M from the troubled US banking system to use as a way to infuse liquidity into various teams in the league who could not get loans from banks once credit tightened last year. There is no way that fact is a “good thing”. There is also no way that the league or the individual teams are going to open their books to let the union or the public see which teams are in the most serious financial peril. Nevertheless, some are in bad shape and others are in worse shape. Even though it would mean reduced numbers of jobs for players and reduced revenue for the league, it may be time to contract the NBA. Here are 12 of the 30 franchises in the league (40% of the teams!) that might be in sufficient difficulty that it makes sense to “redistribute their assets” around the league:

    Charlotte: This is college basketball country. The NBA did well here for about three or four years but the bloom is off the rose.

    Sacramento: Unless the team is a threat to win it all, attendance is “limited”.

    LA Clippers: Any questions?

    Memphis: This town did not work in the ABA; it is not working in the NBA.

    OK City: Maybe this franchise will work out because there is no other pro sports team within a few hundred miles, but is that worth the gamble?

    New Orleans: There are two pro franchises in town. The Hornets will always be #2. Always…

    Atlanta: One of the two worst pro sports towns in the country.

    Miami: The other of the two worst pro sports towns in the country. Love seeing those bright orange empty seats on TV for playoff games.

    Indiana: There are reports that the team is losing $30M a year. If that is even close to correct, that cannot go on for long.

    Washington: Like Sacramento, attendance drops like a rock when the team is not in contention. The biggest front-runner fans in the country…

    New Jersey: Like New Orleans, the Nets will always be the #2 team in the NYC market. Always…

    Philadelphia: The team has not drawn well for a while now; their announced attendance numbers should be filed under “F” for “Fictional”.

From that list, the league could surely find a way to cut down to 24 teams at the most. I would cut all the way to 20; but that’s just me…

Finally, here is a comment from Greg Cote of the Miami Herald regarding the intersection of the sports world and the economy:

“A 1909 Honus Wagner baseball card sold at auction for $1.62 million. Unless the card includes a secret code to the whereabouts of about $1.61 million in hidden treasure, I’m thinking the buyer overpaid.”

But don’t get me wrong, I love sports…

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  • Ed  On May 18, 2009 at 3:25 pm

    Re:NHL on Versus

    I saw a report NHL radio asked one of their stars, Henrik Zetterberg of the Wings, the other day if he was watching the Caps-Pens series. He wasn’t, he said his hotel did not get Versus.

    Nice job, Bettman….

  • Ed  On May 18, 2009 at 3:29 pm

    forgot the Zetterberg link…

  • The Sports Curmudgeon  On May 18, 2009 at 7:01 pm


    I am one of those folks who does get Versus on my cable system here in the DC area. However, when we go to our weekend home where we have a satellite system, I cannot get Versus.

    I know that Gary Bettman thinks that having the NHL on a network where the NHL is one of the top properties gives the network incentive to help the NHL “grow the brand”. Nonetheless, ESPN or TBS or TNT would provide access to lots more eyeballs than Versus does.

  • Ed  On May 20, 2009 at 12:49 am

    Agreed. But how bad does it look when one of your inhouse outlets asks one of your stars – and he is not watching you? Bettman screwed up

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