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Wednesday, July 15th, 2009 at 11:45 am  |  38 responses

More Bad Economic News for the NBA

Things keep getting gloomier and gloomier: “Commissioner David Stern said Tuesday that less than half the N.B.A.’s teams turned a profit last season and that some owners had argued that a worst-case decrease in the salary cap of 5 percent might be too optimistic…Last week, the league predicted that its salary cap could drop to between $50.4 million and $53.6 million in 2010-11, which would represent a loss between 2.5 percent and 5 percent in basketball-related revenue. On Tuesday, Stern added that teams could face at least a 10 percent drop in ticket revenue next season.”

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  • http://www.shawn-kemps-offspring.blogspot.com Eboy

    If The Sternbot would allow the ENTIRE league to be competitive and not slant it toward three or four favorite teams each season, he wouldn’t have this issue with fan support from all areas of the country.

  • Fat Lever

    Stern will never admit it, or accept it, but I think contraction should be a serious consideration at this point. Cut 4 teams right off the bat. Let it sit for a while, see the repurcussions(sp), then think about expanding to Europe a few years down the line.

  • http://adfji.com Jukai

    Eboy: what does Stern do which allows only four teams to be competitive?

  • http://www.shawn-kemps-offspring.blogspot.com Eboy

    If you have to ask, you’re silly.

  • niQ

    Eboy once again shut the hell up you have no idea what youre talking about

  • http://www.alllooksame.com Tarzan Cooper

    hmm, lets see, pau for javaris/kwame is one example

  • Rich

    I agree with the contraction. Look at it. 1) You got Memphis having no clue how to run a team. 2) Charlotte can’t give tickets away. 3) Sacramento wanting to sell or move their team badly. 4) New Orleans still trying to shed their contracts away like snakes do skin. David Stern, there’s nothing wrong with contraction.

    We also have to fault these owners. Bob Johnson was oblivious creating the Bobcats. They thought Jordan would change everything when he came aboard, but nothing has changed. And the Memphis ownership gave away Gasol for chump change. And just got Z-Bo? Why? Another thought, more owners should try and be cheap like The Scrooge Jerry Reinsdorf.

  • http://www.shawn-kemps-offspring.blogspot.com Eboy

    Tarzan get’s it. niQ obviously is a diQ. And yeah, contraction might not be a bad option to explore. Fat’s on point.

  • rav

    get rid of 5 teams from the grizz, clippers, bobcats, pacers, t’wolves, kings and bucks and relocate the other 2 to somewhere like seattle and vegas/kansas/san diego (would include vancouver had the nba not screwed that one up), make sure that their uni’s arent like a d-league uni and make sure that no more than 6 teams go into the playoffs (3v6, 4v5 in 1st round and 1v4/5 and 2v3/6 in the 2nd round etc) – the league is much better (i’d include the thunder in that list but they seem to be viable in okc right now)

  • Krishan

    Somewhere, anderson varejao is laughing

  • Krishan

    Rav that 6 team playoff idea is idiotic. The playoffs are the most profitable part of the nba season, cutting it down is pretty wrong. Not only that, you’re suggesting to limit the games the two top seeds play by giving them byes, possibly the two biggest ticket-attractors by then.

  • donovan

    Contraction wouldn’t solve as much as:

    - Eliminating guaranteed contracts (yes, I know, Billy Hunter will never allow this) … Hmm, you mean, like, you actually have to perform for your money? Weird concept, I know.

    - Shortening the regular season to, say, 70 games. + shortening the first round of the playoffs to five games again + making it so LESS THAN MORE THAN HALF OF THE ENTIRE LEAGUE makes the playoffs, a fraction that serves to make the regular season essentially meaningless and devoid of intensity.

    - Eliminating the draft lottery.

    - Upping the age limit to 20 years old, at least. (No, this would not actually help the NBA on the court, BUT… and this is important for fans paying the bills… it would provide the ILLUSION that it was helping the NBA, as the players teams would be drafting would be that much better known, believed in and worth paying for in the minds of fans with disposable income.)

    Hmm… more later.

    Contracting the Clippers and Grizzlies wouldn’t be a bad idea. Clippers because they’ve never done ANYTHING and never will, the Grizzlies because that’s simply not a basketball town. Leave Charlotte because that’s a basketball-crazy state and MJ might own the team. Leave the Kings because they may move to VEGA$. Well I hope.

  • donovan

    Word to Rav…

    One thing the NFL business model GETS that the NBA severely does not is the concept that less is more.

    If you have something people like, and you give them less of it, they will want it that much more.

    David Stern just simply does not understand the concept, apparently.

    Too many teams… too many games. None of it matters until the very end.

  • ber

    Eboy is right. Only about 4 teams have multiple games shown on National TV. In order to make people excited about some of these other teams, they need to be shown on TV so they can grow a fanbase.

  • The D Train

    donovan: Unfortunately even the NFL no longer gets that less is more, since they are trying to expand from a 16 game season to 18 games.

    Over-expansion is a long-term death sentence for the NBA. Too many teams, too few good players, and a crappy economy coupled with high ticket prices leads to empty arenas.

    I think a good example of how few good players there are in the league: do a fantasy draft on NBA Live or NBA 2K9; by the 3rd pick you’re really reaching for someone that is more than a one-trick pony (Rashard is probably a good example of this). Too many teams with too few good players does not make for a strong selling point.

    While contraction will be an absolute last-ditch effort when everything is crumbling down around them, as a fan I wouldn’t oppose losing Memphis, Minnesota, Charlotte and maybe one more. Know what all 3 of those teams have in common? All 3 were among the 6 most recent expansion teams in the last 20 years. Among all 6 of those teams, Vancouver and the original Charlotte have already changed locations. Minny and Toronto haven’t really enjoyed success on more than a limited basis. The only 2 teams that have worked out out of the 6 are Orlando and Miami. So contraction by 4 teams seems like a pretty reasonable idea from a fan standpoint.

  • donovan

    Seriously…

    Half these cats on ESPN who slam on the Grizzlies, et al. have probably seen them play, maybe, half of a quarter during a given season. And the fans are no different.

    Instead of 25 Lakers games and 1 Bobcats game, how about 20 and 6 or something.

    I like Emeka Okafor, Gerald Wallace, Raymond Felton, etc. But with a basic ABC/ESPN/TNT package, you wouldn’t even know they’re still alive.

    And that NBA TV ish is a joke as far as attracting a mainstream audience goes.

  • http://www.sonicbids.com/shaemorin doyouwantmore

    Good businessmen don’t panic. It would be an amateur, reactionary move to do stuff like scrap whole teams as some have suggested, or drastically alter the structure of the playoffs etc. The league as a whole will be fine in the long-run if the economy as a whole will be fine in the long run.

    The league’s money problems are a result of the bad economy, NOT a bad league or bad teams. Some of the teams that people have suggested scrapping have long histories and hugely invested fans and communities. In a bad economy stability is what gets you through, not risky moves to try and fix everything at once.

  • http://www.sonicbids.com/shaemorin doyouwantmore

    I could not agree more about making the league as a whole more competitive. I like Chris Bosh, Chris Paul, Deron Williams, Brandon Roy, Kevin Martin etc. But does the average person know who these guys are? No. The league and media seem to think they are best served by catering to the lowest-common-denominator fans of Kobe and Lebron and no one else.

  • http://www.youtube.com/user/officerbarbrady what

    Contraction is not a bad idea, but I would actually support a system of soccer-style relegation too. Imagine how much more motivated the Heisleys and Sterlings of the league would be to spend money if the consequence of not doing so was dealing with D-League level revenues.

  • http://slamonline.com/ niQ

    hey Eboy. someone is posting as me and talking sh!t to everyone on slamonline. someone really needs to fix this..

  • DarrowFan

    Require that franchises lower the price of seats just that tiny bit that will allow them to increase attendance and fill more seats, which will then naturally grow interest in the game and keep more generations attending. Move teams in “deserted” cities to better markets. Memphis to Kansas (where the KU Jayhawks have EVERYBODY loving b-ball), OKC Thunder to ANYWHERE else, etc.

  • rav

    @krishan – there are far too many games in the NBA playoffs and it lasts too long, especially when you compare it to NFL/MLB. 6 teams per conference in a 25-26 league team (in my perfect world it’d be 4 teams per conference) – the right mix IMO for a quality playoffs where you could end up with a worthy winner and it’d be the right length for the casual viewers attention span. and by giving the two best teams byes gives the 3 to 6 team more exposure, which of course can help the overall strength of the league.

    @donovan – the reason why there are so many laker/celtics/cavs etc games is because those teams get ratings (or at least their players get ratings) and the big networks would be committing financial suicide if they sacrificed games involving the big teams in order to show the clippers v grizz or bobcats v thunder, and lets be bluntly honest do people outside of clipperland/memphis/charlotte/okc really care that much about those teams as much as people outside boston care about the celtics etc?

  • rav

    @darrow – similar sort of thing has been done here – some teams who know they wont sell out for certain games sell tickets for very cheap in order to get the kids in (e.g. £5 adults, £1 kids) and they tend to go down quite well – cant see why the teams who struggle to sell out dont sell a few tickets like that – they get to expand their fanbase, the parent may buy the kid a jersey from the teamstore that they wouldnt have bought otherwise and there is of course revenue from the food and drink stalls that they wouldnt have got if there was nobody sat in those seats, or alternatively give a load of free tickets to schoolkids (with some teachers there obviously) and to college students on campus etc in order to fill the crowd and get some extra revenues from merchandise at the arena

  • neaorin

    So at what point do we start talking about the inevitable upcoming lockout?

  • http://nbacheapseats.blogspot.com Chendaddy

    Okay, so apparently sports fans aren’t also economists. Aside from contraction (which is a colossal admission that your league is a desperate failure), the very suggestions you’re making that you think would make NBA basketball more appealing are exactly what would cause the NBA to lose even more money. There’s a reason why there are 82 games in a season. Each franchise wants to play as many games as possible to maximize the amount of revenue that comes in. You think that reducing the season down to 70 games is supposed to sell so many more tickets for those 70 games that franchises normally with half empty arenas are actually going to recoup the cost of empty seats AND 12 fewer games? Not to mention how much direct revenue you’re throwing away from teams like the Lakers, Knicks, Cavs, Blazers, Celtics, etc. that normally sell out all their games anyway. And there is no way the league will agree to reduce the number of teams and games in the playoffs. Those games make the most money out of the entire season! There’s a reason why they changed the first round from a best-of-five to a best-of-seven series. More games = more money. Then you all talking about how less prominent teams need more exposure while also saying the playoffs need to be contracted to six teams. That would steal the absolutely most profitable games away from many franchises that are desperate for them to prosper (i.e. Atlanta, Golden State, etc.). Despite all that, the ideas for televising less prominent teams are probably still the most ridiculous. Hey, I get sick of seeing 25 Lakers and 25 Cavs games every season, too. I would love to see more of Al Jefferson owning the post in Minnesota, Danny Granger lighting it up in Indiana, or Brandon Jennings running the break in Milwaukee. Problem is, the majority of TV watchers who tune into the NBA games don’t. 25 times out of 25, the Lakers will draw more viewers than the Timberwolves, Pacers, or Bucks. That TV revenue goes to the league and is shared amongst the teams, so no one is going to suggest pushing the less popular teams just to get them exposure. That exposure won’t lead to higher profits. Doyouwantmore makes the best point. This is not the time to panic and restructure your entire business model. These are forecasts that project ticket revenues will go down 10% next year. Do you know how accurate financial forecasts are? In 2000, financial forecasts were projecting hundreds and thousands percent returns on dot-com companies. Then 2001 happened. The best they can do is predict what may happen based on what’s happening right now. In other words, they can’t tell you jack. There are many theories on how to run the NBA more efficiently and successfully, and the promising ones should be at least explored if not implemented. But we are not in a crisis that requires drastic cost-cutting measures, especially ones that are severely revenue-cutting as well.

  • rav

    @chendaddy – regarding contraction, teams like the pacers, bucks, grizz and t’wolves to name 3 have been losing millions for years, even when the economy was good and their teams were fairly good, and then there are others like charlotte (have they ever broken even?) who have lost a lot of money over recent years, and keeping those clubs running at a loss for so many years will lead to failure, contraction will be dealing with the issue to prevent it spiralling out of control, leading to things like teams running at the bare minimum player salaries (75% of the cap) and having a few thousand inside 18k+ arenas and potentially embarrassing situations like not being able to pay staff salaries.

    as for the number of regular season games in say a 26 league (13 teams per conference) you have around 70-80 games in the regular season and in terms of ticket revenues owners will undoubtedly raise the prices of tickets and other things (merchandise, food and drink stalls, stadium parking etc) to compensate for some of the loss in revenues (assuming that national TV revenues stay more or less the same and a small drop in local tv deals), but more importantly (and this will require the players help) a proportionate drop in their most expensive cost – player salaries, and other costs such as travel would be lower with less games.

  • rav

    and as for 7 game first round series – i think we’ve all realised how bad that move was from both a sporting and tv ratings point of view

  • http://dfjsklf.com Jukai

    Eboy: Spurs are the end all counterpoint.

  • http://www.newyorkshockexchange.com Old School Baller

    A while ago I talked in detail how the expansion had hurt the NBA. Make sure you site the source before you go off pontifercating on economic analysis without a degree in economics. Given the current recession it only makes sense that the NBA would soon get hit in the pocket. In the 80′s Stern was credited with single-handedly saving the league. I wonder who the media will blame for its current problems? Don’t answer that . . . it’s a rhetorical question.

  • http://kingakai.com Alpha-bet

    Well the economy is in a recession, that plays a little part. Also, I would image merchandise and jersey sales are down from where they once were in the 80′s 90. Especially in the 90′s where jerseys were actually apart of the tend in fashion. Now the only people wearing jerseys like that are little kids or if you are actually a fan going to the game..
    ___
    But at the same time, I think it’s a problem that right now, it’s only like 4 teams out of the entire NBA that’s even worth a d*mn. The competitiveness from team to team in the league has to get better..

  • db

    Maybe the NBA is overxtended, but there is no way you can arbitrarily “scrap” franchises once they are established. Even teams which are blleding money still are a property of considerable (potential) value. I would really like to see the reactions if Stern just decided “We’re scrapping teams x,y and z. Sorry Guys, it’s best for everyone else.” In reality this would at least be a difficult process with uncertain results…

  • http://www.shawn-kemps-offspring.blogspot.com Eboy

    Actually Jukai, they were the anomoly. The Sternbot made them his pet project of how to be a team “the right way” from player to management to try and shake the “thuggish” image he so feared at the start of the century from the majority of players making names for themselves. That’s common knowledge.

  • chintao

    This garbage is all gamesmanship for the upcoming labor negotiations. The League in NOT in trouble. Half these teams only exist to provide content to related cable channels that turn vast profits. Did you guys see that line about “basketball-related revenue” at the end of the piece? That implies that there are whole other streams of revenue that are not directly related to the gate. It is very likely that these forms of income (which Stern is implying should not be counted toward team profits) put these fat cats in the black.

  • http://www.triplejunearthed.com/dacre Dacre

    Less then half the teams turned over a profit – for someone like Sir Richard Branson or Oprah thats not an issue, but for Jerry Buss and Mark Cuban it is – if the entire NBA isn’t profitable, then the fat cats will have to feel the consequences also.

    I say restructure EVERYONES wages for this season.
    Players, coaches, owners.
    At the end of the day you can’t be paying people with funds that don’t exist.

  • http://www.triplejunearthed.com/dacre Dacre

    Does the NBA (Sternbot) have a list of standard regulations that each team must maintain to keep in the NBA? Turnover, attendance, total population of city, seating availability…etc???
    It would be interesting to see how many teams in the league are being “carried” each year…

  • http://hibachi20.blogspot.com Blinguo

    Yeah, as Chintao alluded to with the contract NBPA stuff coming up, the League really is not in trouble. It won’t be until the owners complain that they need public funds in order to finance half a stadium or more to continue their family’s wealth for years to come. As if purchasing your own business to make profits is everyone else’s cost of living. And as an aside, aren’t all these huge contracts you see on aged players finally going to go the way of the dodo; max contracts are not being handed out everyday now, just to keep in line with the similar talent being paid around the same (those mid 90′s years). Besides egregiously overpaying the LeBroninite guy who gets a kid wig day. And maybe overpaying the Dwight backup Polish Jumpman tattoo guy (probably trade bait but not a good idea “to try to get something out of him instead of nothing” in the penny pinch economy – or in a roster managing sense as the SLAM writers or someone said here before recently – and his value goes down as the season starts up until the deadline).

  • http://hibachi20.blogspot.com Blinguo

    “As if purchasing your own business to make profits is everyone else’s cost of living.” Should rephrase that, or clarify. Basically, like Dave Zirin’s Terrordome book tells us, its a major cost those new stadiums and it directly takes away from public funds for dilapidated schools, housing, and broken health care among other things. And your taxes going to fund a stadium just for the right to buy tickets to see games there? You’re not the owner nor do you get in free, but you had to pay in full beforehand and for years to come, really. Such a racket. And I read on here before, someone mentioned that the owners are truly wealthy and that to many being owners of teams, is just like a hobby to them among their many other day to day stuff. Some stuff to think about for those angry-run off to calculate Stephon’s career salary totals (ignoring like 30% goes bye bye to taxes and how his compared to his peers) people.

  • chintao

    Is Blinguo my lost twin brother?

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