The NBA’s Collective Bargaining Agreement will expire after the 2011 season. With many small-market owners screaming ‘poverty’ and the Player’s Association unwilling to accept lower salary figures, a work stoppage seems like a very real possibility. Who’s to blame though?
Alike any other business valuation, let’s dive into the NBA’s sources of cash flow. For the past five years, the NBA has dealt with league-wide regressing attendance figures. In 2010, the trend continued as the league saw a 2% drop in attendance from the previous year. Due to lower 2009 attendance numbers, 28 of the 30 teams dropped 2010 ticket prices, resulting in a drop of 5% in revenue from 2009. Overall, 17 of 30 teams saw a drop in attendance figures and the NBA lost an estimated $500 million in gate revenue.
The NBA has one of the most in-depth revenue sharing plans in professional sports. Alike baseball, teams that exceed that salary cap are docked at high interest rates. Teams also share national television revenues and teams that are reporting losses collect money from an ‘assistance pool’. What teams do not share is local television and radio revenue along with luxury box sales. Could this be a point of contention with the new agreement?
It probably will be. The Jerry Buss’s and James Dolan’s of the NBA will not want to dip into their lucrative local bottom lines in order to help the Sacramento Kings stay afloat. Along with the salary cap falling from $69 million to $59 million to $58 million this year and player salaries increasing by an average of 8%, there isn’t much wiggle room for owners.
Are the players completely innocent though?
As a player in the NBA, you are entitled to enter ‘free’ agency when the contractual agreement expires. As long as they reasonably stay within the allotted salary caps, any team is allowed to ink one of these players. Even with all of the public scrutiny, LeBron James, Chris Bosh, and Dwyane Wade all played within the rules outlined in the current CBA. In a pure black and white contractual standpoint, we can’t knock these players, but from a league-wide standpoint, their ‘Decisions’ could ultimately lead to a lengthy work stoppage.
In my estimation, going into last season, only 17 of the league’s 30 teams had ‘Marquee talent’. Teams playing in basketball rich cities or featuring one marquee player made the list. However, that number has shrunk to 14 this year. Chris Bosh leaving Toronto, Amar’e Stoudemire leaving Phoenix, and LeBron James leaving Cleveland will leave big-time holes in their respective markets. Chris Paul demanding a trade out of New Orleans and Carmelo Anthony’s potential free agency could shave the total down to 12 teams. Of course, the Wizards, Clippers, and Kings have budding superstars, but their lack of popularity will hurt their bottom line in the short-term.
With a further growing competitive divide and the cost of living increasing each year, hammering out a new CBA will be an extremely daunting task. NBA Commissioner David Stern wants teams to share local revenues, but roughly half of the league’s owners will not agree to this stipulation. With the Player’s Association feverishly opposed to accepting less money, expect things to get ugly.
The beauty of the NBA is slowly fading away. The league used to be very balanced with premiere talent in almost every city. Superstar players used to will themselves, their teams, and their cities to victory. Now, the LeBron James’s of the world are completely ruining the balance of the game. Sure, LeBron just wants to win, but if you are going to suffocate us all with the ‘King James’ bullshit, man up and lead your team. It’s good for Cleveland, good for the NBA, and hell, it’s good for you…..
With no middle ground in sight and players becoming increasingly greedy, we may not watch basketball for awhile after the 2011 season…