Sely Gallery: CURRENT ECONOMIC PROBLEMS OF THE NBA AND NFL NEED A REAL BIG FIX! - MIKE IN DA

Saturday, February 26, 2011

CURRENT ECONOMIC PROBLEMS OF THE NBA AND NFL NEED A REAL BIG FIX! - MIKE IN DA - FEBRUARY 26, 2011

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CURRENT ECONOMIC PROBLEMS OF THE NBA AND NFL NEED A REAL BIG FIX!

Written by: Mike in DA
Date posted: 2/26/2011

NBA

It’s time to listen to what Commissioner David Stern has been saying for the past few years, and compare it to what he is saying now. Three years ago during the All-Star Game break in New Orleans, Stern was bragging about how the NBA was growing and how it had a global presence and that anyone who thought the economics of the NBA was a house of cards didn’t know his dick from his mouth. Now, he says the league is losing a total of around $350M a year; the league may need to take over a franchise and/or contract a couple of franchises; and without a hard salary cap and other wage concessions from the players, the NBA will have to shut down operations to conserve capital.

Was he telling the truth, the whole truth, and nothing but the truth all the time here? I don’t think so. Three years ago, he was blowing smoke up our asses to hide the fact that the NBA was playing far too many games to half-empty arenas and had too many games on TV where the ratings were approximately what The History Channel would get for a documentary about Chester Alan Arthur (the 21st president of the US for the history-challenged).

Today, we are to believe without question that 40% of the teams in the league operate in the red every year to such an extent that the net annual cash flow out of the league is around $350M. That is an awfully big swing in economics for a league that plays the same number of games and has fundamentally the same TV exposure that it had three years ago when things were just fine.

The main problem here is that there are too many NBA players who are grossly overpaid. As I have tried to point out here several times before when teams sign players well below the “star level” to guaranteed contracts worth $50M over 5 years, there is no way that the team will generate anywhere near $50M in revenue based on that player’s presence on that team. The team is guaranteed to lose money on those contracts the moment they are signed. Those are the contracts that make no economic sense.

You really can’t blame Stern for the league’s economic problems, as he has been dishonest at best and you can’t blame all of the players for being greedy, spoiled brats even though many of them are. There is a problem here and it needs a big fix.

The problems for the NBA require major surgery and not the cliché “band-aid”. Even more importantly, the problems for the NBA will require sacrifice on the part of the players, owners, and the league itself if they are going to be fixed. No "ifs", "ands", or "buts" about it.

My advice to the NBA is that if they wipe out a season, they had better fix all of their economic problems in whatever solution they agree to because when they come back they will have lost fans and lost TV audiences and will have to win them back. The same product they have now will not do that.

And no matter how the problems are eventually solved, expect to pay higher ticket prices. That's a fact, Jack!

NFL

The NFL faces a more impending work stoppage situation; their CBA ("Collective Bargaining Agreement" for the legalese-challenged) expires next week. The NFL has huge TV ratings. This year’s Super Bowl had more than 111M viewers for every time segment for which numbers were issued. And it draws people to their TV sets on weeknights and weekends during the day and the night.

Speaking about the Super Bowl and its telecast, remember that these TV numbers happened for a game between two of the smaller TV markets. Pittsburgh is the 23rd largest TV market; Green Bay is the 70th largest TV market; and Milwaukee, which adopts the Packers as its own, is the 35th largest TV market. Based on the 2010 census figures, the total population of Green Bay is almost 4,000 less than the 105,000 people who showed up at the Super Bowl game in Dallas, aka North Texas.

NFL games in some cities are sold out by season ticket sales before the team shows up in training camp and when fans go to exhibition games, they pay regular season prices. Have you ever visited a team store at a mall during the Christmas shopping season? Official team gear is moving out the door in a steady stream. The NFL is not going broke like the NBA. This is not a misstatement.

However, if there is a strike/lockout/work stoppage for the NFL based on all the classic issues of labor/management mistrust, greed, ego, and hidden agendas, NFL fans need to realize that an often-overlooked aspect of teams will become hugely important for next season. Imagine that the new CBA does not happen until July or August and that team construction by front offices cannot start until then.

Assume that each team has 15 players from the current roster who will be unrestricted free agents in whatever constitutes the next off-season. That is close to 500 players for the league and none of them can be signed until there is a new CBA.

Add to those unrestricted free agents the fact that each team probably has five or six free agents with some kind of restriction based on individual contracts and current CBA rules. They cannot go anywhere either until there is a new CBA; and once there is a new CBA, who knows if they will have any of the same restrictions attached to them.

The league will hold a draft in April, but how can teams sign draftees or undrafted free agents to contracts when there is no CBA in place to govern things like a rookie pay scale or a salary cap and how bonus money will be treated under a new CBA. That puts another 300 players out there to be signed.

If there is no CBA until July, think about the time pressure to assemble a squad to give to the coaching staff to prepare for a season. Training camps usually start around the middle of July. Now imagine that the new CBA does not happen until the beginning of August.

GMs and front office staffs will really earn their money in 2011 if these negotiations drag on into the summer or even later.

And no matter how the problems are eventually solved, expect to pay higher ticket prices. That's a fact, Jack!

And personally, I don't really give a shit if there is no NFL and/or NBA season. For me, there's plenty of College Football and College Hoops to keep me busy sportswise during the non-summer months. As a matter of fact, there are over two dozen college basketball games available for me to watch today (Saturday) and over one-hundred games for me to choose from for wagering purposes.