The sport most effected by the economic downturn…The NBA?
As I’ve mentioned on many an occassion previously, sports are not recession-proof. Baseball has significantly decreased attendance, football has seen layoffs and merchandise store closings, and hockey? Two easy words. Phoenix Coyotes. But arguably, the sport most effected by the recession is professional basketball.
As you may or may not remember, the NBA borrowed $175M for its clubs back in February, and they’ve already announced a decrease in next year’s salary cap,
The league announced late Tuesday that the cap for 2009-10 will be $57.7 million, a 1.6 percent decrease from last season. The cap is generally tied to league-wide revenues, which increased by 2.5 percent in 2008-9. However, the cap decreased based on a formula set by the collective bargaining agreement.
The last time the cap dipped was between the 2001-2 and 2002-3 seasons, dropping to $40.27 million from $42.5 million. It then increased for six consecutive years, growing to an all-time high of $58.68 million last season.
And now, there’s further news that not only was the cap decrease possibly too optimistic, but that less than half of the NBA’s teams are even turning a profit,
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.
The league’s board of governors convened here and will meet again Aug. 4 with the players union in hopes of jump-starting negotiations toward reaching a new collective bargaining agreement. The current one expires in June 2011.
Some observers predict that the next collective bargaining agreement will feature drastic changes and that players will be forced to make concessions because of the economy.
Yikes. Now, I don’t have all of the inside numbers on the other sports, but lets just look at the scenario. Less than half the teams are turning a profit…and league wide revenues increased by 2.5% last year…Meaning that there seem to be a bunch of smaller market teams that are essentially dead weight. I’m no expert, but that sounds like a recipe for contraction. Sure, everything is okay during an economic boom; so much money is coming in that any short comings of weaker teams are never exposed. But, what makes the NBA more effected than hockey, for example? Probably nothing. The difference is that there’s seemingly an expectation for hockey to be in trouble, based on smaller network TV coverage, residual feelings about the strike, etc. Personally, when I think about the NBA, I don’t think about a league that has more than 50% of their teams hemorrhaging money.
And therein lies the difference.
New York Times — NBA Salary Cap Shrinks
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I think the fact that the labor agreement is set up to include all monies in the revenue pool is the reason for this. I actually believe that if the players kicked in an endorsement tax to the owners, I think this ship would be sailing pretty steady.
I just think that sharing the load a bit and giving owners the resources they need to market the league is vital to the success of the league and somewhere between Shoe deals and guaranteed contracts we lost that
the last quarter of 2009 seems promising as we have seen lots of signs of econic recovery against the massive economic recession. i hope that in 2010 all our economies would be back on track. recession really sucks.