The sport most effected by the economic downturn…The NBA?

Posted on July 16th, 2009. Written by Emmett Jones.

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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