Friday, February 27, 2009

Is the NBA in Trouble?

Read this and see what you think.

According to reports, the league is borrowing an additional $175 million to make available to 15 teams (meaning that each team eligible can tap into as much as $11.6 million). A source for the Orlando Magic indicated that his team has lost between $15 and $20 million a year for the past 6 years.

So what gives?

I've blogged before on this topic many times, and have the following observations:

1. That the league has teams in financial trouble is not a surprise. When you sell luxury goods, you'll take a hit in the recession.

2. That the league has teams in financial trouble also is not a surprise when you consider a) that there are too many teams, b) they play too many games and c) the quality of the product is not compelling.

3. You know that your team is in trouble when it advertises for all sorts of gimmicky packages -- cigars, dinner, meet the dancing girls (some of whom look like they belong dancing on a pole, thereby making the game NOT family entertainment), gift cards to retailers, etc. A better solution might be to lower ticket prices, but, then again, people probably have been conditioned away from the NBA because they think they can't afford it. And, if that's the case and they're soured on pro hoops, they probably won't go even if tickets are offered at lower prices.

4. You also wonder what the economic climate will do to the collective bargaining agreement, which seems to be a disaster. Teams get saddled with long-term deals and then can't shake the contracts, teams can't hire free agents meaningfully, and, unlike the NBA, it's not as though you can go from bad to good in a few years. You could stay in the 35-45 win category forever. What's the fun in being a fan of something like that?

The NBA probably will tell itself that "it's the economy, stupid" and that but for the bad economy, they'd be doing just fine. If they do that, they could become extinct. I think that spending habits will change for a long time following this recession, so much so that people will question why they might have agreed to pay $100+ dollars a ticket per game for this product. Put differently, they might migrate for a while if not forever. If the league is smart, they'll use this crisis as an opportunity to reevaluate their business model, their collective bargaining agreement and their product.

It's sad to say, but while college players want to make big money turning professionally, pro basketball lacks the excitement that college basketball offers, and there's no comparison. In contrast, while college football is exciting, pro football -- across the board -- is even more exciting. The NBA should think about that comparison when examining their product and then do something about it.

Or else we'll be left with endless speculation about where LeBron James will go in 2010 and, also, too many stories about whether n'eer do well Stephon Marbury will reform himself in Boston.

That's sad, because people should be talking about the games.


Anonymous said...

I do believe the nba is in trouble. You hit it on the head, too many teams, too many games and not enough quality. David Stern did a great job in the 90's but his ideas aren't doing it anymore.

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