Economists Explain the NBA Lockout
Is it economically worthwhile for the players to hold out for $500 million?
No. Total NBA salaries last year were over $1.5 billion, about three times the amount they are fighting over. Canceling a third of the current season would wipe out the gain of winning the extra 2.5 percent of BRI over the life of the new collective bargaining agreement. Canceling the whole season over 2.5 percent of BRI is insane for the players.
Of course there are other issues relating to the salary cap, like the length of contracts, but the BRI split seems to be the sticking point.
What’s the bottom line?
Can the owners afford to give the players a better deal? Yes.
Forbes magazine estimates that the Knicks franchise, the NBA’s most profitable, is worth about $655 million. The Milwaukee Bucks, the least profitable franchise according to Forbes, still is worth $258 million, and the Clippers, often considered the worst-run team, have a net value of $305 million. The value of the Knicks alone could more than cover what the players are asking for.
Can the players stop the owners from getting a deal that is much worse for them than the previous Collective Bargaining Agreement? No. What the players are willing to agree to is already materially worse than before. The only question that remains is how bad it will get.
Does the players’ line in the sand over 2.5 percent of BRI make economic sense? No, not if they miss many games to achieve it.
Is the owners’ offer fair? Not really.
Should the players take it? Yes.
Will the owners give in and up the ante? Very unlikely.
Will the players be rational and take what is on the plate? We can only hope so.