NBA PM: Have the Owners Been Coddled?
When a prime time interview yields terms like “nuclear winter” and “blow up,” the logical topic must be related to global warming or terrorism. Of course, NBA commissioner David Stern was only making apocalyptic allusions in his statement on ESPN last night. The world didn’t end when the union rejected the NBA’s latest collective bargaining agreement proposal, and even if the Players are responsible for the loss of a season, the Owners are complicit in that effort to say the least.
And amidst all of Stern’s gloom, the world continued spinning today, as it will throughout the rest of the lockout. Even after the NFL season ends—when the Owners suspect Players’ limited savings will run dry and the Players assume the Owners will begin sweating the loss of their biggest advertising opportunities—life will go on for all Americans. People will watch the NHL and college basketball, maybe they’ll go see a movie or out to eat instead of packing themselves like sardines into Madison Square Garden.
Don’t believe me? Time Magazine’s latest issue referenced a 2000 study by the University of Maryland Baltimore County titled “The Economic Consequences of Professional Sports Strikes and Lockouts,” which sheds light on the economic impact of a work stoppage in major professional sports. As Time’s Sean Gregory expanded upon online, we’ve always been told that pro sports generate significant revenue for communities. The Oklahoma City Chamber of Commerce claims that each Thunder game generates $1.3 million for its economy, for instance. But would that money simply evaporate if the Thunder stopped playing, or would it move to other parts of the community?
The study was done too soon after the NBA lockout of 1998-1999 to gather any meaningful data from that work stoppage, but authors Dennis Coates and Brad R. Humphreys still examined 37 markets from 1969 to 1996 to learn the economic effects of work stoppages. Here’s the abstract:
The NBA lockout of 1998-1999 resulted in the cancellation of a signiﬁcant number of games. According to the claims made by proponents of sports-driven economic growth, cities with NBA franchises should experience signiﬁcant negative economic losses from this work stoppage because of the lost spending in and around basketball arenas during this event. Although it will be several years before adequate data exist for a careful ex post evaluation of the effects of the lockout, an examination of the impact of past work stoppages in professional football and basketball can shed some light on the potential impact of the NBA lockout as well as the viability of professional sports as engines of economic growth in cities. The parameter estimates from a reduced form empirical model of the determination of real per capita income in 37 SMSAs over the period 1969-1996 suggest that prior work stoppages in professional football and baseball had no impact on the economies of cities with franchises. Further, the departure of professional basketball from cities had no impact on their economies in the following years. These results refute the idea that attracting professional sports franchises represents a viable economic development strategy.
The mark of a major American city in a lot of ways is professional sports. New York City has more economic pull than any other city in the country; and the presence of two NBA teams, three NHL teams, two MLB teams, two NFL teams, the U.S. Open and a WNBA team support that fact.
But how much do our communities really need these teams and why are cities becoming so competitive in attracting pro franchises?
Seattle’s taxpayers funded a renovation for Key Arena before the 1994-1995 basketball season, only to have the NBA allow the SuperSonics to move to another publicly-funded arena in Oklahoma City before the 2008-2009 campaign.
Sacramento mayor and former Suns point guard Kevin Johnson had to shake down local businesses for $10 million to get Stern and the NBA’s relocation committee to put a hold on the Kings’ potential move to Anaheim.
And for what? Sacramento is a government town. With or without the Kings, the city will have a sea of jobs serving the heart of California’s bureaucracy. Bars will be open, restaurants will have customers, etc.
As the study suggests, Sacramento might not be in such bad shape if the Kings jumped town. Coates and Humphreys concluded that there is no proof of any loss of revenue during a work stoppage.
In this paper we proceed from the assumption that professional sports can eﬀectively enhance local economic development. Under this assumption, work stoppages in professional sports should have harmful eﬀects on the economies of the regions that are home to franchises. If this is true, then the lockout in the NBA at the beginning of the 1998-1999 season will have negatively aﬀected the economies of many major metropolitan areas in the United States. Fortunately, the evidence does not support the assertion that professional sports inﬂuence the economic health of SMSAs. Previous research has found little economic beneﬁt and in some cases harmful eﬀects of the sports environment on cities’ economies. The results of this paper are consistent with those conclusions. Work stoppages in baseball and football have never had signiﬁcant impact on local economies. The departure of a franchise in any sport, particularly in basketball, has never signiﬁcantly lowered real per capita personal income in a metropolitan area. This is good news for SMSAs with NBA teams. The recent lockout will likely have had no eﬀect, and possibly even a beneﬁcial eﬀect, on their economies.
It’s not farfetched. The authors argue that a combination of substitutions (buying movie tickets instead of NBA tickets, for example) and a reduction in public spending (more police have to be active to handle crowds at NBA games, for example) make the loss of an NBA team a zero-sum equation.
If true, that study serves as a slap in the face to any city that has shelled out big bucks for fear of losing 41 regular season basketball games per season.
And yet, the Owners sit in primarily public-funded arenas and cry poverty. Even the cost of buying and relocating franchises has been amortized over their books ensuring that the Players will have to foot some of the bill.
Nobody is saying the Players aren’t to blame as well. The Owners want to restrict free agent signings because the HEAT would have 230 players if everyone could sign where he wanted. Meanwhile, who wants to freeze to death in Minnesota or Toronto without the expectation of winning?
No, the Players aren’t innocent victims in this, but they don’t have two hands in anyone else’s pocket either. Our communities have spent a lot for the privilege of a local professional sports franchise. For the owners, and Stern in particular, to blame only the Players is absurd and insulting. There have been too many handouts, and at a certain point, the teams have to honor their commitment to these communities or stop asking for public funds altogether.
John Wall Appreciates the NBA Veterans
At a recent Josh Howard Foundation event, Wizards point guard John Wall paid an interesting homage to veteran NBA players.
“The toughest part is,” Wall told reporters of the lockout, “the veteran guys they really don’t care what kind of percentage or what kind of deal we get because their career (is) about to be over. It’s mainly for the younger guy to see what’s going on because they’re trying to make rookie contracts six years. There’s a lot of stuff they’re trying to do and it’s basically benefiting young guys like me and the other guys that’s coming in.”
Wall, who says he’s “working out, making sure I’m fully healthy,” didn’t have to admit the obvious, but it’s good to hear a younger player say something. Veteran players such as Nazr Mohammed aren’t going to see a seven-figure swing in one direction or another because of the next CBA.
While he waits for the NBA’s return, Wall said he and many other players are trying to prove their love for the game and say “thank you” to the fans by playing in these charity games.
“It’s not for the money,” he said. “Nobody’s getting paid. It’s basically we want to play basketball. We want to give back to the fans and different communities where some parts, some of these people would never see an NBA game in person. But they can pay $25-$30 to watch a lot of NBA guys play, so that’s all it’s really for.”
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