Does America really care about the lockout?

November 10, 2011

A few interesting tidbits as the NBA labor talks continue.  I would like to point out that the deadline set by David Stern has passed, and they are still in sessions, which seems to hint that the deadline wasn’t the final offer as Stern made it out to be.

While not the best of science, the Poll Position polling company decided to conduct a poll on whether Americans really care about the NBA lockout.  While they only surveyed a small sample, they did find that 76% of those responded that they didn’t miss the NBA.  12% didn’t care either way, and another 12% stated that they missed the NBA.  If we extrapolate these numbers with a back of the envelope calculation, about 36 million of America’s roughly 300 million individuals miss the NBA.  That is a pretty large group of individuals who would like to see the NBA back and playing again.  In sports economics we often look at fan demand, attendance and viewership of sporting contests.  While it is probably the case that more Americans prefer to see the NFL than the NBA, the lockout does seem to be preventing a significant portion of the population from seeing games that they would like to see.

In an article of Forbes.com, Patrick Rishe notes that the losses the owners are claiming are not necessarily the truth.  Forbes estimates of revenues and team values are never perfect, but they are estimating that the league actually is not losing as much money as they are claiming.  It is noted that with the current estimates they are saying about 17 of 30 teams in the league have lost money, and that this is attributable to the structure of the league.  Dr. Rishe calls for stricter salary caps and steeper luxury tax to help fix some of the economic issues he sees in the league.  While neither the Forbes numbers nor the owners numbers are usually one’s we can fully believe, there are many who may lean towards the direction of Forbes.  Owners in professional sports leagues have been notorious for hiding profits, and reporting losses for their teams.  This helps to support the claim that owners are always saying they are losing money and that they need to lower salaries and have a larger piece of the revenue split to make up these costs.  The NBA has shown some franchises having very large yearly losses, but as long as teams keep their books hidden from the public eye, we will always have to doubt the owners argument.

Former Toronto Blue Jays VP Paul Beeston once said:

“Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I could get every national accounting firm to agree with me.”

Hat-Tip (H/T) to vortex forum user “Surfing on a Rocket” for the link to the poll article.


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