David Stern Puts Spin on NBA's Economic Woes with CNBC Appearance

Apparently, NBA commissioner David Stern rang the bell at the stock market this morning and sat down with CNBC to give a rosy outlook on the NBA in this shaky economy.

After examining the attendance figures (which are on par with past years,) and reading Stern’s comments, our good friend Truehoop offered up his thoughts on the current state of the NBA and the economy:

Although what’s different this year is that when you watch on TV, many arenas—Sacramento, Memphis, Minnesota, Charlotte, Indiana, Philadelphia—look really empty. Empty in a way, on some nights, that is almost shocking.

The other thing I’d be interested to know: If the League is OK, as a business entity, what about the teams? Surely there must be some owners whose pockets are not nearly as deep as they used to be. That’ll surely have an effect.

My bet is that enough owners will be pinching pennies that it’ll be a buyer’s market for 2009 free agents, and teams willing to take on salary will have rare opportunities—via free agency, or trade—to acquire real talent.

I couldn’t agree more with Truehoop’s assessment.

What Stern and these NBA attendance figures do not tell us is that majority of tickets were bought before the sharp decline in the economy, and in some cases, years in advance.

These figures are for paid tickets, and not who walked through the door, which hurts food and beverage sales along with merchandising sales.

Also, the attendance figures do not show us the all-important state of the luxury suites, which we hear so often from NBA owners are the “bread and butter” to their revenue streams.

Finally, advertising is down in all mediums, and the NBA is not immune to its suffering, which will crush television contracts in the future and individual ad sales at the arenas.

In my opinion, the hits for certain teams will be seen in the next six-to-24 months, when these owners, as Truehoop said, will not have the pockets they once had, and can’t spend as much on free agency.

With free agent spending coming down, salaries will come down as well. However, won’t revenues be coming down at a faster pace, therefore reducing the salary cap and luxury tax along with it?

It should be interesting to see what happens with the cap and the luxury tax for the all-important offseason in 2010. 

If there is less money in the market, and the cap/tax is reduced, then the moves these teams are making now (Knicks) could be an afterthought.

I am probably over blowing the situation, but something to consider.