The NBA, the Economy, and You

Things are getting so bad that a team is pulling complimentary soft drinks? That’s maybe $50 a game, soda is cheap. Especially if you get the whole dispensing system that most fast food restaurants have. Average cost per soda on one of those is like 40 cents.

What else do you think is being cut around the league, valet parking? Heaven forbid an executive or player would ever have to park their own Mercedes or Bentley. Soon will players have to bring their own towels?

Who knows how bad it will be by the end of the season, but what we really need to look at is next season. When teams start asking for those renewals of season tickets or trying to get new people to get those tickets that weren’t renewed.

The economy is in perpetual downward spiral and it even hasn’t hit bottom yet. With the oil and banking industries currently on their heels, some cities in the northeast, Midwest and gulf coast are going to struggle.

Then there is also the auto industry…

Detroit is the poster city for the bad economy. The effects are already being seen, they just recently did not sell out a game for the first time in recent memory. I do believe it was six or seven years, but I am not sure on that, so if someone has that information please, pass it along.

The Dallas News predicted back in 2004 that Dallas faced a dire economic crisis if it continued it’s current business-as-usual trends.

Dallas continued those trends and through a survey by Bizjournal.com “the survey indicated that the manufacturing, construction, energy and transportation servicesindustries felt the largest drop in demand during the final two months of 2008.

The residential construction community also continued to feel a slowdown that has been in effect for a period of time, while the accounting and legal services groups stayed on a steady course, reporting flat demand.

Bank lending also remained on a downward decline, with tighter lending conditions continuing to restrict activity.”

Well I am very happy that the lawyers and accountants are doing well. But they relied too much on being energy based; they did not diversify like Houston did. Houston was in the same boat, but they moved their focus to wind energy and the biomedical industry. They are now one of the few cities that are recession proof.

How is that going to reflect into season ticket sales for the Mavericks, who are already starting to put a less than stellar product out on the floor?

So we have Detroit and Dallas as two focal points right now, but what about the even smaller market teams?

New Orleans is still rebuilding, but their attendance is up from last year, but I think people realize what they have in CP3 and company there now. But their industry like Dallas is also dominated by the oil/gas industry and that industry is slowly falling by the wayside. 

Also as of 2006, their owner George Shinn has a net worth of $100M. How can he really afford to hold on to the team, especially in this economic environment? Especially since the Hornets have been operating in the red since then? That has to take at least 10 percent of his revenues per year right?

According to Forbes.com, the Hornets have an operating profit of $3.2M so far this year, but they were in the red last year.

So what teams according to Forbes are losing money?

Dallas as before mentioned lost $13.6M last year, Miami Heat have lost $1.1M, Denver Nuggets at $26.3M,  Blazers and Nets lost $900,000 each, Hawks lost $6.7M, Pacers lost $6.5, T-Wolves lost $5.7, Grizzlies have lost $3.2M, Bobcats, $4.9M, and the Sonics lost $9.4M last year, not the $20M he said he was going to lose while in Seattle. 

Can’t wait to see what he loses while in OKC this year.

And OKC almost solely relies on the oil industry, all their owners and invested into it and losing money because of it. OKC needs to the oil to stay at over $40 a barrel to be able to survive this economic trouble. It’s currently at $40.04.

Speaking of OKC, they are in a lot of trouble. Their main money guy, Aubrey McClendon has lost over a billion dollars in the last eight months; he was only worth a little over two billion at that point. It’s gotten so bad that he is currently selling his legendary wine collection.

He should be able to make a few million dollars off the collection he has, but there is a huge movement to buy those bottles of wine and then return them to Aubrey.

I am taking the homeless man’s theory here. You give him the money or an item because he says he needs, but then turns around and does something completely the opposite of what he intended to do.

What is to stop Aubrey from accepting that wine and then just turning around and auctioning it again? You know if I were having money troubles and had to sell my stuff and it was given back to me, I’d turn around and sell it again.

You know what the economy is like; tell me you wouldn’t try to get every penny you possibly could if you weren’t going broke.

I am not saying this isn’t a nice gesture by those who would do it, it’s extremely generous, don’t get me wrong. But never trust a good deed with someone who is down on their luck, especially if that person is driven by money.

A bit off topic from what I originally wanted to talk about, but had to throw in some facts and figures, but what is the economic outlook going to be for this season or maybe even next season. Economic projections don’t have anything getting betting better for 18-24 months.

That’s two sports seasons. The MLB is already suffering from down season ticket sales, the NFL is projecting that it will suffer below normal profits next year. The NBA is laying off  people and soda and table spreads are getting cut in media rooms.

But it’s all part of the economic model that the NBA employs. High salaries, high ticket prices, concessions and parking and very few competitive teams. It’s almost a copy of the MLB model, but at least there is parity and  you can develop players, you can’t do that in the NBA. Have we ever had a single NBDL success story?

The NFL, you never know what is going to happen. The Cardinals made the Super Bowl and the MLB is starting to get like that too. The Yankees missed with playoffs with a near $200M payroll.

But in the NBA we all know who’s going to be there in the end, Boston, L.A. (not the Clippers, if you thought that you should be shot), Cleveland and San Antonio. We all know that’s the conference finals matchups.

It’s pretty much what we see every year, except Boston is now replacing Detroit and Orlando is kind of that odd team out, then places like OKC and Memphis have no shot 

It’s going to be interesting to see what happens when things start popping up. Pay attention to how the MLB attendance goes. Baseball is the most affordable sport to attend in most cities, what is it going to be like this year though.

It’s going to be a great barometer of how the rest of the sportscape shapes up for the year.