NBA and the coming deflation

[QuinielaBox]

 The bad recession we are experiencing has not hit the sports world including the NBA with full force yet. But it will. A lot of sponsorship money and advertising revenue will dry up due to bad corporate profits. The consumer has to pull back in spending and the first thing to go is spending on tickets and incidentals needed to attend sports events. Already, I'm hearing of advertising for deep descounts on NBA tickets and stories of teams releasing "big inventories of tickets".

So with the fall of housing prices and stock market values, wealth is being evaporated. Without cash and credit available, how are NBA owners going to be able to pay their obligations? Where will the money come from for consumers to pay their tickets? The companies have to cut their budgets and the first thing to go is money to pay for those expensive luxery suites, which represents a significant (35%?) of the team's revenue.

Less revenue = lower NBA salaries..... It has to at some point. Also, there are more opportunities overseas for young players to travel and work, and for older players to extend their careers. Basketball has gone global and if the overseas franchises are doing better financially than the NBA franchises, I can see good American players signing up overseas. So there could be a talent shortage for the NBA in several years. What if Kevin Durant, Al Jefferson, Kendrick Perkins, Rondo, Micheal Beasley, Derek Rose, Dewayne Wade, Monta Ellis, Al Horford, Kevin Martin, and Travis Outlaw decide to jump to Europe? What if Gnobli, Nocioni, and Scola go back to South America? What if Yao and Yi go back to China? If all this came to pass, the NBA will have to contract to 24 teams with the likely teams to fold being the Clippers, the Thunder, the Grizzlies, the Bobcats, any two of the Hornets, Heat, Jazz, Nets, Bucks, and Timberwolves.

The threats of deflation to the NBA is that the agents and the players association could be forced into salary reductions or be locked out. Rookie contracts could be extended up to 6 years. Player rosters could be cut from 15 to 12. Contracts would not be fully guarenteed but there would be buyout provisions that still count against a teams salary cap. The salary cap would transition to pure hard cap like the NFL has in place.

Personally, I think ticket prices are way too high and that the NBA inflation from 1982 has been about 5 times the CPI. The NBA must deflate at some point to bring it in line with the rest of the national economy - much to David Sterns chagrin. Television cable packages and the Internet will soften the blow of deflation somewhat but the deflation is inevitable in my opinion.

[guava_wrench]

Valid issues, particularly if Eastern Europe is less affected by economic crisis.

Did the Argentina guys ever play in South America? Don't South American players play professionally in Europe?

I'm glad I was able to sell the games I'm not interested in attending. The interest is still there. I think the scalpers will feel it big time, which is good.

I'm interested to see the markup for playoff tickets.

[Roy Hobbs]

While much of what you say makes sense, I look at MLB, who is expecting a record spending spree this off-season.  I doubt very much that the recession has a huge effect on salaries, and I absolutely do not contemplate any major changes to the CBA, as most economists expect the economy to begin to recover by mid- to late 2009.

[Who]

Unless it gets much much worse I don't see any effect on the court. Teams will make alterations off the court with non-basketball personnel and maybe some members of the front office.