Saturday, December 4, 2010

B.A.F.F.L.E.D. Sports

Professional Sports & the Economy

Recently, ESPN reported the decline in ticket prices for NBA games. Discussions of a possible player lockout have been looming as well, with many speculating the summer as the time of action. The lockout would be the result of the soon-to-expire collective bargaining agreement (CBA) not being renewed.  Collective bargaining is the negotiating between and employer, here the NBA, and a group of employees (players), regarding the terms and conditions of employment.  Employees are often represented by a union or association protecting there interests.  The bargaining results in a collective agreement.  The issue here is player salary caps and revenue shares from ticket sales and TV ratings.  Negotiations for the league's new CBA have persisted for over a year, and even NBA Commissioner, David Stern agrees, little progress is being made. 

NBA Players' Association Executive Director, Billy Hunter reports no breakthroughs have been made in recent meetings, which doesn't prove well for further negotiations.  Players are being encouraged to save their money in the event a lockout does in fact become the final action.  If a lockout occurs, no one plays, and no one gets paid.

The NFL is greatly affected by the economy as well, as their Player's Union Executive Director, DeMaruice Smith sees an end-of-the-season lockout as "nearly certain".  The football league is also dealing with collective bargaining issues, and their current agreement ends in March.  The issue in the NFL is largely the share players are getting of team revenues. 

So what are the economic implications?  Clearly a lockout would again halt playing and payroll, but lockouts in both leagues would be economically costly.  The NFL lockout alone could cost the economy nearly $5 billion in lost wages, taxes and regular revenues.  Let's also think about the business which thrive on professional sports, like apparel shops and sports bars.  

Obviously we would miss our beloved sports, but what do you think about the situation from a business standpoint?  What do you think each league should do?  Each side?  

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