Seven Lockout Links

Posted on August 24, 2011 by


That's not a basketball!

Dave Berri is the General Manager of the Wages of Wins Network.  He is a Professor of Economics at Southern Utah University, lead author of both “The Wages of Wins” and “Stumbling on Wins”, and past president of the North American Association of Sports Economists.

Well, the NBA lockout just goes on and on.  And I am afraid I doubt the lockout is going to end anytime soon.  To keep you amused (entertained? informed?), here are a seven links with some thoughts on our favorite labor dispute.

First, here is a link to my latest for the Huffington Post: How Rich People Ask for More Money.  The post examines the NBA’s competitive balance story and supply-side economics (yes, there is a connection… I think).

My Huffington Post column casts doubt on the NBA owners’ story.  Malcolm Gladwell recently argued that even if some of what the NBA owners say is true (i.e. some owners are losing money), we should not be concerned.  After all, owning an NBA team confers  substantial psychic benefits.   The entire piece is very good.  But the conclusion is well worth repeating:

The big difference between art and sports, of course, is that art collectors are honest about psychic benefits. They do not wake up one day, pretend that looking at a Van Gogh leaves them cold, and demand a $27 million refund from their art dealer. But that is exactly what the NBA owners are doing. They are indulging in the fantasy that what they run are ordinary businesses — when they never were. And they are asking us to believe that these “businesses” lose money. But of course an owner is only losing money if he values the psychic benefits of owning an NBA franchise at zero — and if you value psychic benefits at zero, then you shouldn’t own an NBA franchise in the first place. You should sell your “business” — at what is sure to be a healthy premium — to someone who actually likes basketball.

Jonathan Weiler – at the Huffington Post – agrees with Gladwell’s discussion of psychic benefits.  But even with that argument in hand, Weiler still argues that NBA owners may not be losing as much actual money as they claim.

CBS Sportline has two interesting lock-out related stories.  First, they note that NBA arenas (which were often funded with taxpayer dollars) stand to lose about $1 billion if the lockout cancels the 2011-12 season.  Furthermore, the people operating the arenas – who often are not the NBA teams being hosted – have no place at the bargaining table.  So obviously these costs are not considered by players or owners.

In addition, CBS Sportsline also notes that a recent study argues 22 additional markets could support NBA teams. Should someone say “let’s get a new basketball league”?

Finally, Sports Illustrated has a very interesting story on the New Orleans Hornets.  The NBA now owns this team.  And under the NBA’s direction, the Hornets are thriving.  Yes, even with the lockout this team is seeing revenues expand.  Doesn’t that suggest that maybe the problem NBA teams are having is with poor management? In other words, the players don’t need to accept less. The owners just need to do a better job of managing their respective franchises.

– DJ