Dave Berri hopped (or skyped) across the pond to talk on the BBC show “Wake up to the Money” about the NBA lockout
- Dave Berri on Wake up to the Money
- New Wages of Wins RSS Feed
- And we’re in the process of getting back into the iTunes store.
Dave has been like Stern and Hunter and has been making the rounds on the media circuit.
- Dave talked to the Mark Watch about why the fans will come back.
- Dave talked to the Denver Post about how the fans won’t walk.
In all of his talks perhaps the best of his accomplishments is to get a British host to call the NBA owners socialist. For all their talk of capitilism and free markets, the truth is when viewed from the outside it’s all a bunch of hot air.
-Dre
Update: One issue raised in the BBC interview was that players in the Premier League receive more than 70% of league revenue. Apparently the Premier League is not going out of business.
Posted in: Basketball Stories
Wages of Wins Journal 
classhandicapper (@Classhndicapper)
October 19, 2011
The reason a true free market isn’t appropriate for sports is that even though the teams are independently owned, they all operate under the same larger umbrella (the NBA) that competes with other forms of entertainment. They are not competing with each other in a business sense, only in a sporting sense. They are cooperating in a business sense.
They are like different departments within the same corporation working in the best interests of the entire corporation, except that each department is independently owned.
Imagine a corporation that makes widgets where some of the key employees could be valuable in multiple departments, but could only work in one.
Would it be logical for department “A” to offer a higher salary to some of those employees in order to bid them away from departments “B” and “C”? Of course not. That would raise salaries across the board for the entire corporation, make it less profitable and competitive. and might not even be the best use of those employees.
It would be idiotic!
Well, that’s essentially what we would have in the NBA unless there was cooperation between the owners and rules governing the salaries. In a true free market, the very profitable teams would bid away ALL the best players and eventually put the smaller markets out of business completely. That’s not the goal of the NBA or any of the independently owned teams (departments) that operate under that umbrella. The goal is for each team to do as well as possible and for the NBA to do as well as possible vs. other forms of entertainment.
When you work for a corporation, you do not always get to choose which department you are going to work in. You can’t field offers for a higher salary in a different department.
You CAN ask for a transfer, post for a different job and hope they give it to you, or leave the company.
NBA players actually have greater flexibility than many corporate employees. And just like corporate employees they can always leave, just as some are now by going to China., Europe etc… The reason most don’t want to leave, go on these independent tours etc… is the very same reason many unhappy employees stay at their corporate jobs. They know they have a way better deal where they are and know they should just shut up and collect their checks until something better comes along.
Dre
October 19, 2011
Classhandicapper,
The one issue of your point (and it’s odd you say “sports” not the NBA) is that the more capitalist idea DOES exist. It exists in Major League Baseball. It exists in European sports. People are keen to bring up the NHL and NFL to explain why we need to change the labor rules but conveniently seem to forget these other sports.
pwbrannan
October 20, 2011
Dre,
Are Premier League teams profitable? Even a few years back, I’d heard that the tremendously popular teams Man U and Chelsea operated at a loss, and that they’d racked up combined debt of over $2 billion between them.
This article has a good breakdown: http://www.guardian.co.uk/news/datablog/2011/may/19/football-club-accounts-debt
But investors are still lining up. So, either:
a) the clubs will appreciate in value
b) there are other ancillary benefits to owning a club, financial or otherwise
c) the figures are inaccurate
or some combination thereof. What do you reckon?
In any case, the NBA is undoubtedly profitable to NBA owners along with both a) and b), so yet again, NBA owners are left without a leg to stand on.
WC (@wcrimi)
October 20, 2011
Dre,
Good point.
I don’t follow baseball much anymore and I haven’t seen the profit loss statements for major league baseball. But baseball parks typically have seating capacity for around 50K fans, they play 162 games, and there may be revenue sharing differences (I have no idea). So it may be possible to pay all those huge salaries and still keep the league and most of the franchises profitable.
The downside is obvious and exactly what the NBA is trying to avoid.
The Yankees, Red Sox and a few other teams are constantly bidding away the best players from the smaller markets because they can afford to pay almost anything and remain profitable. All that is doing is raising salaries and lowering profits for the entire league (just like in the inter departmental model I described above) and weakening the ability of the small markets to compete on the field and entertain the fans.
It’s dumb to raise your own cost of labor when you are actually competing with other forms of entertainment.
I’m sure the major corporation I used to work for could have remained profitable even if the various departments were bidding away employees from each other. But it still would have been dumber than a bag of rocks even though it would have been good for me.
classhandicapper
WC (@wcrimi)
October 20, 2011
I’d like to add one more point.
Lost in any sympathy for the players is the fact that owners do their darn best to pass the cost of labor on to customers. One of the reasons I only go to 1-2 basketball games a year (instead of 10) is that the tickets are so darn expensive. There are other things I can do that are fun that cost a lot less money.