NBA Lockout Could Hurt NYC Economically

The National Basketball Association's (NBA) team owners have locked out the NBA players and cancelled the first several games of the 2011-2012 preseason. As regular season games become vulnerable to cancellation, the economy of NYC and of the United States may be harmed.

The Lockout

The owners of NBA teams started the lockout in early July as collective bargaining talks broke down. Team owners have stated that twenty-two of the thirty NBA teams lose money and that the losses total more than $300 million. There has been no attempt by the owners to prove that there are indeed twenty-two teams losing more than $300 million, and the owners have refused to reveal any of their financial results to the players or to the players' union. The lockout is created entirely by the owners, and is not a "strike" in which the players would refuse to continue working under the terms of the previous collective bargaining agreement (CBA). In the lockout, the players are forbidden from practicing or playing as a team by the owners, who refuse to continue operating under the previous agreement.

Malcolm Gladwell has argued that NBA owners are not generally behaving like business owners but instead are enjoying the psychic benefits of owning high profile entertainment assets. He reminds us that the Boston Red Sox of Major League Baseball refused to have any Black players until long after Black players were present on all other teams and that their choice to remain all-white cost them a large amount of money. Because the owner of the Red Sox enjoyed the psychic benefits of enforcing his dogma of white racial superiority, he was willing to lose millions of dollars. His love of racism was greater than his love of (or need for) additional profits.

In the current NBA lockout, though the owners have not opened up their books, the players have offered to reduce their share of NBA revenue from 57% to 54.3%, a reduction that would cause more than one-half of one billion dollars to be shifted from the players to the owners over the next five years. The owners have rejected that suggested reduction and demanded a reduction to less than 50% of revenue. Such a dramatic reduction has no chance of being agreed to by the players. The stalemate has caused some preseason games to be cancelled. Soon, early season regular season games will be cancelled, and then, we'll face the potential cancellation of the entire season.

With most teams claiming to lose money, the NBA owners may prefer not to play the upcoming season rather than to play the season and absorb the losses.

If the season is not played, the fans will lose out, and the economies of both NYC and the United States might be harmed in the process.

Economic Impact

Every NBA team is scheduled to play 41 home games in the 2011-2012 season. Cancelling those games will affect the venues where the games are played and the cities of the NBA teams more generally.

Here in NYC, we have two NBA teams in the metropolitan area. The New York Knicks play their games in Manhattan, and the New Jersey Nets play their games in Newark, NJ (the Nets will play all of their home games in Brooklyn starting with the 2012-2013).

A cancellation of the 2011-2012 season carries major risks for our local economy. The travel industry will lose hotel revenue; restaurants will be harmed. Food vendors, sporting goods vendors who sell replica jerseys, and the cable channels that broadcast the games will lose revenues; advertising spending will decline.

It is likely that the Knicks and Nets are teams that are profitable. If they are, a cancelled season also eliminates the profits of two major local businesses.

In these difficult times, a cancelled NBA season is the last thing we need. Perhaps Gladwell can appreciate that beyond the economic challenges that a cancelled season would cause, there is psychic damage that the owners will cause all of us if they deny us basketball this year.