Posted by John Vrooman on Wednesday, March 29, 2017 in National Basketball Association.

Interview with ESPN.

NBA’s Golden Goose

What goes up must come down. The salary cap (max salary) explosion in the NBA caused by a tripling in media revenues (see attached) will be ultimately countered by an implosion in media right fees for ESPN and conventional (cable) sport broadcasting.

 The NBA has attached its future to the vanishing fortunes of an financially overcommitted and overpriced ESPN.

 By the end of the current media rights contract in 2025 the NBA will probably be caught in the squeeze between a declining demand for the NBA product and the cord-cutting digital media revolution.

 The NBA is caught is a double bind between a few dominant teams with max salaried players and the several teams that have zero-chance at playoff success. This creates an inferior league product where there is a developing strategy of resting players over the course of an excessively long season. 

 SA Spurs Coach, Gregg Popovich was correct when he quipped to ESPN that the reasons for resting players at the end of the 2017 season were “complicated—like health care.”

In reality the NBA doesn’t have a player-resting problem caused by a season length problem.

 It has an endemic competitive imbalance problem caused by the inherently true and deterministic nature of the game itself.

Since the salary cap era began in the 1980’s the NBA has also become the most competitively unbalanced sports league in North America, partially because of the conscious strategy of dynasties and doormats as reflected in the exceptions to the soft-cap itself.

The theory behind the strategy was that dynasties and the promotion of superstars like Larry Bird and Magic Johnson were made for national media. The Larry Bird exception to the salary cap (where a team can avoid the cap to resign its own free agent) reflects the strategic preference for the continuity of dynasties and the unfortunate corollary of doormats.

 The real problem currently reflected in the Popovich resting strategy is not necessarily due to the length of the season, but is more a reflection of the absolute certainty of the outcome of games and the resulting competitive unbalance in the NBA.

 The ultimate economic elephant in the room is still how resting players or shortening the season affects the arena leases, media rights fees, season-ticket renewals, and ultimately the players’ share of BRI (basketball related revenue).

 If the League does not rectify the highly competitive imbalance among its clubs and between conferences in the near future, the NBA will ultimately kill the media goose that has laid the golden salary cap (max salary) egg.

V