SportsProf

(Hopefully) good sports essays and observations for good sports by a guy who tries (and can sometimes fail) to be a good sport.

Name:

Not much to tell.

Add to Technorati Favorites

Sunday, December 28, 2008

Mock NBA Draft

Hoops Hype has posted a mock NBA draft. Carolina's do-it-all Tyler Hansbrough projects as #23 in the first round, based on production, not potential.

If this projection isn't a symbol of the NBA's potential (huge) problems, I don't know what is.

Let's use the economy as a metaphor. Many people were living beyond their means, placing value on things well beyond what they were worth. Take a look at your nearby shopping mall. Huge sales, little traffic, lots of big brands suddenly not worth what they were six months ago.

Take a look at the NBA. Lots of flash and dash, with the product being questionable in most places save the elites. How much longer can the NBA sustain this model? (True, their jerseys are cheaper than NFL jerseys, but perhaps that's because you don't get sleeves with an NBA jersey).

Take a look at the downstairs prices at the average NBA game versus the average Major League Baseball game (save New York, perhaps). Who will continue to buy these tickets at these prices? And for how long?

Here's something to consider. I was at dinner last night with a friend who is a lawyer representing mutual funds. He explained last night that fund companies have serious budgeting issues because they make their money by taking a percentage of the assets they have under management. Well, suppose a fund family had $10 billion under management at the end of 2007. Then suppose that same fund family will have $6 billion under management at December 31 of this year. Finally, that fund family "charges" one percent of all assets under management. So, at the end of 2007, its revenues were $100 million. Now, at the end of 2008, its revenues would be $60 million. Somehow, some way, that fund family has a lot less revenue and, therefore, will need to cut back on its spending.

Well, NBA, most of your customers are in a similar predicament. And, while sports are said to be recession-proof (a statement to which I don't subscribe given how expensive some tickets are these days and how mediocre some teams have remained over the course of decades), the economy is in a bad way and could remain so for some time. In turn, your customers will feel it -- corporations and individuals alike. Unless you're selling to the super-rich exclusively, you're going to have a problem. All of a sudden, your franchises are worth less, and, as a result, your tickets.

I have argued for a while on this blog that the NBA should shed teams, shorten its schedule, improve its product and give the world better basketball. The NBA over the years has ignored such criticism, because in sales the numbers don't lie. My guess is that the NBA office has liked the numbers -- in terms of ticket sales, TV revenue and merchandise sales -- enough to dismiss such criticism as ill-informed. And, to be fair, they have had a point. In the short term.

The NBA now has a unique opportunity to improve its product. It should take it, or else risk plummeting sales and revenues.

Because watching its current brand of basketball -- with too many teams, too many games and too many isolation plays -- is a luxury.

Last time I checked, luxuries don't fare so well in a recession.

2 Comments:

Anonymous Anonymous said...

SP-

You need to recognize that nobody cares about the NBA in any US city that:

1. Has another professional team, or
2. Does not have a top NBA team.

Witness your hometown.

1:53 PM  
Blogger SportsProf said...

You make a good point, but when will the economic reckoning take place? There is, after all, a difference between "no one caring" and no one showing up at the games. When will the advertisers stop paying the freight? When will the corporations stop buying the tickets?

1:30 PM  

Post a Comment

<< Home