Tuesday, November 1, 2011

The NBA Lockout: By the Numbers

The NBA season should be underway right now.  At this very minute, the up-and-coming Chicago Bulls should be on the court against the defending champion Dallas Mavericks. Instead, you know the trending Twitter topic #ThingsLongerThanKimsMarriage?  Well, the NBA lockout is longer.  Literally, twice as long.  Kris Humpheries was out of work for 72 days before being married to Kim Kardashian for 72 days.

Regardless of when the NBA season starts, the lockout is doing some serious damage to the business of basketball.  Over the last couple weeks, I've compiled some stats indicating what’s being affected.  Let's take a look at The NBA Lockout: By the Numbers.

3- Three NBA teams have been sold during the lockout.  Though these new owners of the Hawks, Pistons and 76ers knew what they were getting into, they certainly wished their teams would be back on the court by now.

14- Last month, mayors in 14 of 29 NBA cities wrote an open letter to the league and its players asking – well, more like pleading – that they end the lockout.  An Indiana real estate consulting firm estimated $55 million in losses to the state if the Pacers don’t play this year.  Not surprisingly, Indianapolis Mayor Gregory Ballard signed the letter.

400- Although progress reportedly is being made on a new collective bargaining agreement, job losses attributed to the work stoppage have reached 400.  The losses are estimated at 200 at league headquarters and 200 amongst the 30 teams.

$500,000- Miami Heat owner Micky Arison was fined $500,000 for his candid tweets about the state of labor negotiations.  Arison’s tweets indicate a divide in the ownership group, but the tension supposedly is far worse on the union side.

$600,000- The National Basketball Players Association spent $600,000 in the year leading up to the lockout on legal, consulting and public relations fees.  With the lockout ongoing and players losing the PR battle, the money doesn’t appear to be well spent.

$1.5 million- Each NBA team could lose up to $1.5 million in ticket revenue for every regular season game lost to a lockout.  Adding to the potential losses, all NBA teams have promised refunds plus interest for cancelled games.  Consider this: your money is safer in NBA tickets than it is in the stock market.

$18 million- Memphis taxpayers could be on the hook for $18 million in FedEx Forum bond payments if the entire season is cancelled.  The city-owned arena relies on taxes from game revenue to cover the annual debt service.  If the lockout extends into December, Memphis could file a lawsuit against the NBA to recoup the money.

$100 million- The city of Orlando projects $100 million in economic impact from hosting the 2012 NBA All-Star Game.  Should the game no take place, losing the money would be devastating for the Orlando economy.

$400 million- To date, the NBA has canceled the first month of the regular season.  In losing nearly 200 games, the NBA is forgoing more than $400 million.  That money isn’t coming back.

$500 million- Financial analysts predict the shoe industry could lose $500 million this year if the league cancels the entire season.  That’s approximately a quarter of the annual basketball shoe market.  Some of the brands with the most at stake: Adidas, Nike, Champs and Foot Locker.

$700 million- TV networks and the NBA stand to lose nearly $700 million in ad sales if the entire season is lost to a lockout.  Recently released data indicated advertisers spent $627 million on national NBA broadcasts last year, and thanks to high ratings, the total was expected to increase by 10% this season.

$4 billion- The NBA is a $4 billion business.  To put that into perspective, the NBA is a bigger business than Hasbro Toys, JetBlue Airways or MetroPCS.  Try imaging one of those companies shutting down operations for a whole year.  However, if as many as 22 NBA teams are collectively losing $300 million annually, losing a season to revamp the business model isn’t just reasonable – it’s critical.  

Would you invest hundreds of millions of dollars in a sports team that essentially was guaranteed to lose you money?  Neither would I.

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