Box Score Beat

There’s No Hiding the NBA’s Financial Instability

Posted on 03. Mar, 2009 by Collin Orcutt in NBA, The Sports Economy

NBA Commissioner David Stern was pitching his “everything’s financially A-OK” Kool-Aid hard last Thursday when talking about the league’s $200 million loan. Apparently, not every NBA big wig rushed to his juice stand to grab a glass.

Stern claimed the loan was a sign of the league’s “strength in credit worthiness.” But, as I wrote before, something about the deal just didn’t make sense.

I’ve been waiting for some feedback from the sports media but got it instead from a place I hadn’t expected — the teams.

In an AP story on Fox Sports, Kevin McHale, head coach of the Minnesota Timberwolves, spoke with skepticism about what Stern’s statement:

“The fact that the league had to borrow ($200) million, if that doesn’t tell you there’s some issues, what does?” McHale said.

The focus of the article is not just on the loan, but on the overall state of the NBA economy. Both McHale and Timberwolves owner Glen Taylor (who is also the chairman of the NBA’s board of governors) are concerned about where the league is headed. They said the financial problems are being amplified by the current collective bargaining agreement, set to be re-negotiated at the end of the 2010-11 season:

“I’m hopeful we will start our talks early because I just see a lot of dynamics affecting the long range and how we’re going to keep this a healthy business,” Taylor said. “I do see some changes, that we have under contract. Don’t know if we can make those changes as quickly as we probably should.

Matthew Frutman of The Wall Street Journal also wrote an article on the state of the NBA, using a lack of movement at the trade deadline as a way to exemplify the league’s problems:

For the first time in NBA history, team owners, executives, and fans in numerous markets say they have resigned themselves to the idea that their teams are not going to be competitive this season and that, given the state of the economy, they could not make the sorts of expensive moves that would help them improve. “We all want to win, but we have to be aware of the uncertainty of our future revenue,” said Dallas Mavericks owner Mark Cuban.

Beyond the obvious disappointment for fans, what’s most troubling about this situation is that for the first time in the long history of North American professional sports, the majority of the teams in one league have no financial incentive to improve. Most will be better off financially if they do nothing, and in many cases, will fare even better if they make personnel moves that are certain to make them worse.

When it comes to discerning the league’s financial stability, I can think of few things more telling than Mark Cuban, the most spend-free owner in the league, admitting that teams have to be very careful with their money at this time.

I, for one, hope Commissioner Stern is right — my fingers are crossed that the league is strong enough to weather this precarious economy and navigate its way back to profitability. It just doesn’t seem possible right now, and Stern’s spin only makes that idea sting more.

As an ardent NBA supporter, I’d rather a shot of transparency right now than a sugary cup of falsehoods.

Tags: David Stern, economy, Glen Taylor, Kevin McHale, Mark Cuban, Matthew Frutman, NBA loan, The Wall Street Journal