NBA: Locked Out
The NBA canceled the first two weeks of its 2011-2012 regular season after failing to reach a new labor agreement with the NBPA. For now, as no more negotiations are scheduled, cancellations of more games are likely to be rolled out in two-week increments. NBA players are facing their first lost paycheck on November 15, while arena workers and small businesses in North America’s 29 NBA markets are looking at losses in the tens of millions over the two week cancellation period. Losses will reach into the billions certain if the entire season is wiped away.
One community that is extra nervous about the state of the negotiations is Orlando – that city’s new Amway Center is scheduled to host the 2012 All-Star weekend February 24-26. If the lockout isn't lifted well before then, Orlando will be in danger of the game being canceled, which could take tens of millions of dollars out of the local economy, especially the Amway Center’s downtown environs, which see the smallest direct impact from nearby Walt Disney World Resort on a week-to-week basis.
Bottom Line: Forget the teams and players, local economies and gameday employees will suffer far worse during a prolonged lockout. Hopefully, the NBA and the NBPA get back to the negotiating table before innocent stakeholders start losing income as well.
Killing Time: What Players Are Doing During the NBA Lockout
With NBA games postponed indefinitely, players are picking up a variety of hobbies to occupy their time. One of the poster children for outrageous NBA contracts is finding new business ventures during the league’s lockout. Drew Gooden, who’s scheduled to make $7 million this season, plans to open four new Wingstop restaurants in Orlando over the next year.
Since free agent Delonte West can’t sign with a new team until the lockout’s over, he instead took a job at Regency Furniture Showrooms. West previously applied for a position at Home Depot, but there’s no way of knowing if his criminal background cost him the job.
Finally, Milwaukee Bucks point guard Brandon Jennings is interning in Under Armour’s footwear department during the NBA lockout. Jennings goes to the office daily and sits in on meetings with the company's basketball and jogging shoe developers. Jennings is the face of Under Armour basketball.
Bottom Line: Restaurants? Furniture stores? Internships? It’s great some players have picked up hobbies during the lockout, but I’m sure they’d give it all up to get back on the court.
NHL Off to Fast Start
Has the NBA’s labor situation had a positive effect on the NHL? The league’s season-opening international series once again saw record crowds, and one week ago, Versus averaged 874,000 viewers for hockey’s season-opening Flyers-Bruins game, the most-viewed regular-season NHL game ever on the cable network.
Even before the first puck of the 2011 season was dropped, the NHL announced that it had increased its base of full- season-ticket holders for the second consecutive year. 90% of season-ticket holders renewed their seats this season, a 2.5% increase and an overall 4% jump in season ticket sales. The NHL will average over 9,500 season ticket purchasers per franchise, with 20 out of 29 clubs improving their renewal numbers from last season.
In another sign of hockey health, a NHL source revealed that the NHL and NHLPA have set the players' escrow rate at 8.5% for the first quarter of the season, "the lowest rate since the first year after" the 2004-2005 lockout, according to ESPN.
Bottom Line: Though the NBA lockout could cause some basketball fans to gravitate towards hockey, the overall impact should be minimal. The NHL’s business will continue to thrive regardless of the NBA’s labor situation.
World Series Underway
The World Series begins this week, and without knowing who will be crowned champion, here’s some of the things we can take away from the 2011 season. Despite ongoing economic turbulence, league-wide attendance increased 0.8% over last season to 73.4 million, the most since 2008. Thanks to sponsorship renewals from Bayer, Chevrolet and others, MLB gross revenues are at an all-time high of $7.5 billion+.
However, interest in this World Series could be slim compared to recent years. This is just the third time since 1995 that neither World Series team has a top ten payroll. Also hurting matters, the top seven most popular MLB teams, according to Harris Poll data, were eliminated before the League Championship Series or didn’t make the playoffs.
Bottom Line: Once the World Series ends, attention turns to MLB’s labor negotiations. The league’s CBA expires this December. If the NFL and NBA are any indicators, it could be a long offseason for the Majors. Enjoy the baseball while you know you can.
L.A. Breakdown
Real estate tycoon Ed Roski, who is behind the proposed NFL stadium in City of Industry, has dropped his request for a non-cash minority stake in whatever team relocates to LA, according to Sam Farmer of the Los Angeles Times. Under Roski’s newest proposal, he’ll give the stadium land to whatever team decides to relocate. The team would be responsible for financing the stadium, but would sell Roski part of the franchise at market value. This makes Roski’s bid much more appealing, because as Colts owner Jim Irsay recently said, the league won’t approve sales at a discount.
As AEG remains in the L.A. hunt with Farmers Field, the company also is getting involved in another California project. Indications are that AEG will work with the Sacramento Kings to build a new NBA arena. If the deal goes through, AEG could operate the venue and be its lead investor, with the city of Sacramento owning the venue. Collaborating with AEG would provide Sacramento and the Kings with enough upfront cash to begin arena construction.
Bottom Line: The Los Angeles stadium story is far from over, and don’t be surprised to see Roski’s and AEG’s proposals to change several more times. While no sport is bigger than the NFL, AEG’s foray into Sacramento shows there are opportunities beyond just football in L.A.
Rick Horrow is the "Sports Professor," and is the Sports Business Analyst for Fox Sports. He has been the Visiting Expert on Sports Law at the Harvard Law School, and has authored "When the Game Is on the Line" and "Beyond the Scoreboard: An Insider's Guide to the $750 Billion Business of Sports." His show "Beyond the Box Score" is posted on a weekly basis on FoxSports.com, and the latest emerging trends in sports business can be found at www.horrowsports.com.
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