Bad news for the arena economy: the National Basketball Association has scrapped the first two weeks of the season after owners failed to reach agreement on a new contract with the players union.
Over 13 hours of negotiations over the past two days failed to yield an agreement. Owners are seeking to split basketball-related revenues (some $3.8 million) evenly with players; in the recent past players received 57 percent of that revenue, a formula that doomed owners to operating losses, according to management, with 22 teams losing money last season. Players have offered a deal where they’d retain 53 percent of the basketball-related revenues.
Also at issue: the lack of a robust revenue-sharing system in the NBA that would assist small-market teams, as well as owners’ desire for a hard cap as opposed to the current soft-cap system, which is full of exemptions.
It’s easy to write off the economic impact on arena managers and vendors as fairly small, but the NBA generates a lot of cash: some $700-$800 million a month during the season. The cancellation of 100 games (six to eight per team) means the players will miss their first paycheck of the season and fans will be receiving refunds on season-ticket purchases.
No more negotiations are scheduled.
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