Friday, September 23, 2011

There is More at Stake than Basketball Games

The NBA Lockout, that is still in effect, is a major problem for a lot of concerned parties. If the players and owners do not come to an agreement soon it could be catastrophic. The owners will lose a significant amount of revenue if the preseason and exhibition games are cancelled. Even though the owners are not obligated to pay the players a salary they still have their fixed costs. They have to maintain the facility, and employ all the team’s coaches, trainers, doctors etc. It is in the owners’ best interest to give up a little revenue in the short term so that they can have all the events scheduled for this year and make up the profit loss by making sure they can cover the fixed costs and variable costs with the revenue they bring in from ticket sales, food sales, merchandise sales, and television revenue. The cities that host the teams are losing money on hotels, food, and other incidentals that they count on to make their yearly revenue. The players also have a downside for keeping the lockout in effect too long. They cannot play in other leagues to make their normal salary because of their contracts. If that happens they will have to focus more on their needs like house payments instead of wants like buying a new car or going on a trip to the Caribbean. All parties involved have to find the right margins for their own interests. They must also be able to justify the deal they want and need so they do not lose too much profit and salary in postponing the season for too long.

Blair S.

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