Wednesday, November 16, 2011

The Strange NBA

The last NBA season was widely considered to be a successful one. The Miami Heat managed to get 3 star players, Dwyane Wade, LeBron James and Chris Bosh, on the same team and this move increased publicity for the league.

Somehow though, most of the teams (22 out of 30) in the NBA still managed to lose money. Accordingly to reports I read, the losses amount to about US$300 million. The owners of the teams blame this on the division of basketball-related income between them and the players. In the last labor agreement, NBA players got 57% of the income. This year, there would be a new labor agreement between the owners and the players, and this time the owners want a 50-50 division of basketball-related income.

The players are offering a 52.5%-47.5% spilt which they say would cover the owner’s loss of US$300 million. The owners do not dispute that but has insisted on a 50-50 spilt to guarantee profit for them. This is the part where I got lost.

Now I only have a passing interest in the NBA nowadays but I do not understand how the owners could get away if the call is for “guarantee profits”! I mean as a businessman, it’s my job to make my business a successful, my job to make my business a profitable one.

Here the owners have a union who is willing to cover all their losses, and they are still not happy? The NBA players are offering them a deal where there is almost no way they could make a loss and they are not taking it? A deal where they can’t lose is not good enough for the owners?

What kind of businessmen are they? If someone offered me a deal where there is no downside and plenty of upside, I would race you to the pen! No wonder the idiots are going to the courts!

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