The recent free agency period in the NBA is a sign of impending doom as Economics is about to lay its wrath of consequences for the massive scale of financial incompetence exhibited by the NBA Business Model.
The NBA needs to copy the NFL Business Model as the financial numbers just don`t add up, and the latest trend of two good teams with 15 unwatchable teams and 13 teams being complete garbage is going to lead to further declines in merchandising revenue, game attendance, food and beverage sales, and fan support going forward.
When you have the employees running the asylum is it no wonder that salaries are out of control relative to declining attendance and overall competiveness of the league as a whole. When you start paying role players who have injury issues to boot 20 million dollars per season for four year at the latter stage of their careers you know you have a breakdown in the fundamentals of finance.
There has been much talk in recent years about disruption and trying to pick companies that will disrupt their industries. The debate continued at the Morningstar Investment Conference as Bill Nygren of Oakmark Funds faced off with Morgan Stanley's Dennis Lynch. Q2 2021 hedge fund letters, conferences and more Persistence Morningstar's Katie Reichart moderated the Read More
Just like Boxing which through poor mismanagement killed their product, the NBA is headed in that direction because of a poorly negotiated union contract, a revenue model that doesn`t make sense, and unbalanced talent dispersion around the league.
I would estimate that at least 10 NBA franchises will declare bankruptcy in the next 7 years at this current pace of financial mismanagement by teams as their stadiums are ghost towns, their product is unwatchable, the game experience is deteriorating by the year, and the quality of management professionals is well below average in the business community.