Monday, November 14, 2011

NBA looks to the NHL

The league that James Naismith gave birth to is a second-tier member of the U.S. Big Four. Football obviously rules the roost and Major League Baseball still pulls in 50 million in attendance in tough economic times. The NBA is now on par with the National Hockey League in terms of attendance, and owners are looking at that league, and not the NFL, as a source of economic inspiration.

In 2005 the NHL adopted a scorched earth policy that cost the struggling league an entire season and forced it from its cozy ESPN contract and onto Versus, more commonly known as the what-channel-is-that-on? network. It was a desperate move for a league that was too big and whose Third World distribution of wealth put the NHL on the verge of economic collapse. Ratings and attendance suffered upon its return, but what emerged was a league finally able to operate within its means. The players are still handsomely rewarded, though not as much as before, and the salary cap created competitive parity, which generated greater fan interest and a firmer financial footing for the owners.

Six of those NHL owners own NBA teams, and their experience is pushing the current negotiations.

The league claims 22 of the 30 teams lost money. Faced with similar inequalities, the NHL managed to overcome the disparity by establishing a more equitable split of revenue between players and owners, and by instituting a salary cap. The NBA’s “flex cap” has been a disaster and has only created more wealth for the already wealthy. It needs to be hardened. The current 57-43 revenue split between players and owners has not kept up with rising player salaries and a more equal split is necessary.

Both sides have dug in and each is waiting for the other to blink. That is not going to happen anytime soon, but with a successful example at the ready, the question is will the NBA follow the NHL over the cliff before it realizes Gary Bettman actually got this one right.

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