Ouch

The Clarion Content has been hearing for sometime about the likelihood of an NFL lockout for the 2011 season. It is only recently that we heard about the threat of the same from the NBA. We have been saying the American sports industry was going to get its comeuppance for some time. A double lockout in two of America's three biggest sports, that sounds about like the sports armageddon that we have been forecasting.

Bill Simmons, our favorite sports columnist, has been warning for a while that many NBA franchises are bleeding cash. The Clarion Content's own analysis and research supports Simmons conclusions. There are just not enough fannies in the seats. America's biggest professional sports, especially the NBA and NFL, made this problem for themselves by raising outrageously the prices of their individual game tickets. (Note: of late baseball teams, led by the Yankees and Red Sox, have been following suit.) These ticket prices are ostensibly a sustainable model in the NFL, fans after getting soaked for their personal seat licenses, only have to pay for 11 or so home games, including the preseason. In basketball, fans are expected to pay for 41 homes games. The NBA knew that they were pricing out the average fan, and they did not care. They thought that they would be able sustain sales though corporate ticket purchases.

They did not anticipate the economic reckoning that has come to America. Corporations are no longer dishing out big bucks for sporting events, whether we are talking about sponsorships or season tickets. The NBA is paying an enormous price. They are willing to admit publicly that ticket revenues are down 8-9% year-to-date. This means they are likely much worse off in some cities. As Simmons says, you can see the Monet paintings in the crowd shots behind the basket. (Empty seats create an impressionistic hue.)

The NBA must have started to come to terms with this reality. Commissioner David Stern, interviewed yesterday on the BS Report, didn't blanch at the subject of contraction. He said he hoped to avoid it, but hardly ruled it out. That was a huge shock to the Clarion Content, even if it was negotiation related posturing. Although the collective bargaining agreement is good through the end of next season rather than this one, the NBA submitted an initial proposal to the Players Union this week, just in time for their annual player representative meeting at the NBA All-Star Game in Dallas.

The proposal is jaw-dropping. It offers up draconian measures: minimum salary would be reduced by as much as 20 per cent, the total value of a maximum contract for a veteran would drop below $60 million (less than half of its current level), contracts would only be 50% guaranteed as opposed to the 100% guarantee they have now, there would also be a hard salary cap that teams could not violate (no more Bird rule, no more mid-level exemption), and first-round draft picks would have their salaries cut by about one-third. Those are across the board cuts exempting no one.

Three years ago we would never have seen the players accepting anywhere near close to that offer. Now? Will there be a lockout? Contraction? A settlement? Neither side can go long without income. The current Collective Bargaining Agreement expires July 1, 2011.