NBA Economics and the Next Collective Bargaining Agreement

The Lebron James feeding frenzy notwithstanding, these are troubled times for the National Basketball Association.  The league is already losing hundreds of millions of dollars per year, and the continued sluggishness of the natonal economy does not bode well for an imminent turnaround in the league’s fortunes.  Perhaps some Greek-style austerity measures are in order.  The league’s collective bargaining agreement with the players’ union limits its flexibility, but the current CBA expires after next season, setting the stage for a potentially bitter confrontation over the division of a shrinking pie.

For anyone in need of a scorecard, Matt Parlow provides an engaging review of NBA economics and preview of the coming labor negotiations in a new paper on SSRN.  Entitled “The NBA and the Great Recession: Implications for the Upcoming Collective Bargaining Agreement Renegotiation,” the paper will be published in the DePaul Journal of Sports Law and Contemporary Problems.  The abstract appears after the jump. 

Like most businesses, the National Basketball Association (NBA) has suffered significant negative impacts from the Great Recession. The league’s drop in revenue exposed distinct flaws in the NBA’s current business model and in the terms of employment for NBA players. Due to the precarious economic state of the NBA, the league anticipates a contentious, but necessary, renegotiation of the NBA’s collective bargaining agreement (CBA), which will expire at the end of the 2010-11 season. This article will analyze the effects of the Great Recession on the NBA and the likely implications for the renegotiation of the CBA. Part II of this article will provide a macro-level overview of the economic impacts experienced by the NBA during the current economic meltdown. Part III will explore the attendant effects on NBA players. Part IV will then give an overview of the collective bargaining process – including its significance in sports, antitrust, and labor and employment law – and explore the employment terms that will likely become the focus of the upcoming CBA renegotiation. Finally, Part V will provide some concluding insights.

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