By Bob Moon
Marketplace Morning Report
Published: October 25, 2010
TEXT OF STORY
JEREMY HOBSON: The new NBA season gets going tonight with the tip off between the Boston Celtics and Miami Heat. As our senior business correspondent Bob Moon reports, despite all the hooplah over big name players like Lebron James, it’s expected to be another money losing season for the league:
BOB MOON: At Sports Value Consulting, Michael Rapkoch has been reading the Wall Street Journal, and making salary comparisons.
MICHAEL RAPKOCH: Why is it the investment banks pay the guys who make them the money 37 percent of the revenue, but in basketball and other things it’s 50-plus percent?
Fifty-seven percent of every dollar the NBA makes, in fact, goes to the players. While basketball commissioner David Stern expects this could rank as one of the top five seasons ever, he insists the NBA can’t make money on those margins.
DAVID STERN: I want to let our fans and our sponsors know that this is a sport that’s going to have a good year, but it doesn’t affect the underlying financial dynamics.
As a sports business analyst who’s consulted with team owners, Rapkoch says the NBA’s projected loss of up to $400 million is real.
RAPKOCH: You can’t support a team, a franchise, a league, if your player salaries greatly exceed your ticket prices.
The player’s union is already digging in its heels and warning of a potential lockout next season, once the current contract expires.
In Los Angeles, I’m Bob Moon for Marketplace.
Featured in: Marketplace Morning Report for Tuesday, October 26, 2010