DVR & Live Sports Influence on NBA Free Agency

 

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  • Al Horford – 4yrs $113M to the Celtics
  • Luol Deng – $72M to the Lakers
  • Dwight Howard – $70.5M to the Hawks
  • DeMar DeRozan – $139M resign with Raptors
  • Mike Conley – max deal $153M resign with Grizzlies

These are just a handful of the recent signings in the mayhem that is NBA free agency. After a season that typically ends in chaotic fashion, this is my favorite part of the NBA offseason.giphy copy 8.gif

Not necessarily because I want to know where the free agents go – sure that’s important. But I love it because of the reactions people make in regards to new contracts.

Being invited into the thoughts of others is something we’re afforded in social media.  And fans of course flood timelines with asinine comments (and really, that’s only because they can without any real repercussions, as opposed to saying something extreme in person with the high probability of getting decked in the jaw) . Typical sport consumers have to realize that it’s not fair to compare “normal” market value to that of professional sports. Should teachers be making more? Sure. But it’s also easier to teach fractions than it is to split 2 defenders and dunk, or tackle a 6’6 260lb man and stop him from scoring.

But it’s not just fans that are complaining. Majority of the other comments are coming from other professional athletes, specifically NFL players.

 Granted – they are playing a much more physically taxing sport. But I’m curious to know what the market research says in regards to what agreement the NFL Players Association has with its owners.

ESPN Radio’s Russillo & Kanell show dove into the salary cap and explained why these contract figures are so high.  (3:10 – 10:40).

http://espn.go.com/espnradio/play?id=16681066

Guest co-host Amin Elhassan and Ryen Russillo explained that the BRI (basketball related income, that is all the money made from tickets, merch, food, tv deals, ads, etc.) is divided by 2 – 50% to owners and 50% to players, as agreed upon in the collective bargaining agreement between the NBA players association and the Owners. The 50% that belongs to the players is then divided by 30 (for each team), thus making the salary cap for player contracts. Therefore every time TV networks structure new contracts for rights to broadcast games, every new vendor added in a stadium, every new stadium parking lot, every ad that is going to be placed on the official game worn jerseys starting in the 2017-18 season – all of that and more will add additional revenue to the BRI and make the cap go up even more, forcing teams to spend it on players and make contracts  look insane to those unaware of how the market works.

What is the NFL’s overall revenue?  Has the off the field, PR nightmares finally caught up to them?  Is their brand of sport just not as profitable as the NBA? Football is America’s bread and butter. The sanctity of it comes from its scarcity; we’re only allowed 16 regular season football games followed by a rapid fire playoff system, as opposed to the 82 regular season games followed by 7 game playoff series till the NBA inches to the finals. Absence makes the heart grow fonder when it comes to the NFL. But it should be said that the NBA and MLB contracts are so much larger because there is just simply more of it. More opportunities for revenue and tv deals = more money = bigger contracts = mediocre players getting major player money.

But Elhassan offered up a terrific culprit for the rage against these obese NBA contracts – your at home DVR. Yes. The digital video recorder.

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There is nothing more powerful in television distribution and media market than live sports. Watching the NBA finals on DVR for the first time hours after it already aired just isn’t the same – unless you can bubble yourself and avoid the internet and general society for spoilers, which is next to impossible.

Live sports has a chokehold on broadcast distribution and is the biggest reason leagues individually have mulled over if it’s worth the effort going OTT (over the top) to offer a la carte services like HBO, Netflix, etc.

But in the meantime, if you hate the enormous amounts of money rolling across your NBA free agency timeline – you really only have yourself to blame. Because you’re still going to watch it…live.

 

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