TV Market Could Be the Next Bubble to Burst
Jul 17, 2015, 5:00am CDT
Reporter/Project Coordinator- San Antonio Business Journal
Are NBA players overpaid? It depends on who you ask.
Most of the athletes cashing the checks likely think they are earning every penny of their multimillion-dollar contracts.
A good percentage of fans certainly have a different view, as they are having to dispose of more and more income to help cover the costs of team salaries.
Fivethirtyeight.com took up the issue recently, suggesting that the best NBA players are not overpaid. One of its columnists, Neil Paine, recently wrote, “Forgive me for sounding like a bad Internet headline — but you are not going to believe how underpaid Kawhi Leonard is, despite his new max contract.”
Meanwhile, many think former Texas Longhorn LaMarcus Aldridge, the soon-to-turn-30 forward who signed with the Spurs last week for about $80 million over four years, could have earned more in salary and endorsement opportunities had he gone elsewhere.
There are other experts who believe that the value a team like the Spurs brings to its home market would not be possible without investing so heavily in top talent such as Leonard.
Veteran San Antonio marketer Bob Wills — whose agency, The PM Group, has worked with the Spurs — said the franchise has had a profound impact on the Alamo City because of its success. The team has won five NBA titles since 1999 — the most recent in 2014.
“They have brought San Antonio into the mainstream consciousness in America,” Wills said. “You can’t buy that (exposure). It’s hundreds of millions of dollars.”
The NBA, because of its collective bargaining agreement with the players’ union, adjusts its salary cap depending on anticipated league revenue. The cap for the 2014-15 season was $63 million. It will increase 11 percent next season to $70 million — a record high for the NBA.
NBA owners can afford bigger payrolls because the league has signed new broadcast deals with its media partners — ABC, ESPN, TNT and TBS — that collectively pay nearly $2.7 billion on average each year for nine years beginning with the 2016-17 season, according to The New York Times.
That’s quite a leap from the roughly $930 million the NBA was collecting from its media partners each year under the previous deal.
In a nutshell, national broadcasters have scrambled to secure as much live sports content as possible. That mad dash to deal has caused rights fees to soar. But how long is this sustainable — especially with cable television subscribers continuing to cut the cord?
Again, it depends on who you ask. But at some point, teams will all hear the popping sound.
On the record
San Diego City Councilman Todd Gloria had some choice words for his colleagues, who are scrambling to keep the NFL team from moving to Los Angeles.
“The determination of whether or not a team or teams move to Los Angeles will be a subjective decision of the NFL owners,” Gloria said, according to the San Diego Union-Tribune. “From where I sit, San Diego is getting played at every turn.”