“Unlike In Silicon Valley, There Are No NBA ‘Start-Ups'”

A concise explanation of why labor disputes in sports are so tortuous and odd, via Tyler Cowen and Kevin Grier, on Grantland:

Why are labor disputes in sports so weird?

The bosses control the whole sector and face little competition when it comes to hiring labor. Since the merger with the ABA in 1976, the NBA is a monopoly and operates in a manner (it monopolizes!) that would be illegal outside the sports world. Unlike in Silicon Valley, there are no NBA “start-ups.” You cannot create a new NBA team without permission of the incumbent owners. The league also has to approve changes in teams’ location and ownership.

What does this mean? The owners can get together and agree to jointly cut expenses, that is, the player salaries. Players have limited opportunities to play professional basketball in other countries, but realistically, if you are a world-class professional basketball player, you probably want to be in the NBA.

The star players are the only counterweight to management’s power. To a large extent, they ARE the NBA’s product. Because of this, the owners aren’t talking about using replacement players, and some stars are getting decent offers to play overseas during the lockout. These factors are a cause for concern for the owners and put limits on how much they can extract from the players.”

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Final ABA Slam Dunk Contest, 1976:

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