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Lockout lookout


How the NBA’s work stoppage could affect OKC’s baseline.

Clifton Adcock October 5th, 2011

As the NBA and the National Basketball Player’s Association continue to negotiate a deal that would allow teams to play ball, concern is growing that the regular season may be affected by labor stoppage.

Several downtown businesses are keeping a close eye on the prospect of a canceled season, and hoping the situation gets resolved soon. 

So what caused the current situation, and how does it affect the city?

What happened?
The last collective bargaining agreement between NBA players and the NBA was agreed upon June 21, 2005. The agreement was to last until June 30, 2011, but in early 2009, NBA Commissioner David Stern announced he hoped to open talks on a new collective bargaining agreement two years prior to the 2005 agreement’s expiration, according to a timeline of events from the NBA.

right, A billboard advertising the Thunder. Due to the current lockout, the organization can't display players' images in their advertising.

In January 2010, the NBA made an offer to the players’ union that included provisions for a so-called hard salary cap, meaning teams would not be allowed to exceed the salary cap to retain players as was then the case. The offer also included cutting player contracts to a maximum of four years and cutting the players’ share of basketball-related income from 57 percent to less than 50 percent, according to the NBA.

The players’ union rejected the deal, and Stern later said a new financial model was needed for the NBA because league-wide losses were expected to exceed $400 million. He also said the amount of revenue going toward player salaries was too high and, later, that some teams may be eliminated to get the league’s financial house in order.

After months of back-and-forth between the league and the players’ union, the union filed a suit with the National Labor Relations Board (NLRB) to prevent what, by that point, had become an obvious conclusion: a lockout.

Read the Thunder's policies for season ticket holders at their website.

However, when the collective bargaining agreement expired on June 30, 2011, the NBA announced it would lock players out. With no deal in sight, several players began going overseas to play. Center Byron Mullens is the first Oklahoma City Thunder player to ink a deal overseas during the lockout. Others — including Daequan Cook, Kevin Durant, Serge Ibaka, Kendrick Perkins, Nate Robinson and Thabo Sefolosha — are mulling their options abroad.

After another month of negotiation, the NBA filed an unfair labor practices suit with the NLRB against the players’ union, accusing the union of not negotiating in good faith. After continued negotiations and no resolution in sight, the league announced on Sept. 23 that it is postponing training camps indefinitely and canceled all preseason games including an Oct. 21 exhibition in Tulsa.

On Sept. 28, Stern said that not only is the start of the NBA season on Nov. 1 in jeopardy, but hinted that the entire season could be canceled.

It’s pretty tough to come up with 41-plus concerts that’s going to have that direct spending impact.
—Tom Anderson


What are the consequences?

The possibility of scheduled games being missed already prompted Thunder officials, who declined comment for this story, to issue an email to season ticket holders offering credit or refunds for any missed games.

The Thunder website and Thunder billboards have been scrubbed of any images of the players because of the lockout, and the new practice facility paid for by the city sits unused.

According to the league’s website, during a lockout all contact between the players and the teams is cut off.

According to estimates, the league stands to lose up to $1 billion in advertising revenue if the season is canceled.

Tom Anderson, Oklahoma City’s special projects manager, said each Thunder game has a direct economic impact of $1.28 million. That number is probably lower than the overall impact, Anderson said, because it does not take into account Thunder payroll, advertising and other multipliers.

The total amount of direct impact for 41 home games is around $53 million, he said.

right, The Thunder practice facility, which players are currently barred from.

Anderson said reservation dates at the Chesapeake Energy Arena are still booked, but in the event that part or all of the season is canceled, he will look for replacement events to fill the gaps.

“It would be difficult to replace,” he said. “If you have a major concert, that’s great, and it’s good to have a solid programming mix with the arena, but it’s pretty tough to come up with 41-plus concerts that’s going to have that direct spending impact.”

While the Greater Oklahoma City Chamber is optimistic about this season, the economic impact of NBA work stoppage would be noticeable, but hopefully offset by other spending, said Roy Williams, president and CEO.

“There are a lot of businesses which benefit tremendously when there is a home game,” Williams said. “If games are lost, some businesses will be affected. However, our visitor economy has really grown this past five years. We are hopeful that while there will be some negative consequences, that sector will still see increases in their regular business.”

But do labor stoppages by sports teams really have a negative economic impact on cities? According to a scholarly paper written in 2000 by Dennis Coates and Brad R. Humphreys of the University of Maryland, Baltimore County, the answer is a resounding “no.”

The study, “The Economic Consequences of Professional Sports Strikes and Lockouts,” was written to determine the economic impact of the 1998-1999 NBA lockout, and found that while there is obviously money generated by the sports teams, there was no negative overall economic effect with a labor interruption.

Humphreys and Coates wrote that “the evidence does not support the assertion that professional sports influence the economic health of SMSAs (Standard Metropolitan Statistical Areas). … The departure of a franchise in any sport, particularly in basketball, has never significantly lowered real per capita personal income in a metropolitan area. This is good news for SMSAs with NBA teams. The recent (1998-1999) lockout will likely have had no effect.”

How does the Chamber react to the study?

“Saying losing games has no negative economic impact assumes that every dollar spent on the Thunder is local, which is simply not true,” Williams said. “People travel from surrounding communities to watch the Thunder, eat at our restaurants and shop at our stores. That would be money lost if there are no games.”

Further disruptions are not something many businesses in downtown and Bricktown are desiring.

“It’s a great part of our business as it is for the entire city. We’re just one of many pillars in the city that would be impacted by an ongoing lockout,” said Steve Houser, director of sales and marketing at the Skirvin Hilton, which hosts many of the teams that play the Thunder. “It’s significant enough for us to notice, let me put it that way. It’s not incremental business for us. It’s a pretty key part of our revenue.”

Read OKG online editor Matt Carney's suggestions to fill the Thunder-shaped hole in your heart left by the impending NBA lockout.


Photos by Shannon Cornman

 
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10.20.2011 at 07:45 Reply

Roy Williams is a saladpuncher.

 

 
 
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