The National Basketball Association could stand to learn from the recent history of the National Hockey League. In September 2004, the ice rinks of the NHL went unused in every major city across the United States and Canada. The problem was that the NHL and its players union could not come to an agreement on the correct way to rework the league's ridiculous revenue structure. Players' salaries did not accurately reflect the league's revenue, so there were teams in the league that were paying more in salary to the players than it was taking in on a yearly basis. Add to that the fact that the NHL's TV contract was ending and there were not many networks that wanted to renew a contract with the increasingly unpopular league - along with the refusal of the players union to accept a new salary cap - and a lockout really was inevitable. The NBA may soon be in the same danger that the NHL was three years ago.
Over the summer, Rashard Lewis, formerly of the Seattle Supersonics, signed a six-year deal worth about $120 million. Anderson Varejao, a solid role player for the Cleveland Cavaliers, held out for the first couple of months into the season because he reportedly wanted a contract that was in the eight-figure range. Shawn Marion was just traded from the Phoenix Suns because he reportedly was not going to re-sign for anything less than $20 million. None of the players just mentioned are top-tier players in the league, but each wanted top-tier money.
Meanwhile, while the league currently has a television deal with ABC, ESPN and TNT that runs through 2015 and pays the league a reported $3 billion a year, ratings for its games have been on the decline since Michael Jordan retired for the second time in 1998. Last year's Cavaliers and Spurs final had an abysmal 6.2 TV rating, the worst ever for an NBA finals.
So here we have two of the main ingredients that led to the NHL lockout: Rising costs due to overblown player salaries and falling revenue. If the current trend continues, it would not be ridiculous to assume that the NBA's next television contract will not be as lucrative as the last one it just signed. If there is less of the pie to go around, will players start renegotiating for less money? History tells us not to hold our breath.
This leaves the NBA with seven years to fix its product. The last Super Bowl was the most watched NFL game ever. It featured two teams from the first (New York) and fifth (New England) television markets in the nation. It also featured two teams who had won over 10 games that season. At the same time in the NBA, while the Western Conference is great, the vast majority of the Eastern Conference teams are unwatchable.
The league should restructure the conferences away from East and West and rather go for a system closer to that of the NFL, where the league is not separated geographically. Having all the best teams in the Western Conference is what is hurting the league more than anything else right now.
Regardless of what the NBA does to right itself, it has to do something. History has a tendency to repeat itself, and if something is not done, the NBA will find itself in the same place the NHL was three years ago: off the air.
