NBA commissioner David Stern maintains that the NBA, as currently composed, is not a profitable business.He says the league lost $350+ million last year.
Stern intends to make the players feel the pain, reducing the players’ share of the revenue by about one-third, or $750 million dollars.
He’s even threatened to contract teams, thereby making jobs more scarce.
But Matt Yglesias raises an interesting point. If the NBA is such an unprofitable business, why do billionaire businessmen lineup to by franchises?
Part of the issue is that the teams themselves can be in some ways loss-leaders for businesses whose real profit centre is an arena or a cable network. Accounting can be misleading, actual asset prices are telling you something.
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