The economics of NBA contracts

That is the topic of my latest Bloomberg column, here is one excerpt:

The Boston Celtics just set an NBA record by agreeing to a five-year, $304 million contract with two-time All-Star Jaylen Brown. The obvious question is whether any single basketball player can be worth that much money — especially someone who is not even the best player on his team, much less on a par with Lebron James, Stephen Curry or any number of other shoo-in hall of famers.

I’m not here to make predictions about Brown’s career. But the odds are the deal will be seen as a good one — maybe even a bargain. The economics of the National Basketball Association have been shifting toward more and more money.

This trend is evident in the rising value not just of players but of teams. Last year the Phoenix Suns sold for $4 billion (with the WNBA’s Phoenix Mercury). To put that number in perspective, the Brooklyn Nets sold for $3.3 billion in 2019, the Houston Rockets sold for $2.2 billion in 2017, and the Atlanta Hawks sold for a mere $850 million in 2015.

Much of the rest of the column considers the impact of foreign money on other sports, and perhaps someday the NBA:

And then there is the growing internationalization of capital in sports, which will buttress high prices for both players and teams. This trend goes beyond American basketball: One Saudi Arabian club, Al-Hilal, has offered French soccer star Kylian Mbapp é $333 million to play next year in Saudi Arabia. The Saudis are already paying Cristiano Ronaldo $220 million over two years. Lionel Messi turned the Saudis down, but surely the offer increased his bargaining power with MSL’s Inter Miami, where his deal is valued at $50 to $60 million annually.

Might the Saudis consider something similar for a US basketball star? Lebron James already tweeted that he would gladly accept a comparable offer, and many others would accept far less.

The Desert Kingdom would probably have a hard time putting together a full NBA-like season with 30 teams. But it could bring in more European or other foreign players to its current league, shorten the season, or feature 3-on-3 games. In addition to wealth, they need to rely on innovation.

These scenarios don’t have to happen to serve as a check on NBA management or owners.

Qatar owns five percent of the Washington Wizards, we will see if this becomes a larger basketball trend or not.