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Ethics of NBA Arena Deals
- 2. Background National Basketball Association: $5 billion enterprise Average NBA owner has a net worth of $3.3 billion Basketball has become the second most popular sport in the world According to Forbes, the average NBA team is worth 1.36 billion dollars High profile league = high profile venues NBA does not allow outdated arenas, pressure on teams to play in state-of-the-art venues Teams typically build new arenas every 25-30 years
- 3. The Problem NBA’s blackmail scheme in the past 20 years Threat of forcing a sale of team & relocation if new arena not built NBA owners typically look to local governments for arena funding NBA/Owners put intense pressure on local government officials to pass public funding for their teams private arenas The cities that “play ball” with the NBA keep their teams, the ones who don’t lose them Over the years the general public has ended up subsidizing a large percentage of the NBA’s business through public arena funding
- 4. Examples Most famous example: Seattle Oklahoma City in 2008 Legislation to publicly fund a new arena continually fails to pass in Seattle City Council, despite NBA’s threat of relocation In frustration, owner Howard Schultz sold team to an ownership group based out of Oklahoma City after pressure from league Seattle lost its team of 40+ years, Sonics fans have little say in process Most recent example: Milwaukee in 2015 Aging owner sells team to young ownership group, NBA makes deal contingent on new arena being built by 2019 If no new arena, team would have been sold to a Seattle or Vegas- based ownership group (cities that had arena plans in place) Ultimately local government complied, creating a tax plan to fund new arena just in time for NBA’s deadline Sacramento in 2013 “Arena or Relocation” clause
- 5. Pros/Cons of Public Funding for New Arenas CONS Money spent on building arenas could be spent on education, healthcare, affordable housing, etc. Billionaire owners & investors, in most cases, would be able fund arenas themselves PROS Having an NBA team brings in significant tax revenue Studies show economic benefits of housing a major professional sports team Public generally supports paying a small tax to add quality of life
- 6. Funding for NBA Arenas Post-2000
- 7. Opinion It’s okay for the NBA/Owners to ask for some public help Public funding of arenas itself is not unethical because of the proven economic benefits of pro sports teams A little bit of pressure from NBA is okay (see: recent trends in new arenas), 50/50 funding should be goal Threat of relocation is excessive and dangerous, holding fans and governments hostage NBA top executives should be criticized for their blackmail scheme that has resulted in the general public having to fund a large percentage of their incredibly successful business