The NBA: Where Frugal Happens1
For more than 20 years, the National Basketball Association (NBA)
flew nearly as high as one of LeBron James’s slam dunks. The league
expanded from 24 to 30 teams, negotiated lucrative TV contracts, and
made star players like Kobe Bryant and Dwayne Wade household
names and multimillionaires. The NBA was even advertised as “where
amazing happens.” While costs for brand new arenas and player
contracts increased, fans continued to pay escalating ticket prices to
see their favorite team. But when the economy nosedived in 2008, the
situation changed dramatically.
In the season that followed (2008–2009), more than half of the
NBA’s franchises lost money. Fans stopped buying tickets and
many companies could no longer afford pricy luxury suites. NBA
commissioner David Stern announced that overall league revenue for
the 2009–2010 season was expected to fall by an additional 5% over
the previous disappointing campaign. With revenues dwindling and
operating profits tougher to achieve, NBA teams began to heavily
emphasize cost control and operating-variance reduction for the first
time since the 1980s.
Some of the changes were merely cosmetic. The Charlotte
Bobcats stopped paying for halftime entertainment, which cost up to