Economic Effects of the NBA Lockout

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Economic Effects of the NBA Lockout

The National Basketball Players Association lockout greatly affected the United States economy. Greedy team owners and greedy players fighting over large amounts of money caused the lockout. In March of 1998, team owners felt that they were paying players too much money, causing clubs to lose money, so they voted to reopen discussions on the collective bargaining agreement. The players on the other hand felt that any team financial problems were the owners doing, not how much money players were being paid. When the two sides could not settle their differences and the collective bargaining agreement expired, the owners decided to lockout the players until they reached an equal agreement.

Lasting six months and into the NBA season, the lockout had a huge effect on those businesses or people associated with the games. First of all, since the games were not taking place this meant that employees were not able to work in the stadiums. Those employees who are usually hired to work the concession stands or sell food, drinks, and souvenirs around the stadium were out of work while the lockout persisted. Lack of work meant less income for the old stadium employees, thus lowering the demand for other goods that these people would normally buy. Lower incomes make people purchase fewer amounts of goods from stores, restaurants, and other recreational activities.

In an article entitled Playing With Fire: A NBA Lockout Could Leave Fans Out in the Cold, a Phoenix Suns fan, Phil Lester, discusses the NBA lockout and how much money he spends on game nights. Phil says that he can easily spend between $50-$100 on a night when the Suns are in town, counting dinner before the game, then some snacks and a couple of adult beverages during it. And that doesn't include the money spent on the tickets. Without the NBA, the money usually spent by fans will go unspent, greatly affecting businesses, workers, and the economy as a whole.

Restaurants near the basketball stadiums lost money because of the NBA lockout. Basketball fans eat or drink at restaurants and bars before and/or after games, but these fans were absent from the restaurants and bars because there were not any games to go watch. In an article entitled Check, Please, John Donovan writes that when the Suns are playing at their home arena in Phoenix, people crowd the city. He says that on game nights an owner of a bar or restaurant, A.J. Sulka, can expect to serve at least 1000 people when on non-game nights, Sulka would serve 200 people. The NBA lockout would cause Sulka, and other restaurants and bars in town, to lose several thousands of dollars per game night. Fewer people to serve results in restaurant owners and employees having a lower income. Less food and drinks are demanded, which decreases owners profit and at the same time, waitresses are not needed to work as many hours and are not paid as much in tips. Lower incomes affect the economy as a whole because business owners and workers will spend less money on other goods and services. Lower incomes lower the demand for other goods and services and affect the businesses offering those other goods and services. Businesses rely on basketball games to bring them people who will buy goods and services from them.

Although the lockout results in less income for businesses related to basketball, it does mean that fans who normally go to games and spend money will not be spending the money or would spend the money elsewhere. Basketball fans have more money to spend on other goods, services, or activities. For example, if a basketball fan could not go to a basketball game, they might decide to go to a movie instead. This would bring more business to the movie theater that would not exist if the NBA lockout were not taking place. Also, since basketball fans would not be spending money on a game, they might decide to spend the money at the grocery store and buy some extra snacks. This would bring greater amounts of income to the grocery store. The NBA lockout would then increase the demand for other goods, services, and activities, which

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