The Coronavirus’ Effect on NBA Owners
There has been a great deal of discussion on how the coronavirus will change the NBA forever. The current NBA season may never finish, and no champion may be declared. The 2020-21 NBA season may be delayed to Christmas. The NBA could lose $1 billion in revenue if the season is cancelled, according to ClutchPoints, and it is reasonable to assume the league could lose more from lost attendance next season and beyond.
But NBA owners will be affected by the coronavirus and the resulting economic chaos as much as the league. It may be hard to feel sympathy for these people who own hundreds of millions if not billions of dollars. But we must remember that for these owners, owning an NBA team is not an investment through which they make money. It is a passion project or a status symbol which is little different from how other wealthy individuals buy expensive art.
And if these owners feel relatively financially pressured, they will be less likely to invest in their teams. This can mean a greater reluctance to dip into the luxury tax or invest in new facilities which will improve the team or make it a more attractive free agency destination.
Most people would expect poorer owners such as Phoenix’s Robert Sarver or Sacramento’s Vivek Ranadive to be the ones harder hit by these economic pressures. But in fact, two of the wealthiest owners of the bigger teams are prime examples of how teams could be affected by owners losing wealth.
Houston Rockets owner Tilman Fertitta was worth nearly $5 billion in 2019 and made his money through running a casino and corporate meeting space empire. These sectors have obviously been hit extremely hard by the coronavirus, and Fertitta laid off 45,000 employees over last week according to Newsweek.
Even before all of this, Fertitta had been criticized by Rockets fans for a reluctance to go into the luxury tax even though the Rockets have a limited championship window. It is reasonable to assume this reluctance will not improve given his losses.
Then there is Miami Heat owner Micky Arison, who Business Insider lists as tied for the 3rd-wealthiest owner in the league. Arison was the CEO and is the chairman of cruise line company Carnival Corporation, which has been under scrutiny for its attempts to gain government funds even though it is hardly an essential business. Fortune reported in late February that Arison’s net worth fell by over $400 million due to the Diamond Phantasm cruise ship debacle.
Other NBA owners will have similar stories, as businesses will suffer either directly from the coronavirus or from its cascading economic effects. And this will have a serious effect on the NBA as a whole. The NBA cap will likely decline beginning in 2021 which is expected to be a major free agent market, and there will likely be further squabbles between NBA players and owners fighting for a shrinking pie. The current NBA collective bargaining agreement lasts until the 2023-24 season, though either owners or players can opt out after 2022-23. Maybe there will be another lockout in a few seasons from now.