Rift Deepens as NBA Draws Line on Compensation

Custom Student Mr. Teacher ENG 1001-04 4 January 2017

Rift Deepens as NBA Draws Line on Compensation

The N. B. A. is a well established association and is well-known across the globe. Over the past couple months the association has been in contract talks between the players union and the N. B. A. officials. With the basketball season right around the corner, both sides have been able to work out an agreement to get the players back on the court playing the game they love. As Porter’s “Five Forces” model describes how certain areas of the industry could be affected or affecting the entire game, and people throughout the basketball world.

The way that I look at this situation and in regards to the N. B. A. and the players, because of a strong competitive force in the industry, and according to Porter, these forces can be a threat on the entire involvement in basketball. The lockout brings forward a lot of issues between the union and the officials who are always trying to get more money out of the teams, which is where the talks have heated up in the recent weeks due to a dispute over a 50-50 concept of revenue share. In relation to Porter’s “Five Forces”, the NBA dispute raises a great deal of negotiation in regards to these “Five Forces”, and how the economy is affected.

With the cancelling of the first two weeks of the basketball season, players and fans are constantly finding ways to either spend their money in other markets, or from a player’s standpoint, find a different league to play in during this lockout. Therefore, according to Porter, the closeness of substitutes is creating conflict within the entire industry. Whether the NBA lockout is settled sooner than later, the game may lose a tremendous amount of fans because they may have settled for an interest in a different area of entertainment.

Several players including top stars are seeking interest overseas in leagues in countries such as Italy, France, and Spain, and if negotiations continue we could see a lot more players seeking playing time against strong competition. Even though I wouldn’t consider this a risk but I feel that the NBA should feel a little heat because if disputes continue and an agreement isn’t settled, European leagues could become a substitute, as well as a threat. The third force on the list is the bargaining power of buyers.

This concept does relate to the article and the overall scheme of things because the fans are a huge part of the NBA and create a tremendous amount of revenue within the game. Even though it’s difficult for fans to directly change the price of certain products, the NBA may have to look at keeping the customer happy, therefore a change in price of memorabilia, or ticket price could pose as a threat to the NBA, and the longer the lockout, the more power the fans could embark on.

Thus, the same being said for Porters force in regards to the Bargaining Power of Suppliers. The league and the organizations themselves provide several inputs to the industry as a way to generate a fan base, create excitement within the city, therefore with a lockout in deep talk, the power of the supplier doesn’t seem to be as big of a threat as the buyer, but could become more and more of a threat as the lockout extends over a longer period of time.

There are a lot of people that provide labor and services within the NBA, therefore if a lockout remains, these people involved in such services could be impacted a lot more than what we may see. With negotiations and offers at a standstill, the NBA could be in a lot of trouble in regards to Porter’s “Five Forces” within the industry of entertainment. Even though the fans don’t really have a say in the whole process, but if talks continue the fans will show their depreciation to the sport creating a loss in profit and overall excitement towards the game.

As the talks continue, there are several threats that will remain intact, and create conflict for the NBA as they try to remain calm but seek for a settlement that seems fair. These talks are in millions of dollars, and with both sides not seeming to be willing enough to give up any compensation for their efforts, the lockout could be a long one and the NBA may be in a significant amount of trouble with competitors overseas, the bargaining power of both buyers and suppliers.

Since the intensity of the rivalry is so strong between these established firms, some fans will remain loyal to their teams, but others may look for options. Overall, the NBA, in regards to Porters’ “Five Forces,” could be in trouble if this dispute is not settled and the longer it continues the more threats that could be factored in to the whole process. The players union is trying to remain strong, and the officials are trying to seek more and more money out of the teams.

But with smaller market teams this doesn’t seem necessary because how is a smaller market team going to be able to hold on to the fan base, where the revenue is generated, and in return have to give up even more of a financial hit. The whole idea and looking at the “Five Forces,” Porter should be in talks with the NBA and they should look at the entire picture rather than just worrying about the money involved.

This dispute creates a lot of attention, where in a world of financial power, you get the sense that maybe there should be a stronger focus on the “Game” rather than the financial component. In my opinion and after looking at it from a strategic point of view, I feel that Stern and all his officials are being extremely greedy. There is more to sports than money, when both sides realize the amount of people being affected in the whole process and the threats continuing to impose on the game, then they will understand the stupidity in the lockout and get back to the game the love.

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  • University/College: University of Arkansas System

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 4 January 2017

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