THE STUDY NOVEMBER 14, 2011
Bad news, basketball fans: It looks like efforts to salvage this NBA season have finally collapsed. Players have rejected the league’s latest offer, and now a class-action suit against the NBA appears imminent. The impending legal wrangling isn’t likely to make anyone look good, but the AP report argues that “damage has already been done”: in addition to hundreds of millions of dollars that have already been lost, the players and owners “eventually must regain the loyalty of an angered fan base.” How worried should they be?
A 2004 paper by Holy Cross economist Victor Matheson suggests that it may be too late to stop long-term damage. Interestingly, he notes, most academic studies have concluded that sports strikes don’t bring about “permanent shifts in consumer demand.” But, Matheson argues, there is one important exception to that rule: the infamous baseball strike of 1994-5, from which the MLB “has never recovered.” That strike was unprecedented in severity: It spanned over two seasons and was the first in any major American sport to force the cancellation of postseason games. Fans, Matheson says, do not seem to have forgiven the league. Yes, attendance gradually returned to prestrike levels, but that is only due to “the construction of new stadiums at an unprecedented pace.” The MLB’s rapid stadium expansion can’t go on indefinitely. When that expansion stops, the long-term damage wrought by the league’s meltdown will catch up with it. If the NBA wants to avoid a similar fate, it would do well to learn from this example.