The US’ National Basketball Association (NBA) seems to be having some trouble. This season’s TV ratings are either down precipitously or struggling to hold even, a shift too dramatic to be explained by cord-cutting alone. Meanwhile, the National Football League is doing fine. Tickets for the NBA Cup, the finals of which were last night (congratulations, Giannis Antetokounmpo), went for half of what they did last year.
Part of the explanation might be that both teams are from small markets — Milwaukee, Wisconsin, and Oklahoma City, Oklahoma — and part might be that fans have yet to figure out why they should care about the midseason tournament. The most plausible explanation is economic.
The NBA has a salary cap, which prevents teams in major markets, such as the Los Angeles Lakers or New York Knicks, from snapping up all the talent. (The cap also limits costs to the owners, who in essence are colluding against the players.) An unfortunate side effect it that is harder for all teams to bid for additional players, or to keep the ones they have.
Illustration: Louise Ting
Even when the total amount of the cap goes up, adding more talent at the margin has become increasingly costly in terms of penalties. It is becoming more difficult to form and maintain durable great teams, which makes it harder to elevate new superstars, which is what many fans want.
Think about a casual fan’s impressions of the NBA. They have heard of Michael Jordan and LeBron James, and maybe watched them play or even seen their movies. They know they are two of the all-time greats. The 27th-best player over the same time span — whoever it might be — is extremely accomplished, but does not attract anything close to the same attention.
Superstars are what the game and its popularity are about, most of all with the marginal fans who do not know every player.
It is not surprising that one of the best-known players today, with more than 8 million Instagram followers, is Bronny James, son of LeBron James. Bronny James has barely played in the NBA and is far from a star; his popularity stems from his family story.
Jordan won six rings and LeBron James four, but who is to follow in their footsteps and be the game’s marquee player? One candidate was Nikola Jokic, center for the Denver Nuggets and three-time Most Valuable Player (MVP). Given his extraordinary statistics, he is in the running to be MVP again this year.
His team is another story. The Nuggets won an NBA title last year, but since then they have been in free fall. They let some of their key rotation players leave, most of all because of the salary cap. If they had kept those players around, or brought in star replacements, the Nuggets would have had to pay large fines to the league.
Denver is a relatively small basketball market, so it made more sense to let the players walk. Jokic thus might retire with only one ring, when he could have three or four and become a truly iconic star.
Antetokounmpo was another contender to be the face of the game, and in addition to last night’s NBA Cup, his Milwaukee Bucks won a championship in 2021. Since then, they have not come close to winning again, or to patching up their limitations.
Over the past six years, six teams have won the league title. Compare that to the 1990s, when Jordan’s Chicago Bulls won six titles, or to the 1980s, when the Boston Celtics and Lakers between them won eight titles, with numerous iconic matchups against each other along the way.
Tim Duncan’s San Antonio Spurs, Kobe Bryant’s (and Shaquille O’Neal’s) Lakers and Steph Curry’s Golden State Warriors all produced dominant teams with top stars.
Of course, there are also problems with the product itself. Regular-season games do not mean much, and the median outing is too often mediocre. Optimizing players no longer give their best in these settings.
Due to basketball analytics, too many three-point shots are taken. What was originally a source of excitement has become routinized and predictable. Perhaps US fans do not relate as well to the growing number of foreign players and stars.
Yet there have always been issues with the product. In the 1990s, for example, there were far too many ugly fouls, and some say expansion diluted competition. The league’s main problem now is systemic. The NBA needs to remember that competitive parity is unsatisfying, and that we live in a celebrity culture. It is all about who is going to be the next No. 1 — and the league needs to let market forces have a greater say.
Tyler Cowen is a Bloomberg Opinion columnist, a professor of economics at George Mason University and host of the Marginal Revolution blog. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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