Will Max Deals Ruin the NBA?

Posted at 11:05 PM, Jul 09, 2017
and last updated 2017-07-10 00:05:24-04

The Otto Porter max deal is going to be the deal that ruins the NBA.

Actually, that's not fair to Porter. He's doing what anybody would do and going after what the market is willing to pay him. But the market is broken.

I'm sure you saw the biggest NBA free agency deal of the past week, James Harden agreeing to a four-year $170 million extension on top of the $59 million he's already owed over the next two seasons. In all, it's the richest contract in league history worth over $228 million through 2023.

But Harden is an absolute superstar. A guy who is a perennial member of the All-NBA team and who finished second to Russell Westbrook in the MVP voting this year. He's the type of player that should be maxing the scales and breaking records financially.

As an aside, he's also on a very short list of people I would like to be around when they celebrate their first $200 million.

But some of these other contracts are troubling to me, and should be to you, too, as a sports fan.

Is J.J. Redick really worth $23 million a season?

Consider the fact that Tim Hardaway Jr's four-year contract to go back to the Knicks is worth $71 million. Think about that. That's about $5 million more dollars than Tim Hardaway Sr., who was a considerably better NBA player, made over his entire 15-year career.

Now back to Porter, a 13 point, six rebound a game guy earning a max contract offer from both the Kings and Nets. And the Wizards matched it, all $107 million over the next four years of it, because they couldn't possibly stomach the idea of losing him.

And because NBA teams currently have money to burn, I guess.

But this is why it should be scary: this money comes from the insane cash flow the NBA is getting from it's current TV rights' deals, most notably with ESPN and Turner. It is no different than the booming coverage contracts that have been struck by the NFL, Major League Baseball, the Big Ten, SEC, etc.

But what if the money runs out? And there's compelling evidence that it may.

These TV networks bid these contracts through the roof over the last 10-15 years based off of a business model propped up by the massive carriage fees from cable and satellite providers. ESPN alone costs $6 for any subscriber across the country whether they watch ESPN or not.

But consumers are learning that they have options and that's bad news for these TV networks. Cable and satellite subscribers are dropping in record numbers.

ESPN has lost record subscribers every month for years and the losses are starting to be felt in the bottom line. Over the last couple years, the Worldwide Leader in Sports has laid off thousands of employees throughout their operations, including about 300 on-air or print contributors earlier this year.

The subscriber money is drying up for TV networks. What happens if their rights' money dries up as well?

It's called the sports rights' bubble, and it's going to pop.

And when it does the NBA, and all these other leagues, will have to figure out a new way to print their money and write all these enormous contracts.