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Excess leverage was almost everywhere
And the job market is hurting in many sectors:
On opening night, there could be 30 or 40 fewer NBA jobs than a year ago.
Depending on exactly how large a roster each team wants, the total number of players is a bit higher than 400, so in percentage terms this is a big drop. You'll notice that while NBA wages are adjusting downwards, the quantity of labor demanded is falling as well.
Posted by Tyler Cowen on August 6, 2009 at 01:16 PM in Sports | Permalink
Comments
"You'll notice that while NBA wages are adjusting downwards, the quantity of labor demanded is falling as well."
What are you hinting at? Are you implying that this is an example of a "keynesian" drop of general demand in a cyclical downturn which causes general unemployment (caused by some wage rigidity), or do you see this is as a sectoral readjustment of labor in light of the now revealed past misallocation of resources (monetary-policy-distorted prices misled people into expecting much higher future wealth, hence a shift into "luxury" consumption goods like sports)?
Posted by: bbb at Aug 6, 2009 1:32:51 PM
I think he's nodding at Scott Sumner's post about supply and demand and how you can't infer anything from a change in price:
So what do we know about prices? We know that if the price falls because supply increases, then consumption will increase, and if the price fell because demand fell, then consumption will decrease. In other words we know that if the price (or interest rate or exchange rate) changes, we can predict with 50% confidence that quantity will increase, and 50% confidence that quantity will decrease. So that’s progress, I guess.
Posted by: Bob Montgomery at Aug 6, 2009 1:57:07 PM
I guess it implies that the marginal benefit of fringe players is at least temporarily lower then the marginal cost. Or that the NBA has a surplus of marginal players who are undistinguishable until something occurs, injuries, that increases the demand for a given set of attributes to some team.
Posted by: DanC at Aug 6, 2009 2:01:50 PM
BTW, the current price for B-Ball players doesn't clear the market because players are willing to hold out until demand increases (which they anticipate once the season starts) while owners are unwilling to pay for a product that they may not need. Or think of it as the owners don't want to insure at the current cost of insurance. If they could, I wonder if owners would pay to have an option of first refusal on a marginal player?
Weren't the old taxi squads in football like an option. i.e the story I was told was that George Halas of the Chicago Bears would keep extra players around by getting them jobs as taxi drivers. Then if he needed one of these players, he could quickly add them to the roster. The players were given jobs so that they could remain flexible if called upon (and have an income).
Posted by: DanC at Aug 6, 2009 6:52:01 PM
Sorry, I stand corrected on the taxi squad story
http://en.wikipedia.org/wiki/Taxi_squad
Posted by: DanC at Aug 6, 2009 6:54:50 PM
Basketball players who would have been the 14th or 15th men on NBA rosters should be reasonably okay if the league goes to short rosters. Most of them should be able to sign with teams in Europe or elsewhere for decent (if not NBA-level) money, and will be able to keep their skills sharp enough to be signed to NBA contracts as injuries occur.
What would be far worse from a player perspective, not that it ever will happen, is if NFL teams ever reduced their rosters. The NFL pretty much has a worldwide monopoly, especially now that Arena Football is out of business.
Posted by: Peter at Aug 6, 2009 9:49:44 PM
But isn't it unsurprising remembering about the global recession and the corresponding concequences like job losses, job search, etc?
Posted by: job search at Sep 16, 2009 7:53:17 AM
