Monday, August 18, 2008

Globalization, Even in Hoops

DALLAS - MAY 1:  Owner of the Dallas Mavericks...Image by Getty Images via Daylife Mark Cuban nails why the NBA should be encouraging players to go over to Europe. Can you imagine if Lebron played 1 year for $50M in Greece or Italy? How much merchandise would he sell? How many Nike shoes? How popular would the game become in Europe?

If I could own a single asset these days, it would be a premier sports team. Sports are one of the few things that people want to watch in real time which means that they will sit through advertising. If you own a team in one of the top leagues (NFL, MLB, NBA, English Premier League, etc) you have a monopoly on the best players, as long as you continue to pay them. Furthermore, players want to play against the best, so you have a built in network effect.

The only thing that can upset the apple cart, is if billionaire owners try to upset the network effect. They'd have to justify enormous salaries to the Lebron's of the world, but with merchandising, tv rights in a new continent, a huge ego boost and a strong euro, they're beginning to get to that point.

The NBA needs to follow Cuban's advice on players, but also needs to put franchises in Europe, and Asia too. That will keep the monopoly in tact and make these people buku bucks.

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