THE DEMAND FOR BASKETBALL PLAYERS IS DERIVED FROM THE DEMAND FOR ENTERTAINMENT.

It's getting on toward the end of the semester, but teachable moments in economics arise all the time.  Consider the curious economics of basketball salaries, in which the women of the fevered brow, plus Dementia Joe, got themselves so worked up about those niggardly starting salaries in the WNBA.  "In order, though, for the pay scales to be commensurate, don't the employers have to offer customers (fans in this story) commensurate value propositions?"

An internet culture reporter (yes, dear reader, that is a proper job title now-a-days) called Donnavan Smoot worked his sources to come up with a concise summary of the state of payment.

Women’s basketball is, arguably, more popular than ever. But two key factors are keeping the WNBA and its players from capitalizing on its newfound buzz.

The first is the WNBA’s collective bargaining agreement, or CBA. The CBA, which was agreed upon by the WNBA and the Women’s National Basketball Players Association (WNBPA) in 2020, gives the players around a 10% share of the league’s annual revenue, according to a 2022 study by Bloomberg News. Also, because of a salary cap in the league, the maximum amount a player can be paid for the 2024 season is $241,984.

In the NBA, players and owners split revenue evenly.

There is a clause in the WNBA’s collective bargaining agreement that allows players and owners to split revenue evenly, like the NBA does, but that can happen only with money that exceeds the original targets.

In an appearance on MSNBC following the WNBA Draft on Tuesday, sports journalist Jemele Hill encouraged WNBA fans to do their part to help their favorite players earn more by driving up revenue.

“If you are outraged when you saw those salary figures, if you think women deserve more, it’s really simple,” said Hill. “Buy the merchandise, watch the games [and] go to the game.”

Every so often, a blind squirrel finds an acorn.  Presumably, as the National Basketball Association are running the WNBA as a summer loss-leader, some of those base revenues go to reduce the subsidy payments from the parent company.  Interestingly, there might be some limits on players' ability to trade on their name under the current bargaining dispensation.

Kelsey Plum, an All-Star for the defending WNBA champions, the Las Vegas Aces, has spoken up about the pay difference between the NBA and WNBA, dissecting misconceptions about the argument for players to make more.

“We are not asking to get paid what the men get paid,” Plum said on the Residency Podcast in 2022. “We’re asking to get paid the same percentage of revenue.”

Plum also said that she didn’t “see a dime” from any of her jersey sales, another result of the CBA’s current structure.

The other factor limiting WNBA players’ earning potential is the league’s current media deal, which, according to Front Office Sports, is worth $60 million. For comparison, the NBA’s current deal is worth $24 billion dollars — a figure that is expected to increase during the next negotiation cycle.

All of this could change in the coming years. Although the current collective bargaining agreement runs through 2027, the players have a chance in 2024 to request to opt out in 2025 and restart negotiations for a new agreement. The players are expected to exercise their option to terminate the deal, leading many to predict a massive change going forward.

Bear in mind, dear reader, that collective bargaining agreements in sports leagues serve to disarm the positional arms races among general managers at the same time that they provide terms of employment for players.

When a team adds up the annual salaries of all the players on its roster, that total can’t exceed the salary cap, which for 2023 is $1,420,500. That represents a 3% increase from last year, when the salary cap was $1,379,200.

Hardship exceptions exist, if rostered players will miss significant time due to injuries, illnesses or other reasons. Outside of those exceptions, though, the salary cap is nonnegotiable.

Teams also must meet a minimum total salary of $1,188,990. If a team does not reach the minimum, that team must make extra payouts to its players at the end of the season, with the WNBA Players Association deciding on the distribution of the money.

Each team can have up to 12 players on its roster at a time, meaning the total salary (up to $1,420,500) must be divided among those 12 players. Contracts can vary, with the highest possible salary in 2023 sitting at $234,936. Rookie contracts are valued between $69,770 and $86,701 depending on where the player was selected in the draft. Those numbers, like the salary cap and salary minimum, increase every season.

Such provisions ensure the continuation of the league in two ways: first, that no one team is able to load up on high-ability players, rendering the competition boring; second, that total payroll does not exceed the willingness of spectators to watch the games.

In the WNBA, the players receive 50% of the the league’s incremental revenue. In the NBA, players receive 50% of all revenue. That means WNBA players share in only the revenue earned above the league’s revenue target for that season. The revenue target goes up by 20% each season, but the actual numbers are unknown.

So the league needs to exceed its revenue goal for a season in order for players to reap the rewards.

Ultimately, it comes down to that value proposition, something that even the powerhouse NBA is learning about.

The NBA is a valuable property. The question is how valuable. Disney and Warner Bros. Discovery want less NBA for a reason. The league has lost about half of its audience since 2012.

The NBA averaged just 1.56 million viewers across ABC, ESPN and TNT this past season.

"The NBA’s regular season, which ended this week, posted the lowest rated season in network TV history, dropping from last year’s disaster. Overall viewership on cable and network TV was down too," adds Clay Travis.

"LeBron and Adam Silver have destroyed the league."

Hard to argue.

Last June, the NBA Finals averaged just 11.64 million viewers.

Four of the five lowest-rated NBA Finals of the past 30 years have occurred in the past four years. (12.4 million viewers in 2022, 9.91 million viewers in 2021, and 7.45 million viewers in 2020.)

The NBA is political. Wokeness is a niche. The NBA is now more niche than mainstream, in terms of mass interest. Viewership of the NBA is closer to the NHL and Formula 1 than the NFL.

Heck, WWE is a more watched television product on a weekly basis than the NBA. (WWE is also better to watch live, in person.)

The NBA regular season has become increasingly meaningless. Star players skip games because they care so little about the outcome of said matchups.

The WNBA is also political, although in a different way, and who knows what the effect of all those tweens in their CLARK 22 jerseys will be on the state of play, and the sponsorships.

Free agency and rookie contracts, though, are likely to be with us no matter how the ladies renegotiate their collective bargaining agreements.  The reason those provisions exist dates back to the closing days of the American High, when a victorious and prosperous country was sufficiently willing to pay to watch football on fall Sundays that the American Football League emerged to take on the National Football League, and the American Basketball Association emerged to take on the National Basketball Association.  The established league might have crowded out the Dallas Texans, who became the  Kansas City Chiefs, but in the competition for talent, the players could finally cash in.  Green Bay Packer Jim Taylor owned a wreck-diving business in Louisiana to meet off-season expenses; his successor Donny Anderson was drafted by both the Houston Oilers and the Packers: the bidding war, involving the notoriously stingy Vince Lombardi, continued until Mr Anderson "couldn't think of anything else to ask for."  In the first Super Bowl, it was Donny Anderson who laid a crunching block on Fred "The Hammer" Williamson, knocking him out of the game, and Packers cracked wise about "Donny hit him with his checkbook."  A few years later, the leagues merged, but in the absence of a standard rookie contract and free agency after four seasons, one O. J. Simpson had enough prospects in Hollywood and elsewhere to hold out on the Bills until they came up with the right sort of offer.  "What Simpson has asked for is $650,000 for five years, plus a $500,000 loan for investment purposes. Even this is something of a compromise, since Simpson would prefer a three-year contract and might now even settle for a one-year deal."

Thus come the standard contracts, and all that remains of those American ... titled leagues are the two-point conversion (after much hemming and hawing) and the three point outside shot.

Institutions evolve to conserve on transaction costs, and a standard contract with different base salaries based on draft round and draft order cut down, without eliminating, the foolery.  A bigger standard rookie contract for the WNBA's next bright stars (and they're finishing their spring semesters now) still calls for a better value proposition for the fans.  Tom Knighton is skeptical.  "Clark won’t get that big of a payday unless the WNBA becomes that big of a league. Frankly, I don’t see that happening anytime soon."  Let alone the sport becoming big enough for another upstart league to bid those salaries up; particularly in a low-trust country with incompetent government.