Could Saudi Money Be Coming to the NBA, Too?
The Boston Celtics just set an NBA record by agreeing to a five-year, $304 million contract with two-time All-Star Jaylen Brown. The obvious question is whether any single basketball player can be worth that much money — especially someone who is not even the best player on his team, much less on a par with Lebron James, Stephen Curry or any number of other shoo-in hall of famers.
I’m not here to make predictions about Brown’s career. But the odds are the deal will be seen as a good one — maybe even a bargain. The economics of the National Basketball Association have been shifting toward more and more money.
This trend is evident in the rising value not just of players but of teams. Last year the Phoenix Suns sold for $4 billion (with the WNBA’s Phoenix Mercury). To put that number in perspective, the Brooklyn Nets sold for $3.3 billion in 2019, the Houston Rockets sold for $2.2 billion in 2017, and the Atlanta Hawks sold for a mere $850 million in 2015.
If you are a multibillionaire looking for a thrill, a sports team is a reasonable purchase. As long as the US economy keeps growing and US wealth keeps rising, there will be a steady flow of potential buyers.
And then there is the growing internationalization of capital in sports, which will buttress high prices for both players and teams. This trend goes beyond American basketball: One Saudi Arabian club, Al-Hilal, has offered French soccer star Kylian Mbapp é $333 million to play next year in Saudi Arabia. The Saudis are already paying Cristiano Ronaldo $220 million over two years. Lionel Messi turned the Saudis down, but surely the offer increased his bargaining power with MSL’s Inter Miami, where his deal is valued at $50 to $60 million annually.
Might the Saudis consider something similar for a US basketball star? Lebron James already tweeted that he would gladly accept a comparable offer, and many others would accept far less.
The Desert Kingdom would probably have a hard time putting together a full NBA-like season with 30 teams. But it could bring in more European or other foreign players to its current league, shorten the season, or feature 3-on-3 games. In addition to wealth, they need to rely on innovation.
These scenarios don’t have to happen to serve as a check on NBA management or owners. A less dramatic situation is already unfolding, and it likely represents the ownership future of the NBA. The Qatar sovereign wealth fund purchased about 5% of a company that owns the Washington Wizards (NBA), the Washington Mystics (WNBA) and the Washington Capitals (NHL). The rest of the world is growing wealthier too, and that money has to be invested somewhere. US sports teams are an obvious target.
That’s because, as more of the world goes online and artificial intelligence becomes more important, live performance will only become more special: No computer can provide it. Like a Taylor Swift concert — her tour is projected to gross more than $1 billion this year — live professional sports provide a kind of excitement that can’t be found anywhere else. If you are looking to go long on something these days, go long on live performance — with next in line being live performance shown on TV.
As for Jaylen Brown, the final verdict on his contract will come on the court. But the question isn’t whether he is the best player in the world (the answer is no), but whether the Celtics have a good chance of winning a title without him (the answer there is also no). As it now stands, the Celtics are betting favorites to win the championship next year. Since Brown teamed up with fellow star Jayson Tatum in the 2017-2018 season, the pair have made the Eastern Conference finals four times. In addition, Tatum is only 25 years old and Brown is only 26, so their best years are almost certainly still ahead of them.
If $303.7 million still sounds like a lot to you, rest assured: Word on the street is that his contract will be surpassed soon enough.
Elsewhere in Bloomberg Opinion:
• The NBA’s Immigration Policy Could Be a Model for America’s: Matthew Yglesias
• The NBA Realizes Racism Is Bad for Business: Stephen Carter
• Leagues Should Resist Becoming Part Owners of ESPN: Adam Minter
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. He is coauthor of “Talent: How to Identify Energizers, Creatives, and Winners Around the World.”
