THE BLOG
11/17/2011 06:23 pm ET Updated Jan 17, 2012

The NBA Lockout's Forgotten Victims

You've no doubt heard by now that the ongoing NBA lockout has taken a sharp turn for the worse. First, the pre-season was cancelled. Next, we lost the first two weeks of regular season games.

Then on Monday, the NBA Players Association rejected the NBA owners' latest deal...

And announced that they were disbanding the players union....

They even filed an antitrust lawsuit against the owners.

With all games cancelled until Dec. 15, it's becoming more and more likely that the 2011-2012 NBA season isn't going to happen.

[See which players' paychecks got hit the hardest: The NBA Lockout's Biggest Victims]

Sure, players and owners have millions of dollars at stake in the lockout, but what about others associated with the league?

I'm talking about average Americans making a living from the ancillary services professional sports provides. A lost NBA season could be disastrous to businesses and many employees in NBA cities.

Here's a look at how the lockout stands to impact American cities and the little-known people behind the scenes:

Silent Victim #1: Arena Workers

Many of the employees who work on game day -- such as security, ushers, parking lot attendants and janitors - work part-time. However, these workers, who earn around $11 per hour, count on this income to help pay the bills and feed their family. And no games means no money for thousands of individuals.

Workers at arenas, such as Staples Center in Los Angeles, could take a particularly hard hit since the California stadium is home to two NBA franchises -- the Lakers and Clippers --and hosts 82 games a year.

Silent Victim #2: Game Day Entertainment Workers

No NBA game would be complete without the lights, music, video and entertainers that make it a wonderfully unique experience. Like other arena workers, game day entertainment workers are paid per game, so they will certainly feel the pain of the lockout for every game canceled.

Entertainers like the public address announcer would lose around $500 per game, while NBA dancers and cheerleaders would lose between $50 and $100 per home game.

Like other arena workers, these jobs aren't likely the sole occupation for these workers, but it's still lost revenue that could have been put to use in the local economy.

Silent Victim #3: Local and Small Businesses

In truth, studies show that professional sports lockouts have little impact on the overall tax revenues professional sports cities collected during lockouts, as a recent article on Slate outlines.


This suggests that people simply find ways to spend their money on other types of entertainment during a lockout.

But certainly not every business would go unharmed. Local sports bars will suffer now that baseball season is over and the local NBA team is shuttered by a lockout. Naturally, restaurants and shops near arenas are likely to lose revenue due to fewer events.

That doesn't even take into consideration future seasons, where disillusioned fans hesitate to buy season tickets due to waning interest caused by a skipped season.

The cities that would be impacted the most? Memphis, Salt Lake City, Orlando and Portland, naturally, where the NBA is the only professional sports franchise in town.

While the NBA survived a work stoppage in 1999, the current economic climate is much grimmer, so it is difficult to estimate the full impact a long-term lockout would have.

Silent Victim #4: Cities with New Arenas

When a team builds a new arena, they don't simply write a check or take out a loan like a homeowner might. They often issue bonds, which are essentially loans from whoever buys the bonds in exchange for a typically modest rate of interest.

Teams use the money to build the arenas and pay back bondholders with revenues from ticket sales in the future. But when there aren't any games, teams don't receive the income expected to pay back dividends to bondholders.

Memphis recently built the FedEx Forum arena and may have trouble paying bondholders when the bonds are set to mature, depending on how long the lockout lasts. A shortfall could mean that local governments are on the hook to cover the bond payments, which could reach $10.6 million by 2029, or the bonds could default. With local governments already strapped for cash, it's unlikely they'll be able to help out.

Sacramento is putting together a plan to raise funds for a new arena as well, which would bring 4,000 construction jobs and an estimated $7 billion in additional tax revenues over its lifetime. A lockout could be devastating to their efforts to build the arena and keep the franchise in their city.

Silent Victim #5: Team Staff

Many teams, anticipating a lockout, wisely set aside money to keep the majority of their office staffs intact. These staff members include office, administrative, marketing and executive staff positions.

However, teams are looking for ways to cut expenses during lockout negotiations, and there have already been casualties from non-essential staff members. If the lockout drags on, expect more jobs to be lost as well.

Silent Victim #6: The Association

It probably flew under most sports fans' radars, but the lockout has already had an impact on NBA employees -- and I don't mean the players.

Over the summer, the NBA laid off 114 people from their New York, New Jersey and international offices in a cost saving measure the league claims is not related to the lockout. Instead, a league spokesman said, "the league's expenses far outpace our revenue."

Of course, a greater share of revenues is exactly what the owners and league are asking for in the lockout, so it is hard to say that the firings aren't related to the lockout.

The Investing Answer: The lockout affects more than just the players and the owners; it also has far reaching repercussions on local economies and individuals nationwide. An end to the lockout would not only be good for sports fans, but would benefit to a multitude of workers associated with professional sports.

By Brian Reed, www.investinganswers.com