The recruitment of Kevin Durant became legal 1 July 2016. On this date, NBA owners and personal people begin the process of “wooing” free agents. However, if there is one thing known about free agents, players like Durant are not free. Signing a top talent like Durant could cost an owner more than one hundred million dollars, and the level below Durant could cost around one hundred million dollars. Nonetheless, the money is there and much of it comes from non-sports fans.
The reason why Durant and the others receive huge money can be traced to one piece of legislation and one revision during the Ronald Reagan presidency. In 1984, President Reagan signed into law the Cable TV Act of 1984. What that did was socialize cable TV for those who wanted almost everything offered on a basic expanded tier. Consumers brought everything offered on the tier or nothing at all. There was no choice. The legislation saved ESPN, CNN and others from financial ruin and sports operators started getting major money from cable TV.
The other Reagan years work that helped owners was the 1986 tax code revision. Simply, in the right set of circumstances, a sports owner could extract as much as 92 cents out of every dollar generated in a publicly funded venue leaving just eight cents to pay down the debt for the local municipality. That increased owners’ revenue. NBA and other major league athletes got more than 50 percent of the much higher revenues generated after the leagues negotiated player deals.
The TV legislation and the new enhanced revenue gadgets in super sports venues stuffed sports with money. There was also a shift from fans to well-heeled customers. Major League Sports became less accessible to a person with a limited income or limited access to money.
Durant will get his fortune and should thank Ronald Reagan who helped make it possible.
By Evan Weiner for The Politics of Sports Business.
This article was republished with permission from the original publisher, Evan Weiner.