NBA Teetering On The Brink

We have written quite a few times over the last few years that the entertainment and leisure business salaries could very well drop as much as 90% in extreme cases. Most people don't realize the dynamics driving these astronomical salaries but it is all part of the largest financial bubble in history we have been writing about since starting this blog. Forty years ago professional athletes often had summer jobs. A relative of mine was one of the top players in the NBA in the 60s and 70s. He was the third player taken in the draft and was making $17,000 a year early in his career. That was a substantial sum at the time but it might have been comparable to what a doctor or successful small business owner made. Today players on developmental squads that never play a single minute are making millions. As the concept of money gains value again, and it is as I type this as witnessed by a rising dollar, there will be a realization that there simply is not enough money in the economy to continue to pay these salaries. (That goes for exorbitant CEO salaries as we have written, Wall Street mobster pay, actors, musicians, etc. Remember, one of our themes is that this is the cycle that society's most successful see an unwinding.) As this dynamic starts to unfold, salaries will come under tremendous strain. The only question is how rapidly this will happen. The Federal Reserve deferred the process but now political decisions are being made that could very well create some rather large shocks in the next few years. I believe it's quite plausible every professional sports league will ultimately need to reorganize in bankruptcy. That's not the end of the world but it is the end of an era of profligacy.

Link here.