While sports franchises oftentimes lose money during a season or post small profits, they attempt to make the best business decisions as possible in hopes of turning their team into a profitable endevour. It is baffling how often fans and the media forget sports are a business and while team executives make decisions to improve the on-field or on-court success of their respective teams, they must make smart business decisions in the front office in order to have the opportunity to improve the former.
New Houston Rockets guard Jeremy Lin is undoubtedly not worth $25+ million and definitely not $15 million in the final year of the three year deal…on the court. However, due to enormous international NBA popularity the Rockets hold a tremendous asset in Lin soley because of his status as an Asian American. There are numerous examples all around sports that reflect the international marketability of athletes, such as Ichiro Suzuku, Yu Darvish, or former Rocket Yao Ming. CNBC Darren Rovell’s crunched the numbers on the impact Lin’s departure has already had in the few days since Lin left New York, indicating Madison Square Garden Inc.’s stock dropped 8.6% in just five days, equating to a $101 million loss.
Despite his late arrival onto the national scene Lin finished the season ranked #2 in jersey sales, slightly behind Derrick Rose of the Chicago Bulls. The Rockets might not get a desirable on-court return on their investment but an major new revenue stream with Lin’s international presence will give them the luxury to potentially sign an elite free agent while paying a significant chunk of any impending luxury tax with Lin’s “popularity” revenue.
Assuming Lin receives the $15 million in the third year of his current deal, glance over those NBA players that will still have larger salaries than him in 2014-15. Jeremy Lin was a steal.
By Andrew Doughty
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