The importance of sports in the economy has grown over the past several decades. Sport is a major source of economic well-being for countries and its subjects; it employs millions directly and indirectly, source of government revenue and a major tourist attraction. The National Basketball Association and its television partners entered into a new $24 billion media-rights deal. In a story carried in Wall Street Journal on 6th October 2014, NBA and its partners argued that the deal is an indicator of the swelling value of sports programming in a disjointed media setting. Nonetheless, consumers and pay TV distributors argue that the deal is scandalous since they are in the receiving end. The most hard-hit are the consumers who will have to dig deeper into their pockets since the cost of maintaining pay TV will go up (Flint and Cohen para. 1-2).
Consequently, the consumers’ expenditure will rise lowering the amount of saving (the marginal propensity to consume will be higher than the marginal propensity to save). The economy has not fully recovered from the devastating effects of the 2008 financial crisis. The national savings average has significantly shrank and the government has been encouraging people to save more to boost investment. High national savings culture release sufficient resources to investment. The NBA and media partners deal will lead to higher consumer bills which will subsequently lower family’s savings and investments. The healthcare cost will also go up since cases of mentally related illnesses will rise as families grapple with high cost of living at diminishing real income. The cost pressure will also drive inflation. The government will spend more money on recurrent expenses as opposed to development expenditure; this will affect the rate of economic growth. The economy will be negatively affected by the NBA and media partners deal because of high consumer bills lowering savings.
Works cited:
Flint, Joe and Ben Cohen. “NBA, Media Partners Defend Rights Deal: Some Pay-TV Providers Say $24 Billion Contract Will Drive Up Customers’ Bills.” Wall Street Journal, 6th October 2014. Accessed 7th 0ctober 2014 <http://online.wsj.com/articles/nba-media-partners-defend-rights-deal-1412638278?tesla=y&mg=reno64-wsj&url=http://online.wsj.com/article/SB11235677476619194475904580198692011564252.html>
