NBA Tells Teams to Pay Ticket Refunds Plus Interest in Labor Work Stoppage
By Mason Levinson - Mar 28, 2011 10:30 AM ET
Business ExchangeBuzz up!DiggPrint Email .National Basketball Association season-ticket holders will receive refunds plus interest if games are canceled because of a labor dispute next season, in contrast to the National Football League, which has said it’s up to clubs to decide how to handle deposits.
While both leagues have told fans that they’ll get their money back for tickets to lost games, the NBA will also pay interest on what could amount to loans to franchises from fans, Mike Bass, a spokesman for the NBA, said in a telephone interview. The NFL is letting its clubs set their own policies. At least one team, the Chicago Bears, is not offering interest.
Whether interest payments are addressed at the league or team level should be of less concern than how fans are treated overall, said David Carter, executive director of the Sports Business Institute at the University of Southern California.
“Individual fans will be made more than whole by the teams, directly or indirectly, or these franchises will face an extraordinary community relations backlash,” Carter said in a telephone interview.
The NFL shut down on March 12 following the expiration of its collective bargaining agreement with players, putting the 2011 season in jeopardy. The NBA’s agreement with its players’ union expires June 30.
The interest rate on NBA tickets will be set by the league before games are potentially canceled. The league hasn’t determined when interest will begin to accrue.
Teams can also offer their own options, such as leaving deposits on account in exchange for future tickets.
The Golden State Warriors are guaranteeing a 5 percent interest payment on season-ticket renewals for 2011-2012 received by April 13.
The Miami Heat offered season-ticket holders an option to receive discounted 2011 playoff tickets and a 5 percent payment in exchange for keeping renewal deposits in a Heat account rather than seeking a refund should there be a work stoppage. A six-month certificate of deposit offers about a 1 percent return, according to bankrate.com.
The Heat last week said it had sold all its season tickets and that 97 percent of those renewing chose the team option over what the league will offer, said Kim Stone, an executive vice president for the team.
The NBA’s decision to at least guarantee interest payments is “just good business practice,” Stone said in a telephone interview.
“We are a fan-friendly league and what the NBA was trying to do was develop a fan-friendly policy in the event of a work stoppage,” Stone said.
While the NFL mandated a leaguewide refund policy, “the clubs wanted to be responsible for the execution,” Brian McCarthy, a spokesman for the league, said in an e-mail.
Jim Christman, a spokesman for the Bears, confirmed the team’s plans in an e-mail while declining to comment further.
“When you think about the amount of money involved in giving interest over what is hoped to be a short period of time, they would lose so many more millions of dollars in bad publicity if they didn’t take care of those fans,” USC’s Carter said.
The NBA also offered refunds with interest during the 204- day lockout that ended in January 1999. That season was shortened to 50 games from 82, the only time games were missed because of a work stoppage in league history.