Negative complementarities in the labor market

by on July 31, 2010 at 11:40 am in Economics, Sports | Permalink

The Miami Heat easily sold out its season tickets after LeBron James announced he was joining the team. That turned out to be bad news for the ticket-sales staff, which the Heat fired Friday.

“Now that the supply for [season tickets] has been exhausted we no longer require a season ticket sales team,'' the Heat said in a brief statement Friday afternoon.

A team spokeswoman, Lorrie-Ann Diaz, declined to comment or answer questions about the firings, which one staffer said cost roughly 30 people their jobs.

The full story is here and for the pointer I thank Michael R.

1 Jonathan July 31, 2010 at 11:47 am

30 people x $40,000 (or so) per year saves about $1.2 million. Next stop: see if the Heat stop advertising. That could really save some big bucks.

2 Cowboy July 31, 2010 at 1:52 pm

Right “on the money”, Six Ounces.

Now, on to creating a subsidy for the buggy-whip industry, combining it with federal regulation to make the cost of electrical power skyrocket…

3 Bernard Yomtov July 31, 2010 at 3:12 pm

Nice to see all the sympathy being expressed for 30 newly unemployed people.

And no, six ounces, the job does not “belong” to the employer. You think we live under feudalism? It’s a contract between employer and employee. Either can cancel, obviously, but your eagerness to kowtow to some rich guy is unappealing.

4 Andy July 31, 2010 at 4:42 pm

Although the stated reason is plausible, I find it more likely that they fired the staff for doing their job extremely poorly. Elasticity of demand, marginal revenue, monopoly power, etc, etc. They should have doubled the season ticket prices the Monday before the signings were announced.

5 Peter July 31, 2010 at 5:36 pm

Six Ounces,

The job is not tangible property. It is not owned by either the employee, the employer, or any third party. It is a contract between the employer and the employee for the employee to perform either specific or general services in exchange for agreed-upon monetary remuneration.

Usually, such contracts are at will, and either the employee or employer can terminate without reason. However, this is not always true, and many contracts limit the circumstances under which one or both parties may terminate the contract.

To repeat though: jobs are agreements, not property. They can’t be owned. At most, when the contract is not performed upon, they create liability against the non-performer.

6 thehova July 31, 2010 at 7:50 pm

heh, not much sympathy from the comments section.

The economics of the NBA is a strange beast. What other business could completely cut their sales staff.

Perhaps the Cavs will need to beef up their sales staff and advertising budget.

7 Yancey Ward July 31, 2010 at 8:31 pm

Bernard,

I am not the one upbraiding other commenters for their lack of sympathy. If you are going to do that, you had better be putting up more than empty, implied sympathy yourself.

8 Andrew August 1, 2010 at 5:46 am

Jobs are relationships, not owned by either party. They must be nurtured. The branches cannot win at the expense of the roots and vice versa.

When the relationship is no longer profitable, it is not only acceptable, but incumbent on the employer to re-purpose the employees. But, in a highly division of labor economy it is not the employer’s job to do re-training and they are not even capable of doing it. There is likewise a lot of tough talk by people who want tho shift societal costs onto employers just because “yes, we can.”

However, a business that runs this way is not looking for sustainability, so this could all end very badly for the Heat. Don’t be surprised if the person you have an affair with proves unfaithful to you.

Why aren’t there outsourced ticket sales companies that can be contracted by the various customers that have variable output (I’m sure there are, why doesn’t The Heat use them, and can these people go work there)? With concerts and such, it seems like a permanent, dedicated ticket sales force is an aberration. Not to mention 30 employees sounds like a lot to me. And, salesman usually do fine.

9 Eric J August 1, 2010 at 7:16 am

With a lockout almost certainly coming next year, all NBA teams are going to be slashing their staffs. The Heat just got ahead of the curve on this one.

10 Tom M August 1, 2010 at 11:20 am

This makes me wonder what percentage of new season ticket sales the Heat’s economists (if any?) attributed to LeBron’s marginal revenue product.

11 Alex H August 3, 2010 at 1:36 am

Sales staff was on commission plus salary.

See the Sun Sentinel article at… http://articles.sun-sentinel.com/2010-07-30/sports/sfl-heat-season-ticket-staff-fired-20100730_1_individual-game-tickets-staff-writer-ira-winderman-sales

The exact quote is … “Sources said the employees made a base salary and commission, which was sizable during the sales rush that came on rumors the team might sign LeBron James, Chris Bosh and re-sign Dwyane Wade. Some employees were offered severance of up to a year’s salary and extended benefits. Additionally, some staffers might be hired back to oversee season ticket holder accounts, the sources said.”

Comments on this entry are closed.

Previous post:

Next post: