You only have to look at European sports leagues to see what kind of an advantage the "closed league" system is for players. The stability the NBA players have is tremendous. Just look at it this way? What was the last NBA team to fold or get wound up? When was the last time you remember a team having trouble paying their players because of financial turmoil? When was the last time a shady owner came in from a third-world country, overpaid stars and then disappeared when his money ran out? European soccer is full of these stories.
Competition sounds like a great thing for players, in theory. A rich man with deep pockets comes from abroad and buys a small team. Since there is no salary cap in soccer(except the MLS), he can throw money at potential transfer targets. Since players' rights are not traded for other player's rights in soccer but rather traded for cash, he can just throw money at teams to get much better players than his team currently have. You don't need trade assets like in the NBA, you've got cash. If you overpay, you can get much better players than the standard of your club. Why wouldn't a team sell you their best player if you pay twice his actual market value? And why wouldn't he come to a crappier team if you pay him twice the money. Keep in mind that in soccer, the money you pay for a player's rights is actually a fee to break his contract. He signs a new contract with you regardless of how much he had left on his old contract. That means you can instantly offer him double his salary. Of course, you overpaying for players has an effect on the market is that it drives up both wages and the transfer fees. The players love it, because their wages go up.
At some point, the bubble bursts, and it's perfectly logical. As several clubs drive wages up, teams end up signing players to contracts they cannot honour. Then you have a situation where both players and teams who are paying their players suffer. It's obvious how the players suffer, but a little less obvious why other teams would suffer. The devious part about this is that most large transfer fees are paid in installments. If you pay $10 million to a club to sign their player, this will usually mean something like paying $300,000 a month for the next 3 years. That's how most deals are structured. Of course, the selling team then has to assume you will be able to make those payments and spends the money. They might buy a couple of players of their own and their wages may total $200,000 a month. If you go broke and can't pay them anymore, they can't pay their players. They then go broke and it affects teams they owe money. Vicious cycle then continues.
And it's more common than people would think.
https://www.dailymail.co.uk/sport/f...uggling-Portsmouth-players.html#ixzz0SfuRHyRx
This was 2 years ago. Portsmouth FC were playing in England's Premier League, which is widely considered to be soccer's highest quality league.
https://www.guardian.co.uk/football/2011/nov/16/hearts-delayed-players-salaries
This is going on now. Heart of Midlothian FC are Scotland's third best team. Scottish league is probably just outside of top 10 leagues in Europe.
https://www.inter.it/aas/news/reader?N=3676&L=en
This was in Italy 10 years ago. SS Lazio had won the Italian championship two years earlier. Italian league is probably top 3 in the world. This story is kinda hilarious, because unlike the NBA players, these guys "voluntarily" took a pay cut. In reality, they did it because some money is better than no money. The team couldn't afford to pay them their full wages so they decided to take a pay cut hoping that the team would be able to at least regularly pay them their decreased wages. Sort of shows you what might happen if NBA teams really start going broke.
And these are top leagues in Western European countries. I've got a relative who plays soccer professionally in Croatia. Saw him this summer. Told me how in Croatia's top division, about 2-3 teams out of 12 pay their players on time. The rest are all in arrears, ranging from a couple of months to a year. One of the team's recently had to forfeit a league game since their players decided to not show up, having not been paid since 2010. My cousin's description of how this happens? He calls it the "They can't pay you half as much as we can tell you we'll pay you" syndrome. Team owners offer you contracts, and they might as well be giving you Monopoly money. In theory, you might be doubling your salary, but in reality, your pay will be 6 months late. If you sue the club, you'll wait a couple of years on a decision, which will then be unenforceable. The club is in debt and if they get wound up, their president might go to jail, but you won't ever see any money because there isn't any.
Sorry for a long rant about a different sport, but to bring it back, the greatest thing about the closed league system, from a players perspective, is that your contract is guaranteed by the league itself. At the end of the day, you will get your money. Unless perhaps there is a catastrophic scenario where NBA as a whole goes out of business and the combined assets of the owners aren't enough to pay the remaining contracts off. Kinda unlikely. When the shady Russian mobster who owns the soccer team goes broke, the league can't pay you because it's not their jurisdiction. Your contract is with the shady Russian mobster. Something that did not seem that bad when you first signed it.