The Ship Be Sinking

Mouth Almighty

Excruciating

Ready for the dumbest thing ever written about the NBA, non-racial issues division? Ch-check it out.

It’s wrong on so many levels, including the basic one of assuming that the NBA as such is an industry and therefore the underperforming members of that industry are likely/justifiably suffering losses, being out-competed by their rivals. The NBA is not a market; it is a cartel of sorts with socialist revenue-sharing policies, location restrictions and other mandatory league-wide structures in place to allow all members of the group to compete as best they can within their larger market, which is the pro sports and similar entertainment field within each NBA city. The competitive alternative for, say a Bulls fan is the Blackhawks, Bears, Cubs and White Sox; it is not the Thunder or the Timberwolves or other teams which it would require a plane ticket for him or her to see live. This SHOULD be obvious given the structure of franchise-to-franchise relations within the NBA (and the fact that they’re identifiable as franchises and not semi-self-contained clubs, as in the international soccer model), as well as from the fact that the NBA is by definition a zero-sum game. Only so many games are played each year; some teams must win, some must lose, and exactly 16 will make the playoffs- no more, no less. This is not by any means a realistic analogue to any number of other business areas in which the number of companies which can prosper within the field is indeterminate. Equally importantly, the reality is that NBA teams losses are caused by any number of factors having little or nothing to do with competitiveness on the court or lack thereof. Take the Nets: they play in a dilapidated husk of an arena situated just outside the back of beyond, a building (and state) they’ve been trying to flee quite publicly for years now and which they’ve since been confirmed to be leaving at the end of the year. The effect of that set of circumstances on business should be obvious, and most money-bleeding teams have some analogous set of circumstances in play.

More importantly and harking back to the crypto-socialist nature of the league: because wins and losses are a zero sum game and the winning teams are dependent on the losing teams as much as the inverse, and because the NBA’s labor contracts are negotiated on a league-wide basis between a unified front of owners and a unified union of players, it is incumbent on the league to negotiate- as a matter of self-preservation- a labor contract which, so much as is possible, guarantees the best possible chance for overall league profitability and individual profitability on a franchise-by-franchise basis. If you want to see what happens when a sports league tries to operate in a non-socialist fashion, take a look at the English Premier League: despite operating in a functionally monopolist environment and boasting only 20 teams, competitive pressure and a lack of league-wide labor cost control and revenue sharing has resulted in several financial loss-driven competitive collapses of integral and championship-level clubs (Leeds most obviously, and nearly Chelsea pre-Abramovitch), and one implosion of a club so bad that the club nearly went out of business during the season (Portsmouth). That alone should demonstrate the wisdom of the NBA and other North American sports leagues adopting more of a socialist model than a purely competitive one, and should demonstrate the dangers of a myopic “bad teams deserve to lose money” philosophy.

Bear in mind, sometimes losses are unavoidable despite whatever the league may do. Some owners are just going to be incompetent and hire GMs who run the team into the ground with bad contracts, or hire lousy marketing departments, or deliberately piss off their fansbases as part of attempts to move their franchises (we see you, Clay Benett) or find new and innovative ways to be crap at running a team (Charlotte Bobcats, step up!). This is unavoidable, and attempting to shove money into the pockets of these jokers at the expense of the players is ridiculous; but the more restrained and tempered desire to enable to possibility of profitability- not the inevitability- through the various mechanisms noted above is a crucial part of prudent business strategy and protection of competitive balance. But hey, why would I expect the national editor at Forbes to get that, when he can pull snarky comments from his ass about an industry he doesn’t understand instead?

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March 2, 2010 - Posted by | Other NBA

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