The Free Market Alternative

The other day, I (Arturo Galletti… in case you were wondering) wrote a piece on the numbers behind the NBA Labor dispute.

To summarize:

  • Player’s salaries have stayed even with inflation. Essentially this means their pay has not been going up.
  • Owners have been increasing their spending. Management’s operating costs (per their own numbers) have been going up at five times the level of inflation (that’s a lot).
  • Even in the ideal case for the owners with the new CBA these problems will repeat themselves in 2020.
  • The Owners are asking the players to take a pay hit to make up for bad management practices.

A smart reader (Mel Hauser take a bow) asked the following question:

Why don’t the players threaten to start an exhibition season? –I would expect some cable network would be more than willing to buy insurance and book locations. Basketball is an easy sport to set up–and this threat will scare the NBA robber barons.

Hmmmm….

Can they? The answer seems to be yes.

Now that they’re locked out, the players can set up their own league and hold their own games and the NBA has no legal recourse to stop them.

This is intriguing but would it be financially viable? Let’s have some fun with numbers.

Fun with numbers (Image courtesy of xkcd.com)

Just for grins, let’s make a business case:

  • The new league would be owned by the members of the league (i.e. the players). They would hire an organizing entity to put together the venues and the events. William Morris or CAA with an assist from Nike (Nike Player’s league anyone?) could put this together in a heartbeat and finding an open venue this fall and next spring? Not hard at all. The players (through the union) would pay a share of the gross revenue to the organizing body. Let’s say 20% of the gross revenue.
  • A TV contract would be required, initially for one year of course. Likely candidates here are Comcast and CBS. Again, the organizing body could take care of this beforehand.
  • The teams could be organized as follows. The players currently in the league vote for 30 captains. The captains then select the cities they represent based on a draft style lottery (Imagine it: “….with the 11th Pick Steve Nash selects…..””). Any city with a proper venue would be allowed to apply (hello Las Vegas, welcome back Seattle and Vancouver) Then another lottery for player picks is held and team captains select 14 other players in a snake style draft (Again imagine it: “….with the 30th Pick Chris Paul selects…..””). For the years after that Player Captains could be put to a fan vote, if captains are re-elected they can stay with their city and protect 5 players (at the cost of multiple draft picks, similar to a fantasy draft).
  • Players would of course name their teams.
  • Trades will be approved by a majority of the team captains.
  • Salaries could be divided as follows. 50% of the total would be split evenly amongst the all the players and the other 50% would be split based on draft position with a weighted system. An easy way to do this is to assign points: Captain is worth 30 points per game with team, 1st round picks are worth 29 points per game with team, 2nd round picks are 28 points per game and so on up to 14th rounders and the undrafted at 16 points per game played with team.
  • Captains can make five cuts per year and five pickups. Waiver rules can be done similar to a fantasy league (for grins we could get Yahoo to run/sponsor the waiver wire).
  • As for Coaches, a pool of say, 40 job candidates, could be found and another draft could be held. The Captains would then again choose the coaches. Coaches’ fates would be tied to the Captain’s.

The league would then play home and home series for all teams for a 58 game regular season and proceed to a 16 team playoff (no conferences just the top 16 teams) . This would work out to about 72% of the games currently played (which is the number I will also use as a multiplier for all the revenues).

Let’s crunch the numbers:

So if the players found someone willing to set this up for half a billion dollars a season (565 k per game or 18 million per team for the season), they could keep their current salary levels and control all the revenues themselves.

Somebody needs to start asking for some feasibility studies.

Get to it Rookie!

-Arturo

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