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
Just a mind game–a threat really–but you fail to include other continents into the mix. A team Nowitzki in Germany might do very well–as would team Ginoboli in Argentina. Yao Ming in China might really bring in a bananza. And limited edition team paraphernalia might help Nike fend off Adidas.
It’s time for unions to call management’s bluff. Just as municipal unions should coordinate strikes, athletes need to show their cojones off the court, Maybe the AFL/CIO could be a cosponsor of the league–would it be politically incorrect to call it the MBA–the Marx Basketball Association? Might sound sweet in Russia and China? And Detroit?
The current arrangement is more Marxist. This is:
http://en.wikipedia.org/wiki/Cooperative
Why in the world would there be a draft to select cities much less players? This doesn’t happen in the real world. There isn’t a draft to select which software developer works for what tech company.
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Raphael:
The problem is that software companies will be just fine if other software companies go out of business. In professional sports a business model must allow for two different sorts of competition: game competition and economic competition.
However, there is no doubt that the present system is terrible: two colluding entities (the owners and the players) attempt to eliminate economic competition from their business. It is really bad when those two entities also collude to limit the potential income of a group not at the bargaining table (the rookies) to benefit the owners and the (established) players- even going beyond that by limiting SEVERAL YEARS of young players’ wages.
Would it be okay if all of the software developers got together and agreed that new software engineers would have a “rookie salary cap”? NO. Why then, do sportswriters seem to all agree that it is perfectly okay for pro sports leagues to do this?
Ives,
Embedded in your argument is the idea that a draft system or a “rookie salary cap” is some how conducive to greater competition. False. Research done by others shows why this isn’t true. Articles written by doctor Berri shows why this might not be true. There has been no evidence of this what so ever. If, however, you have come across such evidence, feel free to post it.
Nonetheless, in a real free market situation, and not this fictional – if I ran the world- article written above by Arturo, it is completely feasible that issues like these can be solved. The Knicks have so much more capital then the Bobcats? No problem. Move the Bobcats to New York. But to say the fix is to cap how much money other people can make or spend is preposterous.
AR:
Embedded in “my” argument? I was discussing your comment, not defending AG’s article. I think we probably agree on most things. However, a system which called for all teams to compete absolutely for players would probably not be workable so long as there is just ONE league. That being said, you may have a good point: the big advantage of big markets may be because the leagues do not allow enough teams in the big cities. Another example of the weakness in a tightly controlled semi-monopoly such as the NBA.
Look at the age limit: why should the players not be allowed to go pro whenever someone is willing to sign them? If a young engineer is offered a well paying job when he is 16, should all of the other high-tech companies demand a rule that you can’t hire an engineer until he is 20?
Which players would be most receptive to this and influential? They should at least pursue it to rattle the owners’ cages.
Great post.
You’d think this is precisely the sort of thing an enterprising players association would explore. What a hell of a lever.
To improve your idea:
1. Your TV estimate is way way too high. By factor of 5. What is the TV value of preseason NBA games? Very low. After the initial bump for curiosity, we’re talking small dollars.
2. Instead, make it a single elimination tourney. 32 teams. 1 game per team per weekend. 5 weekends of games. 1 “Draft” weekend. That is 6 weekends worth of high ratings.
NCAA gets 800 million for its 3 weekends. I could imagine clearing 200+ million for this much smaller package.
The first weekend play the 16 games; then the 8 games the next weekend; and so forth.
Winning team gets 30% of the total prize pool ($60 million to split among 15 guys, that’ll cover a few car payments). All the other players from the 31 losing teams get paid the way you described for 50%. You could make the “other 2″ teams something fun — retirees. You’re telling me Karl Malone wouldn’t want to suit up with some young cats?
Players like it — fun, a lark, but nothing real. Just up to 6 hard-fought Game 7s. Very low injury risk.
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