Why Mark Cuban is full of it

 

Mark Cuban has come out and said he thinks that the one and done rule is not enough. He thinks in fact the NBA should extend this rule to three years! (full quote via ESPN)

“I just think there’s a lot more kids that get ruined coming out early or going to school trying to be developed to come out early than actually make it. For every Kobe Bryant or Kevin Garnett or Carmelo Anthony or LeBron James, there’s 100 Lenny Cooke(s)…

Then you say, what about the kids that aren’t college material or whatever? I think then we just put them in the D-League for three years and then they become draft-eligible with their class. They could go to Europe if they want, like Brandon Jennings

It’s about kids’ lives that we’re ruining. Even if you’re a first-round pick and you have three years of guaranteed money — or two years now of guaranteed money — then what? Because if you’re a bust and it turns out you just can’t play in the NBA, your ‘Rocks for Jocks’ one year of schooling isn’t going to get you real far.

This argument is a self-serving lie told by an owner to follow a common theme we’ve seen. In business the traditional role of the owner is to supply the capital, place of work and take the associated risk. In the NBA, owners hate the idea of this. Owners often convince cities to take on the cost and risk of building stadiums. Teams not making money want teams making money to make up the differenceBasically, owners want all of the joy that comes with being an NBA owner, without the risk of being a business owner. This ploy is nothing more but another owner asking to reduce the risk even more.

How the draft is great for owners

Arguably, the one thing owners in the NBA have to take a risk on is players. And among the riskiest group of these players is young players. It’s hard to know, which players will become great and which will burn out. In the “good old days” most players would stay in college for multiple years. For example, let’s look at the superstars from the greatest draft:

  • Hakeem Olajuwon – 22 years old as a rookie and played 3 years college ball.
  • Michael Jordan – 21 years old as a rookie and played 3 years college ball.
  • Charles Barkley – 21 years old as a rookie and played 3 years college ball.
  • John Stockton – 22 years old as a rookie and played 4 years college ball.

NBA Players reach their peak around 25 to 26. The older they are when they start the better they are. Additionally, a player’s rookie contract (especially a first rounder) is a steal for a team that gets a good player and virtually no risk for teams that get players that fizzle. Finally, by staying in college longer NBA teams get more data before they decide to invest them. And of course, NBA teams don’t have to invest anything in this. The NCAA or other leagues take on all of the “risk” (more on that in a second), while the NBA gets a crop of talented players to underpay.

What if they fail?

The idea that the NBA ruins players is an interesting argument by Cuban. In essence, players should go to college because they might fail in the NBA and if they fail they’ll have no skills. It sounds like a great morality statement, right? First, Cuban suggest players could play in D-league or Europe, so he clearly doesn’t have a problem with players trying and failing, he just doesn’t want it in his league. Second, if his real problem is with players being unable to get an education after they fail in the pros then why not suggest fixes to the NBA or NCAA to help players? Cuban’s suggestion is that players should play for relatively nothing (full room and board to MIT would cost around $65,000 annually, Comparatively, the minimum salary for a rookie in the NBA is around $475,000 a year) or play in worse leagues. He is asserting they’ll be better off doing this than playing in the NBA. The NBA could easily defer part of rookie contracts and apply them to a tuition fund for players that don’t pan out. The NBA could insist the NCAA should offer fully guaranteed multi-year scholarships, as opposed to ones that cease when players get injured or enter the NBA. However, Cuban is not interested in the welfare of the NBA players. Cuban is interested in decreasing the risk for NBA owners.

What’s more, Mark Cuban is a fan of entrepreneurship and free market ideas. Why on earth then is he saying players shouldn’t be allowed to make money on their skills or allowed to take risks? It’s simple. Mark Cuban has a conflict of interest. As an NBA owner he wants to maximize the value of the players he gets. That means he will flat out hide behind an iffy statement that doesn’t even line up with his general character.

Summing up

Over the course of the history of the NBA the owners have done as much as they can to minimize risks and pass the cost of these risks onto others. Rather than invest in stadiums and risk it doing poorly owners expect cities to pay for them. Rather than risk that a young player won’t pan out, they expect the rookies to play for less than their value and with clauses very beneficial to the team. Cuban is simply sticking with that mentality. All I can say is that owners are progressively making their role in running NBA teams less and less needed. It’s worked so far and they’ve been able to have their cake and eat it too.   I’m hoping that at some point the NCAA, cities and players realize that the owners are just a glorified middle man and that could make for a fun lockout.

-Dre

 

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