The Origin of the Parity Myth

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Editor’s note: Regardless of who wins this year’s NBA Championship, this year’s winner will be a franchise that has won it all before. Since the 1979-80 NBA season — a span of 33 years — only 9 NBA franchises have won a title. In honour of this amazing lack of competitive balance, Dre has written a post on one our favourite myths: the idea that the NBA needs “parity” in order to be successful.

It occurs to me that one of the most prevalent thoughts in sports goes like this:

We need a fair league where any team has a shot of winning! If the same teams just keep winning over and over, no one will watch!

But this myth is not backed by data. The NBA reached its highest levels of popularity when it was the least fair; when the Lakers, Celtics, and Bulls were winning all the titles. And this is also true of other industries; in the tech field we’ve seen companies like Microsoft, Google, and Apple gain utter dominance and remain successful for years. We’ve also seen this in other entertainment fields: even as the Star Wars movies continued (with declining quality) they all made hundreds of millions of dollars. In fact, Hollywood is littered with sequels that keep recycling the same plots, and people keep paying to see them. So why is there this myth that it’s bad if the same couple of teams keep winning? The answer is almost a century old and comes from Dave Berri and Martin Schmidt in Stumbling on Wins:

In 1935, the Brooklyn Dodgers (yes, there was an NFL team with this name) and [Bert] Bell’s Philadelphia Eagles both desired the services of a star fullback with the Minnesota Golden Gophers named Stanislaus (“Stockyard Stan”) Kostka. At this time there was no college football draft. Consequently, a bidding war for Kostka ensued between the Dodgers and Eagles. When the war ended, Kostka signed a $5,000 contract with the Dodgers.

The owner of the Eagles [Bell] argued that NFL teams should no longer compete for the services of college talent. For Bell, a better system would be a reverse-order draft, where the worst teams from the previous season get to select the best college talent. Upon being drafted, the players would only be allowed to negotiate a contract with the team that held his rights.

Instituting the NFL draft clearly benefitted Bell. Bell’s Eagles were the worst team in 1935; and when the draft was instituted in 1936, Bell got to choose first.

Now, notice what we have. An owner wants a player and “loses” the negotiation. As a result, the owner rallies to change the rules such that the same scenario can’t happen again. In Bell’s case, the rule change also benefitted him immediately the following season! Of course, simply saying “I’m a sore loser!” wouldn’t be a compelling argument. So Bell gave the very same argument we see today. Poorer teams (in his case both money wise and performance wise) can’t compete with richer better teams. If this happens, the league will fall apart! We have to do something! Won’t somebody think of the children?!

And it turns out that this scenario is not uncommon, even just in the history of the NBA. Here are a few fun examples:

  • In its early days the NBA had a territorial pick. A team could choose to select a player that played college ball within 50 miles of their team instead of using their first round pick (and of course the closer team beat out other teams that may have wanted to draft the player). The logic was that the local fan base would already know the player and it would improve league popularity. Of course, the very first draft with this rule has Ed Macauley, reigning AP player of the year, and All-American Vern Mikkelsen up for grabs and surprise, they were both selected using territorial picks!
  • Wilt Chamberlain was selected by the Philadelphia Warriors using the territorial pick rule. Of course, he went to school in Kansas, which missed the 50 mile rule by about 1300 miles. The Warriors argued that there was no team in Kansas and that Wilt went to high school in Philadelphia. The league bought it.
  • Bird Rights allow teams to re-sign players, even if it put the team over the cap. This was originally done so the Celtics could re-sign Larry Bird. Shocker.
  • In 1994, Glenn Robinson, the first pick of the draft, held out on his rookie contract. He eventually signed a 10 year, $68 million dollar deal. The next season the NBA instituted rookie scale contracts that limited both the amount and length of contracts that rookies could receive.
  • In 1998 Kevin Garnett signed a six year, $126 million dollar deal. In the lockout, which happened the very next season, the NBA owners changed the rules such that individual player salaries were capped.
  • In 2011, LeBron James and Chris Bosh chose to sign six year deals with the Miami Heat instead of re-signing with their respective teams. Both of these deals were facilitated via sign and trades — where the player’s old team signs the player to a new contract and immediately trades them away. The following season the NBA instituted rules that stated players could not get the same raise levels or contract lengths via sign and trades.

In all of these cases, we see owners changing the rules either to get a good player or in response to a deal that greatly benefited the player. The motive seems pretty clear. Owners want good players and feel upset when they have to overpay them or worse, lose out on them. And in all of the cases, the rules change in the owners favor. And the only way this works is if the owners have a good line to sell their story with. The popular stories are that the league needs to help out bad/poor teams or the league will fail. Or that the league needs to help out a particular fanbase. Or that if the players keep negotiating this way, the league will go bankrupt. And if Bell has taught us anything, it’s that a good story — even one proven false by decades of data — will work for a very long time. So we shouldn’t expect owners to stop this trick any time soon.

-Dre

P.S.: Interestingly, Stan Kostka only played 9 games in the NFL and his stats were nothing spectacular. So, over the loss of roughly $80,000 of today’s dollars and a player that never really helped, we’ve had both the parity myth and the draft for almost eighty years!

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