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NBA: The fallacy of restricted player movement as a restraint of trade.

Kanick makes some interesting analogies and discusses the fallacy of restricted player movement as a restraint of trade.

Back in 2011, in the aftermath of the LeBron super team thing, the NBA owners locked out the players because there was no Collective Bargaining Agreement in place. The CBA talks broke down over ‘player movement’ issues. Basketball Related Income distribution to the players was settled on with a band around 50% and thus a revenue sharing partnership was agreed upon. Rookie contracts are slotted. Max contract frameworks are defined.

The problem was player movement.

The NBA wanted a franchise tag; the players didn’t.

To me, it seemed the biggest issue. Chris Paul, Carmelo Anthony, Dwight Howard were all playing the franchise shopping game using LeBron’s template. In so doing, they were holding their current teams hostage and alienating countless NBA fans/customers. But ‘player movement’ as a blocking point in negotiations was diminished as a minor point. Or at least that’s how I read the reporting at the time.

When it was discussed, the prevailing wisdom that I saw reported/tweeted/blogged ran like this: why shouldn’t players be entirely free to work where they want.. just like you and I are?

I’ve got a different viewpoint on this, interested in your thoughts. I’m using the 2011 NBA lock-out as a context. But I’ve seen the larger player movement issued applied in the NFL and NHL. MLB players are of course quite happy, but the macro outlook of a ‘have and have-nots’ league is dim.

The debate over ‘righteousness of free player movement’ and the ‘responsibility of a union in partnership with an enterprise’ is in hibernation but still current. In my opinion, the NFL’s franchise tag strikes a fair balance between the sides and deserves some acclaim.

‘The NBA is a business.’ Ok. What does that mean exactly?

First, I think it’s useful to define the ‘business’ of the NBA.

The NBA is in the entertainment business. Their product is ‘competitive sporting event.’ Their competitors are not Cavs vs. Heat vs. Knicks, etc. Their competitors are NHL, NCAA Men’s Basketball, NCAA Men’s Hockey, UFA, PGA Golf, NASCAR… any other competitive sporting event that occurs in Winter and Spring.

When you look at the NBA as a singular business entity with a common goal, then it becomes easier to view the 30 teams as franchises of the NBA brand. As the brand grows, the all the entity’s partners benefit.

As with any franchise model, the brand’s value derives from the delivery of a consistent product where ever the franchise is located. The Big Mac I get here in New Hampshire is the same as the one you get in Elyria.

What if Dunkin Donuts offered Super Columbian Supremo in Miami and Sanka in Cleveland?

In other words: what if a franchise brand did not deliver a consistent product? What if the brand’s best product was only available in select geographies? Well Cleveland would support their local Dunks for awhile because it’s a good national brand and the advertising is compelling and it’s got cachet and we haven’t figured out quite what the other options are. But ultimately, if the product sucks, consumers find the other options.

The brand suffers. Franchises fail. It’s true with coffee. It’s true with ‘competitive sporting events.’

If Dunks should adopt a policy where Supremo is only served in glam locations while less happening locations get Sanka, the result will be less franchises. Less franchises mean less revenue. All partners see less dollars.

Bringing this back to the NBA, the predictable outfall of truly free player movement is a league where the best teams are in, say, eight cities. The other 24 will get suck. After a steady diet of suck, those teams will fold.

I don’t care about all that. I’m a great baller and I should get to play where I want. Anything less is a restraint of my rights.

YOU’LL BE HARD PRESSED TO FIND A REPORT CALLING OUT CARLOS BOOZER FOR HIS DISHONESTY WITH GORDON GUND.
YOU’LL BE HARD PRESSED TO FIND A REPORT CALLING OUT CARLOS BOOZER FOR HIS DISHONESTY WITH GORDON GUND.

Well first, no one is telling anyone they can’t live and work were they want. You want to live in New Orleans? You can. You can even play hoops there. No one is stopping you. But you’re playing pick-up ball and you’re flipping burgers. You just can’t work for the NBA there. For a real world example, let’s say I’m an IBM college hire. I don’t get to tell IBM that I must work in New Orleans. I go where they tell me and am grateful. Or… I can try my luck with another company that will let me work from New Orleans. Free will prevails.

Second, your union agreed to this arrangement and for good reason. Ensuring a high level of talent to all franchises ensures a healthy 30 team league. Healthy league means 30 x 13 = 390 due-paying union members. Imagine an eight team (albeit in all prime locales). That math goes 390 – (8 x 13) = 286 less union brothers. This is bigger than you. There’s a real brotherhood aspect to union and it needs to be acknowledged.

You don’t care about all that and still want to get yours? Start a players’ league where guys get to play where they want. Stern’s NBA is bringing in $5,000,000,000/yr. Stern can get that because he’s got 32 franchises,, even in those suck towns you don’t want to go to. You may not want to play in Detroit or Milwaukee or Cleveland or Minneapolis… but you and your union are splitting $2,500,000,000 among 390 players. That averages out at $6.4MM/player. If that’s Bryant Gumbel’s idea of a plantation overseer, then he needs to check out some documentaries. When Jeffery Kessler calls NBAPA members plantation workers, … well, ‘absurd’ is a kind description.

Go ahead and start your eight team players league with teams in LA, LA, Vegas, Miami, NYC, Chicago, Nassau, and Honolulu.

If there are no fans, then no one watches, then TNT/ESPN aren’t paying.

Don’t be stupid. Accept your trade to Indy.

More human rights framing.

In my opinion, a big problem in this dialog is the nomenclature. The NBAPA is a union of workers, yes. But any union worth its name understands their role: the union assures the business owner of a reliable workforce of qualified tradesmen. If I call a union carpenter, I know I’m getting a pro. That’s why I pay more for a union man and not ‘some guy.’ Done right, ‘Union Built’ is a sign of quality, trust, beneficial to the business and the end-user. Thus the union has a responsibility to deliver a consistent level of craftsman to the NBA and that means all their franchises. In return, the union members split $2,500,000,000 per year.

But I would take it step further. The NBAPA is a cartel. There is a finite number of resources the NBAPA control which are needed for the NBA to create its product. The NBAPA can set whatever price it wants. In return, the NBAPA must ensure some quality-control on the resources it delivers.

In other words: no, you prima-donnas, you don’t get to play where you want as long as you’re in the NBAPA playing for the NBA.

Suck it up and take your $6,000,000 and shut the fuck up.

Your numbers are bogus and TV dollars drive this anyway.

Yes, let’s talk about TV dollars. Hell, let’s talk about a model for the most successful entertainment business in the ‘competitive sporting event’ category.

In 2011, the NFL did $9,000,000,000 against the NBA’s $5,000,000,000. The NFL does $5,000,000,000 in TV alone… and that’s with a 16 game schedule against your 82 games. The NFL is the most successful ‘competitive sporting event’ business in the history of earth.

Why?

The games are great in spite of themselves and they are events. But that’s not all.

Parity.

Draft plus salary cap plus restricted player movement (franchise tagging) means all franchises have a level footing from which to build their team.

Put it this way: The 2012 Super Bowl was Pittsburgh versus Green Bay.

If you can even imagine Pittsburgh and Green Bay in the NBA then you can also imagine that a Pittsburgh vs. Green Bay NBA finals would never happen.

What’s the big deal? We’ve got Kyrie Irving now and the Cavs are on the upswing. Thus the ‘player movement’ thing can be overcome.

2.8% LOTTERY WIN IS NOT A VIABLE PATH FOR FRANCHISE REBUILDING.
2.8% LOTTERY WIN IS NOT A VIABLE PATH FOR FRANCHISE REBUILDING.

Well that’s true. Bringing this back to Cleveland, the best player in the league chose to leave NEO for jet-skis and strip clubs. Who are we to begrudge the choice? (In particular, who am I to judge when my mindset at 21 was ‘I can’t get the fuck out of Ohio fast enough.’ That’s pretty much verbatim.)

How do non-glam teams recover from this? They really don’t as a rule. Free agency isn’t an option. Name me the last big free-agent who signed with Cleveland, Indy, Milwaukee, Minnesota, Detroit.. I could go on. All I got is Shawn Kemp.

No, the Cavs hit on a 2.8% lottery play and managed to get (imo) the most transcendent player since LeBron. And while you can’t say enough good things about Chris Grant for setting up the Baron Davis trade or Dan Gilbert for his willingness to write checks for about $27,000,000 to a non-contributor… this is not a repeatable model that other have-not franchises can employ.

No. The Cavs were smart and more importantly, the Cavs were lucky.

And even with this unprecedented luck, there’s nothing to stop Kyrie Irving from leaving at the end of his contract.

So, are you proposing a return to the reserve clause?

No.

My God, no. That was a human-rights abuse. That is a blot on American history. Oliver Wendell Holmes’ decision in 1910 reveals a shortcoming in our form of government.

I just think it’s wrong to enter into a partnership, an incredibly lucrative partnership, as a collective and then embark on a path that focuses on the individual. The restriction of player movement yields a stronger league which benefits the owners AND ALSO the players.

Post-script:

I gave this a lot of thought back in 2011. Here’s a couple letters I shot out to Bill Simmons and Adrian Wojnaroski. I felt like they’re two reasonable guys, but their coverage of the CBA negotiations lacked nuance. In other words, they seemed to come down in the ‘just settle this’ camp. No I never heard back from them.

My email to Bill Simmons.

11-22-2011

Bill,

If Dunkin Donuts had super Colombian supremo in Miami and Sanka in Cleveland, it would not be a very good ‘brand’ would it? And the franchise owners in Cleveland wouldn’t probably be able to stay in business would they?

When Jeffrey Kessler says the players want to be considered partners, doesn’t that mean business partners? And doesn’t the players ‘union’ have the responsibility in this business partnership to provide a consistent level of talent to all the franchises in this business?

In my opinion: The ‘player movement’ issue is crucial to the future of the NBA. The owners are right to hold out for a change in the current system.

It seems to me the players want it both ways: a partnership with revenue sharing, but the freedom so that they can play in jet-ski cities. Followed to its logical conclusion, fans non-glam towns wont buy Sanka, teams will fold, and the ‘union’ will lose 15×8= 120 roster spots at average salary of $4MM* per= $480MM in player salary. What kind of union in this day and age does that?

As a fan of a cold weather city team that is not New York or Chicago, I can tell you is that all we want is to be relevant. I didn’t see Carmelo looking at Milwaukee. I’m not seeing Dwight Howard considering Indiana. Chris Paul will not be going to Minnesota.

Perhaps if all those teams fold the revenue numbers will remain constant through pricier TV contracts (though I doubt it because you’ve just lost millions of eyeballs in the Midwest). So the players in the smaller league will still get theirs. But the Samardo Samuels and 100 odd other players occupying roster slots 8-15 will be hosed. Who is looking out for them? Certainly not their union. Who is speaking out for them? Certainly not you or any other national (and I must add bi-coastal) media members.

You seem to be in favour of moving the NBA closer to MLB’s broken model. This surprises me when the most successful professional sports league in the history of earth just held the most profitable championship game in the history of earth with teams from two cities that could never attract a free agent in the NBA current ‘player freedom’ model.

NFL. Pittsburgh. Green Bay. Parity.

Wellington Mara got it when he agreed to TV revenue sharing which enabled a green bay to compete with a New York. it made the league. Pete Rozelle got it, always working toward parity because close games are more fun to watch, and so enabled the NFL brand to. Pete Rozelle got it. Individual players may not like the franchise tag rule, but as an organism, the union knows their members are better off participating in a thriving league with growing TV revenue.

I’m baffled why you don’t get it. have you not looked at it from this point of view?

Kanick

My email to Woj.

11-15-2011

Hi Adrian, I enjoy your work. Thank you.

I’m writing because I read the reports/analysis of this mess and I always feel like the biggest issue isn’t explored. Player movement -usually lumped in the ‘system issues’ phrase- seems to be what the owners want to ‘fix’ (my opinion) and it’s what the players don’t want to give up.

When I look at the NBA as a business, it resembles a franchise model. The product they sell is ‘competitive sporting event.’ The basic idea in franchises is that the experience and quality of the product will be consistent in any branded franchise location. If the Dunkin Donuts in Miami gets Columbian Robusto and Cleveland gets Sanka, then the model doesn’t work. (you see where I’m going.)

When viewed in this way, I think the concept of the players as a labour union falls apart. Labour would be the counter people at a dunks, ushers in the NBA. The players are the coffee beans: the basic ingredient of the product. So the players organization is more like a cartel than a union. They can bind together and set the price for the raw material that they possess. The raw material is talent; price for talent is being established via revenue split percentages. But for the price established, they must deliver a reasonably consistent quality level of the the raw material to their customers. The players seem unwilling to accept basic quality control levels for the raw material they’re delivering. This seems unreasonable to me.

As a franchise owner, I Can manage the costs of the ingredients by adjusting my sell price. But my product must have a consistent level of quality across all franchises. The player movement trends indicate that, the best players will accept less money to play in Miami/LA, while Cleveland and Detroit are forced to overpay for Larry Hughes-level free agents. Obviously this breaks the franchise business model. It also damages the product –> i.e., is a Lakers T-Wolves game truly a competitive sporting event?

The irony to all this is that if the union/cartel won’t ensure quality product to non-glam franchises, those franchises will eventually fold. Isn’t it better for the union to have 32×15=480 roster spots than 24×15=360? Does the union not understand that maintaining a robust 32 team league is in their best interest? Or do they simply not care about the bottom 120 of their brotherhood?

I don’t think there are human rights violations in play here. If I accept a job with proctor and gamble, they might move me to Seattle or Jacksonville as a term of employment. If want to be in Memphis, I’m free to seek employment there. Likewise no one is stopping CP3 from gaining employment in Miami, it just wont be with the nba franchise there.

No one is stopping him and the players from starting their own league either, but if they remain unwilling to provide quality product to all their teams, the same problems will exist.

It feels like these guys aren’t getting great advice. And it really feels like the bottom 120 in the union have no voice in this at all.

Thanks for listening, interested in your take if you have a chance to reply.

Know you get a lot of mail, hope this gets your attention. would love to hear back.

Kanick

Sport Is Everything. Kanick.

You can catch more of Kanick’s articles via his personal site, by clicking here.

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