Malcolm Gladwell on what the NBA doesnt want you to know

[LakerLegend]

http://www.grantland.com/story/_/id/702 ... -economics

[Paydro70]

This has already been posted a few times, but what the heck.

The money quote: "Let us recap. At the very moment the commissioner of the NBA is holding up the New Jersey Nets as a case study of basketball's impoverishment, the former owner of the team is crowing about 10 percent returns and the new owner is boasting of "explosive" profits."

This article also dovetails with an argument I've made here before: The focus on the profitability of the NBA is misguided.

Some owners treat their franchise as a hobby (if you were a billionaire, wouldn't it be worth spending $10m a year in order to own an NBA team?), and some own it for the sake of its effects on their related businesses. Others successfully DO run a profit. Regardless, there are no shortage of people willing to purchase teams despite years of losses. In short, unlike most companies, the NBA does not need to be directly profitable to persist indefinitely.

So long as this remains the case, where the league is not in danger of contraction (which, whatever others may say, it is not... even the Hornets have suitors, they just aren't in New Orleans), the negotiation is not going to be about profitability, but relative bargaining power.

[DuckIII]

Yes, the owners are veeeeery rich.

Yes, many of them have independent business interests and revenue streams.

Yes, some of them like Ratner have profited in other ways by virtue of owning an NBA franchise.

Yes, some franchises have recently been sold for lots of money.

Yes, the players are also very rich.

Yes, the players have zero financial risk and operate on a 100% profit basis.

Yes, some franchises sell at a loss (Bobcats) or can't find a buyer at all (Hornets).

Yes, players also generate significant collateral revenue (endorsement deals and access to investment opportunities) by virtue of their status as NBA participants.

Yes, Gladwell's article is narrow, superficial claptrap when put into its appropriate context.

[Brooklyn_34]

Yes, the owners are veeeeery rich.

Yes, many of them have independent business interests and revenue streams.

Yes, some of them like Ratner have profited in other ways by virtue of owning an NBA franchise.

Yes, some franchises have recently been sold for lots of money.

Yes, the players are also very rich.

Yes, the players have zero financial risk and operate on a 100% profit basis.

Yes, some franchises sell at a loss (Bobcats) or can't find a buyer at all (Hornets).

Yes, players also generate significant collateral revenue (endorsement deals and access to investment opportunities) by virtue of their status as NBA participants.

Yes, Gladwell's article is narrow, superficial claptrap when put into its appropriate context.

I don't know if we read the same article....the scope of the article was INTENDED to be narrow...it was not intended to address the issues that you bring forth.

The point of the article was to show that the transaction involving the Nets WERE not indicative of an economic crisis for owners... it attempts to dismantle the view that the owners are facing a crisis. Here is a quote:

"The rich have gone from being grateful for what they have to pushing for everything they can get. They have mastered the arts of whining and predation, without regard to logic or shame. In the end, this is the lesson of the NBA lockout. A man buys a basketball team as insurance on a real estate project, flips the franchise to a Russian billionaire when he wins the deal, and then — as both parties happily count their winnings — what lesson are we asked to draw? The players are greedy."

Gladwell is saying that the owners are complaining and doing so shamefully. He points to a time in which the gap between rich and poor was not as vast yet the rich were not complaining as much as they complain now. The people involved in the Nets deal are making LOTS of money. Why blame the players?

[HartfordWhalers]

This has already been posted a few times, but what the heck.

The money quote: "Let us recap. At the very moment the commissioner of the NBA is holding up the New Jersey Nets as a case study of basketball's impoverishment, the former owner of the team is crowing about 10 percent returns and the new owner is boasting of "explosive" profits."

This article also dovetails with an argument I've made here before: The focus on the profitability of the NBA is misguided.

Some owners treat their franchise as a hobby (if you were a billionaire, wouldn't it be worth spending $10m a year in order to own an NBA team?), and some own it for the sake of its effects on their related businesses. Others successfully DO run a profit. Regardless, there are no shortage of people willing to purchase teams despite years of losses. In short, unlike most companies, the NBA does not need to be directly profitable to persist indefinitely.

So long as this remains the case, where the league is not in danger of contraction (which, whatever others may say, it is not... even the Hornets have suitors, they just aren't in New Orleans), the negotiation is not going to be about profitability, but relative bargaining power.

Nice post.

[Doctor MJ]

This has already been posted a few times, but what the heck.

The money quote: "Let us recap. At the very moment the commissioner of the NBA is holding up the New Jersey Nets as a case study of basketball's impoverishment, the former owner of the team is crowing about 10 percent returns and the new owner is boasting of "explosive" profits."

This article also dovetails with an argument I've made here before: The focus on the profitability of the NBA is misguided.

Some owners treat their franchise as a hobby (if you were a billionaire, wouldn't it be worth spending $10m a year in order to own an NBA team?), and some own it for the sake of its effects on their related businesses. Others successfully DO run a profit. Regardless, there are no shortage of people willing to purchase teams despite years of losses. In short, unlike most companies, the NBA does not need to be directly profitable to persist indefinitely.

So long as this remains the case, where the league is not in danger of contraction (which, whatever others may say, it is not... even the Hornets have suitors, they just aren't in New Orleans), the negotiation is not going to be about profitability, but relative bargaining power.

Wow. Well said. Truly, the thread can end after that.