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NBA Lockout Analysis: Should Players Start a New League?

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It’s been whispered and laughed about for months. Bill Simmons and Jay Kang wrote a silly proposal for how it might work back in October.  And now (some job title including the phrase “Players’ Trade Association”) Billy Hunter is saying it could happen. I’ll bite: It’s time for the players to start their own league.

Let’s start with the obvious, that we are all aware that it now makes more financial sense for current players to simply take the 50-50 deal proposed by the owners (which involved a new measure of BRI so that it’s actually worth less than 50% for the players, but we’ll pretend no one is aware of that, which is painfully close to the truth) than to carry on with their de-unioning, lawsuit-filing ways.

It’s clear at this point that the players’ stance is about pride and not allowing those who already profit the most from the NBA—owners—to profit even more so without any sort of checks or balances on how terrible of a job they do running their franchises. The players would rather earn nothing, knowing that the owners are also getting nothing, than a much smaller slice of a $4 billion pie.

That being said, it makes simplistic sense to say, “Well then just play ball on your own under your own rules.” The problems with this type of plan are pretty clear: They need some serious cash to get this thing going, they need to organize how the whole league looks and runs (including TV rights and arena issues), and they need to attract fans to this renegade league that is supposed to be the NBA without the name NBA. Let’s address these issues one at a time, and please keep in mind I’m no economist and I’m keeping things simple, but I’ll try to apply a little bit of logic where it fits.

The Players Need Cash To Bankroll This Venture
Simmons and Kang already handled this by pointing out that a players’ league should simply bring in America’s third-richest man ($33 billion), Larry Ellison, who has already tried to purchase the Hornets and the Warriors. He more than has this thing covered dollar-wise, obviously wants his hands in pro basketball, and what better way to screw over David Stern who did not allow him to buy the Hornets so that the NBA could take it over than to start a competing league made up of all the best players in the world? He blew around $200 million so that he could win the 2010 America’s Cup (yachting), so he seems just reckless and determined enough to truly commit to such a project.

Now I’m not proposing that Ellison becomes 100% owner of this thing, simply that he is the chief investor who starts it and is paid down to a small ownership percentage over a set period of years. I think the players’ salaries should be tied in part to partial “ownership” stakes, which I put in parentheses since each player would only be a “part-owner” during the time he’s actually playing in the league. The current players as a whole, however, would be the actual owners of the vast majority of the league as they’re buying Ellison out over time (although never completely). How on-board would players be with helping a league grow and improve if their salaries depended on it? I’ll go with totally.

And if they need more money to keep it going after the first year or two? Then it’s IPO time – open up the league for public investors. Don’t let any one person own a significant portion of the new league, but get fans into the action. They will no longer gripe about ticket prices or whatnot if they’re getting a portion of it back as owners, plus there are more than enough people who would feel more comfortable investing in something they understand and appreciate than whatever mutual fund you can’t name that’s in your portfolio (example of this working: the publicly owned Green Bay Packers). Get that TV contract and put some big-time events on pay-per-view (Dana White can help explain how to take on the big boys in this regard), place teams in cities that can actually support them, and the money will roll in. Sure it won’t instantly have the cash flow of the 2010-11 NBA (although sponsorship on jerseys would certainly help), but you also won’t have owners hiding profits all over the place which means players could actually make the same amount as they did last year by having a much larger slice of a smaller pie.

Believe it or not, people will pay to watch the best basketball players on the planet playing the game – it has nothing to do with the NBA brand. The league brought in $4 billion last year because people want to see those players, and those same players will still be playing—just now in this new league—so there’s cash to be made.

Organizing This New League
Please don’t fall into the common trap of thinking the players are too stupid or lazy to build their own league, therefore it can’t happen. The players won’t be designing squat, so it doesn’t matter how business-smart they are; that will be left for people who actually know how to put companies and the like together. Of course I don’t know the nitty-gritty details, but start by placing 30 clubs in cities that make sense (look at the link above [hint: Vegas, Montreal, The Inland Empire] and seriously consider 5 in NYC), hire Jon Spoelstra to develop the marketing plan (greatest sports marketer ever by a longshot), put some economists in charge of figuring out how to split the players’ ownership/equity pie so that league growth equals increased dough for the talented workers, and start working on “the arena issue.”

Yes, this is severely glossed over and lacking major details, but it would cost Ellison what—maybe $1 million?—to put together a team of smart people to pound out the basic structure in about a month. Players everywhere are organizing Durant-headlined All-Star contests left and right with about 2 weeks heads up to the fans who are buying out every overpriced ticket the minute they’re available. I’m sure a group of smarty pants assembled by Ellison can make some headway reverse-engineering the NBA.

Attracting Fans to This New Product
Ever heard of the ABA? They formed in 1967 as the NBA was expanding from 9 to 10 teams, and the elder league had a little bit of momentum on their side: an amazing dynasty that was still going (Celtics), a historically great team that had recently moved to LA (Lakers), legendary players the fans were in love with (Russell, Chamberlain, West, Robertson, Baylor), and 15 years of infrastructure. Within 5 years, the NBA was up to 17 teams, their New York franchise became a dynasty for the ages, their LA franchise had a season for the ages (69 wins, 33-game winning streak in ’71-72) and they landed most-anticipated-player-ever Lew Alcindor. The result? The talent in the ABA had caught up to and very soon thereafter surpassed that in the NBA.

Unfortunately the ABA was run by a series of terrible commissioners who knew nothing about making money (the league’s ultimate downfall) and never did get a TV contract, something that would be far easier to accomplish today. And if commissioner George Mikan didn’t completely botch the luring of Lew Alcindor in1969 (who said “The Nets [ABA] had the inside track and blew it.”), the ABA’s talent level would have been overwhelmingly dominant by the mid-70’s with almost all of the exciting stars of the decade in that one league.

Image that was happening today, with TV networks everywhere tripping over themselves to broadcast big-time sports, with a league that starts out with all the talent the fans already adore and want to see, and with a competent person put in charge who has some business sense (again, Jon Spoelstra – although I’m sure he might be hesitant with his son coaching in the NBA right now). You’re telling me they wouldn’t have every pro basketball fan lining up to buy tickets, to watch it on TV, and to purchase a new wardrobe of new merch? Start everything off with a massive draft on pay-per-view (Simmons/Kang idea) that would bring in a zillion dollars and lots of fan interest, consider the creation of a two-tiered league like the English Premier League in which regulation gets far more fans interested at the end of the season, and within 5 years people would wonder why the players didn’t screw billionaire owners over sooner.

So there it is, an admittedly basic plan for how the players really could make their own league. You can nitpick my lack of real details all you want, but it doesn’t take a genius to realize that the players have the goods that fans pay to watch. They always will, no matter what logo you put on top of it. So like the ABA could have done in the ‘70’s, it may be time for something new that takes down the current NBA structure.


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