TrueHoop: David Stern

Missing stars shouldn't spoil our night

December, 7, 2012
Arnovitz By Kevin Arnovitz
For the second consecutive week on Thursday, a marquee NBA game was broadcasted nationally without the full cast of principal actors.

The parallels are faint. Carmelo Anthony sat out after slicing a finger that required five stitches in Charlotte on Wednesday night, whereas Spurs coach Gregg Popovich sent four-fifths of his starting lineup home with no associated injuries.

But just as the absences of Tim Duncan, Tony Parker and Manu Ginobili were supposed to produce a lopsided home win for Miami devoid of drama, Anthony in street clothes seemed to diminish much of the allure of the Knicks-Heat matchup going in because how many solid conclusions can you take away from a game that isn’t really a fair fight? Meanwhile, the commissioner argued, fans tune in to watch superstars, and depriving them of that is insulting.

Much like played out in the Spurs-Heat game the prior week, the Knicks-Heat game on Thursday night was high-grade basketball. To the extent it lacked suspense, it wasn’t because a Melo-less Knicks couldn’t compete with the talent of the Heat, but because Miami couldn’t defend an animate object, while the Knicks moved the ball and drained shots.

Both games were compelling. The San Antonio reserves’ devotion to Popovich’s system without the aid of their offensive catalysts became a captivating storyline, and who wasn’t entertained by the Knicks’ sharpshooting?

The charisma of superstars will always fuel fan interest, especially in the NBA, but the past two Thursdays should serve as evidence to people who get agitated when superstars aren’t in uniform that there’s value in marketing not only marquee players, but teams as brands.

Every week, the NFL draws in millions of viewers on Sundays and Mondays to watch their broadcasts. Some of those viewers can tell you the names of all the offensive linemen and defensive backs on the field, but the vast majority of those who watch nationally are probably unfamiliar with anyone beyond the quarterbacks. But they still watch in eye-popping numbers, because the NFL has sold the game as the product.

This isn’t to say that Tom Brady, the Manning Brothers, Aaron Rodgers or Michael Vick aren’t guys who drive narratives or draw large numbers of viewers. But people watch the NFL because they’ve decided that, within reason, no matter who’s on the field, fans will be treated to an entertaining three hours.

Likewise, millions of people watch college football on Saturday afternoons knowing little other than a few national implications and the tribal histories. Who knows how gargantuan the ratings will be when Notre Dame and Alabama square off in the national championship game next month? How many of those viewers could name more than a couple of starters? How many care that they can’t?

The NBA would be crazy not to capitalize on the charisma of its most exciting players, but there’s also value in remembering that teams and, even more important, the game itself hold great appeal -- as football has proven that over a generation.

That’s one of the things that most bothered me about the commissioner’s response last week. He made an implicit statement that somehow the game was diminished because Duncan, Parker and Ginobili weren’t out there, when the message should’ve been that fans were about to witness the world’s greatest game being played by two of the league’s premier franchises, neither of which will disappoint you.

TrueHoop TV: David Stern on technology

June, 20, 2012
Mason By Beckley Mason

David Stern: NBA to consider short season

May, 9, 2012
By Beckley Mason and Henry Abbott
On Tuesday, David Stern told CBS’s Jim Rome that the NBA owners would discuss whether to follow a shorter schedule -- like this successful lockout-shortened one -- going forward.

However Stern doesn’t anticipate changes soon, because, more or less, change is hard and potentially expensive.

"The reason you don't make it a shorter year is because of the infrastructure that's been built,” said Stern.

“You have all of the buildings that have been selling an 82-game schedule. You have these local TV deals. You have these network TV deals. So, we'd have to negotiate with our players to take 20 percent less every year on the salaries that they're getting. That is a problem."

That would indeed be a problem, if indeed that's how it turned out.

But how much less players would make is probably not yet knowable. Currently, player salaries make up a percentage of Basketball Relate Income. Players only played 66 out of 82 games, but they could get more than 66/82nds of their normal salaries. This is especially true if sources are correct saying that TV revenues were close to those in a normal 82-game season.

This idea of a shorter season is not new at all. In fact, Shane Battier believes a shorter season would make for better, more compelling (and thus more lucrative) basketball. He explains in a 2008 interview: “The NBA season only needs to be fifty games. I think the fans would love it because every game would mean so much more, like in college where every game is so important. Players would love it because it saves wear and tear on their bodies. I think TV people would like it because more people would watch. I just think it would be a great thing."

During the lockout, our Kevin Arnovitz wrote convincingly about the same idea, only he suggests 44 games would be the perfect amount. Many others have chimed in, too.

Even if the 82 game season is here for the foreseeable future, this shortened year reminds us that change is possible and allows us to question the league's time-honored conventions.


An attack on opulence

July, 15, 2011
Harper By Zach Harper
As you’ve probably heard by now, the NBA has laid off 114 employees from the New York, New Jersey and international offices this week.

It’s an effort to help the NBA get rid of $50 million in expenses and the layoffs represent 11 percent of the league’s workforce. Immediately, people are going to blame the lockout for these 114 people losing their jobs. While the league is claiming it’s not directly due to the lockout, they’re going to have a hard time convincing anybody that this is actually true.

One of the people they don’t need to convince is Matt Moore from CBS Sports’ basketball blog Eye On Basketball. He’s not really blaming the actual lockout itself for the loss of these 114 livelihoods. He’s taking a completely different angle.
Unless you started covering it from the beginning, which removes your frame of reference, spend enough time around the NBA and you'll learn the real meaning of "opulence." It's everywhere. From the cars the players drive, to their jewelry, to the locker rooms where they spend a grand total of about four hours every night. It's in the banquet halls and the hotels reserved and the equipment used. It's in the gift bags for friends and media, the free food, the superstar (or Lenny Kravitz) performances, the pyrotechnics, everywhere. It's astounding. Everyone stays at the nicest clubs, eats at the nicest restaurants, travels in the nicest cars and buses.

It's in even the tiniest things. At the NBA Finals, along with All-Star Weekend, the NBA gives away gift bags for the media. A little thank you to say "We appreciate you bringing attention to our business, even though half the time you're jumping on our mistakes like cobras on an injured mouse." This year it was a simple wireless mouse and a mousepad that has the Finals logo on it. A schlocky little thing that was still pretty nice when you think about it being free. I kept it mostly because I wanted to give it to my newborn son when he is older to say "Your father got this at the first Finals he covered."

Tomorrow I'm taking it to the nearest charitable donations joint and dropping it off. Because now it's just a reminder of how opulence wasted has cost 114 people their jobs when it shouldn't have tonight. It's nothing but a guilty reminder of how the mismanagement of resources and revenue can wind up costing real people their jobs, jobs they need.

Professional sports are really all about opulence these days. Have the biggest and best stadium with the biggest and best team in the biggest and best market. Show everybody you’re better than them. Show them that they should want to be you.

There isn’t anything wrong with this in theory. Sports are about competition. Teams are competing to show they’re better than their opponent. Fans adopt that philosophy because you want your team to be better than every other team. Leagues want to show they have the best fans and the best product because they’re always looking to expand markets. Opulence ends up being a means to an end.

The problem with the NBA’s opulence over the last couple years is it may have led to these 114 people losing their jobs and joining the staggering unemployment ranks. Now granted, not all 114 people live in the United States. But the world economy isn’t exactly booming everywhere either.

There is nothing wrong with opulence unless your opulence surpasses your ability to afford it. If the league knew this lockout was coming (and we’ve been talking about it long enough to know they did), then it’s highly disappointing to know they didn’t plan for it better. They threw giant parties during their events and afforded the best accommodations for its employees. It’s an extremely nice gesture and a good business practice until it ends up costing you actual employees.

Moore continues:
The people that were laid off this week by the NBA, the 114? They're out of a job, now. They didn't have to be, but here they are. Maybe they deserved to be. Maybe their positions were utterly useless. If that's the case, why not just reassign them? Have them work on creating efficiency plans or, I don't know, creative ways to end the lockout. Maybe they were just lazy. Maybe 11 percent of the NBA's total workforce really was just lazy and redundant. But doesn't that reflect the people at the top and their organizational structure more than it does the people who were actually affected by this?

The NBA has a right to run its business towards profit and to act in its own self-interest. But to trot out their opulence time and time agian, to splurge on so many little things that when you add them up it looks like one of those trash mountains from "Wall-E," it's not only off-putting, it's downright nauseating.

Ultimately, the league can do whatever they want because it’s their business, not ours. We’re the consumers and we choose to enjoy it to our fullest capabilities by choosing which teams to root for and how personally we take the product they put out there. The NBA isn’t really about catering to everybody in the world. It’s about running a business the best way they see fit for their own gain (which isn't a bad thing, just a reality). If everybody ends up enjoying it like people have over the past couple years, then that’s probably the best-case scenario for the NBA. Enjoyment leads to consumption and consumption leads to making money.

However, when they’ve been warning people about the impending (and now current) lockout and then the story of layoffs comes out, it’s hard to believe they did everything in their power to prevent affecting their employees' lives like this.

David Stern on LeBron James, Dan Gilbert and the CBA

July, 12, 2010
Arnovitz By Kevin Arnovitz
David Stern
Garrett Ellwood/NBAE/Getty Images
David Stern: Service with a smile

LAS VEGAS -- Last week, LeBron James tipped the balance of power in the league and the NBA revised the 2010-11 salary cap upward to $58.04 million. In a business where celebrity and liquidity are vital to the health of the game, July 2010 has been a monumental month for the NBA.

Summer League, which is usually an exhibition of young talent and a summer schmoozefest for league insiders, has been buzzing with the fallout from James' decision to sign with Miami, followed closely by talk of the looming negotiations over the collective bargaining agreement.

Those two issues were the dominant themes as David Stern's press conferences in Las Vegas following a meeting of the NBA's Board of Governors.

On the James firestorm, Stern offered a series of nuanced qualifiers and condemnations.
  • On LeBron James: "With respect to LeBron's departure from Cleveland, a couple of things. One, he was certainly entitled to do that. I think he's both a terrific player and a very good person. Had he asked my advice in advance, I might have suggested that he advise Cleveland at an earlier time than apparently he did that he was leaving, even without announcing where he was going, so we could have eliminated that. I would have advised him not to embark on what has been come known as 'The Decision.' I think that the advice that he received on this was poor. His performance was fine. His honesty and his integrity shine through. But this decision was ill-conceived, badly produced and poorly executed. Those who were interested in it were given our opinion prior to its airing."
  • On Dan Gilbert: "I think that remarks by Dan Gilbert, the owner of the Cavaliers, catalyzed as they may have been by hurt with respect to the manner and the fact for himself, his team, and particularly for the people of Cleveland, though understandable, were ill-advised and imprudent. I have notified Cleveland that they will be fined $100,000 for those remarks under my power as Commissioner."

Whatever misgivings Stern had about James' orchestration of his decision-making process, the commissioner certainly didn't disown the public preoccupation that accompanied the lead-up to the announcement.

"I'm a devout reader of The Sports Business Daily -- and I've never seen so many pages devoted to one subject, not to the World Cup, not to the [baseball All-Star Game], but to the decision and its aftermath," Stern said. "It was just wild."

Stern's remarks about the collective bargaining agreement didn't vary a whole lot from his comments at press conference during All-Star weekend and the NBA Finals. The owners have furnished the players with their numbers. The players don't agree, in large part, with those numbers and the means by which they're being calculated. Stern maintained that the two sides aren't as far apart as the players suggest, but also said, "We're asking for fundamental changes in the system and the players, as Billy Hunter has said publicly, would very much like the present system to continue. So you can fill in the gaps for yourselves on that."

Those gaps are deep chasms. Fundamental change vs. the status quo is a very oppositional duality. Stern has provided the players with numbers that the union believes adamantly are false. The players insist the owners have exaggerated the 30 teams' aggregated losses, the number of teams that are unprofitable and the degree to which they're losing money.

Given that owners across the league have been doling out hefty contracts for the better part of two weeks, Stern was asked to reconcile that free spending with the reported losses in revenue.

"Our owners spend within the system," Stern said. "They're encouraged, praised, and otherwise driven to improve their teams. Of course, they have the capacity. It winds up driving them to unprofitability. They want to change that system so when they get driven to it, whatever they do, there won't be losses. That's all."

Regarding the increased estimate in revenue that nudged the salary cap number higher for 2010-11, deputy commissioner Adam Silver returned to what the owners see as an intrinsic problem in the current system. "Part of the problem with the existing system is it's based largely on revenue, not net revenue," Silver said. "Although our actual revenue numbers were better than what we projected, it came at a large cost. Our teams did a spectacular job in a down economy of increasing ticket sales, but that came at the cost of additional promotions, additional marketing, additional staff."

Most teams -- or at least management -- were ecstatic when the league bumped up the salary cap number by nearly $2 million. The salary cap estimate has been a moving target for the past year, a dynamic that's rarely discussed publicly, but one that's very peculiar. In what other industry do those charged with conducting the day-to-day business operations not know what their tactical budget is going to look like six months from today?

Since last July, the guesstimate of the salary cap has gone from somewhere in the neighborhood of $50.4 million to $53.6 million. Then, in February, Stern announced that the league projected an aggregate loss of $400 million this year after suffering losses of $200 million in each of the first four years of the current CBA. It's worth noting that this proclamation came down during one of the year's two most fluid trade markets -- the February deadline. A rosier $56.1 salary cap estimate was released in April on the eve of the postseason. Then, just after the trade-rich draft period, the league released the surprisingly high actual cap number of $58.04 million.

Skeptics might see the timing of the ever-shifting cap number as a deliberate attempt by the league to retard spending at times when management are most eager and able to spend. The league might respond that such are the realities of the current system. Don't like it? Change it.

Over the next year, that change vs. more of the same debate in the NBA will be as resonant as anything we've seen in a historic election.

The business of owning an NBA team in 2010

May, 3, 2010
Abbott By Henry Abbott
For most of my life, the general consensus has been that owning an NBA team was one of the sweetest deals out there. Almost no matter what you did, you would make money. Even the Clippers were in the dough! Even if you had to dig in your pockets now and again for a free agent, you'd make all that up and more -- the story went -- whenever you decided to sell.

Things change, though.

The economy tanked. Teams have gone to amazing lengths -- including profound price cuts -- to sell tickets. The Bobcats were sold by an owner under real financial duress, for a price that indicated he had not only incurred operating losses, but also an erosion of team value over the years he owned it. Greg Miller, CEO of the Jazz's parent company, whose family has invested in the team for more than three decades, told TrueHoop few weeks ago that "almost anything we did with our money would get a better return on investment."

When David Stern said in February that the league was positioned to lose more than a billion dollars over the next few years, I couldn't shake the notion that some of that may have been posturing for the players union. The league and the union are, at the moment, haggling over how to carve up the NBA's revenue pie. At a time like that, it would make perfect sense for the owners to claim poverty, and to demand major concessions from the players.

But there's evidence that the financial pain among NBA owners is real. Consider that the Bobcats sale could be seen as a sign that, for the first time in decades, this really might not be a great time to make money selling your NBA team. And yet, despite a bad market, more than a quarter of the league is for sale in some manner. Reports have had the Wizards, Warriors, Pistons, Hornets, Hawks, Nets, and Grizzlies all in various states of play, not to mention that Michael Jordan has said he's amenable to additional investors in the Bobcats. Word on the street is that there may be even more teams on the market than that.

If an NBA team is, as many secretly suspect, the goose that laid the golden egg, why in the heck would you sell when the market's down, an owner-friendly collective bargaining agreement is on the way, the game is gaining ground overseas and the economy is recovering?

It's enough to make you think all that talk about NBA teams losing money might not be just rhetoric.

It's also a sign of changing times. The new thinking is that in this day and age, the profits will generally go not to all owners, but instead to the owners of well-managed teams.

At the Board of Governor's meeting, I asked Commissioner Stern about this. Our exchange:
There seem to be a number of NBA teams in play at the moment, despite the fact that it's a bad economy, and the Bobcats sold at a number that didn't wow a lot of people. Is this a sign that owning an NBA team isn't a surefire good investment, or is it different now than it used to be?
You know, I guess I would say that we'll have to wait and see. Clearly the Bobcats reflected a series of decisions that had been made over the years that resulted in there not being a good TV deal out of the box, there not being a naming rights out of the box, and there not having a pricing structure that was encouraging of the community, taken together with the basketball decisions. They were operating out of a relatively deep hole, and in some ways, I think there should be some relationship between performance and value, and I think that's what happened in Charlotte.

That said, I'm pleased to report that our competitive colleague, Mr. Jordan, is working that market as only he can, and I expect the financial performance of Charlotte to improve along with his basketball performance, which finds them in the playoffs this year; and there will be a huge turnaround financially in that franchise.

The others, I think we just have to wait. It's true that Washington, as you said, is in play. There are negotiations going on and we expect that to trade at a very robust enterprise value. It's likely and that's because of an estate, a sale by the estate.

Detroit will be under scrutiny for a sale, I think, because of the settlement of the estate. It's been announced that Golden State is for sale, and there are always ongoing issues for other teams, as well. I've read that I've more than read; I've read, but I've also been intentionally involved, that New Orleans is having some discussions. And that was well reported on to the owners, and I think that the valuations will be solid.

And then you can draw your own conclusions about where that sits, but it's going to take a few months for all of this to settle out. I'm optimistic.

You've told us that this is a difficult time; you said those words today, and at the All Star Game, you told us that the league was expecting to lose money.
We will still lose money. There's no question about that. Nothing's changed. The fact that we lost 300 some odd million dollars last year and we are down in revenue this year, will, as Adam Silver reported to the board, continue to reflect that we'll lose money.

But I think there are, you know, buying opportunities in our franchises, and what we heard was the capital markets are loosening up. We'll be renewing certain aspects of our league credit facility. Credit is getting looser. And there is a generally more optimistic view of the world by high net worth individuals, which defines a group that would consider buying NBA franchises.

I don't think we are going off the charts any time soon on the high end, but I think we'll see some solid pricing. But, you know, when you consider some of the losses that go with it, that, of course, has to be a drag of types on franchise values. But despite that, I think we'll see solid pricing in those franchise transactions that are coming.

To better understand the changing landscape of NBA ownership, I called George Postolos. You may know him as the guy who recently tried to buy the Bobcats. But his NBA experience is far deeper than that. (He jokes that he literally carried David Stern's bags.)

After Harvard Law School, he worked at the highly regarded Wachtell, Lipton, Rosen & Katz (a firm that, ironically, advised Michael Jordan in getting the team Postolos wanted). Postolos then became a special assistant to Stern, dealing with, according to his official resume, "collective bargaining, efficient operation of league offices, national television, international expansion, and retail brand extensions." He then became president and CEO of the Houston Rockets, where -- thanks to some clever negotiating of TV deals and stadium development -- he says he more than tripled the franchise's value. Since leaving the Rockets, Postolos has started his own business that does two things: Invests in sports teams, and advises others who would like to do the same. He is connected around the NBA, and keeps a close eye on ownership situations around the League. He is also a serious basketball fan. We spoke by phone a few days ago:

Can you clear something up for me? You’ve been discussed in the media as someone who wanted to buy the Bobcats. Yet on your company website, you’re described essentially as a consultant to people who want to invest in teams. Can you clarify?

I remain committed to becoming an NBA owner. By that I mean becoming part of a group that acquires a team. That’s a goal that I’ve had for some time.

In addition to that, I also consult with people who are interested in buying teams, even if I don’t have a relationship with them were I would become part of a group. I similarly have worked with investors who are interested in baseball teams, and football teams, but most of the action has been in Major League Baseball and in the NBA in the time that I have been doing this.

Is 2010 a good time to buy?

I’m not a fan of any deal, just a good deal. 2010 could be a year when you could strike a good deal. There aren’t as many buyers as there used to be. You might say buyers are scarce.

That just has to do with the state of business in general, the financial markets in general, and how that’s impacting sports and many other businesses.

It’s unique, or it’s unusual to have multiple teams that have been for sale for a period of time. If you’re someone who has been interested in investing in a team, you’ve had an opportunity to look at a number of them over a short period of time.

The high net-worth businessmen in these deals have had a lot of success -- most of the people who’ve invested in sports fit into that category -- so they’re also prominent in some other industry. So when your core business has issues, then you’re going to look at all of your assets and you’re going to say OK, I want to make some adjustments here. I want to concentrate on fewer businesses.

One of the things you’re going to take a look at is your sports franchise, particularly if it’s requiring liquidity, because there has been a liquidity crisis. By liquidity, I mean free cash that you have available for investment purposes. If you have a business that is losing money, and the NBA has talked about how last year and this year too have been money-losing years, those losses have to be funded. And those have to be funded by ownership, and in significant part by equity contributions. That means they’re using up liquidity.

With private equity investments in general, and many other businesses, they have more needs for cash now, which means they’re going to look harder at these things.

Every situation is different. You have a couple of estate sales where a longtime owner has passed and the next generation has to make decisions about whether they want to be involved or not. It’s lots of different circumstances, but they’re affected by what’s going on in the economy, and where the NBA is in its collective bargaining agreement negotiating cycle. But you’re seeing similar things in other leagues. Multiple franchises are looking at their strategic alternatives, because there’s some duress.

Owning an NBA team used to be seen as a can’t-miss investment. And if that were still the case, it’s hard to see how a death in the family could make you want to sell. With a great long-term return, wouldn’t you hold on no matter what?

So far most people have held on. I think that’s important to keep in mind. Just because a franchise is for sale doesn’t mean it’s going to sell. You see a wide difference between what the current owner wants to sell for and what a buyer wants to pay. Then a transaction doesn’t happen. Someone might solicit proposals over a period of months or years. But the fact that you have a large number for sale doesn’t mean you have a large number that will sell.

If I’m understanding correctly, it’s like a street with a lot of “For Sale” signs on front lawns. And one house down the street may have just sold cheaply. But if the owners of those houses aren’t desperate, they may eventually take it off the market again.

It’s a good analogy. Most every owner will have that option. There are very wealthy families, these are very wealthy individuals, these are very wealthy groups. Most of them will have the option of continuing to hold the franchise.

In some rare circumstances, there will be somebody more motivated to sell, maybe because they’ve got significant pressure from somewhere else, or maybe because of the capital structure. Obviously, in the NHL with the Coyotes, that was a forced sale, and the owner decided to seek bankruptcy protection, and you have a long process from that.

You have the same situation with the Stars, potentially. The situation Tom Hicks is in with the creditors of his sports franchise there that’s affecting both of his franchises. And I think [former Bobcats owner] Bob Johnson was in a situation, not saying anything specifically about his situation, he was very motivated to make a change. He made that very clear, and so you knew he was going to do something. I don’t think any of the other teams have gone that far.

In the New Jersey situation, you’ve got a big need. They’ve got to finance a new building, and they need new money coming in to meet that objective. The existing owners wanted a new party to come in and they needed a big infusion of capital to complete the stadium project. That’s why that transaction happened.

Not sure if you saw a little while ago that Greg Miller defended his family’s investment in the Utah Jazz, but at the same time said almost anything else they did with their money would get a bigger return.

I think that they have done a good job over the years. They’ve had good people in management positions. They’ve made good decisions off the court. On the court, they’ve been competitive. I don’t know exactly how they finance their operation. They have spent aggressively to get their new team in place, after the Stockton and Malone era came to an end. Maybe that’s put some stress on their investment, or maybe that’s dampened their returns. I would think that they’d be in the position, because they’ve been active for so long that they have done reasonably well.

They certainly have a well-run franchise that’s been competitive. There are certainly other families that owned franchises during that period that have done quite well.

Maybe it has to do with market size, or the wealth of the market. But other owners in similar situations have done very well. But they have spent aggressively, and maybe it has something to do with having interests that trumped running it as a good business. And that’s certainly the case in sports sometimes. I think anyone would say that they’ve been a well-run franchise over an extended period of time.

(Read full post)

David Stern meets the press

April, 16, 2010
Abbott By Henry Abbott
Meeting the media at the conclusion of the NBA's board of governors meeting at the St. Regis Hotel in New York, NBA commissioner David Stern expressed measured optimism about the business of basketball in the years to come.

For instance, as Chris Sheridan has reported, in place of earlier dire predictions about a 2010-2011 salary cap as low as $52 million, the league now anticipates a $56.1 million salary cap next season.

Stern says the higher numbers are based on teams' "Herculean efforts" to sell tickets.

Other topics the commissioner addressed:
  • The Board of Governors approved two new uses of instant replay -- to determine whether a foul should be a "clear path" foul, and to review out-of-bounds calls throughout overtime, instead of only in the final two minutes. The changes will take effect next season.
  • Teams and the league, he says, had meaningful discussion about revenue sharing, with "robust revenue sharing" a major topic moving forward.
  • On the issue of resting players late in the season, the commissioner says the board had a "spirited discussion." Teams want to make their own decisions about how many minutes to play their players, and Stern said he generally agreed, "unless that discretion is abused."
  • Asked when Mikhail Prokhorov will take possession of the Nets, the commissioner says that the smart tactic for Prokhorov may be to put off closing until he can take "vacant possession" of the Brooklyn stadium property, which continues to be subject to much legal wrangling. Should it become pressing to take over the team to influence key off-season decisions, Stern says Prokhorov might then be wise to close the deal without resolving all the real estate legalities. Stern further reiterates that he has complete confidence Prokhorov will take possession of the Nets, and reports that the team is projecting the transaction will close in mid-May. Without adhering to any particular schedule, Stern assures "it's going to happen."
  • Also on the topic of Prokhorov, Stern brushes aside suggestions from a New Jersey congressman that Prokhorov may have run afoul of U.S. law in conducting business in Zimbabwe. "The law doesn't apply to Prokhorov," Stern says of the Russian national, whom the NBA says it has investigated thoroughly. "If it did, he'd be in complete compliance."

Stern proposition

February, 13, 2010
Abbott By Henry Abbott

Gary Dineen/NBAE via Getty Images
NBA Commissioner David Stern discusses the NBA's fractious relations with the player's union.

There are a thousand story lines of All-Star weekend. Most of them are fun: Dunk contests, 3-point shootouts, and divvying up superhero names among players.

But simmering beneath them all is the reality that the mother of all labor fights percolates. Stern says: "Based upon the last several years, we have shown the players the facts, and at our current level of revenue devoted to players salaries, it's too high. I can run from that, but I can't hide from that, and I don't think the players can, either. Those are the facts."

The NBA has supplied players with a proposal. The players have poked holes in it, condemned it and discarded it.

This could take a while -- both for the League and the Players Association to come to a resolution, and for us fans to understand what's really going on.

Saturday, it was David Stern's turn to shape the dialogue. Press conferences like this are traditional at All-Star and the Finals, and they virtually always include reports of the League's many business strengths.

For instance, Stern says:

"Our game as we come into this weekend is in terrific shape. ...

"Our shots are up, our percentages are up, our scoring is up, the fast pace of our game is being enjoyed by our fans, our ratings remain strong, and actually, our attendance -- and it is doing better this season than we were actually projecting it. We are going to be down a little under two percent and in this environment, that's really very good. The game on the floor, watch our rookies, watch our sophomores, watch our All-Stars, watch our first-time All-Stars; it's really, you know, quite extraordinary.

"It's a lot of fun. It's a good time to be commissioner in the NBA.

"Internationally, the interest remains strong, and here we are as the capital; when I say the basketball world, I really do mean it. We are going to be in 215 countries with our events and television. We are going to be in 41 languages, and in addition to that, we are hosting just about everybody, our international broadcasters, our international clientele, as well as domestic. What a time, what a great time."

He went on to explain that the League was opening offices overseas to serve growing audiences in Africa, India and the Middle East. And, of course, the League has long been aggressive in the coveted Chinese market.

Now, granted, this report was tempered compared to the normal cavalcade of corporate victories. But in 2010, a domestic market holding fairly steady, and people all over the world falling in love with the game -- that's a good start on the future.

Everywhere you go these days, people talk about the economy "returning to normal." Whenever that happens, the NBA ought to be sitting pretty, right?

Wrong, says Stern.

And here's where his job gets exceedingly tricky. He is a leader. He needs to present to everyone ... employees, fans, sponsors, business partners, and owners ... that he and his staff are performing at a high level, and are well positioned.

On the other hand
Stern has to somehow make that case, while also putting some weight into his main message to the Players Association:

"This year we are projecting a league-wide loss of about $400 million, and in each of the first four years of the deal, probably losses of a couple hundred million, at least $200 million a year."

So everything, he implies, is being well-run. The market will presumably be improving. Ratings and attendance are solid. And a whole big bunches of new fans are in the pipeline.

But, doing the math, brace yourself for a mighty $1.2 billion in losses.

Stern is the best in the business at shaping the message. But making these two cases simultaneously is a tall order. Asked how both everything can be so good, and yet so bad, Stern says:

"We have teams now that are, No. 1, you know, maintaining their prices or cutting them; historically have added people to do customer service, group sales, enhance game presentation. And internationally ... when you open an office and you ship people there and you do the investment spending; we have always investment spent and we are continuing to do that. But it's beginning to -- this economic environment -- we are feeling it a little bit more."

What's a fair amount of money to pay the best basketball players in the world? That's something that would take a team of experts to determine, and even then it would be one part guesswork. Maybe they are paid too much. Maybe they are paid too little. Maybe the owners who lose money are victims of the economy and the cost of international expansion. Maybe they are victims of failing to control their own spending. Maybe the owners have been bleeding cash, and some of the hurt must be passed on to the players. On the other hand maybe it was just a couple of bad years, and this is all a negotiating tactic.

The only real way to know the truth is for some team -- or all the teams -- to open the books for public scrutiny.

There's not a lot of certainty in this labor situation, except for this: There's no way that's going to happen. An NBA team's bottom line is one of the closest-held secrets in sports -- spilling the beans would let the union make projections -- and it's a good bet it's going to stay that way.
The fallout from L'Affaire Rondo continues. Has Joe Johnson officially emerged from his slump? Are we ready to classify Denver as a "defensive juggernaut"? Is Carlos Boozer a good fit in Detroit?

Brad MillerMatt McHale of By the Horns: "The ruling is a rather predictable cop out, considering that the league hates to admit when officials make huge, game-changing mistakes, especially in high-profile playoff games. David Stern would sooner confess to being the Batman than acknowledge that his referees sometimes err, or that those errors might actually swing the results of important games ... Look, I'm not calling for a fine, or a suspension, or for a redo of the final two seconds of Game 5, or even an admission that, had the correct call been made, the game might have ended differently. I just want consistency. I simply want a league that has spent the last few years trying to outlaw blows to the head that can injure or endanger its players to stand by their supposed mission statement and say, 'Oops, we goofed. Won't let it happen again.' That's it. Is that really too much to ask? According to Stu Jackson: Yes. However, you can probably expect closer officiating scrutiny in Game 6. Game 5 was edging close to 'let 'em play' status. I doubt you'll see that tonight."

Joe JohnsonBret LaGree of Hoopinion: "After [Joe] Johnson's 1-6 start from the field to open Game 5, his eFG% was down to 37.5% for the series. From that point forward, Johnson made five of nine shots (one three-pointer included) and went to the line 15 times. He'd attempted 17 free throws through four games of this series. Johnson didn't go to the line 15 times in a game all season. Or last season. Or the season before that. Or ever in his NBA career. So maybe we should hold off on declaring Joe Johnson back until he makes at least half of his shots in a game rather than scoring his points in a thoroughly atypical and likely unrepeatable fashion."

Denver NuggetsJeremy Wagner of Roundball Mining Company: "We have seen Denver play pressure defense from time to time during the regular season, but never for entire games and never for multiple games in a row. This team has come alive in the playoffs and they are playing defense that I feel confident saying has never been seen in Denver. Maybe someone from the ABA days can correct me, but the exceptional teams of the mid 1980's never locked down like this team has ... So there you have it Nuggets fans.  Denver dominated this series and won easier than even the most optimistic fan thought possible. The Nuggets averaged 24.2 more points per game that the Hornets and I believe have proven themselves a team to be taken seriously for as long as they remain active in the playoffs."

Orlando Magic Daily: A comprehensive look at the Magic's Howard-less performances.
The Painted Area: Seven to watch in Euroleague Final Four.
Piston Powered: Looking ahead.

(Photos by Elsa, Scott Cunningham, Doug Pensinger/NBAE via Getty Images)

Somebody should make a timeline of every time the NBA has ever made some kind of blanket denial, unsupported by evidence, and then follow-up to see how it turned out.

The point would be, of course, that the NBA is asking us to trust blanket denials right now -- David Stern calls Donaghy's latest claims "baseless" and the desperate acts of a convicted felon -- in the face of some of the most serious charges imaginable, from a former referee.

I am open-minded to all sides of this debate at this point. These are dueling assertions, with precious little evidence. Certainly, you wouldn't want to believe Tim Donaghy without some supporting evidence.

The same goes, I'm afraid, based on recent history, for the NBA.

My mind turns to Justin Wolfers.

"On a personal level, having been on the receiving end of a blanket denial from the NBA," expalins Wolfers, "I know as a fact that it was not well thought through. Clearly, this business, like every business, is run by PR."

Wolfers is one of the most respected names in economics. And he was also the lead author of that paper about racial bias among NBA referees that got people so worked up a year ago.

That paper prompted the NBA to say all kinds of things about Wolfers' work, including calling is sloppy and ludicrous. From an Associated Press article of May 2007:

Speaking before Friday's Game 6 of a playoff series between Toronto and New Jersey, Stern said of the report: "My major concern about it is that it's wrong."

"This is a bum rap, that's all," Stern said. "This is a bum rap, and if it is going to be laid on us it should be laid on us by basis of some people who are purported to be scholars in a publication that purports to hold us up to a higher standard -- a little bit more should have been done."

And, of course, there was a blanket denial, that was backed with grand claims that the NBA had better information proving Wolfers wrong.

Much like during this referee scandal, the NBA conducted an internal investigation, and then pronounced the matter settled in their favor without taking the step of letting the public see what the people in the league office know.

The only problem was that the NBA was evidently not working with the best facts available, and in the final analysis was almost certainly wrong all along. That notion is supported by countless economists who have vouched for Wolfers' work, and even, apparently, the NBA's own secretive internal study, which was eventually handed over to Wolfers and media outlets.

Wolfers has given academic talks about how, upon further review, the evidence supports his initial assertions, despite the NBA's protestations. He plans to publish those findings at some point.

ESPN's Lester Munson did an excellent job, at the time, detailing the situation.

Why did the NBA suddenly give Wolfers its study?
"I believe they were tired of the criticism that they had not given it to us," he said. "And I don't think they really knew what their study said."

An independent analysis of the two conflicting studies requested by confirms Wolfers' findings that referees favor their own race when they blow their whistles. Thomas Miles, who has a Ph. D. in economics from the University of Chicago and is a graduate of Harvard Law School, dissected the massive study completed by Wolfers, and compared it with the smaller study by an NBA consultant.

"I believe [Wolfers] has the better points," said Miles, a professor at the University of Chicago Law School. "His study focused on the interactions of the race of the referee and the race of the player. The NBA was more concerned with the number of fouls called on black players and comparisons with the number of fouls called on white players."

Wolfers says that by rushing to discredit its critics, the league may have had some short-term public relations victories, at the expense of long-term credibility.

"Supreme Court Justice Louis Brandeis said sunlight is the best disinfectant." says Wolfers. "The NBA is in a crisis of confidence here, and I think sunlight is very important for future credibility of the league.

"At the time of the referee race study, other economists looked at my original study, and then the NBA's study, and said that the future credibility of the League would be shot if the League didn't acknowledge that they had erred in their initial statements.

"Now the allegations the League is facing are much more serious. But they do have data on every referee. They have in internal database that they use to grade performances on each game. It would be valuable to know if the game in question had been questionable by the NBA's own metrics. I'm thinking that a data snoop, people like myself, could be very helpful in going through the information to see if there is anything to be found.

"When I taught business ethics at Stanford, we talked about how businesses all record everything. They keep paper trails of almost everything they do. And there is always a student or two who questions that. Why not shred everything? Delete the files! The reason is because a clean paper trail is a complement to an ethical business strategy. If you're doing the right thing, then you want the longest paper trail you can possibly get."

Because, says David Stern, that's when you watch.

In the L.A. Times, Kareem Abdul-Jabbar remembers 1968, when he was very sympathetic to calls for some black American athletes to boycott the Olympics in Mexico City.

Then Abdul-Jabbar wonders about Beijing 2008:

Here we are 40 years later and we are once again about to send our young athletes overseas to compete in games while we send our young soldiers overseas to fight in war. And, as before, there is a social agenda attached to the Olympic Games.

Should we boycott the Olympic Games to protest China's arrogant human rights performance, its political imperialism, its shoddy exports that recently have left some Americans ill or dead?

The answer is no.

While it may seem disingenuous to be playing games with countries that aim weapons at us, the same claim can be made about us by many other countries. I am of a mind that the actions of Smith and Carlos made a difference in 1968.

However, this Olympics is an entirely different situation that requires different tactics to achieve a satisfactory resolution. Instead of turning our backs, we need to continue a dialogue with the Chinese. The more we talk with each other, the more we understand each other and can reach compromises that will benefit the lives of those we are trying to help. Jackie Robinson once said that the great thing about athletics is that "you learn to act democracy, not just talk it." That's what our athletes will demonstrate to the 1 billion Chinese who may be watching.

Also, in a wide-ranging interview, Commissioner David Stern tells Brian Berger of Sports Business Radio that he is not opposed to using the Olympics as a platform to discuss policies.

"People should be encouraged," he says, "to speak out" in broad discussions, protest, or other forums. He says not sure such dissent "should ever be violent." He also notes that witholding athletes has been shown, in his view, to only hurt the athletes.


Attorneys for the City of Seattle, as part of their legal tussle with Sonic owners over the KeyArena lease, have discovered some shocking emails.

Jim Brunner of the Seattle Times tells the story. (The Times has also posted copies of actual emails. Like this.)

I implore you to read this entire email exchange between Sonics Chairman Clay Bennett and NBA Commissioner David Stern, in which Bennett swears that he and his co-owners always intended to keep the team in Seattle. Their conversation comes in August 2007, in the wake of the mini-scandal when one of Bennett's co-owners, Aubrey McClendon, was quoted last summer saying that the owners always intended to move the team to Oklahoma City:

I am concerned that you may feel I have betrayed your trust. David you know how I feel about our relationship both personally and professionally. You are among a very few, notwithstanding our relative brief actual physical time together that have significantly affected my life. I view you as a role model as an extraordinarily gifted executive, a deep and compassionate thinker, and a person with a rare and unique charisma that brings out the best in everyone you touch. You are just one of my favorite people on earth and I so cherish our relationship Sonics business aside. I would never breach your trust. As absolutely remarkable as it may seem, Aubrey and I have NEVER discussed moving the Sonics to Oklahoma City, nor have I discussed it with ANY other member of our ownership group. I have been passionately committed to our process in Seattle ...

Now, let that soliloquy ring in your head as I tell you that Clay Bennett's emails are also littered with what could best be described as "smoking gun" type evidence that the Sonic owners, despite a contractual obligation to make a good faith effort to stay, always intended to leave Seattle.

For instance, in the Seattle Times, Brunner writes about many examples that precede Bennett's pledge to Stern:

  • "In one e-mail [at the time of the team's purchase] sent to Bennett and Ward, McClendon celebrated the news with the subject line: 'the OKLAHOMA CITY SONIC BOOM (or maybe SONIC BOOMERS!) baby!!!!!!!!!!'"
  • "On April 17 last year, team co-owners Clay Bennett, Aubrey McClendon and Tom Ward talked about whisking the Sonics away to Oklahoma as soon as possible even though it would mean breaching the KeyArena lease, according to the city's motion filed in U.S. District Court in New York City. 'Is there any way to move here [Oklahoma City] for next season or are we doomed to have another lame duck season in Seattle?' Ward wrote. Bennett replied: 'I am a man possessed! Will do everything we can. Thanks for hanging with me boys, the game is getting started!' Ward: 'That's the spirit!! I am willing to help any way I can to watch ball here [in Oklahoma City] next year.' McClendon: 'Me too, thanks Clay!'"
  • "In June 2007, Tim Romani, an arena consultant for the Sonics, e-mailed Bennett that he would start 'reaching out' to Oklahoma City Manager Jim Couch to 'engage him in deal negotiations,' the e-mails said."
  • In an e-mail exchange later in April, Bennett told McClendon it was 'quite likely' the team would play in Seattle another year but that he was 'attempting quietly and without litigation' to 'work through the lease.'" 

Unless someone comes forward to prove these emails are not what they appear to be, I'd say that's game, set, match, for anyone who wants to prove that Clay Bennett has acted like a weasel.

It's also convincing in terms of documenting that the team's efforts to stay have not been in good faith.

But ... does any of this influence David Stern's support for Clay Bennett's ownership group? Does it affect the upcoming vote on relocating the team? Does this inspire a meaningful new level of public outcry? What new legal challenges might this present to relocation?

In short, does this do anything to help Sonic fans keep their team? We'll see.

(Via Enjoy the Enjoyment

The commissioner recently got snooty with a reporter for the 2,198th time in his tenure. The conversation was, in essence, the reporter wondering if the league might allow some time off to players like Dwyane Wade this pre-season. Wade, the reporter pointed out, will have just traveled a long way to and from the Olympics, and then would be asked to travel a long way to a pre-season game overseas.

Click that link and listen. Commissioner Stern got on the highest horse in the barn and acted 1,800 kinds of annoyed at the reporter for spreading misinformation about how far away Europe was and being "so American."

"You mean flying from Miami to Paris instead of flying from Miami to Portland? ... It's actually closer. That's something that, since 1990, I have been trying to overcome. I think I succeeded in doing it in the league. Now I have to do it in the media."

Flying over water, he said, did not make it any further than flying over land. That point, in the eyes of some, won the moment. 

Look, I love Europe. I have been there many times and have family there. I hope to take my kids there this summer. The commissioner doesn't need to sell me on Europe. I'm glad teams are going there.

But Mr. Commissioner, if you must be haughty in selling the locale of your latest business venture, please at least be accurate.

Point #1: In the pre-season, most teams keep their travel pretty regional. If the Heat weren't playing in Europe, they would not likely be playing in Portland. If past years are any guide, they would be playing in places like Orlando and Charlotte, which are a lot closer than Paris.

Point #2: Closer? From Miami to Paris is 4,579 miles. From Miami to Portland is 2,704 miles. That's an 1,875 mile difference -- which is about the distance from where Stern works in New York to some beach in the Caribbean, where Stern apparently was in his mind as he spoke.