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Pro Basketball Crosstalk: Of market size and parity

Sep 16, 2010, 3:28 PM EST

tim_duncan_spurs.jpgLet’s face it: there are some topics in basketball that are best
tackled by having two writers talk past each other at gradually
increasing volumes. We’re not making any progress unless we’re yelling
our way through the real issues, and that’s precisely what John Krolik and I hope to accomplish in Pro Basketball Crosstalk.


In each installment, we’ll talk around each other while discussing a choice NBA item. On the docket for today is…

Resolved: That market size is not the root cause of the NBA’s lack of parity. 

John Krolik: To
get some facts out of the way: the current CBA is done after this
season, and things are going to get ugly. The owners say they’re losing
money, the players don’t want their current rights and salaries taken
away from them, and there’s almost certainly going to be a lockout.
Whether or not games will end up getting canceled remained to be seen,
but there’s a very legitimate chance a labor stoppage will happen. 
At some point, this is going to become an argument
about parity. The teams that contend for a championship are the teams
that spend the most, and small-market/small-salary teams are going to
cry foul. Changes will be demanded, and a “hard cap” of some
description may even be considered. 
Here’s my point: I think people saying the NBA’s
current salary structure causes a parity issue are making a classic
causation/correlation error. (My favorite example of this: everyone who
spends two years in the Marine Core is a disciplined soldier. Everyone
who spends two years in the Ford Modeling Agency is physically
attractive.) Teams aren’t good because they spend money.Teams spend money because they’re good. 

More than any other major sport, the NBA is
(to borrow a term from Bethlehem Shoals), a League of Stars. A team
only plays five guys at a time, they get to decide how much their star
player gets the ball, and stars are in the game roughly 80-85% of the
time. Compare that to baseball, football, or hockey, and the
differences are obvious. (The value of basketball stars also tends to
be more “stable” than that of their baseball or football counterparts.) 
To truly be a title contender, it’s almost
imperative to have a superstar. Let’s look at last season’s title
contenders and how they acquired their best players/superstars:
  1. Los Angeles Lakers: Acquired Kobe Bryant on draft day.
  2. Boston Celtics: Acquired Paul Pierce and Rajon Rondo on draft day; traded a high-value former lottery pick for Kevin Garnett and the #5
    overall pick for Ray Allen.
  3. Phoenix Suns: Acquired Amar’e Stoudemire on draft day; Steve Nash was a franchise-changing free agency acquisition.
  4. Orlando Magic: Acquired Dwight Howard on draft day.
  5. Cleveland Cavaliers: Acquired LeBron James on draft day.
  6. Dallas Mavericks: Acquired Dirk Nowitzki on draft day.
  7. Denver Nuggets: Acquired Carmelo Anthony on draft day.
  8. San Antonio Spurs: Acquired Tim Duncan, Manu Ginobili, and Tony Parker on draft day.
You
see where I’m going with this. Yes, all of these teams spent a lot more
money than the other franchises, but they did that because their
superstar(s) gave them the chance to win a championship and they wanted
to take advantage of it. Rashard Lewis getting a max contract would
have been a terrible move for the Nets, because he’s not going to take
any team very far by himself, but Dwight Howard’s presence made
overpaying Lewis worth it for the Magic. There’s no way the Cavaliers
would have spent the money they did on top-notch role players if LeBron
wasn’t there.
Even the most extreme examples of team-building
come back to non-salary cap issues. The Heat were able to do what
they did because they had Wade, Pat Riley, and the Miami climate. The
Lakers got Gasol because their best player was Kobe and the Grizzlies’
2nd-best player was a young Rudy Gay. The big-money teams do end up
being the ones competing for championships, but everything starts with
superstars, and most of those are acquired on draft day. More
“glamorous” markets also play a role in free-agency decisions a lot of
the time, but unless the next CBA includes a plan for a weather-control
device, there’s no cap adjustment that will change that. (The 2004
Pistons managed to win a championship without a superduperstar, but I’d
hardly say they bought their championship.)
You could give every team 11 billion dollars to
spend, and 16 teams would make the playoffs, 14 teams would miss them, two teams would make the Finals, and one team would win a championship.
The teams that have success will likely be the ones that have the best
players. That’s just the reality of the situation. Salaries are dished
out on a linear scale, while talent is on an exponential scale. The teams
with the best players are always going to have a huge advantage over
everyone else. If you try to “buy” a championship without the elite
top-line talent to do so, you become the Isiah Knicks. 
Maybe small-market teams that compete for the 7th
or 8th playoff seed in their conference lose their best players due to
fiscal concerns sometimes, but doesn’t the increased chance of landing
a superstar with a high draft pick more than make up for the loss of losing a player incapable of leading
a team to the promised land? 
Most times, “small market” teams that don’t have
success have nobody but themselves to blame. Look at the Hornets. They
have a great player, they’re in a small market, and they may end up
losing him. It’s awful. But who was holding a gun to their head when
they traded for Emeka Okafor’s contract, or signed Peja Stojakovic to
his? Both of those moves essentially crippled their cap flexibility,
and that’s why they’re in the situation they’re in today. If you have
enough money to wildly overpay veterans, you have enough money to field
a competitive team using smarts and patience. Too many teams try to
force the issue and “show they’re competitive” rather than be patient
and wait for the right draft pick or the right deal that will actually
put their team over the top. 
Here’s my second major point — this is not a
league that was designed with parity in mind. I’ve already made my
point about how superstars have far more influence over an NBA game
than they do over a baseball or football game. 
Consider also how a game with so many points scored
keeps random events from deciding a game. If Deron Williams slips on a
wet spot, makes a bad pass, and the opposing team gets a transition
three, that’s a five-point swing in a game that will see 200 points
scored. If Clayton Kershaw fails to snap a curveball correctly with two
outs and Buster Posey hits a three-run home run, that one mistake could
account for 80% of the points scored in the game. The Patriots were one
play — one play! from being the greatest team of all time. Also,
consider that basketball has the most pronounced home-court advantage
in all of major sports, which makes it even harder for the underdog to
win a playoff series, and that every NBA playoff series is
best-of-seven, which greatly increases the chances that the “better”
team (or one with the more favorable match-ups) will win. Fluke
championships or playoff wins happen in the NBA, but they’re far more rare than they are in the other major sports.
Here’s where I’ll sum things up and hand it to you: there isn’t much parity in professional basketball. But to focus
on that fact during the coming CBA negotiations is to ignore the
reality that parity in the NBA is a pipe dream for a number of reasons
that have nothing to do with salary. 
(P.S.: So I can regain some of the points I’ve
almost certainly just lost with Nate Jones — the amount of NBA players
that go broke/the Eddy Curry bankruptcy situation really makes me think
any CBA negotiations are treating the symptoms rather than the disease
here. A little money given to responsible agents and managers who could
get players to invest their money responsibly could prevent a situation
where most owners are losing money because of the exorbitant amounts they’re forced to pay their players. If the NBA’s most overpaid
player is filing for bankruptcy, there are some serious problems
present that a new CBA won’t fix.)

Rob Mahoney: If we’re looking to identify the root cause of the NBA’s lack of
parity as the resolution instructs, we’ll be searching for some time.
In truth, there are a number of factors that work to destroy the
overall balance of the league, and I do consider market size to be one
of them. It may not lie at the center of everything, but market size
certainly has traceable influences across the league.

I don’t think there’s a way to argue around market size being an
advantage. Bigger markets mean more industry, which translates to more
corporate suites and sponsorships. Bigger markets also mean more
consumers, which not only means more tickets and concessions sold, but
also more merchandise peddled to the members of a larger in-city fan
base. Bigger markets typically mean more income to spend on coaches,
trainers, various other staff members (director of quantitative
analysis/stat guru, anyone?), facilities, technology, and
accommodations. Depending on the team’s agreement with the arena in
which they play their games, a bigger market could mean less of a
financial burden; bigger cities mean more concerts and attractions to
fill that space in the off-days, which either means less of a financial
commitment from the team’s owners in the initial construction of a new
arena, or possibly a reduced cost to rent that space for all parties, including the team.

In addition, market size provides a case where perception really is
reality. In most cases I think the use of that phrase is tripe, but if
we’re to argue the influence of market on, say, free agency, perception
is king. It doesn’t really matter if a big market is actually
better for an NBA franchise than a small market. It just mattered what
Shaquille O’Neal thought at the time. As long as the players themselves
are sold on the allure of the big city, they’ll continue to flock to
the NBA’s biggest markets.

You’re right in saying that superstars are essential, and that the
draft is the easiest way through which to procure one. Unless you’re the
type to subscribe to fairly elaborate conspiracy theories, market size
won’t apply there. That said, having the aforementioned financial
benefits (and then some — I’m sure there are plenty of big market
advantages that I’ve left out) does give teams in bigger markets more
leeway than their small market counterparts. They can afford to
actually use their first rounder every season, rather than pawn them
off, year after year, like Robert Sarver. They can actually pay to keep
their starting point guards, rather than having to watch them sign with
the Knicks. They can absorb long-term salaries via trade that small
market owners may be reluctant to take on.

None of that removes lottery luck from the equation, but it does
give teams in large markets more of a margin for error. The superstars
may provide the foundation, but owners still have to pay for the raw
materials for the team’s overall structure. It’s not impossible to do
so in a small market, but it is a bit more difficult. Finances
make it so. The reason why so many small market teams are compelled to
“show that they’re competitive” is because often their results are
driven by the financial bottom-line rather than long-term basketball interests. Owners dictate the criteria for management’s success, and if
an owner is looking to generate revenue as quickly as possible, a GM,
no matter their savvy, may not have time to wait for the right draft
pick to come along. If a GM’s job hangs in the balance, what exactly
are they to do?

Plus, I have a hard time believing that the same Miami coup could have taken place in Charlotte. Or that the Pau Gasol deal had nothing to do with Memphis as a basketball market. Market size may not be at the root of either of those events, but its influence is fairly evident from where I’m sitting.

The teams with the best players will indeed win championships, but
the San Antonio Spurs are the only small market team to win a title in
the last thirty years. There’s something happening here, and the
results suggest that the best players end up on large market teams a
startlingly disproportionate amount of the time.

Complete parity may indeed be a pipe dream, but that doesn’t mean a
new CBA shouldn’t attempt to limit the impacts of the market
discrepancy. After all, the primary function of bargaining agreements
is to limit, not to solve. They limit how much damage a poor GM
can do to their franchise, how much money can be offered to players,
and how long a player and team are to be wed. Nothing written in the
new CBA is going to put all markets on perfectly equal standing, but
maybe the agreement can at least limit the financial difference in an
attempt to align the primary interests of NBA decision-makers. Fewer financial
concerns for small market clubs allows them to focus fully on building
a winning team, a luxury that, in some cases, the status quo doesn’t
afford them.

JK: I think we’re talking past each other a bit re: large markets. My point
isn’t that Los Angeles/Miami isn’t a more attractive market than, say
Charlotte. It’s that the former two markets are more attractive than
Charlotte for reasons beyond the scope of any CBA. The big, glamorous
cities are the big, glamorous cities, and no cap, hard or soft, will
“fix” that. 

Don’t forget that everything comes back to the
competence of management. Robert Sarver sold his draft picks,
but he also used the money that could have been used to sign Rajon
Rondo on Marcus Banks. That’s just dumb, regardless of financial
situation. And don’t forget that the Cavaliers competed for
championships while the Knicks and Clippers were irrelevant either. And
is the fact that Charlotte didn’t have the fiscal means to overpay
Raymond Felton really supposed to break my heart? If he’d lived up to
his potential or fit in Larry Brown’s system, the Bobcats would have
worked a lot harder to keep him. As it is, the Knicks get to pin their
hopes on him. 
As for the stat guru/assistant thing, I bring you back to the Moneyball A’s
— stat consultants make ludicrously small amounts of money when
compared to overpaid veterans. A good consultant is cost-effective, and
there’s no getting around that. Facilities and accommodations are both
perks that come with having a billionaire owner (both of our favorite
teams have both), but there’s little proof that a Blu-Ray player and
XBOX in a locker can truly help to shift the balance of power. 
I think market size is a factor in the way things
work, but not the impetus. The Cavaliers were accused of bullying other
franchises when they bought back Big Z and thus essentially traded
nobody for Antawn Jamison. Their willingness to take on Mo Williams’
contract and Joe Smith’s desire to re-join the team meant that Mo was
traded straight-up for Damon Jones. Again, this happened in Cleveland.
The greatest post-Russell dynasty played in the same city as a baseball
team that hasn’t won championship in a century. 
To your last point, building a winning team in the NBA is hard. Other
than Phoenix, only one team achieved a winning record without a player
(or players) they acquired on draft day at the helm. Guess who that
outlier team was? The Charlotte Bobcats.

RM: As I mentioned, the point isn’t to “fix” anything. It’s for documents
like the CBA to do what they can to make things as competitively
equitable as possible for teams that aren’t in those massive
markets. No one said the answer has to be — or even should be — a
modification of the cap. A creatively altered revenue sharing program
could be the answer, or maybe something even better.

You can’t control for poor management or market attractiveness. I get that. What you can
do is make it so owners in small markets worry a bit less about the
team’s finances, and a bit more about being competitive long-term.

A lesser discrepancy
can also make it easier for ownership to fork over the cash for
something with less obvious benefits; stat gurus may not pull in huge
salaries relative to NBA players, but the full value of their
contributions to a franchise isn’t exactly easy to define, either.
Open-minded owners with cash flowing freely might not think twice about
hiring a numbers guy, but if the team is cutting costs, dodging the
luxury tax line like the plague, and really looking to turn a profit?
The benefits are obscured by circumstance. 

There isn’t any emotional grandstanding in
my insistence that we consider the relevance of market size, so forgive
me if that Raymond Felton bit was short on pathos. The point wasn’t
that small market teams are drowning in woe, just that the natural
order of the league has put them a half-step behind big city teams. In
an effort to make things as fair as possible, why not at least try to
compensate for those discrepancies? Sure, it’s possible for teams like
the Spurs and the Cavs to overcome them, just as the Knicks and the
Clippers have squandered their natural advantage. That doesn’t mean
there isn’t room for improvement in the system, or that there’s reason
enough to give up on controlling the market size variable.

  1. Darius - Sep 16, 2010 at 4:13 PM

    Both points were good and correct. Interesting article

  2. Anonymous - Sep 16, 2010 at 4:20 PM

    the reason for a lack of parity in the NBA is simple: Intelligence.
    Smart teams scout well, they draft well, they don’t overreach or overpay and they realize that you build a team through the draft while using free agency to fill in the holes to complete the team.
    Of course, a little luck also plays a part of those teams that do compete.
    The Spurs are the classic example. The Spurs scout globally, they find good draft picks late in the rounds like Dejuan Blair. They stash players in Europe and South America and let them develop without having to pay them.
    The OKC Zombies lucked out and got a once in a generation player in Durant, but they drafted well in surrounding him with talent. Westbrook, Harden, Greene. The Front Office knows what it wants to do and understand its limitations in being a small market. But they draft well and develop the players with good coaching.
    The Knicks spend money but their overall incompetence keeps them from competing. They traded high draft picks for over-priced free agents.
    Minnesota was primed to become a contender for the future, but David Kahn used all those draft picks so badly and made so many stupid trades, he’s set the franchise back. He used 3 first round draft picks on point guards and he’s traded for countless small forwards.

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