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The magnetic nature of markets and why we need a weighted lottery

Aug 20, 2011, 9:00 AM EDT

Lebron-James_draft AP

Over at TrueHoop, Kevin Arnovitz is the latest in a long stream of really thoughtful people to start trotting down a path that is hyper-supportive of the free market and very skeptical of the value of any handouts. The topic in this particular instance is the draft, and how if the 2011-2012 season is lost in totality, perhaps the NBA should abandon the draft. The concept is to allow players to just enter as free agents and let the chips fall where they may. Its foundation is based on a conversation between Malcolm Gladwell and Bill Simmons (because if I’m searching for practical solutions to real-life problems, THAT’s exactly where I’m starting) about how the real answer to contention is free agency, not the draft, and because it’s illogical to reward losing, every team should have an equal shot in the lottery. Arnovitz takes it a few steps further. It’s the NBA deregulation equivalent of saying “really, that toxic spill is the ducks’ problem.” But Arnovitz makes a good case as he always does:

If you wanted to extend Gladwell’s idea even further, why not eliminate the draft altogether in 2012 in the event of a lost season? Declare every eligible incoming player a free agent and allow the market (and the restraints of the salary cap) to dictate where they land.

We often assume that small-market teams would get the shaft, but are we absolutely certain that Harrison Barnes would agree to take a minimum salary (for the sake of this exercise, let’s say there’s a “rookie minimum exception” of $2 million for teams with zero cap room) from the Lakers when Sacramento could back up the truck for his services and guarantee him the starting small forward position for years to come? Would a Jared Sullinger or Anthony Davis be willing to play out of position as a fourth option in Miami for millions less than he could earn in Indiana?

We don’t know, but for a league that’s grappling for a new financial model and examining issues like revenue sharing and competitive balance, it would be useful to find out. In a draft-less world, rookies would be paid at market value and teams that have been frugal would have an advantage over those who have spent lavishly. Most incoming players would have to balance factors like dollars, touches and the allure of a marquee market.

via What a canceled season could mean for the draft – TrueHoop Blog – ESPN.

Couple of thoughts here, and because I’m not a good enough writer after forty-nine days of lockout brain damage, I’m going to use bullets. That’s right. Bullets.

  • As a starting point, let’s take a quick review of contending teams in the NBA. The Spurs were the top seed in the league, and have won four championships in twelve years. Plus they’re a small market. It’s a good thing that they’ve negotiated free agency so well to get Tim Duncan, Tony Parker, and Manu Gino… oh, no. Well, hold on. Oklahoma City has all that cap space, and they were within range of the Finals, everyone says they’re going to be champions at some point with this core. I remember when they made that offer to Kevin Durant and Russell Westbrook in… no. Well, hey, the Celtics did completely build their core around the guys they brought in in 2007. Not like they drafted Paul Pierce and then used younger players they drafted to pull in Garnett and Ray All… whoops. I’ve run the joke dry, so, Dwight Howard, Kobe Bryant, Dirk Nowitzki, Derrick Rose, Joakim Noah, Luol Deng, Dwyane Wade all drafted. Can you win with free agency? Yeah, pretty sure the Heat prove that theory, but it’s a combination of both.
  • Next, there’s this prevailing concept that there is no reason to try and weight things against small markets, that the open market will take care of itself. Getting beyond the absurdity that is the fact the Lakers have been in 31 of 63 Finals and both Boston and Los Angeles have more combined championships than the Steelers, Cowboys, Patriots, Broncos, Raiders, 49ers, Packers, and Dolphins, a quick trip down memory lane brings up a few fun ones. Kareem Abdul-Jabbar sticking Milwaukee and heading to LA for his prime, Shaq abandoning Orlando for the same, Dennis Johnson’s career in whole, Bill Walton all the same, Carmelo Anthony, LeBron James, Amar’e Stoudemire, Pau Gasol, we’re not really lacking for examples of the cream rising to the largely populated top. But let’s just take those as outliers, rare random exceptions in a sea of small market success. In fact, let’s get past the whole impact of markets in general.
  • The real problem isn’t even necessarily markets. It’s the perception that winning is success and that success is any sort of indicator year by year of whether the team is run well. That sounds moronic, right? How can it be wrong to determine how good a team is by looking at their success? The answer is that these things go in cycles. Let’s take Jared Sullinger for example. Let’s say Jared enters the big ol’ open market and the Spurs are interested for a lower price and the Hornets are interested for a slightly higher value. Arnovitz is correct that Sullinger will weigh the fact that if he goes to San Antonio he’ll be sitting behind Tim Duncan and if he goes to New Orleans he takes David West‘s spot. But Sullinger’s going to look at the two choices and examine which has a better chance of winning a title. Because while players love money, in their youth there’s also the idea that they can earn the money later. Win now, and your market value goes up immediately. But in reality, he wouldn’t sign with San Antonio. Or New Orleans. He’d probably sign with the Lakers. Why? Because when Pau Gasol is gone, he’s the Lakers’ power forward. Then he gets paid. So he gets to compete for a title now, take over when Gasol is gone and get the money, and on top of it? These are kids. Young men. And young men care about how cool something is. Brandon Jennings is a Buck and is happy enough about it. But he wanted to be a Knick because that’s cool. And that factor, which is exaggerated by the success of larger markets, is self-propelling.
  • The real harm in a system without the draft isn’t to small market teams like New Orleans, or San Antonio. It’s to places like Minnesota, Milwaukee, Indiana, and Cleveland. Places that have terrible weather in the winter, no big reputation for being awesome, aren’t mentioned in songs, and are the kinds of places people on the coasts don’t care about. That’s a huge part in all this.
  • You know what’s really frustrating? Back before the internet was really booming, when you needed an immediate weather update on a huge deadly storm in the Midwest, you went to the Weather Channel. Your local stations couldn’t afford updates in the middle of the day on a Saturday, so you went to the Weather Channel to find out if your house was going to be blown away. Unfortunately, the only updates you could get would be on how the weather was in Long Beach (GUESS WHAT, IT IS SUNNY AND 75 AGAIN TODAY!) or Long Island (mild rain showers, be sure to get those umbrellas, New York!). The results is that while houses are being blown away, the Weather Channel is focused on places that don’t have bad weather. That’s kind of the same deal here. Milwaukee’s ownership hasn’t been flawless, but they haven’t been cheap. They haven’t drafted exceptionally well, but they haven’t been terrible. But trying to compete in a free agency only system would drive them into nothingness. Which a lot of people are fine with because that means they end up getting contracted. Most of these people live on coasts and root for teams with great chances of winning a title next year.
  • In reality, it’s good for the league to have some sort of idea that anyone can win a title, that the rest of the teams aren’t just around to be Washington Generals. I can definitely buy into the concept that we shouldn’t reward bad ownership (yet we do under the current pro-big-market system by letting Donald Sterling make a profit), and that this isn’t about helping out those who can’t help themselves. But creating change is good. Having a fanbase go from good to bad makes it more interesting when they have a revival. It lets them ease up on costs for a while as they rebuild, and re-evaluate. And having teams go from bad to good is essential in growing the fanbase of the entire league.
  • Now, again, Arnovitz’ central idea is that it’s worth seeing if an open market would result in Sullinger signing with Milwaukee, or Charlotte, or Brooklyn with the decision weighted on what’s best for the player. But the risk is too great of some teams never being able to sign any young players, constantly over-paying for marginal veterans and staying in the range of terrible-to-barely-mediocre. Proof of that lies with the Bobcats of the past several years. They weren’t denied draft picks, they just traded or sold them. The Bobcats tried to rely on veterans, they used the trade market as their free agency counter. The result was a disaster it will take years to dig out of.
  • Maybe it’s possible that all markets really are equal and that these 18 and 19 year-olds will follow the advice of their agents and make the best overall decision considering all factors. Maybe we’ll see equality throughout the land and it will serve only to further punish those teams who aren’t ran well. But it’s just as likely that teams that are run well but not exceptionally so in places that don’t have metro systems will find themselves tumbling down the wheel of disaster, with no way to slow their momentum or recover from a free agency departure or a bad injury. The bad get worse, and the worse get even worse, unless they’re metropolitan, in which case they lean on legacy and endorsements and they’re fine. At some point, we’ve got to decide whether we as fans want a league of teams or to seek out the elimination of those teams who aren’t doing well at this particular moment in time.
  1. sknut - Aug 20, 2011 at 9:34 AM

    I agree what happens to sacremento if they back up the truck for Barnes and he stinks. at least now the draft compensation is held down for that possibility. the reality is that the NBA unlike the other pro sports treats those teams like minny milwaukee clevleand poorly due to them not being sexy cities. that matters to these players a lot more than it matters to NFL players. see green bay or Pittsburgh not exactly glamourous cities

  2. khandor - Aug 20, 2011 at 11:14 AM

    Kurt,

    Terrific job.

    The only part I would disagree with is the notion that Charlotte is in dire straits which will take years and years to overcome. If the Bobcats do a good job drafting quality players and making sound free agent acquisitions then within a relatively short period of time there is no fundamental reason that the Bobcats cannot develop into a solid contending franchise similar perhaps to an east coast equivalent of the once formidable – and recently departed – Seattle Supersonics.

  3. craigw24 - Aug 20, 2011 at 11:27 AM

    Matt, Very good article.

    We are at one of those extreme swings in our society, IMO, and these extremes throughout history are periods when our ideas do not conform with balance.

    Free market capitalism has to have some type of regulations and some form of social safety net or the entire society breaks down – just like a socialist state needs some form of capitalism to avoid the inertia of sameness. The same is true in our beloved NBA.

    The concept of the NBA is that there is a game with rules and a league with partners. In any social endeavor there are natural forces favoring one party or another and if the rules don’t at least try to address those forces that that social construct will fail.

    I do like the fact that you address free agency, rather than simply the draft, as the key to the inequity problem between rich and poor teams. Players absolutely deserve some form of free-agency, if only to get away from the Donald Sterling’s of the world, but this is an issue that should be a central part of the discussion – along with some form of valid revenue sharing between teams.

  4. jjpileggi - Aug 20, 2011 at 10:41 PM

    The lottery has been a public relations win (people DO watch the ping pong balls) but has not helped the teams that need help the most. Too many times the worst team in the league does not get the top pick. That hurts in years where there is onoy one or two blue chips. If the worry is that teams will “tank”, then deal with the offenders, but don’t punish everyone who is a loser.

  5. valman61 - Aug 20, 2011 at 11:12 PM

    The entire point of a sports league is for everyone to have a shot every year. They say it’s that way in the NFL, but it’s not. We all know Cincinnati, Carolina, and buffalo are not winning. But the system is such that their fans know they are only a few years away if they’re smart. They can all retain their players and sign free agents. That competitive balance is due to the NCAA being a great farm system, the draft, and the salary cap. Revenue sharing is key to ownership agreeing to share the wealth enough for everyone to compete, bit still allowing the big city owners to make a little more on their bottom line.

    The polar opposite, and closest to the free market system, is baseball. Every year the big teams are good and with the exception of a few years here and there, the small teams are bad. Even when small teams are good, they will not be able to retain their talent. It’s bad for the league. It’s bad for the fans.

    A free market system does not compare to a sports league. In a free market, killing your competition is a good thing. Monopolizing the market is every business owners dream. In a sports league, you need your competition to survive. You need them to compete, because when they can’t even the best run team will lose money in the long run.

    Failing to see the differences between a regular business and a sports league fundamentally flaws any argument supporting a free market system in sports.

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