By Matt Moore and Ken Berger
As part of his thorough and systemic plan for a CBA resolution to end this lockout madness, Ken Berger topped things off with a piece saying that the most logical solution to the NBA's remaining problems was contraction. Berger singled out two franchises to be chopped off the NBA forever in contraction, New Orleans and Sacramento (Memphis, Indiana, and Minnesota were all only saved due to their relative leases in their buildings). Being a champion of small market teams and not wanting the good fans in those cities to have their souls ripped out just to make sure the bigger markets sleep easier at night (which I also believe harms the league by shrinking its nationwide fanbase), I took umbrage. We decided to debate just some of the many issues surrounding contraction. What follows is our conversation.
Matt Moore: From your contraction piece:
And the question is: If the NBA is losing so much money -- $300 million last season and $1.845 billion during the six-year collective bargaining agreement that just expired -- then why continue to pour good money after bad into markets that have proved beyond any doubt they cannot support an NBA team without massive transfers of wealth that have failed to make them viable?Let's start here. We're still talking about relatively young frames of reference, aren't we? Yeah, New Orleans is a hole right now. It was owned by one of the worst owners in the history of the league. It's still recovering from one of the worst natural disasters in the history of the United States. Itn't it slightly possible that the right ownership could turn this thing around? And if we say that's possible, isn't the opposite true as well? What about the other small market franchises that are considered so connected to the league they could never be moved?
Let's say Popovich retires after 2013, same time Duncan retires. Buford is unable to recapture the Magic, especially with Ginobili gone. The team goes into a slump. A 10-year slump. We've seen it happen. Do we contract them, if that was now? How about Oklahoma City? If the core falls apart, if Kevin Durant (God forbid) went down with a career-ending injury, and Presti can't recover, do we just ditch those fans who have shown that with any semblance of a contender, they can be profitable and supportive? Are we really torching Sacramento just because the Maloofs' money has vanished in the recession and the team took what is pretty much the normal amount of time recovering from 2002... when they were one terribly officiated game away from the NBA Finals?
Basically, aren't all your candidates simply based on who is having a rough time... right now? And if that's the case, isn't it impossible to really give a fair estimation of who should be contracted? And what happens if another team can't make money in the new, better NBA? Isn't there always a loser, for long stretches in sports? If that's the case, are we just going to contract again in 10 years when San Antonio, or Orlando, or Utah is trapped in the cellar?
One more question.
If we're looking at truly terrible teams that haven't performed well or made good decisions, like Minnesota, why aren't we punishing Philadelphia, with that prime market and one of the worst attendance rates in the league? Sure, the Knicks make a world of money because of their market. But isn't that the real problem? A terribly run team can still make money? Bad teams that don't get enough support from the NBA's system isn't the problem, the fact that James Dolan and Donald Sterling turn a profit no matter what they do, that's a problem.
Ken Berger, CBSSports.com: To your first point, this isn't about blindly eliminating teams that aren't competing at the moment, or in a short-term frame of reference. In fact, we wouldn't even be talking about contraction if the owners hadn't put it out there that they can no longer survive with the NBA in its current state and thus locked the players out to get a better deal.
If player salaries are on the table, as well as guaranteed contracts, rookie scale, contract length, hard vs. soft vs. flex cap, the split of BRI, and literally everything else that has an impact on the NBA business model, then it is not only fair and appropriate, but prudent to evaluate whether the NBA has A) teams in the right markets, B) too many teams, or C) both.
If it's fair to ask the players to take a 33 percent pay cut, and to ask the owners in markets that are doing exceedingly well to fork over tens of millions more to support struggling franchises, then it's absolutely fair game to discuss whether some of those teams in some of those markets will never be able to thrive regardless of what salary structure and revenue-sharing system is in place. Apple wouldn't continue to fund an under-performing store or produce a failing product, and neither should the NBA.
Your San Antonio point is a non-starter. First of all, San Antonio is the 37th TV market in the United States, according to Nielsen, compared to No. 52 New Orleans -- the smallest in the NBA. According to the U.S. Census Bureau, the San Antonio metropolitan area (2.1 million) was nearly twice the size of the New Orleans metropolitan area (1.2 million) in 2009. Further, there is a long, established history of success in San Antonio -- both on and off the court. There is a history of success in Philadelphia, as well, by the way. There is no history of the NBA succeeding in New Orleans.
Granted, the city endured a catastrophic natural disaster that was nobody's fault. But the team relocated from Charlotte, a failed expansion market, and now the NBA has teams in two hopeless markets. Given the arena lease in Charlotte, there is no way to contract the Bobcats. But the Hornets, given that they are owned by the league and have only a $10 million penalty to break the lease, simply have to be examined for contraction if the owners are serious about addressing their money-losing problems.
If the owners simply want to use the losses as an excuse to put the players in their place, well, that's another story.
Your point about San Antonio or Oklahoma City someday winding up on the grim end of the cycle is valid. That can happen almost anywhere in the league; it's happened in Sacramento, where the Kings were thriving for years and then got obliterated by an unforgiving system that makes it difficult to recover from bad decisions or poor performance -- or both. That's why I'm in favor of a comprehensive plan to fix the league's problems. It's not an either-or game with pay cuts, a more flexible cap system, more robust revenue sharing, or eliminating a couple of teams. It should be all of the above. Teams like the Kings, Sixers, Timberwolves, etc., who've been successful in the past would be able to regain that success more quickly with a more flexible cap system, shorter contracts, and enhanced player movement. It's not about which teams are at the top of the cycle and which teams are at the bottom right now. It's about much more advanced metrics capable of measuring whether NBA franchises in all 30 markets have a chance to be successful and make a profit -- given some reasonable sacrifices on the part of the players, enhanced revenue sharing and a more flexible system that allows teams to get out of a bad situation faster.
I find it illustrative that those in the industry like yourself who are so adept at unemotionally evaluating on-court performance with advanced metrics that often betray what the naked eye sees suddenly allow emotion to infect your opinions about contraction. If you applied the same clear-eyed, sobering, numbers-driven approach to the viability of certain markets as you did to pick-and-roll defense, you would see the reality that emotion and gut-reaction thinking currently are obscuring for you.
Lastly: Part of the contraction argument is specific to certain markets -- New Orleans, Charlotte, Memphis -- and whether they are viable. But there are two other components: 1) the broader discussion of whether fewer teams would result in a better and more profitable product; and 2) the narrow, practical debate over which teams are feasible candidates to contract. The lease and arena situations in New Orleans, Sacramento and Milwaukee simply make those teams candidates to satisfy the broader goal of creating a better, more profitable product because there are fewer barriers to contraction. Contracting a team isn't an emotional decision. It's about dollars, practicality and a path to achieving the NBA's stated goals of competitive balance and profitability.
To your last point about Sterling and Dolan: It is difficult to imagine a system that would justify having Sterling as one of 28 people in the world lucky enough to own an NBA team. If a new CBA could contract Sterling, that would be a victory for all concerned. As for Dolan, he clearly deserves much if not all of the venom he has received. But Madison Square Garden is paying every penny of an approximately $800 million renovation to the arena. The same cannot be said in smaller cities where politicians gave up the farm due to the threat of losing their team or never getting one in the first place. The system has to be changed to narrow the gap between the haves (like the Knicks) and the have-nots (like the Thunder). It's the have-no-chance teams that are the problem.
Matt Moore: Well for starters, we're basically saying, "Well the owners have a problem (losing money). So naturally, let's punish the players (salaries) and the fans (losing teams). That should make for a better NBA!" All this despite the dubious nature of many of ownership's claims, and the fact that if they are in fact losing money, at least part of it is due to their own decision making regarding revenue sharing and their decisions to give those insane contracts. Before we start lopping off markets which at some point in the future could be just as viable as any other given a good string of luck, narrowing the NBA's fanbase and making it even more of an elitist sport, maybe we should look at some other options and make sure ownership's done everything it can to take care of itself. Finally, if we're going to go down the row of "we need to do what's best for the owners' profitability (in the context of their being "the league" despite their ownership only lasting at most a few decades versus the overall legacy of the sport), isn't the best thing for them to hold a four-year lockout so they can get every little desire they want, including $100,000 max non-guaranteed contracts?
I'm just not in the business of looking out for ownership. I'm in the business of looking out for the well-being of the entire league and the fans. Especially when, as you've pointed out brilliantly in this contraction argument, they're the ones who end up paying the most for these arenas.
I'm not so sure the San Antonio argument is a non-starter. To begin with, if we're going to go with market size? How about Charlotte at 24, Sacramento at 20, Indianapolis at 25, or Utah at 30? You talk about a "history of winning" which is entirely contingent on the luck of the lottery and a good owner (which changes constantly in the NBA). Those teams have a combined zero championships. Why not just lop them all off, in favor of a lower market, San Antonio, which is reportedly also losing money (as reported by David Aldridge)? I mean, if the Spurs aren't profiting despite the Duncan era, isn't San Antonio a viable market to cut? There are already two markets in Texas, after all. But no one would suggest that idea, because it fits in with the older idea of the league. Getting rid of the Spurs is incomprehensible, mostly because they've been around and won championships recently. If Indiana manages to squeak one out, when they were title contenders as recently as five years ago, by the way, are they in the same group?
And while I'm very emotional about the possibility of losing these markets, I have a clear-eyed reason not to. This league for too long has depended on two to three teams leading the way. The league is constantly praying for Celtics-Lakers to save them, because it hasn't established itself in the other markets in the country the way the NFL, or even MLB has. The Knicks are allowed to remain the sacred cow because of the money they pull in from market and a championship four decades old. But instead of weakening the rest of the league and strengthening the top of it, the NBA should be looking for competitive balance, because that activates the whole of the country as a fanbase, and subsequently as a market base. For whatever reason, it's become insanely popular to essentially submit to our big market overlords, likely out of some emotional fondness for the halcyon days of Lakers-Celtics or Bulls-Knicks. But a more sustainable approach which will help the entire league, not just those select few owners blessed to operate in a big ol' market, is one that raises the league's profile to where every team is profitable. Build up. Don't tear down.
While we're at it, I find the disregard for the financial hit in these communities deplorable. Setting aside the job losses, which are actual people (and I don't find that the fact owners are currently laying off personnel to save themselves some dough to be a viably equal comparison), you've got the damage to local businesses. You've got local charities losing that source of revenue. You've got effects all over the place. You think if you lop off the Kings, they're all going to start buying Lakers jerseys, as seems to be the end goal of most of these big-market advocates? One, that'll never happen, and two, it's not a sustainable strategy for league growth.
Finally, let's talk about that whole public-financing issue, since you seem to think that's the real death knell. Isn't the better option in those cases to force the owners to take on more of the financing? Furthermore, cities that don't want an NBA team don't vote for arenas. They don't support efforts to keep them. Seattle's representatives failed the Sonics fans, but that's the cost of representation. Meanwhile, markets that do want the league vote to support it. Are we really to say that neither the people, nor the owners, should be held accountable for their decisions, but only the fans of those teams who live and die with them? That's who we want to punish, as they continue to pump money into the team which bolsters the local economy?
Ken Berger: So, you don't take the owners' loss claims at face value. Neither do I; so at least we can agree to be circumspect when it comes to the owners' claims. We will find out over the next two months just how staunchly the owners will stand behind their loss figures. If they are willing to lose an entire season, and thus sacrifice nearly $4 billion of revenues, then they should be smart enough to examine ALL aspects of their business model that are failing ... including whether they are doing business in the right places with the optimal number of teams.
As has been made very clear from my coverage of the lockout, I am not in the business of looking out for the owners, either. I am not in the business of advocating for either side. I'm trying to find solutions.
Teams like the Spurs and Blazers, who compete and still allegedly lose money, clearly fall under the category of teams that are viable but need the system and revenue sharing system to change to make them more viable -- and to ease the transition from bottom of the standings back to the top, if they get hit with that cycle. I'm glad you brought up the Pacers, who have lost money nearly every year of their existence and continue to ask the city to take on more and more expense associated with their business. But you are ignoring the fact that teams like the Spurs, Blazers, Pacers and others would have their talent level enhanced by absorbing some of the best players from contracted teams. This would make the product better in those cities, and across the league, and would make for a more compelling, competitive product. This is the "good of the league and fans" aspect that you mentioned. Nobody is saying, "Contract the Hornets and Bucks and send all their good players to the Knicks and Lakers." The combination of more concentrated talent, system changes that would enhance the mid-level teams' ability to compete and revenue sharing that would mute the competitive advantages in the biggest markets would achieve much of what you are seeking to achieve.
Though I do like many aspects of the NFL cap system, the comparison between the two sports has serious limits. There are nearly four times as many players in the NFL. Role players and specialists are far more prevalent and important in football. Basketball is a game driven by singular talents and stars, and there is no way around that. You will never find as many people in the country who will sit and watch your average Wolves-Kings regular season game. But the fact that the Wolves and the Kings are so inept only magnifies this fact. And don't tell me that the Wolves and Kings could be championship contenders in five years. Then we fill in the blanks with whomever is at the bottom of the barrel then. But we don't simply contract the team with the worst record in any given year. We examine whether there are markets in the NBA that have never been, and will never be viable -- and whether reversing the dilution of talent caused by expanding or relocating to such markets would be good for the product. It unquestionably would be.
Stars and big-market teams have always driven interest and ratings for the NBA, and always will. We shouldn't be asking whether this is right or wrong; this is the DNA of the sport, and it can't be dramatically altered. But the gap between the haves and have-nots can and should be narrowed. Can the NBA have a business model that achieves all its goals with 30 teams, some of which are in markets that cannot keep up? And if you insist on doing that, what is the cost? And who pays it?
Nobody supports the idea of anyone losing his job. But if you're going to champion the cause of those who'd be left behind if the Hornets and another team were contracted, then you cannot ignore the public cost of forcing teams to stay in those markets. How much more money do Louisiana and New Orleans have to divert from legitimate needs to support a failing basketball team? In Memphis, the city can't find the money to open schools on time, yet it pays $13 million a year in debt service for FedEx Forum -- and an accompanying parking garage that was the subject of an FBI investigation for misuse of public funds. How can you say that the public cost associated with contracting the Kings would be greater than the cost the city and region would bear to build the team a new arena -- which will be financed with decades of public debt, lost tax revenues and misallocated resources?
It's a vicious cycle because the cities that are too small to support an NBA franchise on their own merits are those that must pay the most to get the teams there in the first place. And once the team is there, the initial cost is never enough. The Pacers go back to the city and get $33.5 million more to operate Conseco ... the Timberwolves get millions in public funds to duct-tape the Target Center back together, and then will want a new arena built for them in five years. A sales tax is passed in Wisconsin to fund a new ballpark for the Brewers, and now the politicians want to extend it to build a new arena for the Bucks.
When does it stop? When the Kings move to Anaheim and in five years say, "This arena sucks, build us a new one?"
Go ask people in Minneapolis if the Timberwolves have bolstered the local economy. The team has been a drain on the public coffers there for years, and will be for years to come if they stay there. That's what I call deplorable.
Matt Moore: I think it's difficult to argue that professional basketball, with $930 million in annual media buys alone, is simply unsustainable. This isn't about how the business is structured, it's about how it's run. The owners, as you've pointed out in the past, are asking not for a "Get out of jail free" card, but a "Don't ever be allowed to put in jail." And if we start chopping off franchises that we think are the drain, what's the next result if the owners continue to find ways to circumvent the intent of the cap structure (as they did with the current system using the luxury tax)? Are we just going to be back here in five years, looking to contract down further, to the point we're left with the big markets and some Midwestern Washington Generals for them to pound upon?
Right, but if we were having this conversation in 2005, we're calling the Pacers "viable." The Blazers are the mess of a franchise who haven't won a championship in 30 years and are mired in mediocrity in an ancient building. But we're not going to liquidate the Blazers now because they're a playoff team. This is the issue. We're not contracting teams here because they're unsustainable, it's because it's convenient right now. And that's not a good enough reason to hurt fans, local economies, and the strength of the league.
You talk about how those players would be allocated across the board to all those San Antonio's and Portlands. Has that been your experience? Or do the players nearly always drift towards those same teams time and time again. If you've forgotten, I can refer you to the seven months of hell you spent covering the Melo debacle. I'm severely dubious about the prospect of talent being equally distributed. It may look that way immediately following the dispersal draft, but in a few years, we'll be back to the same formula.
A better idea? Get great players in wounded market like Andrew Bogut, Tyreke Evans, and Chris Paul the ability to compete on par with the rest of the league. Then you've got more superstars, which as you said, drives the league. We have the talent. You can't tell me Chris Paul's not a star worth following. But the league continues to promote only following those five or six teams, to the detriment of the total strength of the league, which hurts their television packages, which hurts their bottom line, and here we are. There are obviously bigger problems in New Orleans than that, but nothing that couldn't be fixed with a decent ownership group. That's what's really missing is this league. Not ripping the hearts out of loyal fanbases, but owners with vision and a will to win. Instead, as we've covered and both dislike, we get Donald Sterling.
As far as the DNA of the sport goes, if we're admitting in this exercise that the DNA is the exact thing that's causing the profit loss, which leads to the sickness that is this lockout, why are we not talking about trying to build a better animal, for lack of a clear analogy? The league isn't limited in how it's portrayed. You're absolutely right in the ways that the NFL and the NBA are dissimilar. But just because their comparisons are not perfect does not mean that there shouldn't be efforts to emulate the model. The model works, which is that at the start of every NBA season, 32 fanbases of rabid, loyal fans believe in their team, their players, their coaches can win the title and are willing to spend money to be a part of it. That's the successful model, not praying the Heat and Lakers wind up in the title game every year until the next big market juggernaut is born.
As far as Memphis goes, I direct you to the Memphis Commercial-Appeal and a report on the economic benefits the Grizzlies have directly held on the area.
Memphis, like the rest of the country, is mired in the ongoing effects of the recession. To insinuate that blowing up the major tenant of a building that's already built, that already exists will somehow fix or even improve things is flawed logic. Sacramento loses one of the few major public events it has going for it. New Orleans still has the building. And for every complainer in Minnesota or wherever about the drain on the Wolves? I've got another to talk about the Vikings, or the Mariners, or the Chiefs. If we're talking about eliminating all waste in a community, these franchises exist among a litany and don't serve as the way out.
Ken Berger: You seem to think I am taking a pro-owner position here. The owners don't WANT to contract. It would cost them MONEY to contract, because they would have to pay an owner to go away. Unless we are talking about the Hornets, in which case there is nobody to buy out because the rest of the league already OWNS the Hornets -- who are, bar none, the clearest-cut case for contraction in the history of contraction. You've seen the financial statements. They're hopeless. Shinn was a deplorable owner, but that's what happens when you put teams in cities where they don't belong. You get bad owners leaching off the public, because no sane, competent businessman would try to operate a team there. Oh, and by the way, the public has to PAY for all this incompetence. These public boondoggles to put teams in places that can't support them, in the name of "expanding the fan base" and "promoting the brand" is one of the saddest commentaries of sports in our society over the past quarter century.
These loyal fan bases you speak so wistfully of wouldn't have been part of the NBA -- and thus wouldn't be a burden to the NBA business -- if the league hadn't over-expanded in the first place. Don't tell me the NBA would wither away and die without teams in New Orleans, Charlotte or Memphis. It was doing fine without teams there for years. And in fact, in the case of New Orleans and Charlotte, each city is on its SECOND team and it still isn't working. What demigod or savior of American business are you hoping will come along and make these markets profitable? Anyone who had all those great ideas would've stepped up and put a team there. Instead, we got Shinn and Robert Johnson, and in Memphis, we got Heisley.
You're a little hysterical about turning the NBA into a league of five big cities and the Washington Generals. Nobody is saying that. I am saying that, if you're going to look at the entire business, then you need to look at the number of teams and the location of them. In the case of New Orleans, where the team is buried in debt, owned by the league as a charity case, with no track record or hope of ever being viable, and with the most reasonable cost imaginable to get rid of, contraction represents the easiest business decision for the NBA during David Stern's commissionership. A much saner and financially viable decision than expanding and then relocating there in the first place. Nobody is going to nuke the Rockets if they don't find a replacement for Yao Ming.
You're also obsessed with the notion of, as you put it, right now. Well, Matt, this is right now. This is where we are: The NBA is shut down for the foreseeable future, the players are locked out, and the owners -- who take all the risk, make all the investments and write all the checks -- are saying that two-thirds of them are losing money every year. We can choose to believe them or not, but you can't ignore the fact that they are in control. And so right now, we have a team in New Orleans that is a burden to the league and to the residents of its city and state -- a team that never would've existed in the first place if not for the grandiose and overambitious expansion vision of David Stern. Now, due to the grandiose and naive visions of Matt Moore, we are supposed to compound the mistake of overexpansion by further burdening the NBA -- not to mention the good, tax-paying people of Louisiana -- and keeping the team there? For what? So we can save a few hundred jobs at the expense of tens of millions of dollars that could be better used?
I didn't wake up one day and say, "Let's get rid of the Hornets." But right now, the NBA is in crisis. Whether you're on the players' side or the owners' side, now is the time to evaluate everything. The sport is shut down. Some aspects of the business clearly aren't working. Why ignore such a sensible solution simply to be able to say you saved a team that is in no way a healthy or productive member of the NBA?
As for how the talent will be dispersed, I have no experience with this, because based on my rough recollection, I've never seen the NBA contract -- only expand, and expand too much, says the evidence. And you've twisted my argument about Memphis. I am not drawing a straight line from the city schools crisis to the Grizzlies' arena. I am merely highlighting what a shame it is that the taxpayers of Shelby County will continue to pay millions of dollars a year in interest on a basketball arena at a time when children could be held out of school because there is no money to pay the teachers to show up for work.
And since you brought up the Commercial-Appeal, you may want to check out the rebuttal to that homerized and pitiful piece of shameless boosterism. In this piece, someone who doesn't live in Memphis and may never have even visited actually bothered to contemplate how many jobs might have been created if the city had sold $250 million in bonds for some other, perhaps even useful purposes -- and also calculated that the 1,534 jobs allegedly created by the arena project came out to a cost of $150,000 per job. If the Commercial-Appeal had been doing its job, it would've analyzed the costs and benefits of that arena a tad more carefully instead of printing verbatim the schmaltz from the Chamber of Commerce. Instead, the city will pay millions in interest this year while it struggles to find money to pay teachers and open schools, but at least it will have a basketball arena that may not be used for its intended purpose this season -- because the NBA is shut down, in part, because it has too many teams in cities where they don't belong.
If that makes sense to you, then move to Sacramento and brace for tax increases and shoddy services so that a new arena can be built at no cost to the Maloofs or any other NBA owner, for that matter. Go Kings!