THE POLITICS OF SPORTS BUSINESS
There is a new contender for the dumbest athlete when it comes to the business of sports. The New Orleans Hornets guard Chris Paul now wants to join Amare Stoudemire in New York with the Knicks and Paul has also suggested that Denver Nuggets forward Carmelo Anthony joins James Dolan's crew in Manhattan. Paul, if the comments are correct, has thrown gasoline on a fire started by the Miami Heat's signing of Dwayne Wade, Chris Bosh and LeBron James that might have be a product of players' collusion.
On Monday, NBA Commissioner David Stern downplayed the collusion charge after an owners meeting in Las Vegas.The National Basketball Association is out of control in terms of the normal sports business model and Chris Paul, not LeBron James, may be the final spark that lights a war between the owners and players in July 2011. The athletes may be the show but the owners are the employers and there are some rules that need to be followed both official and unofficial. When you play in New Orleans or Denver, you don't say you are going to New York or elsewhere in a year or two. It kills the local enthusiasm for the customer and fan base. Paul plays for a small market that was devastated by Hurricane Katrina five years ago. In fact Paul played the first two years of his pro career in Oklahoma City because New Orleans could not economically support an NBA after the disaster. Paul has done some great work raising money for New Orleans and the surrounding area but his business acumen is not there.
Paul's remarks were ill conceived for the overall business of the NBA.
That should not be surprising because all he does is play basketball for a living but his advisors would do well to tell him to keep quiet. Paul joins LeBron James as two players who need better public relations advisors.
NBA Commissioner David Stern and his owners (except perhaps the Knicks Jimmy Dolan) have to be upset that Paul allegedly said at Carmelo Anthony's wedding that "we will form our own Big 3." That statement was reported in the New York Post. The New York tabloids and some Wall Street types who buy corporate tickets at Madison Square Garden may be happy, but Stern's league has outlets beyond the Hudson River and the players may cause fans and even corporate backlash in other markets.
The economy breakdown has hurt the NBA but players making comments about going somewhere else is a punch in the gut that Stern and the 30 owners don't need.
Whether Paul did make that toast or not is immaterial. The story is out there and you have to wonder what the very powerful Denver Nuggets owner Stan Kroenke (whose wife is a Wal-Mart heir) or Hornets owner George Shinn who wants to sell the Hornets to an oilman and Hornets minority owner Gary Chouest are going to do. Paul and Anthony are under contract to their respective teams and are the centerpieces of the team's sales push for luxury boxes, club seats and cable TV advertising (Kroenke owns the Nuggets cable TV network, Altitude).
This is a problem.
If Paul and Anthony want to leave, why should local corporates buy luxury boxes, club seats and marketers buy signage in the arena and TV advertising? The players are mercenaries and have no loyalty to the area but sports sells the idea of the "Sixth Man" in basketball, the "12th Man" in football, the home ice advantage in hockey. The home crowd is worth something, so sportswriters say and other sports people contend.
Root, root, root for the home team is the mantra and the players do it for the fans or as one time Nets forward Derrick Coleman said for the "city of New Jersey." That is absolute fiction as players go for the best contract for the most part wherever they can find it and this is just a job for most players who go from team to team either on their own or because some general manager decides that the player isn't good enough and needs to be replaced.
Players come and go. But players should not call the shots, employees don't call shots, Management does.
The national TV packages and international deals and some marketing partners probably don't care about the players calling the shots and building teams.
Did LeBron James, Chris Bosh and Dwayne Wade collude to sign with the Miami Heat? There is some evidence that they wanted to play together however collusion is hard to prove. Eric Davis and Darryl Strawberry talked openly in 1990 about playing together for the Los Angeles Dodgers and eventually they did. Collusion has been a worry for 44 years going back to the Dodgers Sandy Koufax and Don Drysdale hold out. The two pitchers decided to negotiate together for a new deal for the 1966 season. The pair held out for 32 days and finally signed the most lucrative contracts for any player in 1966.
By 1968, the Major League Baseball Players Association and Major League owners agreed to an anti-collusion clause in the collective bargaining agreement. Major League Baseball Commissioner Peter Ueberroth in 1985 persuaded owners not to go after free agents. The policy continued in 1986 and 1987. The Major League Baseball Players Association filed a grievance with an arbitrator and won a $280 million award in November 1990.
Eric Davis and Darryl Strawberry talked about joining the Dodgers at some point during the 1989-90 time period. Davis was traded to the Dodgers from Cincinnati and Strawberry left the Mets after the 1990 season as a free agent and signed with the Dodgers.
The Wade-Bosh-James trio did nothing illegal. They fulfilled their contracts and went into free agency. Stoudemire finished out his Phoenix Suns contract and was free to negotiate elsewhere as was Joe Johnson. But the manner that LeBron James ended his free agency week and used a league partner — The Walt Disney Company's ESPN like it was another bad "reality" TV show on one of Disney's TV networks like ABC (which televises the NBA Finals) — will rub some people in the league the wrong way.
Here is a partial list of people who might not be very happy right now. The Chicago Bulls Jerry Reinsdorf (see his baseball history and his role in the 1994-95 Major League Baseball strike), the Hornets Shinn and Chouest, the Nuggets Kroenke (his Colorado Avalanche hockey team did not play in 2004-05 as part of the NHL owners lockout), the Cleveland Cavaliers Dan Gilbert, the Milwaukee Bucks Senator Herb Kohl, the Minnesota owner Glenn Taylor and owners in San Antonio, Salt Lake City, Portland, Sacramento, Oklahoma City and maybe Ted Leonsis in Washington who in May at a speech before the National Press Club said that the NHL (Leonsis owns the NHL's Washington Capitals) is in better financial shape than the NBA and pointed out that the NHL's collective bargaining agreement has a hard salary cap "that protects owners from taking stupid pills."
Paul apparently took a "stupid pill" when he suggested that he Stoudemire and Anthony team up with the Knicks in the same way that Wade, Bosh and James signed with the Miami Heat.
The NBA has had one major lockout, that in 1998-99 which took a few months to resolve. The players quickly agreed to a new collective bargaining agreement in 2005 possibly in part because some of the NBA owners had interest in National Hockey League teams (Los Angeles Phil Anschutz who owns the LA arena where the Lakers and Clippers play, the Toronto Raptors, Reinsdorf — a partner in Chicago's arena with the Wirtz family — the Philadelphia 76ers. Leonsis — a minority owner of the Wizards — the Atlanta Thrashers, the Colorado Avalanche and the Dolan-owned New York Rangers along with various TV and arena partnerships) and the players saw what happened with NHL players.
The players are the stars and performers and it is true that no own pays to watch Dolan or Portland's Paul Allen. But the players are also employees and there are some conditions that they need to meet. Announcing publicly that they want to play elsewhere is a major problem on many levels. The "alleged" bond between players, teams and fans that is being broken. Why would advertisers and marketers buy into a basketball team if they know the employees want to leave? Are municipalities who have poured hundreds of millions of dollars into arenas and stadiums that are not working out based on people flocking to the stadiums/arenas and businesses popping up around the building being duped? The NHL's Montreal Canadiens organization pays more in property taxes in Montreal than all 29 US-based NBA teams pay in property taxes.
There is also a question of whether the NBA is a bona fide competition. If Paul really wants to leave New Orleans for New York, is he playing his best before the people spending copious amounts of money in a very poor market or going through the motions until he gets to New York?
Dan Gilbert charged that LeBron James quit on the Cavaliers during the playoffs. Whether LeBron did or not cannot be quantified but it is not good if there is a suspicion that someone quit as a player during a competition.
The battle lines are being drawn. The big time players are flexing their collective muscles and the owners are not going to like that. Before the Miami Heat signings, owners are complaining about how too much basketball related income was going into the pockets of the players and that the owners have lost $400 million.
The summer of 2011 is coming up quickly for NBA owners and players as the collective bargaining agreement is done. Sports is business and the business of sports is about ready to put the economics and power of big name players on a collision course.