Isiah Thomas, a player/league owner/coach/GM whose laundry list of life victories and failures is too long to recount here (but would make an excellent "30 for 30" documentary), appeared on 590 The Fan in Toronto to talk a little bit about the current state of the NBA and the lockout situation. I have to say...to borrow a phrase from one famous food additive designer, if I woke up tomorrow with my head sewn to the carpet, I wouldn't be more surprised than I am now, because Isiah Thomas, he who is both one of the greatest NBA players ever while simultaneously one of the worst NBA managers ever...seems to get it.
I've excerpted portions of the interview here, along with some of my own commentary.
If you could walk into the negotiations, what would you say to get basketball back?
"You would definitely have to have some conversation that talks about the game and the sanctity of the game. I think you would probably need to do some historical analysis in terms of bringing the players and the owners to the point of where we are today from a historical standpoint and how the game has grown. The game has grown through a unique partnership from the players and the owners unlike any other league has ever enjoyed. Because of that unique partnership of trust, argument, fight, disagreement and everything else ... in time, we've always put the game ahead of our own personal interests. Right now it seems the game is being held hostage by the personal interests of the owners and the players."
- While I think that Thomas' reference to the "sanctity of the game" is a bit of a red herring (because I really don't think guys like Prokhorov or Gilbert care one iota about how the game grew in the 1980's), his larger point about the partnership between team and player is pertinent. Because of the way the league has been built and marketed, the idea of player and team identity are intricately woven. For example, for seven years LeBron James was synonymous with the Cavaliers. Now that he is gone, the Cavs have no identity at all, and probably won't until they fish up another big star to play in their city.
- One of the major thrusts behind this current lockout is the owners' desire to change the business model. While there are certainly aspects of the model that must change (expense control, for example), it is important to note that it is very, very difficult for a going concern to materially change course in a short period of time. Regardless of whether the organization is a billion dollar industry or a small private firm, usually the only impetus for true change is the material threat of extinction (which usually comes at the behest of things like bankruptcy or takeover). So for the league to suddenly say "we're going in a new direction, all hands on deck," this notion is probably over-reaching, and Thomas is right to note that. Changes can be made, but the league cannot simply ignore how it has evolved historically, because history has a lot to say about how organizations move forward in the future.
- I think it is interesting that Thomas notes that the game is being held by the personal interests of both the players and the owners. This is true - both sides want more than they probably rightly deserve, and the sense of entitlement is a big part of the hangup.
Is there one side of the argument that needs to give in more than the other? Or do both need to just compromise certain things?
"The key word that will always be thrown around from the owners' standpoint is certainty. In the last lockout, the owners wanted certainty in terms of guaranteed profits and certainty in any business very rarely happens. Certainty in terms of guaranteed profits very rarely happens when you're taking this risk. From the players' perspective, there's no such thing as unlimited cash and unlimited play. So at somewhere in the middle, those to ideologies and philosophies have to meet. That's when you can start talking about coming to some kind of conclusion. ...What I'm hearing now is the system and the ideologies and the philosophies that you divide the money under, those are kind of the deal-breakers right now."
- Again, Thomas recognizes the problem in the owners' position in regards to "profit certainty." This is where Thomas really nails it - "certainty in any business very rarely happens." In fact, if you as a decision maker want certainty, you almost certainly have to pay for it, usually in the form of smaller profit margins.
- Thomas also hits on the idea of risk, which raises a really good theoretical question. Should owning a pro sports franchise be "risky?" In the pyramid of risk, where does owning a sports franchise fall? I'd argue that it falls somewhere above run of the mill real estate investments such as rental properties and truly speculative real estate investments, such as oil speculation. While owning a team is certainly a mark that an owner is truly high net worth, it is not a birthright that owning a team is a guarantee to print money, especially in an industry that has become notoriously fickle (entertainment). In a sense, it does seem like owners are trying to tweak the relationship between risk and reward, and certainly, if they are allowed to make the rules, the relationship would bend in their favor. However, they cannot make these rule changes in a vacuum, which brings us back to the point that owning a sports franchise is a risky business.
- Thomas also zeros in on one of the things we've discussed regarding player salaries - it is a fixed pie and a zero sum game. If you want to pay a Dwyane Wade $50 million or whatever he is worth, that also means that the guy who is not worth $50 million, or $10 million or even $2 million also needs to be earning his market value.