01 June 2016

Stadiums: Should We Really Pay?

Guest Post by Leon Moore

“The Stadium that Manning built” is what some call Lucas Oil Stadium. But the evidence points to a different builder of this 63,000 seat behemoth: the taxpayers. The stadium cost 720 million dollars, of which the Indianapolis Colts paid only 100 million (1).

The stadium in downtown Indianapolis opened in 2008 and replaced the RCA dome, which was built in 1983. Lucas Oil Stadium is an extremely modern stadium equipped with 1,000 flat screen tvs, 137 luxury suites, state-of-the-art turf and seven locker rooms (4). Proponents of the stadium argued that the building of this stadium would insure many future super bowls in the city and many college basketball tournament games.

The Colts also threatened to leave the city in 2006 adding to the cries for the construction of a new stadium funded by public dollars (4). As Andrew Zimbalist points out, a small market team is much more susceptible to this kind of pressure than is a large market team (5). And Indianapolis is a relatively small-market city. In addition to this, an economic impact study stated that over the next 10 years the project would create 2.25 billion dollars in economic benefit. It also stated that 4,900 construction jobs would be created along with 4,200 permanent jobs (4).

With seeming benefits like this on the table, the stadium was approved. Often In situations like this many people set to make money jump on board quickly. People like construction companies, contractors, architectural design firms and construction unions support these types of projects (5). In addition to these groups, bankers, lawyers and other businesses support the projects (5). With groups this powerful in favor, stadium projects can be approved with greater ease.

In the case of Lucas Oil Stadium, bankers have made huge profits. Goldman Sachs, who the Indiana Finance Authority borrowed money from, are now being paid 71 million dollars to restructure debt (2). The public debt grew to 666.5 million dollars after the auction-rate bond market collapsed in 2008 (1). With the deal the debt will be 296 million dollars (3). So essentially Indiana made a bad deal and are now having to pay even more to get some relief. There was also 43 million dollars of unexpected financing costs that fell on the state (1). Local officials have raised hotel, restaurant and rental car taxes to pay for it and the other costs (1).

But the real question is whether or not building this stadium actually benefited the public. According to a report by Jordan Rappaport and Chad Wilkerson the economic benefits to publicly financed stadiums are much less than initially predicted. Often the economic benefits from a stadium are actually just subtracted from another economic sector in a city (6). With Lucas Oil Stadium however, many people are brought in from out-of-town to large sporting events such as the Super Bowl and college basketball tournament games. So the building of this stadium might have more economic benefits than other stadiums.

But still, the amount that the taxpayers have spent on this will be very hard to make up. Combine the large debt with the fact that Goldman Sachs has seemed to profit off of taxpayers as well, and it makes the building of the stadium seem like a hard pill to swallow.

Many of the people with a vested interest in stadium construction already have money, which makes their influence on local government out-sized. They have the resources to advertise and hire firms to do biased economic impact studies. But the people who end up paying are the regular taxpaying people of the state. As Rappaport and Wilkerson point out, voters should have the ultimate choice over whether a stadium is built or not. They should have accurate and unbiased estimates and it should come down to how much they value their sports teams.

1) http://www.bloomberg.com/news/articles/2012-02-02/super-bowl-lands-on-taxpayers-backs-as-stadium-deal-turns-sour
2) http://www.atlredline.com/goldman-sachs-rakes-in-millions-from-lucas-oil-stadium-1705385983
3) http://www.indystar.com/story/news/2015/05/23/state-pays-escape-risky-lucas-oil-stadium-debt/27802331/
4) http://www.bloomberg.com/view/articles/2012-02-03/as-super-bowl-shows-build-stadiums-for-love-and-not-money-view
5) Zimbalist, Andrew “May the Best Team Win”
6) https://www.kansascityfed.org/~/media/files/publicat/econrev/econrevarchive/2001/1q01rapp.pdf

Images: http://huntconstructiongroup.com/projects/stadiums/lucas-oil-stadium/

30 April 2016

Revenue Sharing in the Barclay's Premier League

Guest Post by Jack Decker

The distribution of revenue in the Premier League is a much better system than that found in the NFL, MLB, the NBA, and the NHL. This model revenue sharing system not only contributes to the growing profitability of the league, but may potentially be the cause of it.

The Barclays Premier League focuses on two main aspects for its revenue sharing plan: equality and merit-based reward. Although these seem contradictory at first glance, they both work together to create a system that is fair and encouraging for all teams. Percentage-wise, the more dominant category is even revenue distribution; 50% of total revenue from UK broadcasting is divided evenly amongst all teams.[1] While this itself is impressive, even more aspects of revenue besides local broadcasting are distributed equally. Central commercial and oversees TV revenue are split up equally between the clubs, and when these payouts are calculated for the 2013-2014 season, they are almost 1.5 times higher than the share from UK broadcasting![2] What this means for the Premier League is that the clubs are on a very even playing field. In fact, the ratio between the top and bottom earning club is only 1.57:1, much more equitable than for the four major sports in the US, all with a ratio greater than 2:1. [2][3][4][5][6]

The eternal problem of socialistic systems is that distributing the wealth so evenly leaves little motivation for individuals to try to earn any themselves. This exact qualm is had by many owners or commissioners, who are worried that generous revenue distribution would hurt the total income of the league. The NHL does a good job at combatting this, making revenue benefits only available to teams that are seeing an increase in their earnings, suggesting that they get rewarded only if they show that they are putting in the effort to succeed as a business. The Premier League has this covered as well; some revenue sharing is merit based. 25% percent of broadcast revenue is distributed based on performance, or how the club finished in the standings, and another 25% is dependent on facility fees, or how many times the club was featured in a UK broadcast. 2014 League champion Manchester City received $41.5 million in shared revenue for merit-based play, while the last place finisher Cardiff City received only $2 million. This aspect of revenue sharing certainly is not equitable, but it provides an important incentive to ensure that the best teams have motivation to succeed and will still be able to assist struggling teams financially.

Establishing a successful revenue sharing plan, as may other leagues have made clear, is a difficult feat. Nonetheless, the Premier League did so with ease, and now is reaping the benefits. League revenues have doubled in the past seven years, described by team owner Dan Jones as a “remarkable achievement”.[7] The reason for this is in due to the revenue sharing system, because it allows all teams to reap the benefits of broadcasting and also encourages more wage costs. The equal sharing aspect of the Premier League’s plan leads to all teams earning money from UK broadcasting, providing a sense of community for the league and making the TV deals less lucrative. Unlike for MLB, the broadcasting revenue exists for the Premier League to share, rather than for individual teams to turn immense profits from. The merit based sharing of the Premier League contributes to its widespread success as well, because it incentivizes all teams to spend a higher percentage of their revenue to improving their staff. In fact, wage costs rose to an average of 71%, a very high figure that resulted in debt for many teams, but led to an increase in the quality of soccer being played and thus made the league more profitable as a whole[3]. Both the sharing of broadcasting revenue and the reward for merit in the revenue system of the Premier League are responsible for league revenue increases.

If you find this topic of interest, please share your thoughts below. If there are any other details of revenue sharing in the Premier League that you find interesting, feel free to explain them in the comment section. Make sure to return to Tully’s Sports Blog for more exciting sports information!


The Revenue Rivalry in New York

Guest Post by Nick Constantilos

The Battle for New York’s Heart

Famous poet Samuel Butler once emphasized “Friendship is like money, easier made than kept”. What makes New York such a notorious and famous city is the endless opportunities and the reputation of endless fame that can come along with it. New York has a variety of reasons why the city has come to such great fame, from Ellis Island to Radio City Music Hall. But maybe the most important and historical is the contribution the city has made to America’s past time, baseball. New York has the pleasure of being the home to two major league baseball teams, the New York Yankees and New York Mets. Great pride comes with having two talented teams but along with that comes great rivalry. Ever since the New York Mets were established in 1962, the two major league teams have been battling for New York’s heart. Although these two teams were only separated by a subway ride, the real rivalry didn’t spark until their first meeting in 1997. This show down earned its nickname the “subway series” due to the short distance between them and fans going back and forth on the subway. Their rivalry would be truly defined after the epic game one in the 2000 world series between the two teams, which the Yankees eventually claimed the trophy.

The Revenue Conflict

The difference in distance between the New York Yankees and New York Mets is just a subway ride away, but the difference in revenue is much more drastic. The New York Yankees earnings in 2015 were 211.75 million dollars while the New York Mets was the MLB’s 10th lowest payroll of 94.76 million dollars. Although the Yankees hold the highest payroll in baseball, the value of the dollar to them is just as meaningful as any team in the MLB. The triumphant Yankees made their voice heard when the President of the Yankees, Randy Levine, commented on the MLB’s unfair revenue sharing system. Levine stated, "What is very burdensome to us -- and is unfair -- is the amount of money we have to pay in revenue sharing compared, for example, to teams in our market that pay 10 times less than us”. This issue caused another stirring of the Yankees vs. Mets pot but this time on the business end. It appears that the main reason Randy Levine was making these unfair claims towards the Mets is because the Mets could potentially be doing better financially then it appears on paper. One thing that is extremely confusing is the revenue sharing between these two teams. Any conflict regarding money such as expenses or revenue can be a complicated conflict to resolve. Revenue sharing is calculated through a formula which relates to net local revenue and many amounts of income and expenses are characterized and measured differently. An important aspect to keep in mind is most of this information doesn’t travel beyond the ownership level which makes it difficult for people outside the “circle” to understand the process. Baseball teams have no limit to the money they can bring in and spend so this makes it hard to justify what is truly fair when it comes to comparisons in revenue sharing. But whether is unfair or not the Yankees as usual made their voice heard.

If you are interested in learning more about the revenue rivalry between the Mets and Yankees check out this link: http://espn.go.com/mlb/story/_/id/15072082/randy-levine-says-unfair-new-york-yankees-pay-more-new-york-mets-revenue-sharing

Footnoted references:

11 April 2016

Let's Be Done With "One-and-Done"


Guest Post by Leon Moore

“He’s not ready, but he has to come out. He has no choice. There’s too much money there for him and he can’t go back to college and then face his friends back home. It’s not right, it’s not fair, it just is.” - John Thompson (4)

Freshman Jabari Parker and Duke had just been upset in their first round matchup by Mercer University. Jakob Gollon, a senior for Mercer, went 5-9 from the field, and 9-9 from the free throw line to score 20 points. Jabari Parker scored 14 points on 4-14 shooting. (6)

For many fans of college basketball including myself, this game was beautiful, partly because Duke lost, but partly because of what the result represented. The senior Gollon had no chance at making the NBA. It was clear he played basketball for the joy of playing, and he was rewarded.

Now consider his high-profile opponent in the game, Jabari Parker. Parker was a lock to be drafted in the top five that june, with most people considering him one of the top two prospects. In college, like Gollon, Parker was playing for the joy of playing. Yet to fans like myself, there was a cloud over his college career. We all knew that he would be “one-and-done,” and leave college after just one year. He would not develop in college and play for four years in all of the rich traditions that define college basketball and college athletics more generally. In that game, Parker represented the trend towards leaving college early to make money in the NBA.
You cannot blame Parker or any of the other “one-and-done” players for making the decision to leave early though. As John Thompson said, “He has no choice.” Now, we will look at the impact economics have had in creating the NBA’s rules regarding when players can enter the draft.

The NBA would like to change the rule to require athletes to forgo the draft for two years after high school as opposed to the current minimum of one year (3). The NBA believes doing this would allow teams to better analyze talent and therefore make better, more informed, draft choices (3). Adam Silver said, “We feel that these players are better off having more time developing as players before they enter into this league.” (1) He added, “I’m making a business decision for the NBA, which is to the betterment of the league and the roughly 430 jobs we have in this league.” (1) NBA owners also would not have to pay for the development of these players if they stayed in college, and importantly, would not have to hold a roster spot for them (5).

However, the NBA Players’ Association is not on board. Michele Roberts, the executive director, in 2011, argued against an age limit, saying “You have a limited life to make money as a basketball player. Anything that limits those opportunities is distressing to me. I view [the age minimum] as just another device that serves to limit a players' ability to make a living." (5)

Some view the NBPA’s opposition as merely a way to create a bargaining chip with the NBA (4). In 2017, there is the possibility that a collective bargaining contract will be reopened between the NBA and the NBPA. The players would like a higher salary cap while the owners and league do not want to compromise, yet also want to reform the one-and-done rule. David Stern, before retiring, said “They see it as a negotiating chip, we aren’t willing to give up what they want in return for making the change.” (4)

It seems nothing will happen unless there is compromise from both sides. The NBA is seeing revenue increase greatly, so the players should be entitled to more money. The salary cap should increase some, but the players association needs to do what is right and change the one-and-done rule. Players feel incredible pressure to turn pro, as they ponder huge salaries, often being forced to disregard what might be in their best interest developmentally (2). Any number of systems should be looked at, including but not limited to what the NBA has proposed and what the MLB currently does. The point is that the current system is broken, and compromise will be the only way to fix it.


10 April 2016

The One Thing Every Owner Needs: Sound Management


Guest Post by P.Lumbean

When my plan to win the Powerball on a weekly basis comes to fruition, one of the things I am going to do is to go about purchasing a team in either the NBA, MLB, NFL, or NHL (this is after I’ve addressed issues like world hunger, poverty, and colonizing space). When I purchase my team, I know exactly the first hire I am going to make and I know what my long term vision for that hire is going to be. I know this because I’ve seen my plan work in real life, and I’ve seen what happens when choosing another course of action doesn’t work so well.

Before I begin, can we all agree on the following? From an historical perspective, are the following teams successful from both a business and won\loss perspective: Cowboys (NFL), Stars (NHL), Spurs (NBA)? Can we also agree that the following teams have, for the most part, a futile history with in-the-arena success and\or on the balance sheet: Buccaneers (NFL), Canucks (NHL), Clippers (NBA)? If we’re in agreement up to this point, then please read on. If not, I may have no prayer of getting you to understand my perspective and consequently you are not a candidate to become a member of my organization so thank you for applying, but we’re going to go in another direction.
The Cliff Notes version of my plan: The first, and one of the only, significant actions I will take as owner of my new franchise will be to hire someone that I will from that point on refer to as “Team President.” This will be someone who is relatively young (ideally 35-45), extremely intelligent and personable, and someone that I could contentedly go out for a beer with. That’s it. Well, that’s not really it, I suppose I would have a job description for them, and the job description would look something like this paraphrased one for Rick Pych, the President of Business Operations for the San Antonio Spurs (NBA). Pych:

. . .leads the business operations for all four sports franchises owned and operated by Spurs Sports & Entertainment which includes the San Antonio Spurs (NBA), the San Antonio Rampage (AHL Hockey), the San Antonio Silver Stars (WNBA), and the Austin Toros (NBA Development League) as well as the operations of the AT&T Center … includes marketing, corporate partnerships and ticket sales, finance and administration, communications, corporate development, community relations, and facilities management as well as all corporate business and player planning and new initiatives on behalf of the organization and ownership.

Something tells me that Rick doesn’t spend a lot of time wandering around the office trying to keep himself busy. Here’s the deal with Pych. He’s been with the Spurs organization since 1993 and has steadily moved his way through the organization until reaching the point where he is right now sitting at the right hand of the throne of Spurs Sports and Entertainment owner Peter Holt. Pych has held his current role since 2008. He has been a consistent presence as the Spurs have gone about their business of being one of, if not, the most dominant franchises in the league. I agree with the website basketballinsiders.com that wrote prior to the start of the season,
Over the years, we’ve seen how a great front office can be critical to a team’s success. Oftentimes, a great front office can be overlooked since much of the attention goes to the franchise’s star players or head coach. But in reality, it’s the front office that puts together all of the pieces to make a team great.
One of the first teams that come to mind when discussing sustained success in the NBA is the San Antonio Spurs. They have a great organization from top to bottom. It’s no surprise then, that they have had very little change over the years.

They then though go on in the article to give credit to Spurs General Manager R.C. Buford. Buford, like most franchise executives with the title “General Manager,” is only responsible for player personnel decisions. That’s not fair because it sounds as though I am belittling Buford’s success. Obviously, the man knows full well what he is doing, as does Coach Popovich, Tim Duncan, and the rest of the folks directly related to the playing of the game on the court. But I would suggest that none of this is possible without guys like Rick Pych and more specifically the relationship between guys like Pych and owners like Holt.

Holt, who bought the Spurs the same year that Pych joined the organization, presumably had a direct hand in bringing Pych to San Antonio. Holt’s loyalty to Pych is apparent, and it would appear as though Pych is equally loyal to those below him on the corporate ladder as well (Buford has been with the organization since 1994).
Loyalty seems to be a thing with the Spurs.

Heading north from San Antonio up I-35, we find a different kind of loyalty in the person of Dallas Stars (NHL) President and CEO James R. Lites. Like San Antonio’s Pych, Lites has general oversight of the Stars. With the exception of four years working for the NFL’s Giants, Lites has been with the Stars steadily since 1992. In that time, he has worked for three different owners. What’s notable here is that it may be hard to find anyone who has been more consistently loyal to the Stars since they moved from Minneapolis to the Lone Star State. Given the significant role he has played in the development and maintenance of the team, he certainly deserves a lion’s share of the credit for their on ice success. Since Lites first joined the organization, they have had three different owners, five different general managers, and seven different coaches. In that same time, however, they have managed a .589 franchise point percentage total (that is to say that they have won 59% of the points available to them during the regular season). This ties them with all-time leader Montreal.

Probably the smartest move Stars owner Tom Gaglardi made when he bought the financially distressed team in 2011 was to bring Lites back to Texas after his stint in New York. Gaglardi gets a lot of credit for saving hockey in Dallas , but his hiring and keeping the clearly capable Czar of the Stars Jim Lites is a big part of that success.

Lites (L) Gaglardi (R)

Before leaving Dallas, I’d like to make our way west from downtown Dallas a little ways to say “Hello” to everyone’s friend Jerry Jones whose franchise presents, for the purposes of this piece, a tale of two franchises: The Dallas Cowboys of Tex Schramm and the Dallas Cowboys of Jerry Jones. The Schramm Cowboys ran from 1960 to 1989 and the Jones Cowboys from 1991 to the present day. For the purposes of this piece, Schramm’s Cowboys were the prototype of the kind of front office structure that I am advocating. Schramm was an old school “General Manager” who oversaw all aspects of the operation of the Cowboys. He answered to only two owners (Clint Murchison and H.L. “Bum” Bright) and had only one football coach (Tom Landry). They key here is that both Murchison and Bright left all operations of the team to Schramm and Schramm obviously did a marvelous job of oversight of the Cowboys, an expansion team when Schramm took the job. During his tenure, Schramm took a fledgling franchise and turned it into “America’s Team.” Three paragraphs in The New York Times obituary for Schramm sum up my perspective of his being a jack-of-all trades kind of general manager:

"The Cowboys were losers their first five seasons, then managed to reach the .500 mark in 1965. Finally, Schramm's insistence on building through the draft paid off handsomely. Players like defensive tackle Bob Lilly, defensive back Mel Renfro and wide receiver Bob Hayes formed the nucleus of a team that got to the championship game in 1966, losing to the Packers. Eventually, the Schramm-Landry Cowboys played in five Super Bowls, winning two."

Schramm did not coin the term America's Team, but he loved it. It had a dashing connotation with the Lone Star on the helmet, and it became the title of the Cowboys' 1968 highlight film, which helped brand it on the public consciousness.

In 1972, he introduced the Dallas Cowboys Cheerleaders to pro football. They formed a touring troupe that took them around the world.

Talk about a leader who had an enormous influence in all areas of the team’s operations! Now, to be fair, Schramm was an extraordinary man who had a huge influence not just in Dallas and on the Cowboys but on the league as a whole. He was perhaps destined for greatness in whatever he did and wherever he did it, but the point for me is that owners Murchison and Bright had the foresight to do all they could to keep Schramm in his position and that consistency of leadership, as much as anything else, kept the Cowboys on top of the league both financially and on the field for so long.

Then along came Jones. Or should I say “Along came Joneses.”

Current Cowboys owner Jerry Jones bought the franchise in 1989, promptly fired long-time coach Tom Landry, and Schramm resigned two months later. Jones philosophy on his role as owner was quite different from Murchison and Bright’s. He and, subsequently, his family were to be in charge and a visit to the Cowboys website makes it all too clear that the Cowboys are a Jones Family endeavor. Jerry is Owner, President, and General Manager and his three children hold the top three front office positions in the organization. On the one hand, this guarantees a certain kind of consistency in the front office and to this point, I have been advocating consistency. However, I have only been advocating consistency when and if the positions are held by capable individuals. Pych in San Antonio, Lites in Dallas, and Schramm of the earlier Cowboys clearly demonstrated an ability to handle the job of overseer. The jury seems to be out with regard to Jerry Jones. His success financially is undeniable. As Patrick Rishe points out in Forbes, “with a currently estimated team value at $4 billion for a team he purchased for $150 million in 1989, and a beautiful sporting facility in AT&T Stadium which has generated millions in revenue for his team’s brand and the region at large by attracting non-Cowboys events to North Texas, his business acumen is undeniably shrewd and forward-thinking.”
He has, however, committed certain public relations blunders (read Greg Hardy) in recent years and his teams have not excelled on the field the way many fans might have hoped.
In short, the leadership of the Cowboys has been consistent if not necessarily particularly competent.

The Tampa Bay Buccaneers also have four folks from the same family ostensibly overseeing the franchise. The differences, however, between the Bucs and the Cowboys are rather pronounced as any casual fan of the NFL will attest. The Buccaneers do in fact have one Super Bowl title to their credit, but their franchise history is dominated by a lot more losing than winning. Since 1995, the Glazer family has owned the team. Currently, three Glazers (Bryan, Edward, and Joel) serve as co-chairs of the organization, and their job descriptions are remarkably similar on the team’s website. It’s a bit difficult to discern who, if anyone, is ultimately in charge of day to day operations of the team. Where Jerry Jones has clear oversight in Dallas and his children have clearly defined (but subservient) roles to his, the Glazers seem to be intertwined. Below them are the usual suspects in charge of on the field efforts (player personnel types) and business operations (marketing, community involvement, etc). My point here is that there is not one clearly defined role for one specific individual responsible for franchise oversight. I contend that this has been part of the problem for the Buccaneers as an organization.
Looking back over the history of the Buccaneer organization, one finds that they have gone as long as seven years without a Chief Operating Officer (presumably leaving those duties to one of the Glazers?). They’ve also had seven different general managers and six different owners. This does not paint a picture of consistency and stability.
Taking a diagonal trip across the continent from Tampa Bay, we land in Vancouver to take a quick look at the Canucks who, for all intents and purposes have a pretty rough history behind them: since the organization’s inception in 1970, they have appeared in the Stanley Cup Finals three times (losing all three). In 3572 games played, they have amassed only 49% of the points available to them, ranking them with the likes of the Lightning, Blue Jackets, and Panthers. If the pattern holds, we should see that consistency of leadership at the top has been in short supply. The pattern holds:

• Prior to 1987, the team went through six general managers (responsible for the hockey aspect of the franchise). They then had a ten year period of stability with one GM (Pat Quinn), but since 1997, they have had five different GMs\Presidents of Hockey Operations.
• On the business side of things, they have in fact had the same Chief Operating Officer (Victor de Bonis) since 2007 but in the ten years leading up to that point, they had three separate Presidents\Chief Operating Officers.

One wonders how the franchise might have fared over all these years had they had the consistent leadership like that of James Lites in Dallas.

Finally, I likely don’t need to say much here about the Clippers and their inconsistency in terms of leadership and owner\management relationships. The words “Donald” and “Sterling” when put together likely tell the reader all he or she needs to know about the Clips and their futility and inept ownership over the years. At the heart of their troubles, however, beyond the obviously incompetent owner, was a leadership structure that never allowed for consistently defined roles. In 2000, Sports Illustrated wrote a lengthy piece about Donald Sterling and among many other indictments, wrote:

• Few Sterling hirelings utter a word--much less a discouraging one--about their boss.
• When it comes to pinching pennies, Sterling is an embarrassment of riches. Old NBA hands still talk about how he reportedly tried to cut costs during his first season by asking coach Paul
Silas if the players really needed a trainer and if Silas would mind taping them before games.
• "To have a decent team you need to keep a core of players together and let them grow," says Los Angeles Lakers guard Ron Harper, a survivor of five Clippers campaigns. "Sterling doesn't
do that. He's not a builder, he's a meddler."
• The most frustrating part of being G.M. was the lost opportunities. Sterling didn't trust his own basketball judgment and wasn't prepared to accept mine. I'd call him about a trade I wanted to pursue, and he'd say, 'Let me get back to you.' He'd never get back to me. So nothing would happen." – Former Clipper GM Carl Scheer
• "I don't know how important winning is to Donald," says Scheer. "He seems more concerned that his books are balanced, that he runs one of the few NBA franchises with no debt, that he can bring his friends to games."

Sterling bought the team when they were the San Diego Clippers in 1981 and initially, he was directly involved in oversight of all operations a la Jerry Jones in Dallas. In soon became apparent though that he was in no position to have any success in this regard. In fact, when he commented that he publicly acknowledged that he would prefer it if his Clippers finished in last place so that they could draft the highly coveted Ralph Sampson, the league promptly fined him $10,000. His attempt a few months later to strong arm the league into allowing him to move the team to Los Angeles prompted an investigation by his fellow owners that almost lost him his franchise. In perhaps one of his only wise moves as an owner, Sterling relinquished some of his duties to someone with a bit more expertise in this regard (Alan Rothenberg), and he and the Clippers were back in the league’s good graces. More or less. Still not content in San Diego, Sterling moved the team to Los Angeles and incurred a $6 million fine from the league.
Rothenberg sat in the president’s office during the move from San Diego and until 1989. His was not a particularly pretty era on the balance sheet, and it was particularly gruesome on the court.

As bad as the Clippers teams were during Rothenberg’s reign as President of the Clippers, keeping him might have been the wiser move for Sterling. Instead, he went back to having general oversight of the franchise and thus continued its unprecedented futility. Some examples:

• In 1990, players went to Sterling in an effort at getting coach Don Casey fired. Sterling referred them to general manager Elgin Baylor who ostensibly was only responsible for player personnel decisions
• The 1991-1992 team had three different coaches
• Between 1983 and 2010, they only had two winning seasons
• They have two 17-game losing streaks, one 19-game losing streak, and one 20 game losing streak to their “credit.”

By 2010, things had finally begun to turn in a positive direction for the Clippers. Not surprisingly, Sterling had turned over the business reigns to a competent businessman and had also improved management of their player personnel department (Elgin Baylor, an amazing player on the court, but a disaster as a GM was gone), and wise draft picks were being made. And most importantly, from the perspective of this piece, a President had been brought in who was fully responsible for the business side and shared player personnel decisions. Andy Roeser had been with the Clips in a front office capacity since 1984 and had been promoted to team President in 2007. It wasn’t until 2012 that he began to have significant input in player personnel decisions, but clearly, there was an effort being made by someone (Sterling?) to consolidate front office power. Not surprisingly, the Clippers fortunes on the court and at the box office began to soar.

Then Donald Sterling did and said what Donald Sterling did and said, and poor Roeser went down with him.
Now the Clippers have a new owner who has decided to split team management duties between a business oriented executive and a player oriented general manager. Time will tell if this return to a decentralized system of power will work for the Clippers, but I wouldn’t be very optimistic for the long term strength of the organization if I were a Clipper fan.

The Spurs, Stars, and pre-Jones Cowboys have a history of success. They also have a history of front office executives who were loyal to their owners and who had general oversight for all aspects of the organization.

The Jones Era Cowboys are difficult to assess in this regard as their owner is the hands on executive and I’m not really sure what to make of him. He’s making lots of money for the team, but can his team, during his tenure, be considered a success?
The Canucks, Bucs, and Clippers have long and ignominious histories of futility and I contend that this is because they have had inconsistent administrative leadership, with unclear job descriptions, and a diffusion of power that leads to disorganization and a failure to progress.

Next month when the Powerball comes up with my numbers, my first calls will be to Texas: “Hello, is your team President looking for a job?”



09 April 2016

Are Yankees Seeking to Torpedo the Revenue Sharing Formula This Year?

Guest Post by Connor Maloney

Under the current collective bargaining agreement (CBA), set to expire on December 1st of 2016, all Major League Baseball teams are subject to a 34% contribution of their net local revenue. The sum of those 30 contributions is then distributed equally amongst the teams. The CBA states that teams must use those revenue sharing receipts in an effort to improve their performance on the field. It also openly states that teams are prohibited to use the receipts for anything other than baseball operations such as repayment of debts, distribution to ownership, etc.

Recently, the President of the New York Yankees, Randy Levine, spoke some his thoughts about the money they are paying in regards to the current revenue sharing plan. Levine spoke in an interview with FOX Sports, “What is very burdensome to us -- and is unfair -- is the amount of money we have to pay in revenue sharing compared, for example, to teams in our market that pay 10 times less than us” [Rosenthal]. He later went on to say that this was something that he hoped would be addressed in the new CBA at the end 2016.

I’m assuming that the current revenue sharing arrangement is something that might be opposed by the top 10 teams in terms due to loss of revenue (which includes the Yankees), but is something that would supported by bottom 10 teams for the same reason. This is a system that was put in place to try and level the playing field between teams in top markets that perennially drive revenue and teams that might not be in big media markets and struggle to gain revenue. There is some cause for concern that this could pit owners against each other in the next discussions for the collective bargaining agreement.

My opinion and my hope is that in the next collective bargaining agreement a system like this remains in place. I would be content if the proportion of the contributions that teams made were adjusted but I just think that this is a system that tries to keep competition throughout the league. The teams that may oppose this feel that it is unfair because they are giving more than other teams. However, a point that is raised by opponents of this system may say that it acts as a disincentive for teams to increase revenue and just depend on subsidy-like proceeds from the revenue sharing.

We’ll just have to see whether the revenue sharing will create tension between owners once the season is over and they begin the effort to design a new collective bargaining agreement.


Rosenthal, Ken. "Yankees Snipe at Mets in Revenue-sharing Gripe." FOX Sports. N.p., 25 Mar. 2016. Web. 06 Apr. 2016.

07 April 2016

Owner-Management Issues in the NBA

Guest Post by Kyle Artus

As NBA teams become more and more profitable, owners are wanting to have more and more control over the players they are putting out on the court. I can’t necessarily blame them, it is their money that is paying the players after all. However, more and more owners are stepping in player personnel decision that should probably be left up to the GM and the rest of the front office. Owners try to make their own decisions on who to draft, sign, or trade, hire a coach and then completely disagree with him on every major issue, and try to stop General Managers from doing their job.

James Dolan, the owner of the New York Knicks, has historically been an owner who wants to get involved in every facet of the team. Two summers ago, he hired Phil Jackson to be the President of Basketball Operations. Phil Jackson has won 11 championships as a coach in the NBA and is widely considered as one of the greatest basketball minds of all time. When Jackson was hired, he was given responsibility over staff hirings/firings, free agent signings, trading players, and drafting players. One month after he was hired, Dolan had already tried to stop him from doing his job. According to the NY Daily News, Jackson had wanted to make some changes to the staff and was planning on firing some of the current members. Dolan came in and put a stop to that.[1] Dolan has a history of doing things like this. He did the same thing to the former GM Donnie Walsh when he was trying to trade for Carmelo Anthony. Walsh had every intention of pursuing a trade for Anthony, but Dolan came in, took over the negotiations, and traded for Anthony right away instead of waiting for a better deal as Walsh had suggested.[2] It is difficult for anyone in management, who are supposed to be the ones skilled in dealing with basketball transactions, to do their job the right way with an owner like that constantly interfering.

A similar story is transpiring in Sacramento with their new owner Vivek Ranadivé. Ranadivé’s came in as owner after an ownership family named the Maloofs sold the team. The Maloofs were generally disinterested in basketball and making the Kings a successful team. So all Ranadivé really had to do was try and he would look better. And he has. But perhaps too much. So far, he has hired Vlade Divac to perform the basketball operations of the team. Together, they hired George Karl to be the head coach. Since then, everything that has come out of Karl’s mouth seems to be the opposite of what comes from Divac’s and Ranadivé’s. Karl has been very verbal about the need to trade star player Demarcus Cousins. He has many times said that they have been looking to trade Cousins. Ranadivé has many times stepped in and said a complete different thing.[4] Reports surfaced that Ranadivé wanted to fire Karl merely four months after hiring him because they thought to have agreed that Karl would not be involved in personnel decisions.[3] Frankly, the personnel decisions should be left up to Vlade Divac since it is job, and both Ranadivé and Karl should stay out of it. However, overactive owners and coaches will always think that they know what is best for the team.

It is no coincidence that both the Knicks and the Kings are two of the teams with the bleakest outlook in the NBA. The Knicks have one aging superstar in Carmelo Anthony and a promising rookie with Kristaps Porzingis, but they also don’t have a draft pick this year and have no other real promising players. The Kings have a superstar in the midst of his prime in Demarcus Cousins, but have consistently failed to build around him. They tried this year by bringing pass-happy Rajon Rondo and sharpshooter Marco Belinelli, but they are still on the outside looking in when it comes to the postseason.

Owners need to recognize that just because they are the ones with the money to pay the players and the staff, they are not the ones who know how to best run a basketball team. They need to let the people in charge of making personnel decisions actually make the personnel decisions. By having a little bit of trust in the people they hired to run the team, these teams could actually turn it around. The best owners are the ones who are willing to pay what is necessary and who stay out of the GM and the coaches’ way.

1 http://m.nydailynews.com/sports/basketball/knicks/source-dolan-stop-jackson-knick-staff-firings-article-1.1765645
2 http://bleacherreport.com/articles/2025630-report-james-dolan-stopped-steve-mills-from-firing-mike-woodson
3 https://mobile.twitter.com/SportsCenter/status/614167723929673728
4 http://www.usatoday.com/story/sports/nba/kings/2015/06/22/sacramento-kings-owner-vivek-ranadive-demarcus-cousins-trade/29143601/