Terrific piece here from Malcolm Gladwell on the NBA lockout, and especially the colorful recent business history of the New Jersey Nets.
Gladwell’s overarching point here, and in a previous piece on Grantland, is one I’ve made many times. Pro sports teams are not businesses. They are luxury goods like works of art, yachts, Ferraris or Italian Villas. Consider the following quote from Cleveland Cavs’ owner Dan Gilbert:
“To me, NBA franchises are like pieces of art. There are only 30 of them. They aren’t always on the market, especially a franchise that would have been such a natural fit. … If you just looked at the Cavaliers in terms of revenues, profits and balance sheets — and you paid this amount for it — people would say ‘You’re insane! You’re nuts.’ But if you look at all the tentacles, the impact on our other venues, it makes tremendous sense. We have now opened a Cleveland office [of Quicken Loans] and that’s tremendously successful. Our employees love it that we’re associated with the Cavs and can come to games — that helps us attract and keep better people. There are a lot of nonprofit things that can be done with pro sports. It brings an unbelievable amount of excitement.”
The analogy wobbles a little when you consider that works of art don’t have moving, human parts that have to be managed, lavishly transported around the country, coached and paid, and may have, you know, entourages and six children with four mothers.
But only a little.
Consider the Nets’ situation, in which the previous owner, Bruce Ratner, wanted the team as part of a mega-real estate arena project in Brooklyn. A competing offer to buy the property from the city, from a developer named Gary Barnett, would have used less land, been far less intrusive to the existing neighborhood, and would have resulted in just apartment buildings. No arena. No Nets.
Oh: And Barnett’s offer was triple Ratner’s.
Gladwell: “Barnett lost. He never had a chance. He wanted to build apartments. Ratner was restoring the sporting glory lost when the Dodgers fled for Los Angeles.”
And here’s the money quote:
“Wealth, after all, is as often the gift of good fortune as it is of design. For whatever reason, the wealthy of that era could have pushed for a world that more closely conformed to their self-interest and they chose not to. Today the wealthy have no such qualms. We have moved from a country of relative economic equality to a place where the gap between rich and poor is exceeded by only Singapore and Hong Kong. The rich have gone from being grateful for what they have to pushing for everything they can get. They have mastered the arts of whining and predation, without regard to logic or shame. In the end, this is the lesson of the NBA lockout. A man buys a basketball team as insurance on a real estate project, flips the franchise to a Russian billionaire when he wins the deal, and then — as both parties happily count their winnings — what lesson are we asked to draw? The players are greedy.”
