Why does David Stern love small markets?
I don’t recall who first pointed this out, but the issue was raised in the last 12 months, and I’ve been paying attention since then. No doubt, Stern is oddly committed to small markets.
I can rationalize this. But first, the evidence…
- Vancouver failed, so Stern supported a move to…Memphis?
- Charlotte got a replacement franchise after the first franchise left. Still hasn’t demonstrated any ability to support a team.
- Stern gave his blessing to the Sonics move to Oklahoma City.
- Stern, in effect, forced the Maloofs to wait for Sacramento to get its stuff together.
- And… Stern refused to sell the Hornets to anyone who wanted to move the team from its host city of 350,000.
His fascination with small markets goes way longer than that brief timeline. I mean, he allowed a team in Charlotte in the first place. He let Sacramento have a team. Probably his only mis-step has been letting the Clippers flee San Diego.
It is obvious to me, and probably many others, that the league would be healthier if a few teams moved to share large markets (NY, Chicago, and the Bay Area can all support an extra team), and a couple of teams just go away (contraction).
But, David Stern is a clever, clever man. Surely he sees something we don’t?
Actually, yes. He probably does.
The key to prosperity is growth: growing revenue, and growing profits. To some extent, this happens organically, due to inflation, and as the population of the USA grows. But Stern, like all savvy businessmen, wants more than organic growth. For that, you need to expand your market.
In the NFL, the dominate revenue stream is national television rights fees, which are shared equally across all franchises. This allows teams in backwaters like Green Bay, Cleveland, Cincinnati, and New Orleans to participate as equals. Not so in the NBA, where the dominant revenue stream is local tv rights fees, which are hoarded by individual franchises.
Baseball has the same revenue dilemma. But in baseball, a low-payroll team can occasionally contend for the title. This actually happens often enough to keep the league relevant, and afloat. In the NBA, evidence points the other way: low-spenders never contend for titles. In fact, they never even make the playoffs.
Stern has talked for years about expanding internationally. To Europe. Or China. Or somewhere. But it keeps not happening. I think that Stern is painfully aware of this. So, instead, he is trying to push the NBA out into the hinterlands. It is his only real option.
I bet Stern has a map in his office that shows all the TV markets served by the NBA. He sees the blobs of color covering the North East, flaring across the South, and climbing up the West Coast. He wants to fill in all the empty parts. He wants all of North America to identify with an NBA team. It’s not a terrible vision, really.
Problems come when a long term vision collides with urgent issues of the moment. For example: when negotiating a new CBA. It becomes awkward to assert that revenues are low, when relocation to larger urban centers is an obvious solution. But Stern ducked that bullet, and the next CBA will be Adam Silver’s problem.
(It is lucky that Sacramento’s fight for the Kings is occurring while Stern still holds the scepter. Clay Bennet heads the relocation committee, and he is Stern’s man. So if Kevin Johnson can raise $525 MM, and a stadium plan, I have no doubt the Kings will stay put.)