NEW YORK, NY - JUNE 30: Commissioner of the NBA, David Stern announces that a lockout will go ahead as NBA labor negotiations break down at Omni Hotel on June 30, 2011 in New York City. The NBA has locked out the players after they were unable to reach a new collective bargaining agreement (CBA). The current CBA is due to expire tonight at midnight. (Photo by Neilson Barnard/Getty Images)
Guest contributor Tyler Goldman, CEO of BUZZMEDIA and former sports attorney, joins SB Nation to weigh in on the NBA lockout and explain why David Stern is at fault.
David Stern is solely responsible for the current NBA lockout. No one else.
The two sides are forced to hold relatively firm to what percentage of the pie they are getting because the pie is not growing at a meaningful rate. Stern, for 26 years the league's commissioner, has never been able to lead growth, and no one should have any confidence that he will do so in the future.
This is not to say that under Stern's leadership, the NBA has not grown gross revenues substantially. The league has and Stern was handsomely rewarded for this top-line growth with an enormous contract of at least $10 million, or roughly 5 percent of the total difference now between the players and the league. But unfortunately, the growth under Stern has been incredibly misleading for a couple of different reasons
First, the league's growth was largely built around aggressive and successful marketing by sporting goods manufacturers, Nike in particular. Nike developed the marketing messaging that drove league growth as Stern took over, and the company spent significantly to amplify the message. The company's goal was to sell product, namely shoes. To do so, the marketing messaging revolved around players. Hence the focus on marketing brands like Jordan, Bird and Magic. This brought new life to the business of the NBA, and increased television and ticketing revenues, but it undercut the brands that David Stern represents as commissioner -- the teams.
The upshot of that is that most games are meaningless from a marketing standpoint. While the season is long and most games do not have the urgency of playoff implications, many other sports are able to generate interest under the same circumstances having created loyal followings to the teams. The league's short-term strategy of focusing on individual players continues today, with LeBron James, Dwyane Wade and Chris Bosh being heavily marketed instead of the Miami Heat. Baseball has a Big Three, too: A-Rod, Mark Teixeira and Derek Jeter all play on the same team; but it is presented in every bit of league marketing as the New York Yankees.
Second, Stern compounded the problem of declining team brands by adding more brands through expansion. The NBA already had under-marketed brands in many markets when it decided to take short-term cash by selling franchises into markets like Vancouver and a post-millennial Charlotte.
Third, Stern has executed poorly with emerging opportunities, some that are natural fits for the league he runs. Many examples stand out, such as the failure to deliver a quality digital offering or TV network; Stern ultimately turned over control of those valuable distribution channels to Turner. While fantasy sports has taken off like Dr. J coming in for a tomahawk dunk, not so fantasy basketball. Likewise, despite the international appeal of basketball as compared to American football and baseball, it does not appear the NBA has figured out how to capitalize on the opportunity beyond a few games in London and China. Instead, it appears that Stern has instead focused on vanity projects like the NBA Store in NYC. Notice that the massively popular NFL doesn't have a brick-and-mortar store, but does run its own robust NFL Network and digital offerings.
All of this should not be surprising, as Stern has faced very little pressure to deliver -- the majority of Stern's constituents bought into NBA at very low price points and have seen their assets appreciate grandly. Moreover, Stern has strong public relations skills, enabling him to manage his theoretical bosses. The lack of pressure has changed recently with owners losing money. No matter how wealthy someone is, no business owner wants to lose money. Probably more impactful, many in the old guard are selling to highly leveraged buyers, which will likely create an impetus for leadership change so they can get an appropriate return on their investment. But this is in the long term. In the short term, with heavy positioning from Stern himself, owners are focusing on re-cutting the pie, when the real answer is to grow the pie. Unfortunately, the only recipe Stern knows is PR.
After a quarter of a century, it appears the answer for the NBA is to replace the lawyer in charge with someone with the marketing and business acumen to grow the asset value of the teams, and thereby the league. By better marketing the teams and the league, the NBA can ensure that its pie keeps getting bigger, like those of the NFL and MLB. That could happen as the ownership ranks change, but it's already too late to prevent another blow to the league in the form of a season shortened by a lockout. For fans, it is a pie in the face.
Tyler Goldman is CEO of BUZZMEDIA, digital's fastest growing entertainment publisher with a worldwide audience of 112 million monthly users. BUZZMEDIA publishes many of the web's most well known entertainment and music properties like Celebuzz, The Superficial, Stereogum, Buzznet and HypeMachine. Prior to BUZZ, Tyler was involved in founding Broadband Sports and Movielink, was a venture capital attorney at Wilson, Sonsini and a sports attorney at Steinberg & Moorad. He attended law and business school at Northwestern after Dartmouth College. Tyler lives in Los Angeles but still has season tickets to the Warriors and hopes his sports editorials will not detrimentally impact the future location of his seats.