NBA commissioner David Stern has wielded unquestioned power over his sport in a way rarely seen during the past 30 years. He will retire in February 2014, handing power over to to his longtime deputy, Adam Silver. It is unlikely that any commissioner will exert the sheer domination that Stern exercised again. So what is his legacy?
In 1984 the National Basketball Association was a very different league. The sport's premiere event, the NBA Finals, had been shown on tape delay on television at 11:30 p.m., as recently as 1981, and other playoff games continued to be on tape delay through 1986. Teams like Chicago were lucky to draw 7,000 fans a night. The average salary in the league was well under $250,000. Franchises could be purchased for as little as $11 million. The four-year deal for national television with CBS was worth $91 million. The popular perception was that no game was worth watching until the final two minutes because every game was decided at the last minute. The NBA was not considered a sport at the same level of the NFL, Major League Baseball or college football. Stern dramatically changed that table.
Stern understood the concept of branding and marketing. He pushed the players to be as attractive and media friendly in their public appearances as possible. He saw the natural rivalry and star power of the Los Angeles Lakers with Magic Johnson competing against the Boston Celtics with Larry Bird. Their contests were always featured on national television. He realized how shoe companies could help build the brand, especially Nike, and how that would lead to endless hours of free exposure for basketball.
As technology progressed, he became adept at utilizing every platform of content supply, twitter to mobile phones to reach fans. He pushed the creation of a NBA network. He had NBA players compete in the Olympics starting with the 1992 "Dream Team." That led to outreach world-wide and the internationalization of the NBA as a world sport. He saw the potential in China and other foreign markets. He understood the concept of "star power." He was fortunate to have the Michael Jordan era followed by Shaquille O'Neal, Kobe Bryant, LeBron James and other recognizable figures that became household names. He also added seven expansion franchises, extending the reach of the league. And he created a luxury tax system to deal with market inequity in which the lowest income teams split up $180 million.
The economic explosion occasioned by the reshaping of the NBA was dramatic. Revenue increased exponentially. National television increased from a USA/ESPN/CBS combined package for the league of $28 million per year to the TNT/ESPN/ABC package of $930 million per year. This doesn't count local or regional television contracts. The Lakers signed a deal with Time-Warner Cable, which starts this year which pays them $200 million a year. The Celtics signed an agreement with Comcast Sports Net New England, which gives the team a 20 percent equity stake in the network and doubles their rights to roughly 38 million per year.
Television revenue has a direct effect on franchise value. The Lakers value expanded to a NBA-high $900 million based on their Time-Warner deal. The Golden State Warriors deal with Comcast pushed their value up to $450 million, roughly a 25 percent increase. Jerry Reinsdorf bought the Bulls in 1985 for $16 million and today they are valued in the range of $600 million.
The players were beneficiaries of the new financial largesse. The average salary of an NBA player today is $5.15 million. The highest paid player in the ;eague is Kobe Bryant at 27 million. Keep in mind that many rosters have "maxed out superstars" and players at the $300,000 minimum. Endorsement revenue can more than double the on-court income of a player like Kobe Bryant. NBA players have the advantage over other sports that fans can see their bodies and faces clearly and their shoe-wear translates into every day wear.
When it came to labor negotiations, the mask of cordiality disappeared from Stern and a harsher, more bullying side emerged. It was evocative of the corporate theory of "Bulwarism" which evolved in the labor negotiations of the 1930's. Management scientifically decided what was the only rational position for both sides and was unwavering in the face of all odds.
As meticulously as he protected the NBA image in other areas, he was content to endure strike after lockout after missed game to achieve his goals. He made antagonistic public comments about the players, their leadership, and their position as if the public really has a stake in a battle between what it perceived as millionaires versus billionaires. He was successful in imposing a salary cap on teams and rookies, which protected management from them. He did reduce the percentage that players receive of the gross revenues from basketball from 57 percent to 49 percent. That will save owners some $3 billion is salary and benefits in the next ten years.
Ego and arrogance aside, David Stern radically changed to scope and popularity of the NBA in a way that has benefited fans, owners and players and it is doubtful that a figure that omniscient will rise soon again.
-- Leigh Steinberg has represented many of the most successful athletes and coaches in football, basketball, baseball, hockey, boxing and golf, including the first overall pick in the NFL draft an unprecedented eight times, among more than 60 first-round selections. His clients have included Hall of Fame quarterbacks Steve Young, Troy Aikman and Warren Moon, and he served as the inspiration for the movie "Jerry Maguire." Follow him on Twitter @SteinbergSports.Full Story >>