Labor Negotiations, Point Guards, and Genius Economists

So I am starting to get a little obsessed with the ongoing progress, or lack thereof, in the National Basketball Association's labor dispute between the owners, (billionaires that mostly didn't get to be billionaires by accident), and the players, (millionaires that also mainly did not get there by accident, unless you consider being 'tall' an accident).Who's that guy? That's not Metta WP.

For months the negotiations have dragged on, and last week the league announced the postponement of the start of team training camps and the cancellation of several early pre-season games. These developments, while not totally unexpected, act to raise the pressure on both sides to reach a settlement quickly, as the start of the NBA regular season, (and the point where players and owners actually start to feel the economic impact of the labor problems), is clearly in jeopardy of being postponed as well. Soon, each week the league and its players fail to come to an agreement means a week of games that will not be played, effecting players, team staffs, arena workers, media and broadcast partners, and all the extended ecosystem of stakeholders in the league. Not to mention me, and how I'll need to find a way to kill every Tuesday, Wednesday, and Friday night from November until June.

From the ESPN.com piece linked above, here's a short recap of the last set of negotiations between the league officials, and representatives for the player's union: (I've added some descriptors in parentheses for clarity).

(NBA Commissioner David) Stern celebrated his 69th birthday Thursday but didn't appear in a festive mood after meeting for about five hours with leaders from the union. He was joined by Silver, the deputy commissioner, Spurs owner Peter Holt, who heads the labor relations committee, and NBA senior vice president and deputy general counsel Dan Rube. (Los Angeles Lakers Point Guard Derek) Fisher, (Union chief Billy)Hunter, attorney Ron Klempner and economist Kevin Murphy represented the union.

 A description of a classic 'Management v. Union' negotiating meeting, right? High-ranking officials from the league, the Union Chief, the player's rep (Fisher), and of course a couple of lawyers and even an economist tossed in for good measure by the player's side. 

Typical unless you take a closer look at the one, 'sort of out of place but not really because I've never heard of him' Economist, Kevin Murphy.

Because Mr. Murphy is not just an ordinary economist - in fact he might be one of the smartest and most influential economists out there. From Mr. Murphy's Wikipedia page:

In 1997 Murphy was awarded the prestigious John Bates Clark Medal by the American Economic Association, given once every two years to the most outstanding American economist under the age of forty, and widely considered to be the second most prestigious prize in economics (after the Nobel Prize in Economics). Murphy was cited for his study of the causes of growing income inequality between white-collar and blue-collar workers in the United States and his research linking the growth in income inequality to growth in the demand for skilled labor. His other research has covered such topics as economic growth, income inequality, valuing medical research, rational addiction, and unemployment.

On September 20, 2005, he was named as one of the 2005 recipients of the MacArthur Fellowship, often referred to as the "genius grant."

So I can imagine the mindset of Commissioner Stern, (no dummy certainly), and the league owners in all this. They have (collectively), more money, more power, more control, and probably think more negotiating leverage in this situation. They usually sit across the table from union officials and player representatives and have to think - 'We're smarter than them.'. It would not be an irrational conclusion. 

But all of a sudden the meeting starts, and in walks the economic genius, Mr. Murphy along with the Union Chief and the Lakers point guard, and I wonder if Stern and the owners did a double take. Did they know who Mr. Murphy is? Did they have any idea about his history and reputation? Did they know they were sitting across a 'not quite but probably pretty soon Nobel prize candidate'?

You want to win your Beer League Friday night softball game? Easy. Bring in a ringer from the local college baseball team and claim he's the new guy in Accounting. 

Want to get an edge at the negotiating table? Drop a 'genius' economist next to your starting point guard.

Eventually a deal will be reached, and the games will be scheduled, and it is hard to know which side will 'win', but for me I'll give the players the halftime lead for their creative approach to stacking their team.

The NBA, where a 30% pay cut was the better option

So the National Basketball Association, henceforth referred to as the 'NBA', 'The League', or 'The Association', fresh off by most accounts was a very successful season, one that started with the LeBron James 'Decision' drama last summer, followed by a compelling regular season that saw several young players raise their play to superstar status, and capped off by a dramatic Championship series were the aforementioned James' Miami Heat team was defeated by a rag-tag, inspirational band of tattooed milliionaires from Dallas, has managed to follow up on its recent success and buzz by failing to forge a new labor agreement between the owners and players, resulting in a classic 1930's style Lockout1.

The lockout has effectively stopped almost all league business, imposed a ban on teams having any contact with their players, and has even resulted in the scrubbing of the NBA's and associated team websites from player photos, bios, and really most signs that people actually play the games2.

Since in a lockout situation the owners no longer have to pay the players, one might think the teams could settle in for a protracted impasse, since player salaries make up the majority of team expenses. But even though the lockout is but a few days old, some teams are already making decisions that seem primarily intended to reduce non-player labor costs. Case in point - the Los Angeles Lakers decision to decline to renew the contract of long-time Assistant General Manager Ronnie Lester3.  

From the ESPN Los Angeles piece on Lester's departure from the Lakers:

Barring a last-minute change of heart, Lester's 24-year run with the Lakers will end when his contract expires this month. By then, at least 20 other Lakers staffers, including almost all of the scouts who work under Lester in the basketball operations department, will have already packed their belongings and headed home. They've been told little by the team, except that employees whose contracts expire on or after June 30 would not have their contracts renewed, and their jobs may or may not open up again down the line.

So on the surface it seems like a sad, but kind of straightforward deal. The League is in what appears will be a lengthy labor dispute, the upcoming season is perhaps already in danger of being delayed, if not totally canceled, and teams like the Lakers are taking quick and aggressive steps to reign in labor costs that are still in their control.  Makes sense right, and really isn't all that noteworthy a story. 

That is until we catch one more little tidbit about the Lester employment situation with the Lakers, buried about 2/3 the way into the piece:

Lester wasn't fired or laid off. By all accounts, he's still greatly respected within the organization and around the league. Lakers general manager Mitch Kupchak considers him both a friend and one of the best assistant GMs in the league. He just didn't protect himself well enough last summer when the Lakers gave him the option of signing a one-year contract for the same pay as before, or a three-year deal at a 30 percent pay cut.

Now it gets more interesting. Apparently this time last year, the Lakers offered Lester a choice - re-up for one year at his current salary, or take a 30% hit but get the security of a three-year deal. Twelve months ago the lockout might have seemed a possible but unlikely outcome given the apparent irrationality of a collection of mostly billionaires (the owners) and millionaires (the players) being unable to agree on a fair division of a massive pot of revenues4. But even as far back as last summer even the most optimistic observers of the NBA scene were expecting a labor problem, and a likely lockout. 

As an executive on the inside, Lester had to know that the lockout was likely, and he must have also suspected that in the event of a lockout, front office personnel might be in a tenuous situation. But knowing that, and presented with a three-year, 30% pay cut option, he elected to re-up for the single year, maintain his salary level, and leave himself exposed to the contract non-renewal it appears he is facing this month.

Tough call, even when not staring an impending business crisis in the face. But it is a good question to ponder, even if a theoretical one.

If your employer offered you a three-year guarantee with a 30% pay cut, would you take the deal? 

Or would you roll the dice like Ronnie Lester did, maintain your salary for the time being, and take your chances?

Notes:

1. That sentence was over 100 words in length. Ridiculous. Get an editor.

2. It is really kind of jarring. Take a look at NBA.com if you don't believe me. The front page of the Knicks team site features a tribute to the team's dancers and the 'Knicks Now' section is mainly about some recent community outreach efforts by the club featuring team executives.

3. Lester's best season of his NBA playing career was 1981-1982, when he averaged 11 points per game for a pretty bad Chicago Bulls team. The second leading scorer on that team was Reggie Theus, possibly more well known to readers as the star of Saturday morning classic 'Hang Time'.

4. There is quite a difference in opinion how profitable (or not), the NBA is, and whether or not the players or owners are mainly responsible for the current labor crisis. Some good background can be found on the FiveThirtyEight blog at the New York Times site.

Traffic, housing choices, and commitment

A couple of weeks ago I posted about an interactive map/tool for the San Francisco area that was developed (at least in part), to help people understand the decisions and tradeoffs related to their choices and opportunities for work and housing. Simply put, the tool helps you assess the costs and commuting times and options associated with Living in Location 'A' and working in Location 'B'. Some of these dynamics and tradeoffs are changing of course, but still for many jobs, the requirement for employees to be physically present in an office or other work location is a fact of life, and will remain so probably forever.

Decisions about where to work and where to live are never easy matters, but for some fortunate folks like C-suite executives or National Basketball Association head coaches, (yes, another sports reference), the decisions are a bit easier, as their comparatively more lucrative compensation packages provide more options and flexibility in terms of housing choices. Let's face it, there are not too many neighborhoods that an average CEO or NBA coach would feel were out of reach.

That is what I was thinking about this morning when I read a piece from the online Orange County (Ca.) Register about new Los Angeles Lakers Head Coach Mike Brown, and his decision to buy a home in a neighborhood called Anaheim Hills.  Only having been an occasional visitor to Southern California, that headline did not really resonate with me, but digging in to the piece reveals a bit more about the potential consequences and ramifications of Brown's decision:

According to Google Maps, (Brown's new home) that’ll be 45 minutes to practice without traffic (but an hour and 20 minutes with traffic) and 43 minutes to Staples without traffic (but an hour and 40 minutes with traffic.)

Brown is sacrificing proximity to his Lakers work to be close to Santa Ana’s Mater Dei High (emphasis mine). That’s where son Elijah will play basketball and son Cameron will play football

Everyone, even the occasional visitor to the LA area like myself, knows or at least is subconsciously aware of LA traffic, and the way in which it effects work and family life in that area. For new Lakers Head Coach Brown, who has a contract paying him (according to reports), $18.25M over four years, to elect to live in an area that will almost certainly present pretty significant challenges and stress simply getting to work has raised at least a few questions amongst supporters and media that cover the team.

Could it be that Brown, recently fired as the head coach of the Cleveland Cavaliers despite being named the league's Coach of the Year the prior season, is well aware of the total lack of job security that comes with being an NBA coach, and thusly elected to choose housing that was more in line with his non-work or family life? NBA coaches are notoriously known as incessant workaholics, and the league is rife with tales of coaches sleeping in their offices, missing important family events, and generally devoting themselves to the sport and their teams. I am not saying that is the right or intelligent approach, but it just has been that way for a long time.

Perhaps Brown represents a shift from that old-fashioned and unhealthy kind of approach to life as an NBA head coach, and by choosing to live closer to the center of his family life he is signaling that he sees that balance or fit between the two as being just as important as success on the court. If so, that is to be commended I think.

But I do wonder if the Lakers organization sees it the same way, and if they are looking at their new $18M coach who potenitally will be frequently stuck on the freeway, navigating LA's notorious traffic jams to try and get to the game or to practice, when it seems at least from the outside looking in that he had lots of other options.

What do you think? Should the Lakers or any organization care or get involved on the personal choices their leaders make about these kinds of things?

How far away from the Arena is too far?

The NBA, where your team leader hates your chances

Tonight is like Christmas, my birthday, and the last day of school all rolled into one - the start of the 2010-2011 NBA season!

For me, it means 50 or so nights to be disappointed by the New York Knicks, the chance to watch LeBron and his talents with the Miami Heat pretty much every other night, and hopefully more great and pithy leadership lessons from Jeff Van Gundy.

At the start of the year most NBA teams have some sense of excitement, (real or fake), and express optimism (at least publicly) about their chances for a successful upcoming season. You know, the whole 'hope springs eternal' bit.  And why not?  Every team has at least a few star quality players, and even the 9th and 10th guy on the bench is a pretty talented player as well.

So prior to the start of the campaign, confidence is pretty much the order of the day, and standard cliches abound. 'If we stay healthy and stick to our strengths, we can contend', or 'If we all concentrate on our roles and share the ball, we will be right there at the end', are mostly what you hear from the top players and team leaders before opening night.  

Given that, it was pretty surprising to see the quotes attributed to two-time NBA league MVP Steve Nash about his team, the Phoenix Suns, and their prospects for the coming season. Nash has been reported to have said (variously) that the team has "a long ways to go", is really a "work in progress". and finally, "to be honest, if I was outside this picture, and a betting man, I would probably pick us to be outside the playoffs".

So your team's best player, and leader, goes public with his expressions of doubt about the team's chances for a successful season.  Probably not going to do too much to fire up the fan base, or even inspire the rest of the players to (over) achieve.  It is pretty common for sports teams to try and adopt an 'no one believes in us' or 'it is us up against the world' strategy to generate and sustain motivation, but that generally only works when the 'them' are the media, the other teams in the league, or even directed against former players and coaches that have departed.

Usually 'it's us against them' falls down when the 'them' is one of your own, and worse still, your leader.

What's your take - does the team leader need to 'fake it', at least publicly?

Go Knicks!

The Logo

The National Basketball Association's (NBA), league championship series commences tonight, with the Los Angeles Lakers facing the Boston Celtics.  It should be an epic series, matching the league's historically most successful franchises.

The picture on the right is the official NBA logo, an iconic image that has represented the league since 1969. Even casual fans probably recognize the logo, but many don't realize that the silhouette in the image is actually based on a real player, the legendary Jerry West, one of the best players to ever wear an NBA uniform.

In addition to West's original nickname, 'Mr. Clutch', given for his uncanny capability to perform at a high level in the most important games, he is perhaps more widely known, at least to the generation of fans that never actually saw him play live, as 'The Logo'.

The image of West, purposefully advancing the ball was meant to represent the real essence of the NBA game, fast paced, athletic, and highly skilled.  In the 1990's the league got away from this essence and style of play when the pace of the game slowed remarkably, the emphasis was placed on punishing and physical defense, and scoring and excitement waned. 

Fans and observers generally hated this slow, plodding, and overly physical style, as it ran contradictory to what the NBA always stood for and the dynamic and exciting type of play that is suggested by 'The Logo'.

Over time the league began to realize that changes needed to be made to try and inject more open and exciting play back into the game, to play to the long term strengths of the league and the brand, and frankly to try and bring the game back, at least philosophically to its position when the logo was created. The just-concluded NBA Western Conference Finals between the Lakers and the Phoenix Suns was evidence of this shift in approach, the games were high scoring, energetic, and not marred by excessive physical play that can detract from the flow of the game.

The larger issue in all of this is I think, how did the league, and organizations in general, allow themselves to stray so far from their essence, those defining characteristics that they were founded upon, that distinguish them from their competition, and define the types of talent that will be attracted to their ranks? How did the NBA let the game deteriorate so far that the lingering memories of that era are 72-63 playoff games and bench clearing fights?

If the organization believes in something - a philosophy, a strategy, or a  set of values strongly enough to imbue them in your organizations' logo, then it is probably a good idea to take a look back at that logo from time to time, especially when things seem to be straying.  Are the decisions we are making, the behaviors that we are rewarding, and the messages we are sending to employees, customers, and the community consistent with 'The Logo'?

Jerry West confidently gliding up the court to hit a winning shot is a much more telling image than Jeff Van Gundy clinging to the leg of an enraged Alonzo Mourning.

Oh and by the way - my pick for the Finals is the Lakers winning in seven games.