The NBA Story

How the Sports League Slam-Dunked Its Way into a Global Business Powerhouse

Rich Mintzer,Eric Mintzer

• Editorial: HarperCollins Leadership
• Año: 2020
• ISBN:
  9781400218868
• Categoría: Betriebswirtschaft
• Categoría: Wirtschaftsgeschichte

The NBA Story will help you understand and adopt the competitive strategies, workplace culture, and daily business practices that enabled the exciting basketball league to become the powerhouse it is today.

Today's NBA is filled with larger-than-life figures, like LeBron James, James Harden and Stephen Curry, who effortlessly dominate the courts. But it wasn't always so glamorous.

The multi-billion-dollar league has grown from humble roots into a sports powerhouse that is loved around the world due to savvy digital marketing and a global focus. Thanks to the popularity of individual players and team rivalries, the NBA has survived league mergers and financial crisis. Teams have earned the respect of millions of loyal fans who are dedicated to the success of every organization within the league.

Through the story of the NBA, you'll learn:

• How to keep a dream alive when it seems like no one wants to see it come true.
• How a company can find their way out of a financial crisis.
• How presentation is the secret sauce to the success of any show.
• And how a company can build a loyal fanbase who will do anything to keep them on top.

Discover how this iconic organization got it right and created a successful long-lasting business, and how you can do the same for your company.

CHAPTER ONE

THE FOUNDING AND STARTUP YEARS

The fast-paced excitement of today’s NBA, with mega popular multimillion-dollar athletes and a multibillion-dollar television deal, started out, like most businesses, on a wing and a prayer. The hope was that such a competitive sport could bring some excitement and joy to a nation that had just played an integral part in World War II. Soldiers were back home, families were moving to the suburbs, and the time was right to grow a professional indoor, winter sports league that would not conflict with the nation’s beloved summer pastime, baseball. It was a sport that had grown organically, starting as a game played in school gymnasiums, playgrounds, and YMCAs, then graduated to high school and college teams. It had already gone professional, but the NBA was going to improve upon the business of basketball as never seen before.

The National Basketball Association was the result of a business merger. It took place initially in 1946 when two rival men’s basketball leagues, both struggling for different reasons, merged, the National Basketball League (NBL) and the Basketball Association of America (BAA). Together they remained a larger version of the BAA for three seasons before being officially billed as the National Basketball Association (NBA) in 1949. However, NBA statistics include those final three BAA seasons and the 1946 merger is widely considered the league’s starting point.

Unlike many businesses, the NBA was conceived as, and remains, an entirely independent and fully self-managed organizational body (a limited corporation) whose members, the teams, are franchises operating as businesses that are independently owned. In 1946, each team paid a franchise fee of $10,000. Today, a new team entering the NBA would pay upward of $300 million.

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Unlike many businesses, the NBA was conceived as, and remains, an entirely independent and fully self-managed organizational body (a limited corporation) whose members, the teams, are franchises operating as businesses that are independently owned.

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The league operated, and continues to operate, under a constitution and a set of bylaws that constitute a contract among the members of the association, who are the owners, now sometimes referred to as governors. These team owners worked out the details of the league constitution and bylaws. The NBA Constitution spells out the governance structure of the league, including the rights and responsibilities of the team owners, the board of governors, and the commissioner. The NBA bylaws provide the framework for the operation of the league, which includes team and player requirements.

The league commissioner, known as the league president until 1967, would be elected by the owners. He was granted disciplinary power, dispute resolution authority, and decision-making authority, including the power to appoint other officers and committees. The owners, in conjunction with the initial league president, created the initial league rules, which were based, to a large degree, on the rules of the previous leagues and on those used in college basketball. It should also be noted that in the initial season, the NBA had a salary cap, which was eliminated after just one season and did not return for nearly forty years.

While the league was now in the startup phase, funded almost entirely by the franchise owners, issues arose almost immediately, which is not unusual following such a merger. The most notable concern was that while the leagues both offered the same product, professional men’s basketball, they had radically different markets: small town and big city.

The National Basketball League, established in 1937, consisted primarily of Midwestern teams sponsored by some of the major corporations of the time, such as the Anderson Packers founded by the owners of a meat packing business in Anderson, Indiana, and the Akron Firestone Non-Skids, named for the Firestone Tire and Rubber Company, based in Akron, Ohio. The NBL teams played most of their games for small crowds in small venues. The Indianapolis Olympians, for example, played in the Hinkle Fieldhouse while the Fort Wayne Pistons actually played their home games in the North Side High School gymnasium. Five of the teams in the current NBA trace their roots back to the NBL. What made the NBL worthy of the merger was that they had the more talented, better-known collegiate players, and college basketball had already gained notoriety with tournaments dating back to the 1920s.

Meanwhile, the Basketball Association of America featured teams in larger markets, which played at venues such as at Madison Square Garden, home to the New York Knicks, and the Boston Garden, home to the Celtics. The big markets were a plus, especially when it came to local marketing, at the expense of the teams, and drawing larger crowds, However, the caliber of play was not at the level of the NBL teams.

The plan was to have four of the more successful NBL franchises join the BAA to complete the merger and hopefully bring together the star players from smaller markets with the drawing power of the teams playing in major markets. This would mean people in New York City or Boston, for example, could see top young stars, (still well-known from their college days), even if they were not on the home teams.

Launching the Business

The new league unveiled their product in Canada on November 1, 1946. While the league was still technically the BAA, this is considered the first-ever NBA game and it was played between the New York Knicks and the Toronto Huskies in front of a crowd of 7,090 at Maple Leaf Garden. It was not a bad turnout considering Toronto was known as a “hockey town.” Even the arena, Maple Leaf Arena, was named for the city’s NHL team. Longtime sportswriter Sam Goldaper, covering the game, wrote that the game “bore little resemblance to the leaping, balletic version of today’s NBA. That game was from a different era of low-scoring basketball, a time when hoops as a pro spectacle was just coming out of the dance halls. Players did not routinely double-pump or slam-dunk. The fact of the matter was that the players did not and could not jump very well. Nor was there a 24-second clock; teams had unlimited time to shoot. The jump shot was a radical notion, and those who took it defied the belief of many coaches that nothing but trouble occurred when a player left his feet for a shot.”¹ The Knicks won the league opener 68–66.

Maurice Podoloff

The person responsible for bringing the two leagues together was Maurice Podoloff, a distinguished attorney who headed the BAA from its inception. Podoloff was also president of the American Hockey League and founder of the New Haven Arena which he opened in the mid-1920s with his brothers. He was more knowledgeable in law and real estate than he was in sports. However, being a good negotiator served him well while dealing with the differing personalities of the team owners. Following the merger, Podoloff would serve as president of the new league which would include seventeen teams in three divisions. The season would run from October through March with each team having an awkward schedule which had teams playing between sixty-two and sixty-eight games, followed by playoffs in April.

Podoloff would spend seventeen years at the helm of the NBA, constantly supporting team owners in their quest to stay financially solvent. He introduced the college draft in 1947 which would bring new talent into the league every year and secured the league’s first television deals for the NBA, first in 1953 with the DuMont Network for one season and then a long-term deal starting in 1954 with NBC.

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Podoloff would spend seventeen years at the helm of the NBA, constantly supporting team owners in their quest to stay financially solvent. He introduced the college draft in 1947 which would bring new talent into the league every year and secured the league’s first television deals for the NBA, first in 1953 with the DuMont Network for one season and then a long-term deal starting in 1954 with NBC.

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Startup Years

Since the NBA was not a totally new business, it had an established product with professional men’s basketball, there was already a small but steady fan base. The franchises maintained most of their players, some of whom had already developed a local following. League offices were maintained by a small staff in New York City while the owners maintained their franchise offices and remained enthusiastic during the early years, well-aware that they still held the purse strings, and that if their enthusiasm weaned they could exchanges players, sell the team, look to relocate or dissolve the franchise entirely.

College basketball provided the most significant competition to the league in the early years. However, the popularity of the college game also worked in favor of the league by providing talent once Podoloff initiated the college draft. This attracted fans who had read about college stars to see if they were as good as the rave reviews in the sports pages.

Among the NBA players who were already well known from their college days and had established themselves as stars in their local markets were Dolph Schayes, Neil Johnston, Bob Pettit, and Paul Arizin. While they all excelled in the early years of the league, one additional player was noteworthy for his impact on the sport and that was George Mikan. He played for the BAA, and then the NBA, for the Minneapolis Lakers. Mikan was the NBA’s first big man, at 6’10”, 245 pounds, and the first must-see superstar. He not only led his team to five titles, but he drew fans wherever the Lakers played. Mikan also created the drill for big men to practice shooting (known as the Mikan Drill) and was the impetus for several of the league’s rule changes.

Despite the presence of Mikan and a favorable environment for the league, overall ticket sales remained low, particularly in the small markets, and there were no major television deals to drive revenue and promote the league during those first few seasons. In fact, college doubleheaders were still bigger draws than NBA games. Several NBA teams had difficulty scheduling their home games around ice hockey, boxing, and other events at some of the major arenas.

The league was almost entirely dependent on ticket sales as a source of revenue and Podoloff, along with the team owners, were constantly trying to market the product. To help publicize the new league, Podoloff hired J. Walter Kennedy, who was well known within the sports media establishment, having served as the publicity director for the Harlem Globetrotters on their national and international tours.

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College basketball provided the most significant competition to the league in the early years. However, the popularity of the college game also worked in favor of the league by providing talent once Podoloff initiated the college draft. This attracted fans who had read about college stars to see if they were as good as the rave reviews in the sports pages.

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Movement and Contraction

In hopes of increasing attendance, several team owners moved their franchises to new markets, some making several moves before finding a more permanent home. Teams such as the Tri-City Blackhawks would move to Milwaukee in 1951 in hopes of gaining more attendance. When that didn’t happen, they moved to St. Louis in 1955 where they would play for thirteen years before moving to Atlanta, where they remain today. The Fort Wayne Pistons would leave the high school gymnasium for an arena in Detroit in 1957; they too have stayed put. Other teams would move to larger markets, where they would either thrive or move again, such as the Rochester Royals who, due to lack of profitability, started making their way across the country, first to Cincinnati, then to Kansas City-Omaha and finally to Sacramento, where they were anointed “Kings.”

In some cases, owners found a new market that was eager to watch professional basketball, so they moved their teams, while in other cases, owners failed miserably. Several disgruntled team owners tried to move their teams, but could not secure a profitable city with an arena in which to play. It was (and still is) also quite difficult to sell a franchise in a fledgling young business. As a result, some team owners threw in the towel early on, deciding that it was better to take smaller losses rather than hanging onto a sinking ship in a struggling league. Contraction within the NBA dropped the league from the original seventeen teams down to ten by the second season (eleven with the addition of the Baltimore Bullets). The league was down to just eight teams by the start of the 1955–56 season. It wouldn’t be until 1970, some twenty-one years later, that the NBA would return to the seventeen-team league at which they started.

Innovation Saves the NBA

Maurice Podoloff, an astute businessman, provided the league with a strong business plan, built in part on the wisdom of notable management consultant Peter Drucker, who emphasized the need to recognize what the customer wants. In this case, the customers were the fans, and they wanted to see a fast-paced game between some of the country’s finest athletes. With that in mind, Podoloff was still looking for suggestions to improve the fan experience.

Led by George Mikan, the new league was generating fan interest, as anticipated, plus the NBA was drawing additional crowds in the early years by having the Harlem Globetr...