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Economist Murphy takes us all to school on players stance


Kevin Murphy is smarter than you.

And me. And David Stern and Billy Hunter and everyone else in the negotiating room. There’s no objective way to prove that, but do you have a MacArthur Foundation “genius grant?” Are you the guy the people who wrote “Freakanomics” think is the smartest person they know?

That’s Murphy. And he’s the players’ economist. Union head Hunter said that pretty much every projection Murphy made back in 2005 about how the labor deal hammered out then would play out was spot on. He may grasp all the moving parts of this negotiation better than everyone.

And he spoke at length with’s Steve Aschburner. You need to read this. All of it.

Know that Murphy has a dog in this fight — the union pays him. But he is too insightful not to read.

And this goes back to the core arguments of the entire lockout — how much money are the owners really losing? And who should pay for it?

I would say the primary disagreement is not over the accounting numbers. It’s what you include and how you interpret the numbers. For example, the accounting picture of the NBA isn’t very different from what it was five years ago or 10 years ago in terms of ratio of revenues to costs and all the rest — it’s changed very little. Which immediately tells you, wait a minute, if the underlying financial picture is similar today to what it was five years ago or 10 years ago, and people are paying $400 million or whatever for franchises, and you’re telling me that these things lose money every year, something’s missing, right? These people aren’t stupid, right? These guys are worth billions of dollars. So why did they pay all this money for franchises that, it looks like, lose money?

Well, the answer is pretty clear. There are a couple of things that are really attractive. One is, historically, you’ve seen franchises appreciate in value and that appreciation has more than outstripped any cash-flow losses that you’ve had. And if you’re in the right tax position, it’s actually pretty good because you’ve got a tax loss annually on your operating and you’ve got a capital gain at the end that you accumulate untaxed until you sell it and then pay at a lower rate. So you get a deferred tax treatment on the gains and an immediate tax treatment on the losses, that’s not a bad deal.

I’ll be honest, the last couple sentences are hard to follow for me. My tax position does no require a lot of thought. But you get the idea that what is in the official books is not the entire picture.

To all of you people saying “name another industry where the workers would get half the revenue” (yes, we read the comments) Murphy has an answer:

In certain sectors, there’s a ton. You go to a law firm, most of its cost is labor. You’ve got to remember, labor is 60-something percent of the economy. In the service sector, it can be much higher than that. And these people really define the product. These are the ones people come to see.

What separates the NBA from a different basketball league? Well, it’s the players. The basketball’s’ the same, the court’s the same, it’s the players who really are the distinguishing feature. That’s not to say that the league doesn’t have value. But the defining characteristic and the scarce resource, if you think about it from an economic point of view, is the talent. It’s not unlike Hollywood, the music business or any of the other ones where the thing that distinguishes one person from another is the talent.

Then there is the competitive balance issue. The idea from the owners that there needs to be more parity, something Murphy says clashes with the NBA’s star-driven league. Like another report yesterday, Murphy says that what you spend really only has about a 5 percent to 10 percent impact on wins on the court. (The owners) want Milwaukee fans, for example, to not only root for the Bucks but to have most seasons with hope that their team can compete with bigger-revenue markets.

KM: There’s an element of that. But also, be careful what you wish for. When you get a Sacramento-Charlotte NBA Finals, guys will be crying over the TV ratings. We know that even with baseball — it’s an exciting World Series but the ratings aren’t there because it’s the Texas Rangers and St. Louis [Cardinals]. Basketball is even more star-driven. You get to an NBA Finals that doesn’t have one of the premier players in the league in it, it becomes a lot less interesting. And with 30 teams, not everybody is going to have one of the premier players.

All the number crunching is nice. But let’s get to what really matters:

Can the two sides reach a deal soon so we can have basketball?

“I was very pessimistic last week after the Thursday blow-up but I’m beginning to come around and think we’ve got a shot,” Murphy said. “If there’s a deal here, it’s going to be a deal that nobody likes. That’s what deals are. Nobody walks out feeling like they got a complete victory. That’s initially. But then you get back to playing and you realize, geez, I can live with this.”

Players’ union, NBA to set up cardiac screening for retired players

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First it was Darryl Dawkins. Then it was Moses Malone.

Two all-time great players who recently died — and at t0o young an age, 58 and 60 respectively — from undiagnosed heart conditions. Even before that, recognizing the issue the NBA players union and the league itself were setting up supplemental health coverage to provide cardiac screening for retired players, something ESPN’s Jackie MacMullan recently broke.

The joint effort between union executive director Michele Roberts and NBA commissioner Adam Silver — at a time when there still may be potentially acrimonious labor negotiations looming for their sides — is intended to ease the health concerns of its retired players.

Roberts said action from the players’ association on providing screening for its retired players is “imminent.”

“I wish I could give you an exact timetable, but we have to make sure all the components are in place,” Roberts told ESPN recently. “I will tell you we hope to have something sooner than later.”

The Cardiologists are affiliated with the NBA already, and some of the money will come from the league, while the union is both pitching in a chunk of cash and is the one organizing this, according to the report.

It’s good to Roberts and Silver working together on this. While you’d like to think this would be the kind of no-brainer move that the league and union would work together on, in the past the relationship didn’t always facilitate this sort of cooperation even on the obvious.

I’d like to think this bodes well for future labor talks, but I’m not willing to completely draw that parallel.


Stephen Curry drops 30 on Portland in preseason (VIDEO)

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Somebody is in midseason form.

Stephen Curry put up 30 on Portland in a preseason game Thursday night, hitting six threes and getting to the line 15 times over the course of his less than 26 minutes. It was quite a show.

Portland won the game 118-101 behind 25 points from Allen Crabbe and 22 from Damian Lillard. Not a lot of defense in this one but it was fun to watch.