Economist Murphy takes us all to school on players stance

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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 NBA.com’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.

NBA.com: (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.”

Adam Silver: NBA could eventually reseed in conference finals

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NBA commissioner Adam Silver has three major talking points on 1-16 playoff seeding (rather than the current system of 1-8 seeding by conference):

1. He likes the idea of it.

2. He doesn’t feel bound by the tradition of an East vs. West format.

3. Travel is a big impediment. Not only would there be more playoff series between teams farther away, the regular-season schedule would have to be balanced and therefore include more games between teams currently in opposite conferences.

(An important point I think Silver doesn’t raise nearly enough publicly in regard to a balanced schedule: That’d mean more away games that start at 10 p.m. for Eastern Conference fans and more away games that start at 4 p.m. for Western Conference fans. That can’t be good for TV ratings.)

The NBA commissioner added another consideration in the debate.

Silver on ESPN:

The other thing you could potentially do is reseed at the conference finals. And that deals with if your two best teams are in the same conference. So, there are some other approaches to deal with. You want the two best teams to meet in the Finals.

A balanced schedule wouldn’t be necessary with this setup. The semifinals would either be fairer and produce a better NBA Finals or have the same matchup we’d get in the current system.

Even more importantly, this could pass.

As fun as it is to debate the optimal postseason format, there’s no way enough Eastern Conference owners (at least five, necessary to create a two-thirds majority) approve. They want to protect their eight playoff spots and guaranteed Finals spot.

But what if Eastern Conference teams were still guaranteed eight playoff spots and two semifinals spots? That be enough. The Rockets and Warriors – two Western Conference teams – are the NBA’s best this season. In coming years, it could be the 76ers and Celtics – two Eastern Conference teams. That’s far more variable than which conference is stronger throughout.

If teams in championship contention feel the very top of their conference will be weaker than the other conference, they could resist. But that still leaves contenders that don’t feel that way and non-contenders that want the additional shared revenue a better NBA Finals would generate.

That’s a plausible path to 20 yes votes and something we should take seriously.

Knicks owner James Dolan: Jeff Hornacek ‘way behind’ in dealing with modern players

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The Knicks fired Jeff Hornacek as soon as they returned to New York following their season-ending win in Cleveland.

Then, they really unloaded on the coach.

Knicks owner James Dolan, via Larry Brooks of the New York Post:

“I think Hornacek had the same kind of issue that Phil did in that he didn’t grasp how different the players are now in the way they think and deal with management and the coaches,” Dolan said. “I think he was way behind on that.

“But I think Jeff is a good coach and he’ll do well when he’s hired by another team.”

“The old-style coaching doesn’t work,” Dolan said. “A coach who tries to do everything himself isn’t going to be successful.

Knicks president Steve Mills, via Marc Berman of the New York Post:

“I think just as we observed the team, there were a lot of things that we just thought would be better at, from attention to detail to player accountability, and Jeff did a good job in some areas. In some areas he could have done a bit of a better job.

Knicks general manager Scott Perry, via Berman:

“The evaluation of Jeff for 82 games, we evaluated everything — practices to games to ability to connect with guys. I think we need to be better in that area and with adjustments. It’s something we could be better at with the expectations we have for our next coach.”

“We could have been a little bit better in situational basketball,” Perry said. “We understand the roster as much as anybody. In terms of consistency, we fell a little bit short in that area.”

This is atypical candor about a fired coach. Most teams just thank him and move on.

But I appreciate it. Don’t we all want to know more of what NBA teams are thinking internally? This is revelatory.

That said, I don’t blindly trust the Dolan/Mills/Perry triumvirate. The Knicks have misevaluated too many people for too long. This more about knowing how they viewed things than knowing this is how things are.

Frank Isola of the New York Daily News:

According to a source, Dolan last season sent an email to Hornacek saying he was disappointed in him for not buying fully into the triangle offense. This took place sometime around the All Star break. So we know that as recently as last season Dolan, who loves to tell you he’s not involved, was actually pushing Phil Jackson’s offense down Hornacek’s throat in a not-so-subtle way.

Dolan had Phil’s back. And then on Wednesday, Dolan trashed Jackson for being out of touch. Man, life comes at you fast.

To be fair, Suns general manager Ryan McDonough also cited Hornacek’s lack of connection with his players when firing him. This will be something Hornacek must answer for if he pursues future head-coaching jobs. Hornacek feuded with Marcus Morris in Phoenix and Joakim Noah, Kyle O'Quinn and reportedly Kristaps Porzingis in New York.

Not that the Knicks set up Hornacek to succeed. They didn’t.

Now, they must find a coach who will perform better in all the areas they just criticized Hornacek for. That’ll be more difficult than criticizing him on the way out the door.

76ers in their feelings about garbage-time shots (video)

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In the Heat’s Game 2 win over the 76ers, Philadelphia rushed a 3-pointer to cut Miami’s lead to eight with 6.2 seconds left. Heat point guard Goran Dragic took the ensuing inbound, dribbled past a pressing Ben Simmons, avoided a swipe attempt by Robert Covington and drove in for an uncontested layup:

Covington, via Anthony Chiang of The Palm Beach Post:

“It definitely matters because you can just dribble it out, everything,” Philadelphia forward Robert Covington said. “But you know, we don’t understand why he did it. But overall, we just said, OK, that gives us anticipation because obviously he didn’t care about the simple fact of the score of the game. They were already winning.”

Dragic, via Chiang:

“I don’t care,” Dragic said when asked about the Sixers’ reaction to the play. “The first game we were down 30 and they were still running [inbounds plays after timeouts] with seven seconds left in the game. It’s the playoffs. I’m doing everything it takes.”

Dragic’s play was perfectly fine. If the 76ers didn’t like it, they should have stopped it. Beyond that, why risk allowing a miracle comeback? It was the right, safe play.

Philadelphia tried to return the favor in its alreadyfeisty Game 3 win last night.

His 76ers up 19 with the shot clock off, Ben Simmons pushed the ball ahead and passed to a streaking Dario Saric, who attempted a layup. Kelly Olynyk blocked Saric’s attempt. Then, Miami guard Wayne Ellington fouled Covington with 1.7 seconds left, prolonging the game with free throws:

Philadelphia center Joel Embiid, via Ian Begley of ESPN:

“I wish I was there in that Game 2, because I was kind of pissed about it. … I was on the sideline, really mad,” Embiid, who missed the first two games of the series due to an orbital fracture and concussion.

Embiid said he told his teammates to look to score if they encountered the same scenario late in Game 3.

“It’s always good to blow a team out,” he said. “I think we were up 18 or 20 and if you could get that lead up to 22, I think it’s good. I love blowing teams out. I like the fact that we did that. We’re not here to make friends. We’re here to win a series.”

Heat forward Winslow, via Begley:

“I think they felt disrespected by Goran’s [layup], and we weren’t just going to let them do that,” Miami’s Justise Winslow said.

This is all so silly.

Last month, Saric scored late on the (pressing) Cavaliers in a game that looked decided. (Cleveland guard Jordan Clarkson then threw the ball at Saric and got ejected.) But the 76ers are going to be aggrieved now?

To their credit, the Heat fulfilled the don’t-it?, stop-it philosophy with Olynyk’s block.

Jrue Holiday stops to point at Jusuf Nurkic, who had just gotten dunked on by Anthony Davis (video)

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Jrue Holiday has spent most of the Pelicans-Trail Blazers series making life miserable for Portland star guards Damian Lillard and C.J. McCollum.

In New Orleans’ Game 3 win last night, Holiday turned to tormenting Jusuf Nurkic.

After Anthony Davis putback-dunked on Nurkic, Holiday stopped to point at the Trail Blazers center. Yes, we saw. But I still appreciate Holiday calling our attention to Nurkic just in case.