I guess I want to take down the System (NBA)

Three weeks. That’s the offseason for KMARK. Three weeks. No Spring Training. No Training Camp. Nothin. Right. Back. In the. Saddle.

LIV Golf told everyone they were a startup and looking for cash and were ready to Grind after Saudi Arabia pulled its indefinite funding of the breakaway golf tour. Startup? Investors? Possibly you, Mr. Bryson DeChambeau. Why not? I’m being serious. Why is a startup with multiple employees worth more than $100m looking for investors? Ask them. Ask Phil, Rahm, Sergio, Cam Smith. This is the frothiest startup sports investing environment in history. Pickleball teams? Funded. Tier 2 soccer teams? Funded. WNBA franchise rights? Exploding. Institutional capital flooding into college sports? Exponential. Minority shares of franchises in Tiger’s Tuesday Golf League (you know, the indoor sim golf tournaments held once a week) are valuing teams between $90m-$100m! Why a Tour headlined by the world’s preeminent Youtube golf star can’t raise money is their own fault. It’s the fault of every player and executive involved. I’m not going to pretend I understand golf tour economics better than the next guy, but the lack of distressed investor interest in LIV indicates that this tour is folding and folding fast. And when it does, we’ll need a deep dive into golf’s portfolio of consumer products (Majors, PGA Tour, TGL, Ryder Cup) and whether or not the health of the sport is properly packaged and delivered to us fans. Which is great, because Break’s Over and I need something to write about.

Adam Silver has a weird appreciation of European sporting mechanics. For a man that looks like he’s never actually spent a summer under the Tuscan sun, he sure does have an affinity for mid-season tournaments, NBA Europe, and now, draft oriented relegation. That’s right. Borrowing from the Western World’s greatest meritocratic societies (joke), the NBA is instituting a relegation zone for the bottom three performing NBA teams that strips the Biggest Losers’ of the best draft lottery odds. Hot damn I’m back in the saddle.

If you’re a bottom 3 performing NBA team, you’ll have worse odds at landing the top pick then teams who finish 4-10 from last. There are other elements of the NBA’s draft lottery reform, and no shortage of people wringing their hands at a system destined to fail, but it’s the relegation zone that has caught most of the attention. This is your punishment for blatant tanking. In theory, teams will fight for their lives to move from worst to 4th worst.

Alright, it’s time to take a position on these reforms. Here it is: Silver and Teams are missing the Bigger Picture. Of course I, a systems thinker, understand that the NBA fundamentally has a team building problem, not a draft problem. The league convinced themselves that Tanking is the only productive team building strategy (it’s not) because Free Agency and trades yield inconclusive results. Free agency is broken in the NBA and those ramifications produce Tanking and these busted draft reforms. Consider that at most 2-4 teams enter the offseason with any level of cap space needed to sign a free agent. The league’s best players don’t even bother with the free market anymore for two reasons: massive early career extension opportunities and no promise of any actual market should they play out their contract. More to the point, the league’s insane salary cap, luxury tax, financial engineering requirements to make a legal trade restricts teams abilities to actually trade present for future value. The latest CBA reintroduced the Expiring Contract trade because it’s impossible for over-the-cap teams to swap players without matching salaries. And remember, every team in this league operates over the cap. Adam Silver can’t rip up the CBA, can’t redefine what a non-taxpayer Mid Level Exception means, and thus won’t change the pathways franchises have to actually improve year over year. The only strategies GM’s will imagine involve wild strokes of luck (Jokic, SGA) or multi-year tank fests. Maybe the relegation zone proves to be wildly entertaining. The externalities remain to be seen, but I’d be saved from sitting through another slog of an NBA season where a quarter of the league quits on the season if Silver (and Bain, McKinsey, any consultancy that doesn’t employ me) could just think a little bigger.