Adapt or die.
The Darwinian concept seldom is more true than in the world of professional sports, and the NBA is no exception. From the lengthening of uniform shorts to the moving of the stanchion, from the “one-and-done” revolution to the rise of the three-point shot, the NBA has had to navigate countless ever-shifting factors — internal and external, large and small — in order to survive.
The latest upheaval — an influx of a new breed of eccentric, largely self-made billionaire owners — is no exception. Whether from the world of technology, entertainment, or venture capitalism, these owners have helped breathe new life into the league and its coffers.
They’ve also brought to bear increasingly industry-specific dogmas that are fast challenging the old order of NBA relationships.
2010: Mikhail Prokhorov, Russian billionaire-industrialist-politician, purchases an 80 percent stake in the New Jersey Nets, in the process moving the franchise from its longtime Meadowlands digs to the hipper (and more commercially lucrative) New York City borough of Brooklyn. Prokhorov, the NBA’s first non-North American owner, teams up with rapper-turned-mogul Shawn “Jay-Z” Carter to finance construction of the Barclays Center, of which the former controls a 45 percent interest.
2013: Dotcom prodigy Chris Hansen sets his sights upon restoring the Sonics to the Emerald City by attempting to take the Sacramento Kings off the hands of the much-maligned Maloof family. The gambit includes a well-publicized battle with a group led by technology maven Vivek Ranadivé, who, along with longtime Stern assistant and former All-Star point guard Kevin Johnson, succeeds in keeping the Kings in Sac-Town.
2014: The Milwaukee Bucks are sold by longtime owner Herb Kohl to private equity maven Wesley Edens and hedge fund manager Marc Lasry. The new owners are instrumental in coach Jason Kidd’s messy departure from the Prokhorov’s Nets to coach the Bucks.
2014: The Los Angeles Clippers are sold for $2 Billion to former Microsoft honcho Steve Ballmer, who immediately is the subject of sweaty, crazed courtside photos and of stories of continued dysfunction in the organization post-Donald Sterling.
Welcome to the new NBA, where new-money owners are increasingly imposing their wills and industry mentalities upon their newfound charges. At the core of their philosophy is a requisite sense of innovation-driven urgency, along with expectations that their unique skill sets will magically translate to immediate playoff success — seemingly by osmosis. Such approaches have changed the game in such a way that, while league coffers and future team sales stand to become even more lucrative, the short-term effects on players and coaches are becoming increasingly contentious.
These new owners — particularly those in technology and finance — have made a living on a my-way-or-the-highway ethos. As entrepreneurs, many have weathered daunting odds to create massive, lucrative enterprises. They’ve identified needs, filled those needs, and gotten filthy rich as a result. They’re used to being doubted, ridiculed, and second-guessed.
They’re also used to picking their teeth with the bones of those they’ve vanquished, whether by way of a higher buyout bid or creating products superior to those already on the market. These victories, and the ego-inflation that results, lead to a feeling of invincibility, whereby these owners are compelled seek out new frontiers upon which to plant their proverbial flags — and woe to anyone who gets in their way.
But while this way of thinking would seem to mesh well with the competitive warrior mentality of the NBA, the synergy hasn’t been so seamless.
In the case of Kings owner Vivek Ranadivé, a string of private-sector turnarounds — and the PR lore surrounding his success in turning his twelve-year-old daughter’s underperforming basketball team into state champions — has earned him a reputation as one of the more hands-on members in the NBA’s Board of Governors.
Consider the 2014–15 mid-season firing of former head coach Mike Malone. Malone’s Kings were in the midst of a season-altering winning streak when a freak bout of viral meningitis sidelined the team’s best player, DeMarcus Cousins, for 16 games. Malone, of course, just happened to be the only coach thus far capable of connecting with the mercurial center (and Cousins’ career-best numbers arguably reflected as much).
Following Malone’s dismissal, Ranadivé promoted then-assistant Tyrone Corbin to interim head coach. Following a 7–21 stretch, it was Corbin’s turn to hit the road, leading to the end-of-season hiring of the crusty, but battle-tested George Karl, 2013’s Coach of the Year. While Karl was certainly proven, he also tends to prefer the same fast-paced, run-and-gun offense that some speculate is what got Malone fired in the first place.
Ranadivé’s hyper-aggressive management style doesn’t end with his curious coaching carousel. From the addition of Vlade Divac as Vice President of Basketball Operations/General Manager, to the subsequent departures of special advisor Chris Mullin and former general manager Pete D’Alessandro, to the incessant Cousins trade rumors (allegedly at Karl’s behest, but which have now, apparently, been squashed), it’s sure seems like Ranadivé, founder of a multi-billion dollar real-time software company, prefers turnover to stability, and constant tweaking over staying the course.
Nets owner Mikhail Prokhorov, meanwhile, has garnered the dubious distinction of signing off on some of the league’s most horrendous contracts — Joe Johnson, Deron Williams, and Brook Lopez, for starters — with scant return on his investment. This despite Brooklyn playing in the historically abysmal Eastern Conference, where a sub-.500 team can net (no pun intended) a playoff seed. To their credit, the Nets did make the 2015 Eastern Conference playoffs, eventually getting bounced from the first round by the No. 1-seed Atlanta Hawks.
As recently as January, Prokhorov was mired in a very public will-he-or-won’t-he media dance involving rumors he was preparing to sell the team — the same franchise for which he wildly overpaid five years ago, and which continues to lose him money (to the tune of over $20 million in 2014–15). Prokhorov ultimately decided not to sell the Nets — at least for now — but given the team’s shaky near-future prospects (ESPN ranked them dead last in its recent Future Power Rankings), it likely won’t be the last time we hear of the mercurial oligarch waffling over his shiny American toy.
This is not to say the new breed of owners somehow suffer from collective Attention Deficit Disorder, or that their methods are scattered or slapshot. These men (and women) are revered, if not universally loved, in their fields. Much like their predecessors, they earned their money through a lot of hard work, albeit from behind computer screens or through the kind of social networking unheard of to the Old Guard. The problem comes when the need to be bigger, better, faster runs into headlong into human relations. Put another way: These owners are no longer dealing with microchips or derivatives, but real people — many of whom can be resistant to change, and abrupt change especially.
It’s no secret that the most successful teams in the league have maintained some semblance of front-office stability, with some degree of succession plan firmly in place for managers, coaching staff, and players. Those teams which have suffered the most chaotic personnel roller coasters (the Kings aren’t the only one) tend to foster more player unhappiness, which leads to things like trade demands, Twitter tirades, and other unseemly lash-outs.
Despite their inherent idiosyncrasies as billionaires, NBA majority owners have, for the most part, come from a particular handful of backgrounds — sectors that tend to require patience and time in order for success to be achieved. To wit:
- Real estate and construction: Peter Holt, San Antonio Spurs; Stan Kroeneke, Denver Nuggets; Herbert Simon, Indiana Pacers; Larry Tanenbaum, Toronto Raptors
- Traditional banking: Dan Gilbert, Cleveland Cavaliers; Robert Sarver, Phoenix Suns
- Telecommunications: James Dolan, New York Knicks; Ted Leonsis, Washington Wizards; H. Irving Grousbeck, Boston Celtics
- Transportation and Sales: Tom Benson, New Orleans Pelicans; Mickey Arison, Miami Heat; Richard DeVos, Orlando Magic
- Inheritance: Jeanie Buss, Los Angeles Lakers; Gail Miller, Utah Jazz; James Dolan
That all changed starting in 1985, when Paul Allen — co-founder of Microsoft, a company whose cutting-edge dynamism helped to define the latter part of the 20th century — broke the mold with his purchase of the Portland Trail Blazers. Allen was followed 15 years later by software guru Mark Cuban, who purchased a majority share of the Dallas Mavericks using money made during the 1990’s dotcom boom.
Recently, even more tech dollars have flowed into the league. Robert Pera of the Memphis Grizzlies (an Apple engineer-turned-wireless mogul), Ranadivé, and Ballmer represent a new wave of ownership change.
Taking advantage of the opportunity created by the Donald Sterling saga, Ballmer used his (considerable) war chest to purchase the Clippers as sole owner, and the price served as a wake-up call to the rest of the league, particularly in terms of team valuations.
But admission to the NBA Owner’s Club hasn’t been limited to tech-titan veterans. Indeed, denizens of other industries are getting in on the fun, too — particularly from the world of private equity finance. These owners include Leslie Alexander (Houston), Wycliffe Grousbeck (Boston), Tom Gores (Detroit), Joe Lacob (Golden State), and Lasry (Milwaukee). Meanwhile, the eclectic group that recently purchased the Atlanta Hawks (for either $730 million or $850 million, depending on who you talk to) is led by investment banker Tony Ressler, and includes the following luminaries:
- Jesse Itzler, a former rapper and co-founder of top private plane rental company Marquis Jet.
- Itzler’s wife, Sara Blakely, founder of popular undergarment brand Spanx.
- Townsquare Media CEO Steve Price.
- Rick Schnall, partner at private equity investment firm Clayton Dubilier & Rice.
- And former NBA star/current TNT analyst Grant Hill, who founded a private equity firm after his NBA retirement.
The tech and entertainment industries are worlds unto themselves, demanding mindsets and motivations that, when employed properly, can take a person very, very far — financially and otherwise. More important, these are worlds wherein instantaneous results and ever-increasing innovation are paramount; as soon as a new gadget or software upgrade is released, companies are already hard at work on the next version. As are their competitors.
Entertainment, meanwhile, is similarly high-risk-high-reward, but with a heavier emphasis on splashy, flashy, showstopping facades and a comparative dearth of cutting-edge innovation. Need evidence? Just look at the industry’s almost preternatural propensity for recycling and rebooting the genres, directors, and stars of the past. Yet these industries still very much revolve around high-dollar deals transpiring at warp speed — deals that can literally make one an overnight millionaire.
To expect the tactics and practices wrought in these worlds to translate seamlessly to the realm of professional sports — where resistance to change can be borderline pandemic — is unfair. Egregiously so, when it concerns the players and coaches who make the league the viable business that it is.
The Kings drama is but one example of the new breed of NBA owner trying to teach an old dog new tricks, but that barbarians-at-the-gates dynamic — strained, often awkward — is by no means Sacramento’s alone.
Early on in his Clippers tenure, Ballmer famously admitted he was going to phase out the team’s iPads (made by Microsoft uber-nemesis Apple) and replace them with Microsoft Surface tablets, in addition to peddling other MS products. Ranadivé, meanwhile, made clear his desire for a championship ring and a faster, more exciting game — using a rather interesting player formation — all within his first year on the job. For his part, Ballmer was thrilled the Clippers were once again on the Finals prowl, but made it clear he’d be disappointed in anything less than a ring during his sophomore year as owner. Then there’s Prokorhov, who seems to have scaled back his lofty expectations, like a child grown tired of the toy he begged for all year.
This is the new reality of the NBA: Once seen as another way to deepen community ties and provide a lasting legacy for one’s family, ownership of a professional sports franchise has increasingly become a sexy status symbol, with no shortage of well-funded wallets waiting to seize the next sale.
Nature abhors a vacuum; something will always come to fill the vacancies. While more traditional sectors fail to generate the kind of revenue capable purchasing a NBA team these days, it seems inevitable that ownership will continue trending towards the tech-and-finance profile typified by the current vanguard. To put it in perspective: Herb Kohl, a retail-and-real-estate mogul, purchased the Milwaukee Bucks for $18 million in 1987. In 2014, he sold it to Marc Lasry, a hedge-fund manager, for $550 million. Coupled with the NBA’s relatively high ownership turnover, it stands to reason this new breed of owner will soon be the rule, rather than the renegade exception.
As the league considers allowing advertisements on team jerseys, a la the WNBA, it wouldn’t be surprising to see pharmaceutical companies (flush with baby-boomer money), or even video-game developers, join the ownership fray. As society becomes evermore dependent on technology, it stands to reason those providing digital goods and services — whether coding an app or founding a popular social media company — could generate the means to purchase a NBA team.
Such changing of the guard by no means spells the league’s death knell, of course. As society becomes more tech-driven, owners capable of better incorporating things like digital marketing and social-media outreach — video streaming, apps, and the like — could prove a boon to the league’s bottom line. Teams that can’t adapt get left behind, as fans become more eager for virtual interaction and players become aware of how closely their “brands” are intertwined with their virtual presence. It’s no longer enough for a team to have radio and television broadcasts of its games; without someone live-tweeting the action, it might as well not have happened.
At the same time, a robust social media presence is pointless if there are no wins to draw the eyes. Therein lies the ultimate Catch-22: As NBA ownership trends increasingly towards the tech-savvy, there’s bound to be improvement in how these teams engage with their fans. But if the owner’s managerial style — honed over years in cruel, cutthroat business — becomes too aggressive or abrasive, the team’s performance is bound to suffer.
As the league’s middle and lower classes struggle to stay afloat financially (despite the looming influx of an absurd TV windfall), which could cause more sales, expect the true changing face of the league to be not the combo guard or pace-and-space offense, but a tech-based, microwave-success mentality taking root within the highest ranks of an increasing number of NBA teams.
Originally published at www.si.com on October 22, 2015.