The Lockout And Gladwell's 'Psychic Benefits'

Is owning a sports team close enough to being involved in a 'normal business' that owners deserve a profit? Or is the author Malcolm Gladwell's 'psychic benefits' currency enough? It's easy for Gladwell to take that perspective, as he's not among the 22 NBA owners claiming to have lost a total of $370 million last year. So were there also $370 worth of 'psychic benefits' that balanced the books?



This may be more than a philosophical argument regarding a New Age'y concept vs. a bottom-line one; making allowances for both schools of thought may be central to settling the NBA labor dispute.

Even amid the inactivity of the two sides – following the lead of Congress and the White House, they all appear to be on vacation – one negotiation fact is clear: The owners are demanding, folded into the new CBA, a revised business model that allows them guaranteed profits.

This leads to the debate, plunged into headfirst by the thoughtful Gladwell (best-selling author of such deep-but-accessible best-sellers as "The Tipping Point'' and "Outliers''), that professional teams haven't the right to be treated like "normal businesses'' because there is nothing about them that resembles "normal.''

Writes Gladwell on the Grantland.com site: "The rationale for the NBA lockout, from the owner's perspective, goes something like this. Basketball is a business. Businesses are supposed to make money. And when profits are falling, as they are now for basketball teams, a business is obliged to cut costs — which in this case means the amount of money paid to players. In response, the players' association has said two things. First, basketball teams actually do make money. And second, if they don't, it's not the players' fault. When the two sides get together, this is what they fight about. But both arguments miss the point. The issue isn't how much money the business of basketball makes. The issue is that basketball isn't a business in the first place — and for things that aren't businesses how much money is, or isn't, made is largely irrelevant.''

Gladwell is certainly correct about the tax benefits and the antitrust stuff and the way stadiums are financed, all factors that make owning the Boston Celtics or the Dallas Mavericks different from owning a beer distributorship or a chain of radio stations or a pickle factory. Owners have used the public's appreciation of its own "psychic benefits'' to coerce that same public into footing their bills.

Smile


But when Gladwell essentially asserts that the NBA's "business model'' cannot be broken because basketball isn't a "business'' at all, he's stepping into debatable territory. Who is to say it's not a business? Aren't there myriad different businesses, from the SMC review to Suzie's lemonade stand? Because Mark Cuban sees value in assembling an in-the-red $90 million payroll to win a championship, does that mean Milwaukee's Herb Kohl is obligated to feel the same way? Some owners view themselves as "caretakers of a public trust.'' Others used to own the team in Seattle.

How do we regulate the former view and eliminate the latter? We can say what desire of our owners in terms of blood, sweat and dollars commitment, but I don't know how Billy Hunter, let alone Malcolm Gladwell, is going to mandate that desire in the next CBA. We cannot. Because on some level, it IS a business. THEY own it.

Gladwell says that most owners are involved in sports for what he terms the "psychic benefits" they get from being in charge of an iconic and fun institution. He compares it to a collector who derives from ownership of a Van Gogh both the nuts-and-bolts benefits of investment and the artsy-fartsy fun of being a fancy big-shot. Malcolm even cites an expert who pins the exact percentage of the second "value'' at "28 percent.''

Forgetting for a moment how "28 percent'' sits somewhere between "guesswork'' and "complete malarkey'' … Did my Van Gogh lose me 50 games last year? Did my Van Gogh fans opt to not pay to come admire my Van Gogh? Did my Van Gogh cost me $30 million in (on-paper, at least) losses?

And now it's time to negotiate with my Van Gogh. Does somebody really expect me to give this hunk of canvas and paint a greater piece of the revenue pie because being in partnership with it makes me feel so good? We often buy a candy bar or a new car or a new home based on emotion, fueled by Malcolm's "psychic benefits.'' But how can Gladwell accurately calculate the value percentages there, as he offers so matter-of-factly? (My $1 candy car is made up of 72 cents worth of chocolate and 28 cents worth of emotion?!) And further, back to the point of what an owner is and what a business is: If I'm Mark Cuban or Herb Kohl, who is Malcolm Gladwell to tell me how valuable my "psychic benefit'' is? How can he know?

Let me assure you of this: New NBA owners Joe Lacob (Warriors), Joshua Harris (Sixers) and Tom Gores (Pistons) have grabbed their piece of the league because they have balanced, in their minds and in their checkbooks, the exact value of ownership – including whatever emotional value comes with it. Those three men in particular have financial backgrounds; they are as brilliant in the field of money as Malcolm is in the field of journalism. They needn't be lectured on the financial aspects of owning a business/non-business. Furthermore, Malcolm's position that they overpaid for their teams because they see them as paintings is grossly inaccurate. The Warriors, Sixers and Pistons sold for a lot of money because once we do get a new CBA in place, the NBA as a whole is going to be printing the stuff. And they want access to the printer.

Oh, and let's zip back to the negotiating table: Malcolm's analogy is faulty at its core. The Van Gogh painting that you bought doesn't sit across from you demanding a bigger portion of your revenue, doesn't threaten to move to China, doesn't request more leg room on the team plane and doesn't need a Wii in its locker stall. And you know, if Van Gogh went 32-50 this year, my "psychic benefit'' might be in the toilet, right?

Owning a pro basketball team may be different from owning a pickle factory. But it's different than owning a painting, too.

Smile


Gladwell is a sports fan, like you are and like I am. He is therefore motivated to hope and to wish that NBA owners see their world the way he sees their world: "Quit viewing your $500 million basketball team as a "business'' and all your problems are solved!'' "Give the players what they want; you will be psychically RICH!''

Malcolm Gladwell sees it that way because, as most of us do, he sees the NBA as a game. But the owners don't see it that way. By the way, neither do the players. If either side did, the lockout would be over. But no, for at this moment, both sides see basketball as a business. And you cannot pay either side enough in "psychic benefits'' to get them to budge.








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","mobileBody":" This may be more than a philosophical argument regarding a New Age'y concept vs. a bottom-line one; making allowances for both schools of thought may be central to settling the NBA labor dispute. Even amid the inactivity of the two sides – following the lead of Congress and the White House, they all appear to be on vacation – one negotiation fact is clear: The owners are demanding, folded into the new CBA, a revised business model that allows them guaranteed profits. This leads to the debate, plunged into headfirst by the thoughtful Gladwell (best-selling author of such deep-but-accessible best-sellers as \"The Tipping Point'' and \"Outliers''), that professional teams haven't the right to be treated like \"normal businesses'' because there is nothing about them that resembles \"normal.'' Writes Gladwell on the Grantland.com site: \"The rationale for the NBA lockout, from the owner's perspective, goes something like this. Basketball is a business. Businesses are supposed to make money. And when profits are falling, as they are now for basketball teams, a business is obliged to cut costs — which in this case means the amount of money paid to players. In response, the players' association has said two things. First, basketball teams actually do make money. And second, if they don't, it's not the players' fault. When the two sides get together, this is what they fight about. But both arguments miss the point. The issue isn't how much money the business of basketball makes. The issue is that basketball isn't a business in the first place — and for things that aren't businesses how much money is, or isn't, made is largely irrelevant.'' Gladwell is certainly correct about the tax benefits and the antitrust stuff and the way stadiums are financed, all factors that make owning the Boston Celtics or the Dallas Mavericks different from owning a beer distributorship or a chain of radio stations or a pickle factory. Owners have used the public's appreciation of its own \"psychic benefits'' to coerce that same public into footing their bills.

But when Gladwell essentially asserts that the NBA's \"business model'' cannot be broken because basketball isn't a \"business'' at all, he's stepping into debatable territory. Who is to say it's not a business? Aren't there myriad different businesses, from the SMC review to Suzie's lemonade stand? Because Mark Cuban sees value in assembling an in-the-red $90 million payroll to win a championship, does that mean Milwaukee's Herb Kohl is obligated to feel the same way? Some owners view themselves as \"caretakers of a public trust.'' Others used to own the team in Seattle. How do we regulate the former view and eliminate the latter? We can say what desire of our owners in terms of blood, sweat and dollars commitment, but I don't know how Billy Hunter, let alone Malcolm Gladwell, is going to mandate that desire in the next CBA. We cannot. Because on some level, it IS a business. THEY own it. Gladwell says that most owners are involved in sports for what he terms the \"psychic benefits\" they get from being in charge of an iconic and fun institution. He compares it to a collector who derives from ownership of a Van Gogh both the nuts-and-bolts benefits of investment and the artsy-fartsy fun of being a fancy big-shot. Malcolm even cites an expert who pins the exact percentage of the second \"value'' at \"28 percent.'' Forgetting for a moment how \"28 percent'' sits somewhere between \"guesswork'' and \"complete malarkey'' … Did my Van Gogh lose me 50 games last year? Did my Van Gogh fans opt to not pay to come admire my Van Gogh? Did my Van Gogh cost me $30 million in (on-paper, at least) losses? And now it's time to negotiate with my Van Gogh. Does somebody really expect me to give this hunk of canvas and paint a greater piece of the revenue pie because being in partnership with it makes me ? We often buy a candy bar or a new car or a new home based on emotion, fueled by Malcolm's \"psychic benefits.'' But how can Gladwell accurately calculate the value percentages there, as he offers so matter-of-factly? (My $1 candy car is made up of 72 cents worth of chocolate and 28 cents worth of emotion?!) And further, back to the point of what an owner is and what a business is: If I'm Mark Cuban or Herb Kohl, who is Malcolm Gladwell to tell me how valuable my \"psychic benefit'' is? How can he know? Let me assure you of this: New NBA owners Joe Lacob (Warriors), Joshua Harris (Sixers) and Tom Gores (Pistons) have grabbed their piece of the league because they have balanced, in their minds and in their checkbooks, the exact value of ownership – including whatever emotional value comes with it. Those three men in particular have financial backgrounds; they are as brilliant in the field of money as Malcolm is in the field of journalism. They needn't be lectured on the financial aspects of owning a business/non-business. Furthermore, Malcolm's position that they overpaid for their teams because they see them as paintings is grossly inaccurate. The Warriors, Sixers and Pistons sold for a lot of money because once we do get a new CBA in place, the NBA as a whole is going to be printing the stuff. And they want access to the printer. Oh, and let's zip back to the negotiating table: Malcolm's analogy is faulty at its core. The Van Gogh painting that you bought doesn't sit across from you demanding a bigger portion of your revenue, doesn't threaten to move to China, doesn't request more leg room on the team plane and doesn't need a Wii in its locker stall. And you know, if Van Gogh went 32-50 this year, my \"psychic benefit'' might be in the toilet, right? Owning a pro basketball team may be different from owning a pickle factory. But it's different than owning a painting, too.

Gladwell is a sports fan, like you are and like I am. He is therefore motivated to hope and to wish that NBA owners see their world the way he sees their world: \"Quit viewing your $500 million basketball team as a \"business'' and all your problems are solved!'' \"Give the players what they want; you will be psychically RICH!'' Malcolm Gladwell sees it that way because, as most of us do, he sees the NBA as a game. But the owners don't see it that way. By the way, neither do the players. If either side did, the lockout would be over. But no, for at this moment, both sides see basketball as a business. And you cannot pay either side enough in \"psychic benefits'' to get them to budge. 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