This topic contains 1 reply, has 2 voices, and was last updated by 
Tyrober 11 years, 6 months ago.
J-rueMykel
Tyrober
David Calvert/NBAE/Getty ImagesCreating too many teams too quickly could tax the talent pool and the D-League’s long-term value.Editor’s Note: This is the second installment of a five-part series this week examining the possibility and impact of a full NBA minor league system similar to the model used in Major League Baseball. Today we explore what the financial implications of such a system would be.
What started with a smattering of eight teams in the fall of 2001 has expanded to 16 teams and is the NBA’s official minor league — the NBA Developmental League, or D-League. While many NBA teams have embraced the D-League concept, a few remain skeptical — and this skepticism needs to be overcome if the D-League is to realize its vision of becoming a true farm system for the NBA.
The NBA has been slow to embrace the concept of a farm system as a place where teams can develop their own talent. From 2001 to 2006, the D-League franchises were all independent — while they shared an affiliate relationship with NBA teams, the big league clubs had little control over the D-League rosters, coaches or basketball operations. Developing talent for an eventual call-up to the NBA was difficult.
In talking to several NBA team executives, a consistent message emerged about the problems that existed, and the changes that are needed for the D-League to take the next step. At the forefront were teams’ rights to the players in whose development they were investing.
"If an NBA team likes a player [on another team’s D-League affiliate who is not already under contract to the NBA team], they can sign him," said one team executive. "There is no exclusivity, and no right of first refusal."
The structure of the D-League began to change in 2006, when the Los Angeles Lakers pioneered the concept of a team-owned D-League franchise. By owning its minor league affiliate, the Lakers could install their own coaches and trainers, run their own system and better develop their players — creating an environment much more akin to a minor league baseball team.
"It’s a benefit to NBA coaches when someone is called up [from the D-League], and he is already familiar with the system," said the same executive. "For example the San Antonio Spurs obviously have a certain way of doing things. It helps to have players who already know it."
In 2009 the Houston Rockets and Rio Grande Valley Vipers pioneered a hybrid model, called a single-affiliate partnership. Under this model the D-League team retained independent ownership, while the NBA team (which pays a fee) runs all basketball operations. The D-League team retains responsibility for all business operations, including ticketing and marketing.
Today the 16 D-League teams are a mixture of these three ownership models — independent, team-owned and single-affiliate. There is one outlier — the Texas Legends, the D-League affiliate of the Dallas Mavericks, are a single-affiliate team, but are owned by Mavericks general manager Donnie Nelson. (See chart below.)
If the D-League is to become a true minor league system, it might require all 30 NBA teams to have their own affiliate — either owning their own developmental team, or entering into a single-affiliate partnership with one that is independently owned.
And the shared model has its advocates. "[D-League players are] community property for all NBA teams, and that has advantages too," said one team executive. "Right now the current setup works pretty well for us."
D-League president Dan Reed sees the league evolving toward the farm system model. "We are very rapidly approaching a one-to-one model and a farm system model in our league," he said. "The near-term future is that we expect more and more NBA teams to get involved in managing their own D-League team."
Solvency of affiliates
NBA teams have jumped on the D-League bandwagon in two waves. First were the more progressive teams — the ones that knew they weren’t going to get an immediate return on their investment, but believed the system eventually would figure itself out. The second wave consisted of wealthier teams that were willing to spend after seeing the first wave produce some success.
But to become a true farm system, there will need to be a third wave of teams. The remaining clubs will need to be convinced that there is true value in a D-League investment. A lot of that value derives from the location of the D-League franchise.
"There is value," said one executive whose team has a shared affiliation with an independent D-League team. "But as you study minor league sports in general, you have to understand the city and the lease agreement. Those two things need to make sense."
Another team executive concurred. "Profitability is absolutely, 100 percent dependent on location," he said. "If you have a team like Austin, where there’s a major university and tons of people, then yes. But Bakersfield? They need to play in a gym."
The same executive also noted that the D-League teams initially were all located in the Southeast, and that they all failed. Even Los Angeles had its problems — the D-Fenders, the team owned by the Lakers, ceased operations for the 2010-11 season.
"They weren’t functioning very well as a business," he said. When they returned for the 2011-12 season, they relocated from Los Angeles’ Staples Center to the Lakers’ practice facility in El Segundo.
Reed understands the challenges. "We want to make sure that we’re not growing too fast — that we have the right teams in the right markets with the right owners, and that we continue to build on our successes over time," he said. "While we would love to have 30 D-League teams for 30 NBA teams it would mean we would need to add 14 new teams in a very short period of time. We think it’s better to grow slow, but grow smart."
Salaries affect talent pool?
Another problem to overcome in developing the D-League as a farm system is the size of the talent pool. The model of a successful farm system is minor league baseball, where dozens of clubs operate on five developmental levels, each affiliated with a single major league team. More than 1,500 players a year are drafted into the minor leagues, and almost all Major League players pass through the farm system on their way to the big leagues.
But basketball is different. While it is rare to find a big league baseball player who spent zero days in a minor league system, the opposite is true of the NBA, where most successful players are first-round draft picks. While Reed says that 27 percent of NBA players have spent time in the D-League, this is true only in the broadest sense, when you include players on 10-day contracts and those under contract with an NBA club who are assigned to the D-League for a short stint.
To become a successful farm system, the D-League will need to attract more talent — players who might otherwise stay in school or play elsewhere.
"If you don’t make an NBA roster, there’s a whole world of choices out there for you," said one team executive. "Right now it’s not set up so it works for every NBA team to have a farm team."
Jack Arent/NBAE/Getty ImagesIn the past, some D-League affiliates have struggled to maintain financial solvency.Player salaries are a big factor. D-League players are often paid a small fraction of what they could potentially earn overseas. The league has three salary tiers, with the highest tier earning just $30,000 annually. Travel and accommodations are far from luxurious. "But hey, it’s the minor leagues," said one executive.
To reach the point of sustainability as a farm system, players will need a financial incentive to prefer the D-League over their other choices. This could come at a significant cost, which will affect each team’s bottom line. More than one executive said the NHL’s system of two-way contracts would help. Players on two-way contracts earn a lower salary while assigned to the team’s minor league affiliate, and a higher salary if they are called up to the major league team. That kind of system would help to control the team’s expenses while providing an additional financial incentive to players.
But while many teams are expecting their D-League affiliate to at least be revenue neutral, one executive viewed it differently.
"That’s a cost of player development," he said. "You have to look at it that way. At this time I don’t look at [the D-League] as a new revenue source. We look at the D-League as a talent pool and a place we can send players to get playing time."
Reed also pointed out one incentive that is unique to the D-League. "We provide the absolute fastest way to get to the NBA," he said. "There were 60 call-ups last season — those players collectively made $11 million in the NBA. That’s an opportunity they wouldn’t have gotten if they had chosen to play overseas or stay at home."
The bigger issue for many of the executives is their rights to the players they develop. NBA teams might assign their players (whom they have signed to an NBA contract) with up to two years of service to their D-League affiliate, but they do not control the rights to the other players on their affiliate’s roster. "I don’t think you maximize the opportunity if you control only a player or two," said one.
"If you do a good job of signing a player and helping him develop, another team can call him up," concurred another team executive. "For all your time and effort, you get no return. Teams will need to have rights based on their efforts."
"Even if it’s just two or three players that you pay more to designate, it would help," he continued. "If that happens, an investment in the D-League makes a lot of sense. The value in the franchises will go up. It’s something the players and teams have alignment on."
But Reed says that’s not necessarily the case. "Players in our league really like having the ability to be called up by all 30 NBA teams, and not just one. It’s a competitive advantage for us to tell a player, ‘Hey, you’re not necessarily slotted behind the three point guards on the NBA parent team. If there’s an opening that occurs anywhere in the NBA, it could be an opportunity for you.’"
What’s the best model?
Reed says the league is shifting away from the shared independent model and toward the team-owned and single-affiliate models. These models share the ability for the NBA teams to run their own system, and install their own coaches and trainers.
According to data from the ESPN the Magazine research department, the team-owned and single-affiliate models have been similarly successful in developing players who are eventually called up to the NBA.
The choice between the two models depends on each team’s individual circumstance.
"Each team is different," said one team executive. "It depends on the organization, and the cycle the team is in. Each team has its own situation."
In sum, the success of the D-League as a farm system will depend on controlled growth — its ability to greatly increase the size of its talent pool, while developing rules that allow teams to protect their investments by controlling the rights to the players they are developing.
"It all hinges on the ability for teams to take advantage of the opportunity for player development," one executive summarized.
Ultimately, the burden of transitioning the D-League to a true farm system falls on Reed’s shoulders. "There are a lot of expectations on Dan Reed to get the league to that point," said another.
"Our goal is to build the perfect minor league system for the game of basketball," said Reed, "which is not necessarily a carbon copy of what works well in baseball or hockey."
0
| You must be logged in to reply to this topic. | Login |