The Unbundling of NBA Teams
This offseason shows: star players are becoming increasingly powerful. And the modern attention economy explains why.
This year’s NBA offseason was all about (super)star players moving or asking for trades. Chris Paul arranged a sign-and-trade to leave the Clippers and join Houston. Gordon Hayward went to Boston in free agency. Paul George, after announcing that he wouldn’t resign with Indiana when his contract ended after the upcoming season, was traded to OKC. Kyrie Irving, the news leaked last weekend, asked the Cleveland Cavaliers to be traded. (Also, there are ongoing rumors that LeBron James will leave the Cavs after the season to join the LA Lakers.)
What’s remarkable about those moves is that players took the initiative in all of them. They proactively made decisions about their future and, in some of the cases, leveraged their power and forced their teams’ hands. It is certainly possible that this offseason presents a fluke, a random accumulation of situations. It will take us several years and offseasons to know if we are witnessing a permanent change in power dynamics. But several factors suggest that more than mere randomness is at play.
I won’t go into the details of each players situation nor will I go into NBA particularities like the new Collective Bargaining Agreement. If you’re interested in these factors, I refer you to Howard Beck’s two pieces on the issue over at Bleacher Report. Instead, I’ll look at the phenomenon from the perspective of the attention economy (as I do around here). Because several overarching developments in the attention/media landscape help to explain parts of Beck’s observation:
The era of superstar stability seems to be over, giving way to an era of superteams formed by emboldened, fully liberated players who place personal achievement and satisfaction over everything else.
The NBA and the Attention Economy
Let’s take a step back. One of the central thesis I examine on this blog is that attention is at the heart of the digital economy. It’s hardly a stretch to postulate: money follows attention. As I wrote in my introductory post:
Attention is the currency of the 21st century.
Players have always been central to sports and fans — and therefore at the heart of the basketball business. Today though, they seem more aware of the fact and willing to exercise the power that comes with it. It’s reasonable to expect that many factors play into that, from higher levels of education to changing social norms. But, I argue, the sports system is undergoing some fundamental changes. And these constitute the foundation on which empowered players make their decision.
Fundamental changes in sports media
To understand how attention works in sports, we first have to look at how fans follow sports. Over the last decade or so, the sports experience has changed drastically. I’ll stick to the NBA example, but you’ll find similar patterns and developments across several sports and leagues.
The center of sports fandom are the games (though the surrounding narratives increasingly matter). In a TV-only world, access to games used to be constrained. Even today, national TV games are rare. Per the NBA’s current TV deal, 164 of the leagues 1230 games per season are on ESPN/ABC or TNT. Before the internet, local stations — which exclusively air the local team’s games — usually were a fan’s only option to watch an NBA game.
Most sports news and coverage, too, were geared towards local markets. News used to be dominated by local newspapers, radio, and TV stations. Naturally, their reporting was focused on the teams in the area. That’s what fans cared about and what the companies could afford to produce. Covering the entire league in high quality wasn’t affordable for local media. Thus, before the internet, the sports experience was primarily a local affair.
The internet changed this. It started with news and analysis. As sports writing moved online, it became instantly possible for fans to access the best basketball content regardless of where it was produced. Before, you had to be somewhat of a hardcore fan to subscribe to a national sports magazine. But now, you simply had to put another URL in your browser. As more and more internet writers adapted to this new reality, many started to cover the entire NBA. Suddenly, fans could form a much deeper relationship with the entire league, not just their home team.
With the arrival of broadband, games started to follow the same pattern. With the introduction of League Pass, fans now had the option to watch a much broader array of games. While certainly not a perfect product, particularly in its early iterations, the interested fan (when willing to pay) now had access to way more games. Whatever story line nowadays dominates NBA coverage, a fan with a League Pass subscription can turn on the associated game from anywhere.
The result, as a study of American sports fans by USC Annenberg’s Center for the Digital Future and ThePostGame shows, is that geography is no longer the most important factor for fandom:
Sixty-four percent of fans do not live where their favorite team plays and 73 percent of sports fans do not live where their favorite athlete plays. The concept of a local sports market may be obsolete.
Then, there is social media and a new generation of athletes who grew up with it. Today’s generation of digital native athletes is using social media as a direct way to connect with fans and to directly influence the public’s narrative about them. LeBron James mastered the art of the passive-aggressive subtweet to address team issues. Despite a career record of 31 NBA games in three seasons, Joel Embiid is somewhat of a media darling thanks to his Twitter.
But there’s more than Twitter. A more professional branch of athlete media is emerging as well. Former Clipper (now 76er) J.J. Redick started his own podcast in 2016. In there, he interviewed team mates, other players, and coaches. This year, Road Trippin’, a podcast by Cleveland Cavaliers Richard Jefferson and Channing Frye (and reporter Allie Clifton!), became a favorite pastime among NBA podcast listeners. And on The Players’ Tribune, athletes publish their own (supposedly ghost-written) pieces. It’s where Gordon Hayward announced his decision to leave Utah and where Enes Kanter addressed the political situation in Turkey.
Teams no longer are the natural aggregators of fan attention
Clearly, the sports media landscape has changed. Which creates an interesting effect. In the old days, the team was the natural aggregator of fans. Today, that is no longer the case, at least not exclusively. Instead, fans can now follow the entire league and individual athletes with the same ease. That is, teams are being unbundled as the natural hub of attention.
One of the observations I have made about media in general is that attention is increasingly centered around individuals. In Podcasting, Personality & the Future of Media I wrote:
In the print age journalists were mostly anonymous bylines. Only hardcore media consumers — that is: mostly media professionals — could name more than a handful of journalists. What mattered was the brand of the outlet. Those days are over. Today, writers have become personal brands. The best exceed at creating a following. Among regular people.
The internet gave journalists a face (first in the form of pictures, now increasingly also videos) and a voice. As people relate to people first and foremost, it’s almost natural that once we had a choice between brand and person we went with the latter.
The same is true in sports and particularly the NBA. A 2015 Deloitte study explored fan engagement in sports. While only 8% of the surveyed fans said that their team loyalty was primarily due to the fact that their favorite player is or was on the team, the study also concluded that among NBA fans, loyalty is 2x more likely to be driven by favorite players. As Bill Simmons regularly notes: No other of the major US team sports has such recognizable and popular athletes. Expect this trend of fandom shifting from teams to athletes to continue. As the Future of Sports 2016 report states about Generation Z sports fans: “They follow stars more than teams”.
NBA Economics
One of the mantras I use around here is follow the money. Though money certainly isn’t the only factor that drives athlete (and human) decision-making, it creates an important incentive system.
Superstars turn attention into money
Today’s players are conscious of their popularity and understand how to leverage it. As a result, you’ll hear many of them referring to themselves as brands. Though I hope they remain human beings first and foremost, it is obviously a valid statement.
The attention superstar players amass has direct monetary value. They realize it in different forms. Sneaker and endorsement deals are atop the list (according to Forbes estimates, the top 12 endorsers in the NBA will make $233 million among them). Teams, in the form of salaries, pay players their share of the NBA’s earnings — which primarily stem from the record TV deal the league signed in 2014. Also, several current and former players are known to invest in startups.
LeBron James’ investment in the restaurant chain Blaze Pizza is a particularly interesting case study. When he initially invested in the company in 2012, James still had a contract with McDonald’s and couldn’t publicly endorse his portfolio company. But, as ESPN reported, he decided to end the relationship with McDonald’s in 2015 so he could endorse Blaze Pizza. In doing so, he basically leveraged his popularity to the benefit of his investment. So far, it has paid off: per the company’s latest funding round, James initial $1 million investment is now valued at $25 million. Money follows attention and superstars receive plenty of the latter.
The value of sports
The players’ increasing ability to monetize their popularity is the micro-level trend. There is a macro-level one as well.
Under the NBA’s current TV deal, ESPN and Turner pay $2.6 billion per year for the TV rights. The deal, which went into effect last season, presented an 180% increase over the last contract. As on-demand video offerings lead to cord-cutting and a growing number of cord-nevers, popular live content is one of TV’s last bastions (though digital players are entering the field): brand advertisers love big audiences — and live events are still capable of providing them. In a world of increasingly fragmented media consumption, sports have become a cultural happening and this gives them huge economic value.
Summary
Sports fandom is changing as a result of a changing media landscape. It is becoming more diverse and heterogeneous. In the process, teams are being unbundled. No longer are they the only natural destination of the fans’ attention. Players and the narratives surrounding them are at the center of our collective curiosity, particularly in the NBA. All this happens in an environment where it has become increasingly valuable — in economic terms — to aggregate the public’s attention.
Therefore, superstar athletes with big fan bases — which drive everything from viewership to ticket and merchandise sales — are more important to teams and the league than ever. Their internet-enabled autonomy and direct relationship with fans give them a lot of leverage and bargaining power. Players (and their teams) are aware of this reality. As a result, the power dynamics between teams and star players are moving in the players’ favor. They are in a stronger position than ever. I fully expect them to continue to leverage that power. Including, but not limited to, aggressively influencing on which teams they play.
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