What's The NBA's Optimal Labor Cartelization Strategy?

A blog about business and economics.
April 6 2012 9:15 AM

What's The NBA's Optimal Labor Cartelization Strategy?

141462410
PHILADELPHIA, PA - MARCH 16: LeBron James #6 of the Miami Heat is fouled by Andre Iguodala #9 of the Philadelphia 76ers at the Wells Fargo Center on March 16, 2012 in Philadelphia, Pennsylvania.

Photo by Drew Hallowell/Getty Images

Mark Cuban and David Stern both think the NBA should consider changing the rules to require players to do more than one year of college before earning a salary in exchange for playing professional basketball.

The logic is fairly impeccable. It used to be the case that 18 year-olds were eligible to play in the NBA, and teams would often face a tough dilemma regarding the most talented high school seniors. It was extremely unlikely that kids that young would actually perform well as rookies. And yet teams that passed up on drafting not-ready-yet rookies might find themselves permanently missing out on the services of top talent when they aged. So the league changed the rules and now requires players to spend at least one season playing "amateur" basketball as an uncompensated employee of a college or university on what otherwise gives every appearance of being a professional basketball team. That's a smart deal for the owners. Part of the operation of the NBA cartel is that rookies have no choice as to which firm to go work for; they are only allowed to sign with the team that drafted them. That means rookies also can't negotiate for salaries. Consequently, anyone who's good while playing on a rookie contract is severely underpaid. The logic of the situation is that outsourcing as much of the early player development to the NCAA is smart for owners. Indeed, since NBA players tend to peak in playing ability in their mid-twenties it would actually make a fair amount of sense for the owners to require the players to graduate from college. That way guys on rookie deals would be 23-26 and being severely underpaid in their prime years. Then you'd get probably one contract extension, and by the time that deal's over guys would be in their thirties and on the decline, and you could forget about them.

Advertisement

That's all "makes sense" in the sense that it makes sense for owners of firms in the same industry to collaborate together to find ways to screw over their workers. Outside the context of professional sports we would deem this kind of labor market cartel to be completely unacceptable. Law firms don't "draft" top prospects out of law school; they recruit them. But athletes need to just go where they're told.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Talking White

Black people’s disdain for “proper English” and academic achievement is a myth.

Hong Kong’s Protesters Are Ridiculously Polite. That’s What Scares Beijing So Much.

The One Fact About Ebola That Should Calm You: It Spreads Slowly

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

A Jaw-Dropping Political Ad Aimed at Young Women, Apparently

The XX Factor
Oct. 1 2014 4:05 PM Today in GOP Outreach to Women: You Broads Like Wedding Dresses, Right?
Music

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

How Tattoo Parlors Became the Barber Shops of Hipster Neighborhoods

This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century

Moneybox
Oct. 1 2014 8:34 AM This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century To undertake a massively ambitious energy project, you don’t need the government anymore.
  News & Politics
The World
Oct. 1 2014 12:20 PM Don’t Expect Hong Kong’s Protests to Spread to the Mainland
  Business
Moneybox
Oct. 1 2014 2:16 PM Wall Street Tackles Chat Services, Shies Away From Diversity Issues 
  Life
Outward
Oct. 1 2014 6:02 PM Facebook Relaxes Its “Real Name” Policy; Drag Queens Celebrate
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 1 2014 9:39 PM Tom Cruise Dies Over and Over Again in This Edge of Tomorrow Supercut
  Technology
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
  Sports
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?