Entertainment / Organizational Strategy

Adam Silver and Challeneges of Being a Commissioner

nbaFor years, sports fans have concentrated on their favorite stars in their favorite sports. Heroes such as Michael Jordan, Lawrence Taylor, and Barry Bonds, were loved and criticized by the public, but still are considered to have reached the pinnacle of their sport. However, recently the media and the public have been putting focus on what goes on behind the scenes. Due to sites like YouTube, Twitter, and TMZ (Celebrity News Outlet) scandals are all over the internet and accessible to most people. Commissioners are now being held responsible for not only the actions of their players, but how they respond to those actions. Roger Goodell has received a lot of heat for his handling of the Ray Rice incident. Rice was caught, on video, in an elevator knocking his wife out unconscious. This backlash has shown that sports commissioners are now liable for the discipline of their players. Before players were the only ones condemned for their scandals, and commissioners were left out of the media. Knowing this, it comes as no surprise that all eyes were on Adam Silver when the Donald Sterling incident occurred. He was caught on audio making racist remarks about African-Americans. The newly appointed commissioner responded swiftly and handed out a lifetime ban to the veteran owner. This no tolerance policy for violation of league ethics has led to high praise from the media and fans alike.

Silver has shown that he can take care of scandal and preserve the image of the NBA. However, he might soon be challenged on the current league budget and split of basketball revenues. Both the NFL and NBA experienced lockouts in 2011. The NBA lockout was a scary time for the league. The season was shortened by one-fifths, and the league received some criticism in how the whole ordeal was handled. The NFL lockout potentially could have been just as bad. Several high profile quarterbacks even sued the NFL for anti-trust violations. However, Roger Goodell and the NFL were able to stop their lockout without shaving off any games of the season. Adam Silver may find himself in the same position that David Stern and Roger Goodell were in just four years ago.

The reason for the last lockout was mainly the share of BRI (Basketball Related Income). The players dropped their share from 57 to 50 percent because the owners claimed they were losing money. However, one of Adam Silver’s first business decisions was to secure a new TV deal. This deal allows TNT and ESPN to show NBA regular season games and ABC to show the postseason games. This deal is going to bring in about $2.66 billion a year whereas the current deal only pays about $930 million a year. The current salary cap is only about 60 million, however, the new TV deal is about to change that. Not only will the salary cap burst to an expected $90 million, but players are hinting at wanting even more. LeBron James recently took a two-year $40 million contract that will expire in the summer of 2016. He could have easily taken a higher paycheck, in the 100 million area. However, he chose a lower deal that will expire sooner, in 2016. What is the significance of the year 2016? Over that same summer in 2016, the previously discussed TV deal will kick in. James was also recently elected Vice President of the NBPA (National Basketball Players Association). With stars like him and NBPA President, Chris Paul commanding the union, things could heat up between the players and the owners. One thing the players are pushing for is the end of max contracts. When you add in the fact that players in other leagues, such as Giancarlo Stanton, are signing contracts upwards of $300 million, then NBA players have a valid bargaining point. It is also estimated that, as of this year, James is worth around $500 million to the Cavaliers. With young stars like Kevin Durant, Anthony Davis, and Damian Lillard emerging, there is no telling how much these players will have an impact on the discussion of BRI during the summer of 2016. This will arguably be Commissioner Silver’s biggest challenge to date.

Brandon Morrison

Sources:

http://www.usnews.com/opinion/blogs/pat-garofalo/2014/07/15/lebron-james-return-to-cleveland-will-not-boost-economy-by-500-million

http://www.usatoday.com/story/sports/nba/2014/10/06/lebron-james-tv-contract-nbpa-leadership-chris-paul-cleveland-cavaliers/16835775/

http://www.usatoday.com/story/news/usanow/2014/04/29/donald-sterling-fine-penalty-racism-audio-commissioner-adam-silver-los-angeles-suspension/8460575/

http://www.businessinsider.com/lebron-max-contract-tv-2014-10

http://grantland.com/the-triangle/nbas-new-tv-deal-blow-up-the-salary-cap/

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