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Dan Rosenbaum

Joined: 03 Jan 2005
Posts: 541
Location: Greensboro, North Carolina

Posted: Fri Feb 25, 2005 1:39 pm Post subject:

KnickerBlogger wrote:

Here is the Knicks situation pre-trade:

2005: $104M
2006: $108M
2007: $68M

With Allan Houston taking up $20M a year of cap space, and refusing to consider retirement, shedding contract does nothing for New York until his deal dies. Even if you could get rid of EVERYONE else (Marbury, Crawford, Kurt Thomas, Jerome Williams), you'd only be free a year early, but NY would have absolutely nothing to build around. Most likely you'd have to move Sweetney, Ariza, and send some picks to get a team to take some of these deals. In the end you'd be like the 1999 Bulls - 6 years of rebuilding from scratch, starting in 2006.

I'd rather they try for 2007 or 2008, than 2012.

I agree that getting under the salary cap is not a reasonable goal for the Knicks in the short-term or even the medium-term. But that does not imply that the Knicks can spend with impunity. If they have to pay $80 to $100 million in luxury taxes in the 2005-06 season and end up losing $50 million, a fire sale will begin - just like it did in Portland with Paul Allen. But the problem is that the Knicks will start the fire sale from a much weaker talent base than Portland did and so rock bottom may be much further down than it was for Portland. At that point, a rebuilding similar to what the Bulls went through may begin, except that it could be preceded by several years of mediocrity before rock bottom sets in. Also, I am not sure the Knick fans will be a patient as the Bulls fans, especially if New Jersey moves into NYC. The Knicks could end up being a real financial disaster.

So yes, the Knicks can afford to outspend most of the league, but they cannot afford to collect nearly untradeable contracts and lose tens of millions of dollars.

KnickerBlogger

Joined: 30 Dec 2004
Posts: 180

Posted: Fri Feb 25, 2005 4:12 pm Post subject:

Dan Rosenbaum wrote:

I'll give you that is a legitimate point, if the Dolans can't afford those kinds of losses. But MSG has basically offered to buy the land the Jets plan to build their stadium on for $600M. If the Dolans have that much money to throw around, how much can $50M hurt them?
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KnickerBlogger

Joined: 30 Dec 2004
Posts: 180

Posted: Fri Feb 25, 2005 4:18 pm Post subject:

radio wrote:

knickerblogger: I read your entry today, as I do every time you post. Good writing, and an interesting take.

I suppose the first issue I take with your position on the Nazr deal is that I think Nazr is a good young piece, right now. He's a plus rebounder and a good low post defender, and he's only 27. That's not something you really discuss on your blog. I don't know what his contract demands are like for the offseason, but even if they're prohibitive, the guy's probably got some value in a sign & trade.

One problem is the Knicks are going to rebuild with Marbury, and you can't have Stephon without a shot blocking center. Nazr might be a great fit on SA with the great defenders they have, especially next to ball swater Duncan, but he's not a good fit on this Knicks team.

radio wrote:

If you want me to stipulate that the bad contracts of Houston, Marbury, Kurt Thomas, Jamal Crawford and Jerome Williams are unmovable for 2 years, I will. But by adding 2 more unmovable contracts, the Knicks are taking up a lot of roster space that could otherwise be going to decent young talent. That's seven out of your twelve roster spots, and of those guys only Marbury is substantially above league average. I agree with you that the Knicks will never be under the cap, and that it's probably useless to try. But is it really worth pouring gas on the fire? Well, it is, if you like the draft picks that much.

It's not that individually they aren't unmovable, it's moving all of them at once is impossible. OK Allan Houston is untradeable, but I would almost guarantee that Kurt Thomas has a new home come summer. I might say the same for Jerome Williams as well. I think that's why Isiah got two PFs, to help replace Kurt Thomas come summer.

radio wrote:

But why would you like the draft picks so much? We know with reasonable certainty that the 2 picks (the Suns' in '05, the Spurs' in '06) will be at the bottom of their respective drafts. In the last 10 years, there have been six guys one could reasonably call game-changing talents taken below #25 in the draft (Rashard Lewis, Manu Ginobilli, Michael Redd, Tony Parker, Carlos Boozer, and Gilbert Arenas). Six. That's it. Out of around 350 total players picked. To be fair, there are a couple of other guys I like on that list, such as Earl Watson, Samuel Dalembert, and, yes, Nazr Mohammed. Overall, though, it seems to me that trading established ballplayers for the extreme uncertainty of a couple of low first-rounders (to say nothing of wasting a roster spot and tens of millions of dollars for your trouble) smacks of poor risk analysis.

The Knicks do have their own picks, which should be lottery-esque in the next 2-3 years. Those picks should be able to net them "game-changing talent". The other picks could be serviceable young cheap players, risks on non-Americans, high schoolers, or trade bait. If you're going to rebuild, then what better way to do it than stockpiling picks?
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gkrndija

Joined: 20 Feb 2005
Posts: 64

Posted: Fri Feb 25, 2005 4:22 pm Post subject:

Dan Rosenbaum wrote:

Also, I am not sure the Knick fans will be a patient as the Bulls fans, especially if New Jersey moves into NYC. The Knicks could end up being a real financial disaster.

Your piece about the luxury tax on realgm.com states something along the lines of the NBA business model having a detrimental effect on the quality of play.

What are your thoughts about the European soccer business model where there is no restriction to the amount of teams in each market? What do you think is the ideal model for the fans/players/owners/game?

HoopStudies

Joined: 30 Dec 2004
Posts: 706
Location: Near Philadelphia, PA

Posted: Fri Feb 25, 2005 5:00 pm Post subject:

gkrndija wrote:

Dan Rosenbaum wrote:

Also, I am not sure the Knick fans will be a patient as the Bulls fans, especially if New Jersey moves into NYC. The Knicks could end up being a real financial disaster.

I'm not speaking for Dan, but I've been to the last several sports economics meetings with WEA and the issue of more than one team in markets like LA, NY, Chicago comes up every so often. Most seem to think that it makes sense, but I haven't seen a full paper on the topic. I think Rod Fort even said you could put 10 baseball teams in New York. It might have been in jest, but it might not have been. I think, but no one with economic training has said so, that putting more teams into really big markets takes away the advantage that the few teams there have now for spending money to win a title (especially in baseball without much of a cap). What this has then meant to me (as I've gone way past my economic training) is that the big market teams have the most incentive to be against salary caps and adding franchises in nearby markets (or same markets).

Whether adding more teams is good for fans, that hasn't been addressed very well by my sports econ friends. Their default assumption is yes, but it's not an easy question. Exactly how do you measure quality for fans?

Also, Euro league sports typically have a different financial model. I don't know all the differences, but the sports econ guys from Europe come over here and say what fools all Americans are, while the Americans tell the Euros they don't know how to make money.

All very entertaining for me.
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Dean Oliver
Author, Basketball on Paper
The postings are my own & don't necess represent positions, strategies or opinions of employers.

radio

Joined: 17 Feb 2005
Posts: 13
Location: New York

Posted: Fri Feb 25, 2005 5:12 pm Post subject:

(All quotes snipped from knickerblogger's last post. Someday I'll get this damn html thing down.)

Quote:

That's a good point, and one I hadn't really considered. It may well be true that Nazr is an imperfect fit for this team. However, that doesn't mean he's not useful to anybody, and it doesn't mean you can't get more than a couple of questionable draft picks for him.

Quote:

Agreed, though I'd add that moving Kurt Thomas' bad contract is pretty likely to bring back another one, which brings us back to much the same place. That issue is a somewhat smaller one, but it's there nonetheless: you can only have 12 guys on your roster, and when 6 of them are no better than league average and can't plausibly be moved, you'll have depth issues even if you get a good starting lineup in front of them. That is, of course, pretty far down the line to think, which makes my confidence in that analysis shaky at best.

Quote:

Well, you know what I'm going to say: the Knicks are going to have their own picks with or without this trade. If the point of the low picks is trade bait, I say you had better trade bait in Nazr. If the point of getting the low picks is for a gamble, I say it's a bad bet.
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gkrndija

Joined: 20 Feb 2005
Posts: 64

Posted: Fri Feb 25, 2005 6:33 pm Post subject:

HoopStudies wrote:

gkrndija wrote:

Dan Rosenbaum wrote:

Also, I am not sure the Knick fans will be a patient as the Bulls fans, especially if New Jersey moves into NYC. The Knicks could end up being a real financial disaster.

The one thing I have found interesting from following European soccer is that Manchester United is arguably the biggest club in the world and and they play in a city the size of 400,000. They also share the market with Manchester City and there are many lower divisions clubs that surround the city in the adjacent towns. It is also considered a blue-collar city. From what I gather, they are able to succeed because big cities like London have many teams(Tottenham, Chelsea, Arsenal, Fulham etc...) and as a result level the playing field without creating parity. Of the 22 clubs that have ever won a title, they are all still playing the game.

Juventus, another massive club who share their market, play out of Turin in Italy. I believe they are the 4th largest city in Italy and their population hovers around a million. Yet they are the most popular club in the country.

I read awhile back in a FourFourTwo magazine how in 2001, Deloitte & Touche reported that 20 premiership teams created over a billion pounds in revenue. Since England is only 50 million people, doesn't this show that the NBA has not even come close to growing the game and maximizing the North American market.

Competition in the marketplace should lead to a better product and cheaper prices. Owners that blackmail their city councils for new stadiums are bad for society. Complacent owners who don't re-invest their profits are bad for the game. Following team sports in North America has become a shot-gun wedding.

Measuring quality for the fans is difficult. But I suppose having a team in your city and the affordability of tickets would be a good indicator. I would rather have my home team go 0-82 forever in the NBA than have no team at all. I also find it ironic that in the land of oppurtunity, that our sports culture reflects a socialist society. Art Model once said about the NFL, "we're all a bunch of fat-cat Republicans, who all vote communist." I also think that this lack of oppurtunity has limited many good jobs for basketball players and we've probably lost many stars along the way.

Much like how the Microsoft abused its dominance in the operating system market to limit rival software like Netscape, is the NBA abusing its dominance over professional basketball by limiting teams in each market?

harlanzo

Joined: 15 Feb 2005
Posts: 5
Location: nyc

Posted: Fri Feb 25, 2005 10:50 pm Post subject:

The problem I see with the Knick deals is that they illustrate Isiah's wish-washiness. The picks he'd get for Nazr Mohammed are precisely the types of picks that the Knicks had horded under Layden with Lampe and Vujanic. Isiah basically said that he thought they were worth little then and traded them for Marbury and Penny's ugly deal. He also stated that Nazr Mohammed was the impetus for swapping off Van Horn. Now, he's reversing himself dumping Mohammed and talking about rebuilding albeit with Malik Rose and Mo Taylor and two picks. That fact is that these picks aren't likely to make much of a difference. Nor would standing pat make the Knicks that good either. THe problem seems to be that Isiah is trying all these different and mutually exclusive strategies all within the courts of like 16 months. There is a sense that there is no real long-term plan with the Knicks and he is really just shuffling deck chairs as the ship sinks under some bad contracts (not all of which were his doing).

wallyg

Joined: 23 Jan 2005
Posts: 1

Posted: Sat Feb 26, 2005 10:50 pm Post subject: more than one team in markets

Quote:

but that's an economist's point of view without thinking about real world implications. are there enough people and dollars to support additional teams? sure. but are the people going? probably not. the nets are spitting distance away from MSG and play in the country's most densely populated state, yet despite back to back NBA finals appearances they still don't draw. ask the devils and islanders how being the 2nd and 3rd team in the metropolitan area is working for them.

once you move away from strict economic models into the real world, you're deaing with fan bases with allegiances. are new yorkers who have been rooting for the knicks for generations going to abandon their team (well, if they keep it up like this...mabye) just because you add a new team to the market? if you were starting a league from scratch, then yes...the concept would probably work. but you're not.

Dan Rosenbaum

Joined: 03 Jan 2005
Posts: 541
Location: Greensboro, North Carolina

Posted: Sun Feb 27, 2005 5:09 pm Post subject: Re: more than one team in markets

wallyg wrote:

Quote:

To be honest, DeanO probably has a better sense of how many economists think about this issue than I do. I am fairly new to the academic circle of sports economists. That said, I doubt anyone thinks New York could support 10 MLB teams. Heck, take a model that postulates that the number of professional sports teams that a metro area can support is proportional to its population. That model would suggest that New York could support more than 11-12 times as many teams as say the Orlando area. But from there we would want to adjust for per capita income and sports intensity. And we would also would want to take into account that the "best" team in a given area (definely generally to include team history), especially in a given sport, might enjoy some brand loyalty. Also, it may become increasingly difficult for professional sports teams to get sweetheart stadium deals from public officials as more and more teams are in an area. Taking all of that into account, there is no way that the New York area could support anywhere close to 10 MLB teams. My guess is that the nine professional sports teams (in MLB, NFL, NBA, and NHL) that are there more than saturate the market.

Last edited by Dan Rosenbaum on Sun Feb 27, 2005 6:35 pm; edited 1 time in total

gabefarkas

Joined: 31 Dec 2004
Posts: 1313
Location: Durham, NC

Posted: Sun Feb 27, 2005 6:06 pm Post subject:

i think take a perusal at this may stimulate some more discussion....

gkrndija

Joined: 20 Feb 2005
Posts: 64

Posted: Mon Feb 28, 2005 1:06 pm Post subject:

gabefarkas wrote:

i think take a perusal at this may stimulate some more discussion....

Judging by those numbers, it looks like New York could support an additional 20 NFL teams. When factoring in sports intensity I don't think that many could survive, but I find it hard to believe that another NBA team couldn't make it work. It would be tough to ignore a winning basketball team with cheaper ticket prices, especially if it was branded with a district or borough(Queens, Bronx, Manhattan, Brooklyn, etc...).

I'm not familiar with the New Jersey situation, I've heard once that it's a tough commute from New York. Also, NY fans are probably alienated by the New Jersey name. The Giants and Jets play out of the Meadowlands yet don the New York name. Despite the Islanders troubles, I think they are still one of the more valuable NHL francishes according to Forbes.

I just think its getting past ridiculous with these publically funded sports stadiums. MLB and the NFL can't seem to share stadiums anymore, and now the NBA and NHL have begun to go their seperate ways as well.

Kurt

Joined: 10 Jan 2005
Posts: 30
Location: Los Angeles

Posted: Mon Feb 28, 2005 5:28 pm Post subject:

gkrndija wrote:

I read awhile back in a FourFourTwo magazine how in 2001, Deloitte & Touche reported that 20 premiership teams created over a billion pounds in revenue. Since England is only 50 million people, doesn't this show that the NBA has not even come close to growing the game and maximizing the North American market.

The Premiership is more than just the England market, it is a global league in the way the NBA hopes to be. I've spent time in Scotland, which has its own league, but everyone there has a favorite Premiership team and watches the games on Saturday. Same with Ireland and much of the rest of the European continent (people in England love the German league, and visa-versa, etc.) Heck, I can watch just about any Premiership game here in the US.

That said, it is a very different financial model. Many Premiership teams lose money.

HoopStudies

Joined: 30 Dec 2004
Posts: 706
Location: Near Philadelphia, PA

Posted: Tue Mar 01, 2005 2:24 am Post subject: Re: more than one team in markets

Dan Rosenbaum wrote:

The one thing that Rod Fort has consistently suggested is that the most logical place to put "the next" baseball team is in New York or LA.

That excel file is interesting. Not clear what it all means, but it's interesting. Is there an explanation available?
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Dean Oliver
Author, Basketball on Paper
The postings are my own & don't necess represent positions, strategies or opinions of employers.

SGreenwell

Joined: 12 Feb 2005
Posts: 76
Location: Rhode Island

Posted: Tue Mar 01, 2005 4:08 am Post subject:

harlanzo wrote:

The problem I see with the Knick deals is that they illustrate Isiah's wish-washiness. The picks he'd get for Nazr Mohammed are precisely the types of picks that the Knicks had horded under Layden with Lampe and Vujanic. Isiah basically said that he thought they were worth little then and traded them for Marbury and Penny's ugly deal. He also stated that Nazr Mohammed was the impetus for swapping off Van Horn.

Now, he's reversing himself dumping Mohammed and talking about rebuilding albeit with Malik Rose and Mo Taylor and two picks. That fact is that these picks aren't likely to make much of a difference. Nor would standing pat make the Knicks that good either. THe problem seems to be that Isiah is trying all these different and mutually exclusive strategies all within the courts of like 16 months. There is a sense that there is no real long-term plan with the Knicks and he is really just shuffling deck chairs as the ship sinks under some bad contracts (not all of which were his doing).

I also agree with this. In Hollinger's comments on the Celtics, he notes that Danny Ainge has an overall plan for the team. In baseball, teams like the Minnesota Twins, Oakland Athletics and Atlanta Braves have been successful for many years by sticking to developed plans.

I don't get that impression from Thomas. The draft picks are nice, but does anyone have confidence in the organization's ability to pick up good talent? Last I checked, Sweetney was buried on the bench and he was their last really good draft pick. Well, unless you're counting the immortal Frederick Weiss.

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