How to start a new pro basketball league to rival the NBA

November 1, 2020

Soon enough, each of the major American sports leagues likely will have released a statement explaining that their teams, collectively, brought in a fraction of the revenue they expected to accumulate had there been no pandemic-related shutdowns and cancellations. While the National Football League is still in the thick of its season, so we likely won’t get a statement until December at the earliest, Major League Baseball and the National Basketball Association started disseminating their numbers around the time their seasons concluded.

Sportico reported that MLB clubs “will post $2.8 billion to $3 billion in operational losses this year,” per Commissioner Rob Manfred, while the Associated Press cited an NBA official saying that league’s total revenue was about $1.5 billion less than expected. The NBA had already played a large chunk of its season in front of fans when the pandemic hit, which may be the primary reason it reported not quite as large a loss as MLB.

As an indoor, contact-heavy sport, starting a new season in the current context is probably a more complicated proposition for the NBA than MLB or the NFL. Which might be why I keep thinking the time is ripe for someone to start a rival professional basketball league, and what that might look like.

To start, you’d want to launch such a league when the NBA is in a moment of crisis and instability, especially financial instability. I don’t trust sports team owners to be honest and transparent about their businesses’ finances — and, historically, they’ve resisted attempts to frame franchises as local trusts more than businesses — but even if NBA governors are exaggerating their losses, they’re almost certainly scrambling to figure out how to pay people and get paid even though ticket sales have been stopped completely and it’s unclear how many games might be televised next season. In such a situation, players might be more willing to entertain jumping.

A rival league would step up with the understanding that in its first few years teams would almost necessarily run in the red before a certain point when they would turn a corner and start making profits that would make up for those early losses. Or, they would have owners who aren’t in it for directly building wealth as much as because owning a pro basketball team commands a certain amount of respect from the community and it’s fun to build a team that wins something significant.

One pathway to do this is kind of counter-intuitive for many Americans, but I believe would prove popular: have minimal spending restrictions including no salary cap, don’t have a draft, and institute a promotion-relegation structure.

Salary caps in American professional sports exist to keep costs down for management. The NBA’s soft salary cap can get very complex, but the most important point is individual players can’t get paid more than a figure tied to a percentage of the salary cap in the year they were signed, with the cap determined by the previous season’s revenues.

The highest-paid NBA players right now, therefore, get around $40 million per year. That’s a lot of money, but without a cap, LeBron James might command a salary in the range of $90 million to $100 million per year, or more. Moreover, rookie players who enter the league through the draft get paid a salary that’s essentially set for the first few years of their careers by which slot in which they were drafted, and that pay almost always comes in well below their potential earning power had they been true free agents entering the league. And this upcoming year, it’s unclear how the cap will be set given the league’s sharp decline in revenues.

Any upstart league ought to forego a salary cap, a draft, and most spending restrictions for one simple reason: Doing so would dramatically increase the chances its teams could sign stars and prospects away from the NBA. There may be great variation in the spending capacity from team to team, and therefore very large gaps in talent level, but getting recognizable names to play in a new league, and all the attention that would come with those players, would be a coup.

What about competitive balance? Screw competitive balance. If this league gathered a bunch of real estate and car dealership millionaires to own teams, and then miraculously Jeff Bezos stepped in and said he wanted to run a franchise, and Bezos signed Anthony Davis, LaMelo Ball, Fred VanVleet, James Wiseman, and other free agents and rookies to form a super team that destroys all the other teams that mainly feature four-year college players who’d rather not try to play in Turkey’s second division… that’s a net win for the league. People would pay to see the Davis-Ball team play, and perhaps that would create a domino effect where another team or two would see reason to pay up for Kyle Lowry or whoever in 2021.

But even if there is no Bezos in the group that would pay Anthony Davis $60 million per year to jump to a rival league, would a rookie like Onyeka Okongwu, who might be drafted closer to the middle of the lottery than the top, be tempted to jump for a $10 million-plus annual salary, considering that would more than double his projected starting pay in the NBA? With no draft, players would have some say in where they end up, too, which could be a real selling point. More likely, teams could end up paying about $5 million annually to someone like Tre Jones, who comes from a big college program and is projected to get drafted closer to the end of the first round. What if the league had an age limit of 16 years old? Would any top high school players be tempted to turn pro?

The new league’s teams might fill their teams with these types of guys on the promise that they’ll get paid more than NBA or NCAA teams would pay them, they’ll play a lot more than NBA teams would play them, and after four years or whatever contract length they want to sign, if they’ve proven themselves it won’t be too late for them to catch on in the NBA. From the league’s perspective, sign enough of those guys, and you increase your chances of multiple breakout stars who draw attention and help create an environment where free agents and rookies feel there’s something to be gained from playing in the new league.

Finally, there’s promotion and relegation. The NBA will never become a pro/rel league because no incumbent governor will willingly put themselves in a position to go down to a lower division.

But what if, at the start of this new league, there was an understanding that a few teams would spend bigger in an effort to win right away, those owners were confident they had virtually no chance of being relegated in the near future, and among the rest of the teams there was a significant contingent willing to play in the lower division to start because they wouldn’t need to spend as much up front? There might be teams that want to start out in the lower league so their player payroll can be only $300,000 instead of trying to field a team that would avoid relegation with a $700,000 payroll.

Furthermore, I can imagine a pro/rel system that encourages others to start new teams and leagues in the hope of one day becoming affiliated with the pro/rel structure. So, imagine the new pro league starts with eight teams in the upper division and eight in the lower division. The league could also define a pathway toward expanding to a 24-team upper division and 24-team lower division, or even expanding beyond that by incorporating a third level, for those teams that simply don't have much financial leverage and yet want the opportunity to build up to elite status.

It wouldn’t be easy, and it’s extremely unlikely to happen, but if anyone’s ever going to start a new rival to the NBA, now is the time to do it.

(Photo: "The Oracle Arena, Oakland" by David Jones. Used under CC BY 2.0 license.)