Note to David Stern and the NBA: Be Afraid; Be Very Afraid
By David Henderson
My wife and I are basketball fans, in particular, fans of the home team, the Golden State Warrriors. OK, get over all the laughs and derisive sneers: I’m about to make an important point.
We’ve been following news about whether the NBA will have a whole season, reading the paper and the web every day. The only sport my wife loves watching is basketball: she probably saw at least 77 of the Warriors’ 82 games last season. So she will be devastated if there’s no, or a drastically shortened, season.
I was surprised the other day when I saw this news report:
Stern celebrated his 69th birthday Thursday but didn’t appear in a festive mood after meeting for about five hours with leaders from the union. He was joined by Silver, the deputy commissioner, Spurs owner Peter Holt, who heads the labor relations committee, and NBA senior vice president and deputy general counsel Dan Rube. Fisher, Hunter, attorney Ron Klempner and economist Kevin Murphy represented the union. [bold added]
Is that the Kevin Murphy, I wondered. And the answer is yes, as this note from the Chicago Booth School of Business makes clear.
So why the title of this post? Because Kevin Murphy is one smart hombre. I saw that up close when I was hired by Microsoft in 2003 to help with the mess after the nine states attorneys general refused to accept the deal Microsoft had agreed to with the Justice Department and the other attorneys general. Microsoft had also hired Kevin Murphy. I worked my way through hundreds of pages of trial transcripts of the questioning and cross examinations he went through. I remember [my memory is perhaps imperfect here] the judge accusing him of essentially retrying parts of the original case that had been settled. But man, did he retry them well! He laid out such a beautiful case that it confirmed my view I had had at the start that one of Microsoft’s biggest mistakes going in to the first trial was to hire Richard Schmalensee.
Back to today. We’re hearing so little about the details of the negotiations. Here’s my gut feel: Murphy has helped the players’ union think through the various ways that the NBA owners can take a lot of the profits (not, by the way, that I think the owners shouldn’t be able to take the profits) and think through the various clauses to put in the contract so the union gets more. Duh, you might say: any economist would do that. But my point is that I’m betting Kevin Murphy is doing that better than virtually any other economist the players’ union might have hired.