Win at all costs – The business of basketball


Jun 21, 2011; Minneapolis, MN, USA: Minnesota Timberwolves president David Kahn answers a question during a press conference at Target Center. Mandatory Credit: Jesse Johnson-USA TODAY Sports

Win at all costs. Only the strong survive. The good keep getting better.  Work smarter not harder. These are commonly used mottos by many sports franchises; it spans the entire scope of all sports around the globe. But, it’s not just sports, its businesses also.

Businesses large or small, it doesn’t matter. Every company wants to be successful, they want to be the best. The ability of a company to be successful falls on the CEO. This is why you hear about CEO’s moving from company to company, just like a free agent in sports. Just like free agents in sports, these moves cost businesses/cooperation’s millions and millions of dollars for that one individual.

When a CEO changes companies, or a new CEO is hired, it can have a huge impact on a business before the CEO ever works a day. Stocks go up, or down depending on these hires.

The parallels between successful Fortune 500 companies and that of successful sports franchises are strikingly similar.  Conversely, the comparisons of poorly run companies and bad sports teams are also very similar.

Ask any successful CEO what they attribute their success to and you will likely hear the same answer. That answer is, their team or staff under them. Ask the managers of those teams what make them successful, and you’ll likely again hear the same thing, their staff under them. It often sounds like the modest/cliché answer to give, but, in reality it is the honest truth.

A CEO may have their finger prints all over a company, but they can’t personally train all of the employees in the company, or oversee every individual that works for the company. The CEO relies upon great personnel under them and guides the operation with information provided to them by those individuals and their departments. But, at the core is a great supporting cast, and every great CEO has an innate ability to get the right people under them to make those departments successful.

A sports franchise is no different. It will sound cliché, but in the NBA, the San Antonio Spurs are the epitome of the successful business model. R.C. Buford could arguably be the greatest GM of all time in the NBA. How so? Well if copying is the ultimate flattery, then the Spurs get flattered year after year, and for every good reason. Their approach to winning in the NBA is that of the ultimate business model.

They do it with a solid organization and infrastructure. It’s not just players, or coach, it goes much deeper. It is the entire structure of the organization, finance department, scouting, player, video, entertainment, sales, marketing, and finally, the coaching and players.

There are more current personnel in the NBA that have come from the Spurs organization, or a branch of the R.C. Buford tree, than any other team or GM in the NBA.

So many NBA teams seem to be more about free agency, and show no concern of building through the draft. In a league that is getting closer and closer to a hard cap, similar to the NFL, teams will have to start adapting a different philosophy if they are to stay competitive in the NBA year after year.

If the NFL has taught us anything, it is how to win in a salary cap league. It’s building through the draft. In order to be good in the draft, a team has to have a great scouting department. So even if a team drafts good, they have to cultivate their talent, which requires a top notch player development department. Once the young talent develops, the team will need to manage the money it takes to keep talent in the organization, and that is where a financial guru comes in.

Examples of basketball teams with a solid infrastructure. The Oklahoma City Thunder, Golden State Warriors, Houston Rockets and the Denver Nuggets all seem to have solid business models in place.

You might ask about the NBA heavy hitters; New York Knicks, Los Angeles Lakers, Miami Heat, Boston Celtics or even the high spending New Jersey Nets. Simple, look at the financial flexibility any of them have, or “home grown” players on the roster. Furthermore, look at the draft situation each of these teams hold for the upcoming years.

Conversely, there are some bad teams in the NBA that would prove they are void of any sort of business model. The Sacramento Kings and Phoenix Suns are two prime examples of no organizational direction for the company moving towards.

Other than the Spurs, The Oklahoma City Thunder are another prime example of a team that has great infrastructure. Sam Presti, a R.C. Buford disciple, has assembled a powerhouse of an orginization in the NBA. With Jeremy Lamb, Perry Jones III, Daniel Orton, Reggie Jackson and DeAndre Liggins all having 1 year of experience or less, they have plenty of young talent. Plus they have multiple 1st round picks in this season’s draft. With Presti’s past success in the draft, Oklahoma will be in the same situation for years to come.

The Thunder could be the New England Patriots of the NBA. They continue to pile up talent and when it gets to be either a little old or a little expensive, they ship it out for picks and continue the cycle.

As a Timberwolves fan, 0ne can only look at successful teams and their great business models achieve success year after year and just imagine what could have been. If this team had a solid business model in place and a great infrastructure going into the 2009 draft. It has been well documented how bad the Wolves (David Kahn) blew the 2009 draft. Not only 2009, but, who can tell me what happened to the 3 picks in the 2010 draft. A total of 9 1st round picks in 3 consecutive drafts, and there are only 2 players left on the roster. That’s a 22% success rate. I don’t know about you, but that would get me fired from my job if I produced a 22% success rate.

There is really no way to judge the player development aspect of the Wolves. So there is the financial department of the Wolves. They currently have $59 million on the books for next season and that’s without Chase Budinger and Nikola Pecovic on the roster. Knowing that Pek will be in the $12 million dollar range, and Chase will need in the $2-$3 million range for a total of $15 million. That puts the Wolves in the $74 million range, which would be the 9th highest payroll in the NBA for the 2012-2013 season.

With all the talk of bringing back Kahn or finally going in a different direction. One thing is for sure, regardless of the injuries this past season, it is clear Kahn hasn’t set the team up to succeed for years to come. And with what could have been, Kahn can only be considered a failure for what he’s achieved considering what he had at his disposal to start. Considering that he went into the 2009 draft with no head coach, it also seems like Kahn went into the draft with no plan, and it doesn’t seem like there has been a plan ever since.