Home > NBA, NCAA > The Solution to Keep NBA Prospects in the NCAA Longer: League Contraction

The Solution to Keep NBA Prospects in the NCAA Longer: League Contraction

In a recent episode of the BS Report podcast, Bill Simmons and Chuck Klosterman discussed at length the issue of NCAA basketball players leaving college too soon to enter the NBA draft. Bill, Chuck, and many other basketball fans, feel that this recent trend is hurting the NCAA product (Butler’s 18% shooting in the NCAA final this year) and the NBA product by having players enter the league before they are ready.

The second point has three major facets to it which include high draft picks turning out to be busts (Kwame Brown and more recently Hasheem Thabeet), the fact that when players are coming into the league before they are ready they are squandering time on the NBA benches instead of getting game experience, and in the case when the player is ready at a young age, they are killing their physical longevity. The situation where players are not totally ready is the most common example, but there are the situations where some players are ready straight out of high school or after one year of college like Kobe Bryant, Kevin Garnett and LeBron James It can be argued that if these greats would have instead played at least a few less-physically-strenuous years in college they would have longer NBA careers (not to mention the possible avoidance of “The Decision”).

The list of reasons to want basketball players to play in college for longer goes on and on, and their merits are not being debated here. The fact is that there is one major factor responsible for players leaving early for the NBA; and that is that they can make a huge amount of money right away (you can’t blame anyone for making that choice). The thing that Bill and Chuck were unable to come to an agreement on was how to entice players to stay in the NCAA longer in order to strengthen the product of both the NBA and the NCAA.

A number of solutions to keep players in the NCAA longer were thrown around that involved scholarship penalties for schools that don’t graduate enough players, an increase in the number of NCAA divisions and make the highest one similar to a pro-league, forming a committee who would allow or disallow players to declare for the NBA draft, or just apply a 3 year minimum requirement like the NFL does to it’s prospects. Bill and Chuck were on the right track when the conversation led to the fact that players need “incentives” to keep them in college instead of the NBA.

Since the biggest incentive drawing the players into the NBA is money (the most universal incentive for anyone in today’s society), you would think that to keep them in the NCAA they would need to make money. Unfortunately that is not an option as the NCAA is very strict that players are “student athletes” and no matter how much the schools profit from these athletes they should not be monetarily compensated (this is a discussion for another day, but will be considered as inevitable for this column’s purpose).

All the above being considered, Bill and Chuck were looking far too much on the supply side of things, and not enough on the demand side. Saying that, here is my solution to the problem.
I agree that the incentive to make NBA money is causing the current problem, but instead of trying to counteract that with a competing incentive to make money in the NCAA, the more stable alternative is to lessen the incentive of making the NBA money. The way to do this without immediately lowering the salary cap in the NBA and pissing off every single player, although controversial, is to reduce the demand for players in the league. This would happen by contracting the league by two teams, essentially reducing the demand for players by about 30 positions. You may be thinking, how is reducing the players in the NBA going to keep prospects in college instead of leaving early? Let me explain…

Economically speaking, a normal market for any good or service has diagonal graphical lines for the supply and demand of that good or service (Chart 1). The market for professional basketball players in North America is not a freely operated market, and has a number of restrictions that work to regulate the market (Chart 2).

In the market for professional basketball players, the demand curve is a vertical line which represents the established amount of players that are needed; with 15 players on each team and 30 teams, that number is roughly around 450. This demand for players isn’t a diagonal line because it isn’t dependant on any other factors other than the amount of teams the NBA wants to have. The supply on the other hand is a diagonal line since the amount of individuals with the skill sets and the motivation to be professional basketball players can vary depending on other factors. In the case of the NBA (Chart 2) the salaries (incentives) are fixed through the salary cap. *Note that Chart 2 shows a balanced market, which the current NBA is currently not, as there is most likely going to be a lockout next season, but we are going to use Chart 2 as our NBA starting point.

Most of the suggestions that Bill and Chuck were discussing, such as setting the mandatory-3-years-in-college rule and implementing monetary incentives to stay in school, are based around reducing supply, which means they are trying to restrict players from entering the market (Chart 3). As depicted in the chart, reducing supply while having a fixed demand increases the equilibrium salary level (the amount of money the players expect to be paid). The salary increases are due to that fact that there will be fewer players coming into the league and it will make the availability of high quality players seem scarcer. This is because a chunk of the supply is forced to play in the NCAA or elsewhere.

This solves the problem of keeping kids in the NCAA, but the result will be a dilution of skilled players in the league (they need to fill the roster spots with someone), and it will make the skilled players in the league demand more money since there is seemingly less of them. In turn, when the kids in college see the NBA players starting to get paid more the original incentive that we are trying to confront (the money available in the NBA) is getting stronger! It is an unsustainable model.

In the case that I am presenting (Chart 4) we are keeping all things equal and shifting the demand curve to the left, reducing the amount of players in the league. The first thing this does is it removes the 30 worst players from the NBA and makes every team more skilled. By doing this, it creates less available spots for prospective players outside the league, and creates more competition for the remaining spots. For NBA teams, that means that demand for the assets they hold (jobs for players) just increased, meaning they can reduce salaries (the act of reducing salaries would not happen over night with the subtraction of two teams, but could be used by the NBA as bargaining chips in later union negotiations).

Ok, so what does this mean for players in NCAA? Imagine you are a star player on a Division One school. You just finished your freshman year, you led your team in scoring, and your team made a splash in the NCAA tournament. The summer before, two NBA teams folded. You look at the state of the league and see the level of play has increased, role-players who were getting decent playing time a few years ago are now fighting and scraping just to see the floor, and there is less money in the overall salary pot resulting in players around your skill level making less money as they have taken a step closer to the bottom of the NBA skill-scale.

Hum… Do you enter the draft this year, knowing full well that you could probably get drafted in the first round, not sure where though, but then you have to try out for a team where the overall skill has just increased and the money isn’t what it used to be? You are pretty sure with a little more time under your belt this won’t be a problem, but is it worth the risk right now? I will tell you right now, unless you are absolutely sure you can make it, you won’t go. You will stay in school, get more playing time, continue to be “the man” on your team, avoid sitting on the bench for the next few years, then go in when you know you are ready and can demand the salary you think you deserve.

When you are in law school, in a tight job market, are you going to drop out before you get your degree and try to find a job just because you could do it? No, you are going to stay until you are properly trained and ready to fight and win in the job market. Done. Problem solved.

What this system also does, is it allows players, like LeBron James who are able to contribute to an NBA team at a young age, to come straight into the NBA if they want to. It will be the market economy and incentives at work. And if players comes in early and aren’t good enough, they are going to get cut from teams.

The idea of contracting the NBA, when you look at it from a broad point of view, makes sense. If some teams are losing money and needing to be propped up by the rest of the league, and if medium skill level players are getting paid at the level only the top players should only be getting, it means that the league is diluted! It is the market economy at work. Contract the league and both of those problems, along with the NCAA problem is solved. Bill and Chuck talked about the “glory days” of the NCAA to be around the early 1980’s. In the 1983-84 season there were only 23 NBA teams… Do you see a correlation here?

The only thing that will be holding this back is that the players are not getting much out of it. But you know what; the players are getting a pretty sweet deal right now. Most of them are making an exponential amount more than they would in any other career, and it has gotten to a level that has outgrown the revenue stream of the league. There is a growth rate ceiling for the NBA, and I think we have gotten there, time to let the free market adjust itself.

It is a tough pill to swallow, but if the players don’t accept it they are just acting as economic socialists, something the USA was not founded on. (Hey! They could learn more about this with their extended stints in college now).

Follow Matt on Twitter: @Matt FOTB

Economics is engrained in everything!!

  1. No comments yet.
  1. March 7, 2012 at 7:07 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: