Friday, May 09, 2014

Donald Sterling, Big League Sports, and the Free Rider Problem

Can the other 29 NBA owners force Donald Sterling to sell the LA Clippers? Let's put it another way: can the other 29 owners be forced to remain Donald Sterling's partner? Of course, private citizens shouldn't be forced to sell privately owned businesses. But how much of Sterling's business exists if you take away his association with those other 29 private businesses? If you take away the other 29 teams, what does Sterling own?

Sterling's real business isn't the basketball team itself, but his partnership with the rest of the owners. Donald Sterling didn't "make the league" as he has put it. The league made Donald Sterling an owner. The league has made Donald Sterling very, very rich, while Sterling has never made any money for the other franchises. Can his 29 partners, who have indirectly subsidized his business for over 30 years and who are now worried that Sterling is going to cost them untold millions, be forced to stay in business with him?

What would happen if the NBA owners decided that they couldn't make Sterling sell the team itself, so that the only way to get free of him was to expel the whole team from the NBA? Sterling would still own his business: a basketball team named the LA Clippers. He'd have that business's assets and its debts, hold its leases and its contract obligations. But the other NBA teams wouldn't play the Clippers. They would be free to find other opponents. But who would pay to watch that? Who would pay to advertise at those games? Who would put that on TV?

A Clippers organization cut loose from the NBA would never bring in the profits Sterling has gotten used to as an NBA owner. It wouldn't be able to bring in enough revenue to pay the players' existing contracts. Without its league connection, the team would go bankrupt. Without the NBA, the Clippers organization does not exist. The other 29 owners are Donald Sterling's business.

The truth is that Sterling's membership in the NBA has always involved both indirect and direct transfers of wealth from the other owners. The Clippers have been a notoriously terrible organization for most of Sterling's tenure; that they have actually been winning the last two or three years is an almost flukey interruption after three decades of futility. (And that fluke was directly engineered by the last NBA commissioner, who forced another team to trade a star player to the Clippers instead of the Lakers.) To put it very simply, Sterling has spent 30 years as the owner of a basketball team that people don't want to see. He has basically gotten rich as the owner of the Washington Generals.

Sterling has made money because his team that people don't want to watch holds one of the 30 exclusive licenses to play the basketball teams that people do want to watch. Sterling's business has not been putting on the Clippers' home games but hosting the other 29 teams' away games. Sterling has been granted a special license to sell tickets to Lakers, Spurs, Bulls, Pistons, Celtics, and Heat games. The other 29 teams are obligated to play on Donald Sterling's floor 41 times a year, no matter what. And they are obliged to host the Clippers 41 times a year, no matter how low the demand for those games.

Most of those teams, most of those years, could do as well or better by playing someone beside the Clippers. Fans happily paid to see Bird's Celtics, Ewing's Knicks, Jordan's Bulls, and generations of championship-bound Lakers teams play Sterling's Clippers over the years. But they were paying to see those teams, not the Clippers. And when your team was having attendance troubles, you never got a boost when the Clippers came to town. On the other hand, Sterling could always count on selling extra tickets when better, more popular teams came to town. Sterling has profited off generation after generation of visiting basketball stars, from Magic and Bird in the 80s to LeBron and Durant today.

Now, running an also-ran team for 30 years, with only rare and brief playoff appearances, means that your team doesn't get much time on national TV. But that's okay for Donald, because the league has a formula for sharing out its TV revenue to all of the owners. So Donald Sterling has gotten a slice of the Lakers/Celtics money, the Bulls/Jazz money, the Spurs/Heat money. In the same way, league revenue sharing means that Donald gets some money from every NBA hat, jersey, and official knick-knack that gets sold, although nearly all of that merchandise has some other team's logo. LeBron's jersey puts cash in Donald's pocket. The cash other owners have gotten from the sale of Lamar Odom and Danny Ferry gamers doesn't even begin to match the revenue Sterling has made from Jordan, Magic, Shaq, and the rest. The number of kids who've bought an NBA video game so they could play as the Clippers might actually be the square root of -1, but Sterling has taken a split from every XBox cartridge.

The other 29 NBA owners haven't been hurting, and they haven't missed the cut that goes to Sterling. But for the last 30 years and more, they have been subsidizing him. They have put money in his pocket, and he hasn't put any in theirs.

You'd think that Sterling would be grateful. But, well. Only a few years after buying the Clippers, Sterling moved them from San Diego to LA (which, you may have heard, has another basketball team) despite being forbidden to do so by the league. Instead of building up the league by strengthening the San Diego market, Sterling took the NBA out of that market entirely. Instead, he went to a city where his team added nothing -- and indeed could add nothing -- so he could feed off the existing market created by the Lakers organization. Sterling could not possibly build LA's interest in the NBA; a better owner had already built a deeply beloved franchise there. Years later, NBA Commissioner David Stern would actually reward Sterling by forcing Chris Paul to go the Clippers instead of the Lakers. Sterling couldn't attract stars to his business, so the NBA gave him one. Sterling's relationship to the NBA has always been parasitic.

Sports fans love to hate the big-spending owners who don't give smaller-market teams a chance. But fans give a free pass to owners like Sterling, who exploit their membership in the big-league club to get a lucrative free ride. Every major sports league has some owners who have decided that they can get rich fielding mediocre teams and making a buck off the stars that better owners pay. Attempts to restore competitive balance with revenue sharing don't fix this free-rider problem; they make it worse, because they make it even easier to profit off your association with better-run businesses. Some of these owners are in smaller media markets, but it's not just about the size of the market. Donald Sterling runs his crappy business in Los Angeles.

George Steinbrenner took a lot of heat over the years, and I talked smack about him myself. But Steinbrenner put money in the other owners' pockets. Every team the Yankees play this year is going to make money marketing Derek Jeter's farewell; every team they played last year made money from Mariano Rivera's farewell. Yankee Stadium doesn't get to market the farewell tours of beloved Royals or Indians Hall-of-Famers. The Yankees don't have paid attendance double when the Padres come to town. And they don't double the ticket prices for spring training games against the Florida Marlins. Other teams do charge extra for spring training games against the Yankees; they make a profit off Steinbrenner's payroll. Free-riding owners are at least as big a problem for competitive balance as free-spending owners.

One of the jokes about Sterling's self-immolation is that he castigated his girlfriend for "broadcast[ing]" her association with Magic Johnson. But associating with Magic Johnson has always been good for the NBA's business. He has always made them money and always improved their brand. (Magic is a likeable version of Hyman Roth -- he always makes money for his partners.) The other owners literally want to broadcast their association with Magic; they want him associated with the NBA on TV. The essence of Sterling's entire business model has been to broadcast his association with Magic Johnson, who has put fans in Sterling's seats and dollars in Sterling's bank account.

The rest of the league has carried Donald Sterling for over 30 years, and the value of his NBA franchise has increased twenty-fold in that time; that increased value has been created by the other 29 franchises, not by Sterling. Now Sterling's craziness has threatened those other 29 owners' businesses. Advertisers don't want to be in business with Donald Sterling. TV networks don't want to be in business with Donald Sterling. So the rest of the owners simply cannot afford to be in business with Donald Sterling. They're considering making him sell, at a ridiculous profit that has nothing to do with how Sterling has run his business and everything to do with how the other owners have run theirs. If Sterling fights in court, it will be likely be on anti-trust grounds; major American sports leagues essentially do operate like trusts or cartels, and need to. The joke is that if the NBA didn't operate like a trust, Sterling's Clippers would not exist at all.

cross-posted from Dagblog

Sunday, May 04, 2014

Why Colleges Mishandle Sexual Assault

My first week of college, someone passed along some time-honored undergrad wisdom: "If you're going to get arrested," we were told, "and you see a campus cop coming one way and a city cop coming the other, run to the campus cop." I've been thinking about that advice lately, as the news brings more scandals about sexual assault at American colleges. This week the Department of Education named 55 colleges and universities being investigated for mishandling sexual violence complaints. Fifty-five. The school where I was told to run to the campus police is one of them. That advice is part of the problem: completely backwards for victims of sexual violence. If you've been the victim of a crime, you should run away from the campus authorities. You need the actual police.

The advice to choose the campus police presupposed that I was going to be arrested, for drinking or some other college-boy misdemeanor. And while I managed to get through college without needing it, that advice was sound. Getting arrested by the college police is a better deal. College authorities don't want their students in serious trouble, and they look for ways to let them off easy. Getting arrested by the campus police could still have real consequences. But you can be sure you will face the fewest consequences your actions permit.

But if you are the victim of a crime and only go to the college authorities, that means your attacker will face the fewest consequences possible. Not might. Will. If you are assaulted or raped and you only go through the school's judicial process, you are keeping your attacker safe in the hands of the people most reluctant to punish him.

Colleges don't especially want to punish crimes of any description. Not petty drug and alcohol beefs, not iPad swipes or bicycle theft, not anything. The individual people who make up the school naturally believe, in the abstract, that crimes should be punished. But the organization itself is not interested in crime or punishment. A university will, if you push it far enough, punish you for a crime. But you have to give it no other choice.

I work as a college professor. I was raised by a police officer. Those two things are nothing alike. Police departments and universities obviously look different. But they are actually even more different than they look. The differences are pervasive and profound, shaping the outlook of everyone inside either institution. Cops and deans, simply because they are cops and deans, see the world in radically different ways.

What colleges want is for their students to succeed. Schools are willing to suspend students, expel them, or flunk them out when a particular case seems hopeless. But those are always considered bad results. Flunking and expelling people is not the general goal. What schools want is for as many students as possible to do well and graduate.

That means if one student has assaulted another the school will hope, deep in its institutional heart, that there's some way that things can work out for both students. They will try to mediate a solution that, at least in the mediators' minds, keeps everyone happy. That comes, originally, from a benign place. But the how-can-this-work-out-for-everybody mindset becomes insanely inappropriate when one person has committed a crime against another. It is a ghastly response to sexual assault.

Police and prosecutors are not concerned about everything working out for all parties involved. They're not worried about the long-term future of people accused of serious crimes. The police, by their nature, take sides. The accused can get his own damn lawyer. If someone has assaulted you, go to the people who will treat you as a victim and your attacker as a potential criminal. Do not go to people who view you and your attacker as equally valued members of the community.

Sexual assaults aren't the only crimes that colleges mediate in this wrongheaded way. If you're in college and another student causes you serious harm or does major property damage, you will not get full satisfaction from the school authorities, because they are not a court of law. I cannot tell any specific stories here, but if you have been a victim colleges are not set up, or legally empowered, to give you genuine restitution. And universities' approach to adjudicating crimes can be grotesquely Solomonic. If you go to them about a stolen baby, they will often propose cutting the baby in half. (In the original story, of course, Solomon only proposes the baby-splitting to smoke out a malefactor, because anyone okay with cutting a baby in half is no damned good.) This leads to the kind of Mickey-Mouse discipline often given out to young men who have sexually attacked their classmates. Colleges don't treat rape as a crime because colleges have trouble thinking of their students as criminals.

Even worse, precisely because universities are not courts of law, they have generally become skittish about being sued in real courts of law by the parents of students who misbehave. When a student does get suspended or expelled, they sometimes turn up with parents and lawyers arguing that the punishment is too "extreme" and that the punished student didn't get due process and the school is ruining this young man's bright future and so on and so on and so on. So, the Mickey-Mouse nature of the college discipline process not only means that serious crimes get only Mickey-Mouse punishments, but means even those lame, inadequate punishments are vulnerable to challenge on the grounds that the whole procedure was Mickey-Mouse. After the panel gives the victim half a baby, lawyers show up demanding that the criminal be given three quarters of the baby.

Many school have apparently been conditioned by this process to bend over backwards trying to avoid lawsuits by the families of the very students that the school has slapped on the wrist for serious crimes. Schools have faced legal expenses and jeopardy over taking crimes too seriously. They have not been sued, until just the last few years, for not taking crimes seriously enough. The recent spate of lawsuits, and the investigation by the federal government, is a needed and long-overdue corrective.

What is completely inexcusable, and what I hope the recent lawsuits and investigations and bad publicity will finally end, is colleges' practice of deliberately steering young women away from pressing charges. Colleges, whose self-interest dictates that everything stay in house, tell victims of sexual violence that staying with the college's in-house disciplinary procedure is in the victim's interest. That is a scandal. It is a terrible thing to frighten a young woman fresh from a traumatic experience of sexual violence with stories of how scary it would be for her to go to the police. But traumatized young women are frequently told that going to the police will be much worse for them than staying with the college's in-house procedures. That is a lie. Nothing is worse for victims than a college's in-house procedures.

Whenever someone is telling you how horrible going to the police would be for you, that's usually a sign that you should go to the police right away.  And if someone is urging you not to go to the police, ask yourself why your going to the police scares them.

Worst of all, discouraging women from going to the police when they have been raped or assaulted discourages them from understanding what has happened to them as a crime. And if you have been victimized you must never, ever let go of that basic truth. What has been done to you is not a misunderstanding or a discourtesy or a violation of some pissant code of conduct. It is a crime, and no one who treats it as something else cares about your welfare.

If you are a college or university, the best way to protect yourself from litigation over how you've handled felonies on your campus is not to fool around trying to adjudicate felonies. You're not set up for it, and you're not good at it. Bring in the police as soon as you can; dealing with crime is their thing. And never, ever try to protect one student from the police by leaving another unprotected.

If you are a victim, don't walk to the police. Run. If you can get to the police without telling any campus authorities, do it. You can go to the deans after the police report has been filed. Asking that your attacker be moved out of your dorm will have a lot more bite if you're pressing criminal charges. And that charge will change the deans' sense of the situation's magnitude. They'll be less likely to tell you that moving your attacker to another dorm for a semester is a sufficient final punishment.

A crime is a crime no matter where it happens. If you want to learn about Platonic philosophy, don't go to a police lieutenant. If you've been a victim of a serious crime, don't go to a dean.