David Stern's Game Plan

Baldwin Louie — Fri, 15 Jun 2001 15:00:00 -0700

Fans and the media know that even the best teams have bad stretches, but when it comes to sports institutions, there seems to be an expectation of enduring perfection. Given the NBA's spectacular growth during the '80s and '90s, fans and much of the media were stunned when the league dropped in popularity after the retirement of Michael Jordan, one of history's most memorable athletes. Then a lockout in a labor dispute between NBA players and owners caused the league to cancel half of a season, a loss no league could survive without suffering.

Now Commissioner David Stern is rebuilding the league with a crop of young stars, many of whom are coming to it directly from high school. This year's playoffs offered a vision of the future of basketball, with a bevy of NBA kids providing highlight film material nightly. How bankable those young stars are will soon become evident, as Stern turns his attention to negotiating a new national TV deal for the league, whose four-year, $2.6 billion TV deals with NBC and Turner expire after next season.

What also remains to be seen is whether the league can successfully integrate NBA.com, NBA.com TV (the league's NBA news cable channel), the NBA League Pass satellite package and its global programming. Between Games 3 and 4 of this year's NBA Finals, Stern spoke in his Fifth Avenue office about the state of the NBA's business.

TheStandard.com: All of those conspiracy theories about the odds being stacked so that big-market teams will make the playoffs seem to have paid off with better ratings.

Stern: Yeah, I conspired to have a compelling finals. My reaction to all that is that if all I had to do was sell my soul to the devil [for better ratings], I would have done it a long time ago [laughs]. What we believe the better finals ratings reflect is that the players who are out on the stage now are our future, and the Kobe Bryants and Allen Iversons had to get through other great players, like Ray Allen and Baron Davis, to get here. That was a revelation in the post-lockout, post-Michael Jordan era.

Q: Do better NBA Finals ratings mean a bigger NBA TV contract?

A: It's always better to be up, but I don't think we are going to get a higher number because the finals are higher rating. We'll get a higher number because the product is strong all season. Really, the ratings are a bit of a fixation for some. Compared with our halcyon days, we are down, but compared with the halcyon days of television – pre-cable and Internet – everything is down. Sports will continue as a programming platform that people will insist on seeing live instead of on their TiVo, and one that delivers young males who are impossible to reach, and one that is adaptable to video insertion and the other kinds of commercial incursion that's inevitable.

Q: You'll be the first league in more than decade to negotiate a TV deal during an economic downturn.

A: There is a logjam in terms of the up-front [TV sales] market that will be broken, though maybe not at the levels that the networks would like. Our new deal starts in 2002-2003, and the networks will be relying on their own economic projections as to what the economy will look like then, but that's always the case. What will really be interesting this time around [in the negotiations] is that we can put all of our buckets together, NBA.com, NBA.com TV, our NBA League Pass satellite package and our global programming. The question is: What's the best collective value we can get for the package of assets we have? Our pitch will be that if you lose a viewer to ER, that viewer is gone, but if you lose a viewer to a sporting event, there are other places to find him or her.

Q: We know sports can deliver young males to advertisers like nothing else, and it's an affinity that is lifelong and intense. But don't you wonder when the gravy train will end? TV rights fees keep going up exponentially as viewership keeps falling.

A: It has to, eventually. It's close to over, but it ain't over yet.

Q: No one is making money in sports on the Internet. Can it be done at a time when the vast majority of the audience is on a dial-up connection?

A: In narrowband, we can do it in things like e-commerce and fantasy sports, but our business model is obviously different from things like CBS SportsLine. The broadband adoption rate will probably be more accelerated than cable. People were talking a lot about cable TV in the '70s, and it really wasn't significant until the '80s. I don't view broadband as a short-term economic panacea, but in the long-term, it could be another thing that keeps the gravy train going.

Q: Some of the same people who notice there's no money being made with sports on the Net see wagering as their silver bullet. This is not an easy issue for any sports league, but isn't it one you'll have to face eventually?

A: I've spent my entire career with a predisposition against gambling, from the days I used to prepare position papers for the former [basketball] commissioner. So I really have a hard time accommodating myself to that notion. From a pure marketing standpoint, I understand the tug [opportunity], but I've tried to avert my eyes. We've grown with the assumption that most of our fans are interested in basketball.

Q: A few basketball questions: How long before you have to deal with a high school underclassman who wants to play in the NBA?

A: It hasn't been tested, but the collective bargaining agreement with our players says we will not take kids under 18. We believe it is immune from any kind of legal challenge.

Q: There seems to be divided opinion on whether it would be good or bad for Michael Jordan to return to the NBA. What's your take?

A: I don't know if he's coming back, but it would be good. Given the run that our young players had in the playoffs this year, it would be clear that [Jordan] would be coming back as a basketball player – perhaps the best ever – and not as a savior. That takes the pressure off him, and it takes the pressure off the league.

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David Stern's Game Plan