A Vegas Hoops Startup Wants to Compete With the NCAA, Does It Stand a Chance?
A Las Vegas semipro basketball team plans to pay top high school players to skip college, but the NCAA's overwhelming market power means the idea is doomed to fail.
As the top high school basketball recruits in the class of 2015 finish signing their letters of intent to play college basketball for price-fixed athletic scholarships, a group of California businessmen is trying to make a run at the National Collegiate Athletic Association. The premise: offer the best recruits $700,000 each to skip school and play for a Las Vegas-based semi-pro basketball team for a season before going to the National Basketball Association.
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In a normal, competitive market, this would be a sound plan—dramatically outbidding established competitors for top talent is the best way to gain entry. However, the market for elite high school basketball players is anything but normal. Let alone competitive. Chinese and European leagues have money, and they've mostly failed to attract America's best young players. The Las Vegas team figures to be more of the same.
The reason? Anyone willing to pay high school basketball players is not only competing against the promise of a college education, but also against a much stronger entity—the entrenched monopoly establishment and brand that is big-time NCAA basketball."I think most of it is some of these young basketball players have dreams and dreams start when they're little," said Mike Irvin, the coach of Chicago's formidable Mac Irvin Fire AAU team. "They watch college basketball on TV and they try to be like their favorite college basketball players. At the end of the day, that outweighs the money."Irvin has coached 2014 second overall NBA draft pick Jabari Parker and potential 2015 first overall pick Jahlil Okafor, both of whom could have taken money to play in China or elsewhere for a year before leaving for the NBA. Instead, they chose to play at Duke University.
That feel when you see your main dude and know you'll no longer be exploited by the NCAA. Brad Penner-USA TODAY Sports
"College is the safer option in terms of what players perceive because people have done it before," said Scott Phillips, who covers college basketball and recruiting for NBC and covered the recruitments of both Parker and Okafor. "It's certainly the more familiar option and that's why you see more kids take the one year of college, and when you think about it only a few months, rather than the uncertainty of playing overseas."
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But beyond the pageantry and the familiarity of college basketball, the NCAA can offer financial rewards that no other league can when it comes to branding and exposure.That's because an NBA contract isn't the only money players are chasing when they turn pro. They sign endorsements, and most importantly, contracts with shoe companies. Last year's first overall pick, Andrew Wiggins, signed a $10-12 million deal with Adidas upon leaving school.In order to be worth that much to potential endorsers and shoe companies, athletes need exposure—something they can only currently get from college basketball."If a kid goes overseas versus a kid on TV playing in college every day, the market is going to be better for that kid," Irvin said.The poster child for this cautionary tale is Brandon Jennings, who was the second ranked recruit in the country by Rivals in 2008, but opted to go overseas for a year. He was still drafted and got an endorsement deal from Under Armour, but he told horror stories of his treatment overseas, and he wasn't a household name among casual basketball fans."You look at Brandon Jennings and not many casual fans know who Brandon Jennings is before he was drafted by the Milwaukee Bucks," Phillips said.
Brandon Jennings before going to China and learning about monopolistic zero-sum games. Brian Spurlock-USA TODAY Sports
Contrast that with Jabari Parker, who is the center of a Gatorade marketing campaign, despite having been injured early in his first NBA season."You've been seeing all these commercials for Jabari Parker, who only played a few NBA games before getting injured, but he began to build his brand at the college level last year," said Syracuse sport management professor Chad McEvoy.
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This year, there will be a side-by-side comparison. Of the top two players in the Rivals 2014 recruiting rankings, the top-ranked player, Okafor, played college basketball, while second-ranked Emmanuel Mudiay played in China. Their endorsement success has yet to be determined, but Okafor was the face of Duke's championship run, while Mudiay is only well-known to those who follow high school basketball and recruiting.Want to wager which player is more likely to show up in a soft drink commercial?The NCAA claimed during the Ed O'Bannon lawsuit trial that there are a plethora of options for high school stars, and that their option is simply the best of many. However, the federal judge in that case found that college basketball is, in fact, the only viable option for these players—and as such, the association and its member schools have violated antitrust law by monopolizing the market and then colluding to not pay their labor for the commercial use of their names, images and likenesses.Back to the proposed Las Vegas team. In theory, its very existence could help the NCAA's antitrust case; in practice, the squad is a long shot to ever get off the ground. Organizers told the Sporting News that they would have little trouble signing at least five current McDonald's All-Americans. They did not name names. Reportedly, the team also is scrambling to piece together a viable barnstorming schedule. It does not have a broadcast contract, which means its games—if they even happen—would essentially be taking place on the dark side of the moon. "Where are you going to get that [NCAA-like] infrastructure?" asked McEvoy. "How are you going to build that league up financially in terms of branding, exposure, television?"One organization conceivably could: the NBA. But why would it bother? The NCAA does a perfectly fine job developing and branding young players. And unlike, say, European soccer clubs, NBA teams don't have to spend a nickel on the process. Granted, pro basketball does have the D-League, but that's a low-cost complement to college basketball's developmental function, and not an aggressive (and potentially expensive) entertainment market competitor."At the end of the day, the NCAA is a machine," Irvin said. "It's like the NBA. The money is too big. I don't think the NBA can come up with a scenario that can outdo the NCAA. The money is too large. The NCAA is making crazy money."Ironically, that money—and the Vegas team-snuffing, potential competitor-crushing power it brings—is what allows college basketball to bid no money for the nation's top high school basketball players and still get the best of the best. The NCAA doesn't need to be a fair option. It just needs to be the only real option in town.
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