The NBA’s Minor League Could Soon Transform Pro Basketball

(Bloomberg Businessweek) -- Darius Bazley, who turned 18 earlier this month, is one of the best basketball players his age in the country—a 6-foot-9 forward with ball-handling skill rare for his size. Along with a few peers in the elite ranks of high school basketball, Bazley faces a peculiar problem: His talents are worth millions in the NBA, but he can’t cash in because the league bars players who aren’t at least 19 years old. Since he isn’t eligible to walk the stage at the NBA’s June 21 draft in New York, he had to consider his options.

Most kids in his shoes go to one of a handful of universities (see: Duke, Kentucky, Kansas) that have made themselves into extended-stay residences for NBA draftees-in-waiting. They play in nationally televised games, then leave after a year. All the while, the National Collegiate Athletic Association insists they’re “student athletes” who can’t be compensated beyond scholarships and modest stipends. Occasionally, top prospects go to Europe, where they play professionally for six-figure salaries.

Ultimately, Bazley chose to do neither. He backed out of a commitment to Syracuse University to go to the NBA’s minor league circuit, the G League. He’s not the first player to join the league straight from high school. Latavious Williams did it in 2009, but Williams, who never made it into an NBA game and now plays in Europe, had been deemed academically ineligible by the NCAA. Bazley is the first player to turn down scholarships in favor of the G League. “This kid’s decision was a little startling,” says Michele Roberts, executive director of the National Basketball Players Association.

If basketball fans think about the G League at all, it’s usually as a place where nobodies play for no money in front of no one. In April the NBA raised the G League’s minimum salary from $19,000 to $35,000 for the five-month season that will start in November, which mainly underscored how little the league has paid since it started in 2001. Bazley’s decision may help prove that the G League is an untapped asset: If others follow his path, the league could go from afterthought to destination, unlock tens of millions of dollars in revenue for the NBA, and help college basketball rid itself of its recruiting scandals.

The NBA is cruising at a time when other U.S. sports leagues have begun to sputter. Revenue for its 30 teams is expected to hit $8.5 billion for the just-completed season, up more than 7 percent from 2016-17. Ratings for nationally televised NBA games rose 8 percent from last season, while NFL ratings fell almost 10 percent in 2017, according to Nielsen Holdings Plc. The NBA’s median viewer is 43, compared with 51 for the NFL and 57 for MLB. The NBA doesn’t have the player safety problems that plague the NFL, nor has it faced—and fumbled over—player protests during the national anthem; its fast-paced games fit better into the social media age than baseball’s slow-building drama; and it has international popularity the NFL, MLB, and NHL can only dream of.

This year’s NBA Finals, the fourth consecutive matchup between the Golden State Warriors and the Cleveland Cavaliers, averaged 17.6 million viewers in the U.S. despite ending in a ho-hum Warriors sweep. The last time the Finals ended in four games, in 2007, average viewership was less than 10 million. The series served as a showcase for three global celebrities—LeBron James of the Cavaliers and Kevin Durant and Steph Curry of the Warriors—who rank second, seventh, and ninth, respectively, on ESPN’s recent “World Fame 100” list. Tom Brady, the list’s top NFL player, comes in at No. 38; no baseball player makes the cut. Even the NBA’s most urgent issue—an overstuffed talent pipeline—is a sign of health.

The NCAA, which supplies the vast majority of NBA players, is grumbling about its role as a finishing school. The trouble goes back to the 1995 draft, when the Minnesota Timberwolves selected Kevin Garnett with the fifth pick—at that time, teams could draft as young as 18. Garnett, the first high schooler picked since 1975, was an all-star by his second season. Kobe Bryant made the jump in 1996, and soon high school gyms were crawling with NBA scouts looking for the next superstar. Sometimes they found him—James came straight from high school in 2003—but more often they fooled themselves into thinking they had. Kwame Brown, a Georgia high schooler picked first overall in 2001, failed to live up to expectations and bounced around the NBA for 12 seasons.

Brown’s story is hardly a tragedy—he made about $65 million during his career—but for the league and its owners, it was a problem. High schoolers were hard to evaluate and, with rare exception, not ready to contribute. Teams were spending tens of millions of dollars and getting nothing in return. In 2006, as part of a collective bargaining pact with the National Basketball Players Association, the league instituted the 19-year-old age minimum. “It was very much business-driven,” says David Stern, the NBA commissioner at the time. “The whole notion was that it allows us to make a better judgment.”

The rules reshaped college basketball, filling rosters at powerhouse programs with so-called one-and-done players who left for the pros after a year. These teens have become prime targets for NCAA coaches, player agents, and sneaker reps who are willing to pay under the table. This shadow economy has been part of college basketball recruiting for decades, with the NCAA handing out fines and suspensions now and again. Federal prosecutors raised the stakes in September, however, unveiling criminal charges against 10 coaches at seven schools, as well as agents, shoe company executives, and their go-betweens, who were accused of making illicit payments to players and their families. A month later, with the investigation ongoing, NCAA President Mark Emmert formed a commission to examine college basketball’s woes. In April it issued a 53-page report. The first suggestion was to end one-and-done.

By making this the central plank of its reform plan, the NCAA is kicking the problem back to the NBA and admitting that black-market college recruiters need competition. In the last few months, says a source familiar with the discussions who declined to be named, NBA Commissioner Adam Silver has been talking with players, owners, and execs about what to do with high schoolers. “This issue has become front and center,” says Roberts of the players union. “There’ll be some resolution, either way, within the next six to nine months.” Whatever is decided, the new rules likely won’t go into effect for a few years.

Just lowering the age limit won’t resolve things. “Everybody acts like all our problems surfaced when players couldn’t go [pro] out of high school,” says Jay Bilas, an ESPN analyst and former Duke center. “We had scandal and problems before that, and we’re going to have them after that.” If 18-year-olds are again allowed to go straight to the NBA, he says, it won’t change the number of players who bolt college after a year. The top 15 prospects in a high school class will go directly to the NBA, and the next 15 will go a year later. High school gyms will once again be full of NBA scouts. Unscrupulous college coaches will still break rules to get the best available talent.

The G League began as eight teams owned by the NBA and known as the National Basketball Development League. The idea was to give players who’d been cut from NBA rosters before the season began somewhere to play other than Europe. The league was a common pool of talent; any NBA team could sign any player. In 2005 the NBA rebranded it as the D-League and shifted toward an affiliate model, allowing NBA teams to stash first- and second-year talent on rosters while maintaining exclusive rights.

By 2014 the organization had grown to 18 teams. Malcolm Turner, a former sports marketing executive, took over as president and pushed to expand the league to 30 teams and create a one-to-one affiliation for each NBA franchise. Last season, when Gatorade became the official sponsor—changing the “D” to a “G”—the league had 26 teams, 23 of them owned by their NBA affiliate. A 27th is set to join next season, and Turner expects to hit his “30 for 30” goal by 2020. “It’s taking matters in our own hands and trying to get talented young players NBA-ready as quickly as possible,” he says.

Last year the NBA added slots to every team’s roster for “two-way” players who split time between the NBA and the G League and can earn as much as $385,000 during the season. Turner says that next season, with the raised minimum, the two-way contracts, and other NBA call-ups, more than a quarter of G League players will make at least $75,000—on top of housing and health insurance. The most important indication of the league’s progress, he says, is that at the end of the regular NBA season in April, 53 percent of players on rosters had G League experience, marking the first time a majority of the NBA had spent time in the minors.

Most G League vets in the NBA aren’t boldface names. They’re role players and end-of-the-bench guys like Andre Ingram, the 32-year-old Los Angeles Lakers rookie who made his NBA debut in the team’s second-to-last game of the season after spending most of the past decade playing for the now-defunct Utah Flash and the South Bay Lakers. “You get one sweat suit. You’ve got to keep that for the year,” Ingram says of his time with the Flash. His three days with the Lakers, prorated at the $816,000 league minimum, earned him $13,824, more than he made in his entire first season in the G League.

The simplest way to make the minor league more attractive to elite prospects is to pay more. The NBA could try funneling them to the minors in other ways—forcing players drafted out of high school to spend a month or two there or making players who go to college ineligible for the draft until they’re juniors—but such moves are unlikely to get past the union. A $75,000 starting salary, however, could make the G League at least as appealing as the black market.

Last summer, according to one of the complaints federal prosecutors filed in September, an Adidas AG exec and a Louisville assistant coach conspired with fixers to pay $100,000 to the family of a five-star recruit, later identified as Brian Bowen, to persuade him to enroll at the school. Adidas has a $160 million sponsorship deal with the university. If $100,000 is the going rate for an elite prospect, the G League can probably get away with paying less because it offers better preparation for the NBA. College coaches are focused on winning and keeping their jobs—and bound by NCAA rules limiting practice time—whereas everything about the G League, from the coaching to the schedule to the officiating, is designed to develop professional talent.

That’s why Bazley turned his back on Syracuse. “Spending a year in the G League is going to prepare me for the NBA in a way that no other setting can,” he wrote in the Players’ Tribune in April. Bowen, for his part, left Louisville and is trying to figure out what’s next. Although he wasn’t charged with a crime and has said he was unaware of any alleged payments to his family, the NCAA ruled that he can’t play in college next season. He could wind up in the G League. If he’d been able to earn $75,000 there, he might have chosen it in the first place and saved himself a lot of trouble.

The investment would be worth it for the NBA. A G League that attracts the best high schoolers and other top young players from around the world would command tens of millions of dollars in global media rights, says Daniel Cohen, a media rights consultant at Octagon sports agency. The G League has distribution deals with ESPN, Facebook, NBA TV, a startup network called Eleven Sports, and Twitch Interactive, an Amazon.com subsidiary that streams video games and esports competitions. Eleven, Cohen estimates, pays about $1 million a year. (Turner wouldn’t comment on the league’s finances.) “If I could tune in and watch LeBron James and Kobe Bryant go play their first year for a G League affiliate, it opens up a lot more interest,” he says. “You’ve extended the best league in the world to the two best leagues in the world.”

The NCAA, which charges more than $1 billion per year for broadcast rights to its March Madness men’s tournament, is proof of concept that the American appetite for basketball runs deep. And while much of the attraction of the college game is in its being, or at least pretending to be, for amateurs—kids playing their hearts out for a taste of athletic glory—some of the fun is in seeing tomorrow’s stars today. If the NBA gets it right, fans who once tuned in to watch James Harden play for the Arizona State Sun Devils will soon be watching the next James Harden play for the Rio Grande Valley Vipers. 

 

©2018 Bloomberg L.P.

BloombergQuint
Stay Updated With Businessweek News On BloombergQuint