Good Morning Everyone,

Before we dive into this week’s issue, we wanted to talk about something.

When we started Strategic Bites, we did it because we were helping out a lot of people over text on how real-time business events would impact their working lives. People were asking about overarching re-organizations, layoffs, financial statements, etc. And we loved helping so much, we decided to ritualize it into a newsletter.

After launching the newsletter on Beehiiv, we found that other people were interested, too. And then they weren’t, so we contracted a little bit, but we’re still a sizable but highly engaged community.

That being said, we’ve decided to pivot the subject matter of this newsletter to the business of sports. But we’re not covering it in the backwards-cap wearing style of breaking down sports events. We’re going to be talking about the intricate mechanics of business models, dynamics between players unions and leagues, and other above-the-field issues. The contents of this newsletter going forward are not going to be  inside-baseball think pieces (although this issue is kind of a think piece but it’s a really good one we promise). It’s going to be stuff that non-sports reading people can enjoy too.

Why sports? Simple: Sports is the corporate world on steroids. The topics we’re covering right now provide clear cut examples of why we started this newsletter in the first place: to help you figure out what your job looks like when something happens above your pay grade.

It was evident to us last year that we couldn’t be pharma experts one week, then pivot to being retail gurus. We can’t be generalists anymore, although a lot of you loved that (and it really sent our self-esteem. We loved the happy emails and the angry ones, too).

We’ve been trying to turn this into a serious business since we started. And while we’ve seen some huge progress, we’re still a little short of that goal. So If you’re here for the ride still, that’s great. If this isn’t your fancy, hit unsubscribe. It’s totally okay.

Cheers.

Alright, onto the issue.

We’re going to talk about the NBA’s ratings problem. What happens when a product starts to become stale and the drastic ways needed to fix it.

What’s actually wrong: Beyond 3 Pointers

There have been so many people talking about what’s wrong with the NBA and I feel like everyone is missing the point. This is not just about 3 pointers and load management issues.

This is a competitive landscape problem. And I think what you have here is the result of a very powerful players union vs. a very weak commissioner’s office.

The NBA Players Union: An obstacle?

The NBA players union is  the strongest union in sports. They are the highest paid union workers in America.This is a workforce that has a very good understanding of leverage and is not afraid to exercise it.

But when you put this dynamic against the backdrop of a TV product that’s at its peak when tension and rivalry are palpable, it doesn’t always yield the most consistent result.

Okay, get to the point, please…

The league’s reactions to fixing its  issues have been miscalculated. Let’s talk about 2 examples:

1. The recent salary cap rule changes have made it all but impossible to form super teams. It was a move to create Parity and not have players move around willy nilly.

But parity is not what you want in sports. You want 3-5 really good powerhouse teams that are always going to be contenders. Then you want 2-3 cinderella stories that’ll drive the casuals to watch your games because of the soap opera nature of it all.

2. Keeping the 82 game schedule.

This speaks to the load management problem, the non-relevance problem, the players being spoiled problem, you name it.

There are too many games in the season.

Adam Silver went on Cowherd’s show (link below) and talked about how load management actually increases risk of injury. Which totally misses the point.

Because players who are on contending teams may have to play up to 30+ more games after the season is over to win the title. Their season isn’t 82 games. It could be up to 110 games.

The amount of games also causes a relevancy problem which the NFL has exploited. NBA Christmas is no longer a thing, and all it took was a handful of NFL games being aired on the same day.

So yeah, the problems run deep. And these aren’t easy to solve, but there was a golden opportunity to fix a lot of stuff, and that was coming out of the pandemic.

We keep banging on the Pandemic

We keep saying this and we’ll say it again: The NBA squandered its biggest opportunity to make drastic changes coming out of the pandemic.

1. They could have shortened the season (although difficult, If owners would ever be receptive to squander stadium revenue to maintain long term relevance, it was going to be coming out of the bubble).
   

2. They could have introduced  drastic  in-game changes to improve the tv product. 4 point line. Other changes that could have forced players to score a variety of different ways.

The NBA is the biggest relevant thing next to the NFL. While that’s not going away anytime soon. Just look at how irrelevant the MLB is right now. That fall from grace took years of inaction.

The best thing you can hope for? Quick failure: Okay, a rule change doesn’t work. The 4 point line doesn’t work. Let’s change it or get rid of it.

The worst thing? A slow decline where the amount of eyeballs you can realistically grab slowly makes you a niche sport again.

None of this is investment advice, btw.

Have a great week!

Ahmed and Peter