The NBA Oligarchy

We’ve heard it before: the NBA is a star’s league.

Only now a new study is suggesting that’s not such a bad thing.

Basketball is not like baseball, where a lineup can be packed full of top-hitters without worry over chemistry or hierarchy. Rather, the NBA, and basketball as a whole, is different because a hierarchy exists based around a select group of players and it has a direct relationship to success on the field of play—or so says a new study from professors and students at the Kellogg School of Management at Northwestern University and Stanford University titled “When Hierarchy Wins: Evidence from the National Basketball Association.”

Not only does the study suggest a strong connection between success and hierarchy, but the authors also argue that pay dispersion greatly factors into developing that hierarchy and the NBA teams with the greatest salary disparity tend to be better because they have a more-defined hierarchy, which allows for greater cooperation and coordination. Here’s the abstract of the study, which was authored by Stanford assistant professor Nir Halevy, Northwestern PhD student Eileen Y. Chou, Kellogg School of Management professor of Ethics and Decision in Management Adam D. Galinsky, and distinguished professor of Risk Management at the Kellogg School J. Keith Murnighan:

Past research on pay dispersion has found that hierarchy hurts commitment, cooperation, and performance. In contrast, functional theories of social hierarchy propose that hierarchy can facilitate coordination and performance. We investigated the effects of hierarchical differentiation using a sample of professional basketball teams from the National Basketball Association (NBA). Analyses of archival data revealed that hierarchical differentiation in pay and participation enhanced team performance by facilitating intragroup coordination and cooperation. The data provide the basis for a theoretical analysis which suggests that hierarchy is particularly beneficial for procedurally interdependent tasks (e.g., basketball) but can harm team performance for procedurally independent tasks (e.g., baseball; Bloom, 1999). Overall, the current data indicate that team structure (hierarchy) affects team outcomes (performance) through team processes (cooperation and coordination). Thus, under certain conditions, hierarchical differentiation helps lead groups to victory.

The basic gist is this: when an NBA team has a few, highly paid players leading a group of lower-paid players, cooperation is at a high. And when players are on equal footing in terms of salary, cooperation tends to suffer. Baseball is singled out as being different because players aren’t dependent on each other on the diamond like they are on the basketball court. The success of the 1990s Chicago Bulls relied significantly on Michael Jordan’s ability to work with his teammates, but the 1994 Birmingham Barons didn’t lose or gain anything based on Jordan’s working relationship with the team’s catcher.

“We view procedural interdependence as a critical factor that creates a need for hierarchy,” Galinsky said in a release. “Thus, we predicted that hierarchy in the NBA would relate positively to team performance. This is in stark contrast to professional baseball, which is much more of an individual game requiring minimal team interdependence. Indeed, prior research on major league baseball found that pay disparities had a negative effect on on-field performance and revenues.”

The group studied NBA teams between 1997 and 2007 and focused on pay dispersion, starting lineup dispersion and playing time dispersion in an effort to gauge hierarchy. Team performance was determined by winning percentage, but the authors also looked at other categories such as assists, turnovers, defensive rebounds and field-goal percentage.

Of the three types of dispersion the group studied, pay and starts had the greatest affect on the success of teams while playing time tended to be less important.

“Pay dispersion and starting lineup dispersion were significant predictors of increased intragroup coordination and cooperation, and enhanced the performance of professional basketball teams,” lead author Halevy was quoted as saying in the release.

“People who get paid more may demand the status of starting and the prestige that results—starters receive elaborate introductions set to blaring music while getting high fives and chest bumps from teammates,” Galinsky said. “Playing time is more tactical, depending on which players are contributing the most during a given game.”

Of course, one doesn’t have to look back too far back to find a situation where an NBA team with a very distinct financial hierarchy lost to more evenly paid squad. The Miami HEAT and Dallas Mavericks were two of the highest-paid teams in 2010-2011, but while the eventual champions included several players making over $7 million, the HEAT had just three—LeBron James, Dwyane Wade and Chris Bosh.

Obviously that’s just cherry picking some data off the top and in no way disproves the study. The authors obtained 282 hierarchy and performance data points and 254 pay data points, so its safe to say their work is significantly broader than the tidbit in the previous paragraph.

The authors note that there is some weakness to their research as well. Using archived NBA statistics means we’re looking at the work of only one gender (men) and that data can be open to interpretation. However the study is applicable to other areas of professional life, particularly where there is a high level of coordination and cooperation required. (“Because NBA teams spend so much time on issues of coordination and their performance is constantly visible, the current findings may apply most directly to other performance teams and intense work groups, such as the members of an orchestra or the cast of a play.”)

It would be interesting to see what kind of reaction this study would get if it were thrown into the lockout negotiations. Would NBA owners be so reluctant to pay their stars staggeringly high salaries if they thought that was the key to winning a title and potentially securing a fan base for seasons to come? Conversely, would role players be paid significantly less if they’re seen as mere accessories to the stars they play around?

Mayors Plea for NBA Sanity, Show Lack of Their Own

Being mayor isn’t just about getting good seats at all the local parades. That’s why 14 mayors from NBA cities have signed an open letter to Commissioner David Stern and players association executive director Billy Hunter, demanding an end to the current lockout, Jody Genessy of the Deseret News originally reported.

Drafted on The United States Conference of Mayors’ letterhead, part of the message read, “NBA teams are a vital part of the economic and social fabric of our cities. Unfortunately, lost in the debate over the new NBA collective bargaining agreement has been the perspective of those very residents and the negative impact a cancelled season might have on them, our cities and our local economies.

“We know the issues being discussed between NBA owners and players are complex and need to be addressed to ensure the long-term well-being of the league,” the letter continued. “We are not interested in taking a side.”

The 14 mayors, who include former NBA All-Star and Sacramento Mayor Kevin Johnson, may have a point, but they also might be wasting their time. The owners and the players have undoubtedly been informed about some of the economic impact of the lockout. It’s also clear that such information hasn’t brought us any closer to a resolution.

If these cities really wanted to play hardball with the NBA, they wouldn’t be lining up to build more arenas at taxpayer expense for a league that abandons them whenever a CBA expires. The NBA doesn’t fear a strongly worded letter from City Hall—just ask Seattle.

Check out: Run TMC

It might be awhile before NBATV can show current players, but the lockout has forced the hand of the league’s video archive department. The latest piece of filler is actually pretty promising.

“Run TMC: The Power of Three,” which will begin running on Oct. 25 at 7:30 p.m. EST, tells the story of Tim Hardaway, Mitch Richmond and Chris Mullin’s time together with the Golden State Warriors in the early 1990s. Host Ahmad Rashad will revisit one of the highest-scoring offenses in league history and hopefully shed some light on why the trio was broken up after only two seasons.

And if you miss it once, just check the NBATV listings because it’s sure to be rerun a few hundred times or so.

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