THE BUSINESS AND POLITICS OF SPORTS
Was David Stern good or lucky as National Basketball Association? Stern was a big asset to the growth of the game globally but he may have also benefited from the confluence of very fortunate circumstances.
David Stern replaced Larry O'Brien as commissioner on February 1, 1984. Stern was an attorney who had been the NBA's Executive Vice President. He would direct a tremendous expansion in the marketing of the NBA; develop a cohesive and profitable broadcasting strategy. He would move try to ensure the stability of NBA franchises by increasing licensing revenues, and developing corporate sponsorships.
Stern had some help from his predecessor Larry O'Brien and National Basketball Players Association Executive Director Larry Fleisher who left him the new players-owners agreement.
In 1983, the NBA was having severe financial problems and there was serious thought given to cutting seven franchises in a number of scenarios including combining a number of teams and buying out others. The salary cap maintained 23 franchises although some teams would move including Kansas City and San Diego.
The NBA now had a salary cap and was drug testing players when Michael Jordan entered the league in 1984. Jordan was the third player taken in the draft behind Hakeem Olajuwon who went to Houston and Sam Bowie, who was selected by Portland. Jordan ended up in the nation's number three market and perhaps its most rabid sports town. Jordan cut marketing deals with NIKE and Gatorade and had a major likability. Nike's Phil Knight had as much to do with Stern in making Jordan a household name and lifting the NBA.
Stern was also about ready to get a major gift from Congress as he assumed the office. The Cable Communications Policy Act of 1984. The 1984 Cable Act established policies in the areas of ownership, channel usage, franchise provisions and renewals, subscriber rates and privacy, obscenity and lockboxes, unauthorized reception of services, equal employment opportunity, and pole attachments.
The law allowed cable operators to bundle what were financially faltering networks into a basic expanded tier which may have saved the cable industry as consumers were paying one flat price for numerous stations on basic expanded. The bundling of channels would lead to the formation of regional cable TV sports networks around the United States and strengthen ESPN, CNN (and other Turner properties) and other cable networks. Regional sports cable channels would soon to able to pay more money for events than local over-the-air channels. The sports channels would have two sources of income, subscriber fees and advertising support.
“The real revolution for the NBA came during the 80’s and early ’90 when cable TV penetrated the large cities allowing regional cable networks to grow,” said Jim Williams, a media consultant who was part of the development teams for four regional sports networks. “Cities like Dallas, Houston Los Angeles, Cleveland and Phoenix to name a few had become wired allowing the regional cable networks to become a force. Home Sports Entertainment in Houston, Dallas and San Antonio, Sunshine Network and Sports Channel Florida, Sports Channel Ohio, Home Team Sports in Washington, D.C., Cox Cable in Phoenix all the sudden had the kind of subscriber base that it took to offer the NBA teams big money. The sky became the limit after once the regionals had that penetration into the big city markets. So once the cable pipeline was opened to the big cities the money flowed to the NBA franchises and most all of the league had the vast majority of telecasts on cable.”