David R. Henderson  

Note to David Stern and the NBA: Be Afraid; Be Very Afraid

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My wife and I are basketball fans, in particular, fans of the home team, the Golden State Warrriors. OK, get over all the laughs and derisive sneers: I'm about to make an important point.

We've been following news about whether the NBA will have a whole season, reading the paper and the web every day. The only sport my wife loves watching is basketball: she probably saw at least 77 of the Warriors' 82 games last season. So she will be devastated if there's no, or a drastically shortened, season.

I was surprised the other day when I saw this news report:

Stern celebrated his 69th birthday Thursday but didn't appear in a festive mood after meeting for about five hours with leaders from the union. He was joined by Silver, the deputy commissioner, Spurs owner Peter Holt, who heads the labor relations committee, and NBA senior vice president and deputy general counsel Dan Rube. Fisher, Hunter, attorney Ron Klempner and economist Kevin Murphy represented the union. [bold added]

Is that the Kevin Murphy, I wondered. And the answer is yes, as this note from the Chicago Booth School of Business makes clear.

So why the title of this post? Because Kevin Murphy is one smart hombre. I saw that up close when I was hired by Microsoft in 2003 to help with the mess after the nine states attorneys general refused to accept the deal Microsoft had agreed to with the Justice Department and the other attorneys general. Microsoft had also hired Kevin Murphy. I worked my way through hundreds of pages of trial transcripts of the questioning and cross examinations he went through. I remember [my memory is perhaps imperfect here] the judge accusing him of essentially retrying parts of the original case that had been settled. But man, did he retry them well! He laid out such a beautiful case that it confirmed my view I had had at the start that one of Microsoft's biggest mistakes going in to the first trial was to hire Richard Schmalensee.

Back to today. We're hearing so little about the details of the negotiations. Here's my gut feel: Murphy has helped the players' union think through the various ways that the NBA owners can take a lot of the profits (not, by the way, that I think the owners shouldn't be able to take the profits) and think through the various clauses to put in the contract so the union gets more. Duh, you might say: any economist would do that. But my point is that I'm betting Kevin Murphy is doing that better than virtually any other economist the players' union might have hired.


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CATEGORIES: sports economics



COMMENTS (4 to date)
aretae writes:

Apologies for warmup:
I grew up a wunderkind, college classes at 9, fought with parents to skip high school and go to college directly...standard many-sigma geek prodigy stuff. My current field is education, and I count my primary valuable skill as watching (and evaluating) how people think.

Re: Murphy.
I once took a class from Kevin Murphy at Booth, and while I find that most professors even at good schools are only moderately smart, Murphy didn't have that failing. Darn, but his thought processes are impressive. I loved watching how he was thinking, and as an educator, I loved watching him teach folks how to think better.

I'm inclined to agree with your analysis of Murphy. Hard to think you could find someone better.

Yancey Ward writes:
My wife and I are basketball fans, in particular, fans of the home team, the Golden State Warrriors. OK, get over all the laughs and derisive sneers:

As a Cincinnati Bengals fan, you will get no laughs or derisive sneers from me.

Steve Sailer writes:

Good. Maybe next time the NFL Players Union will hire him so they too can get a fairer deal. Maybe someday a College Football Players Union will hire him so they can get a cut of the action other than random envelopes filled with cash.

David R. Henderson writes:

@aretae,
Thanks. When I was visiting my friends Sam Peltzman and Dick Thaler, and my new friend, maybe, Bob Lucas, at Chicago in December 2005 (I remember the date because the late Dan Seligman had reviewed Charley’s and my book, Making Great Decisions in Business and Life, in the Wall Street Journal the day before,) I went by Murphy’s classroom and saw him with his baseball cap teaching IO. I caught the energy.
@Yancey Ward.
:-)
@Steve Sailer,
Re NFL, not sure. Re College Football, I totally agree with you.

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