The underside of Thunder economics
Early in Mark Cuban’s appearance on the B.S. Report with Bill Simmons, Cuban briefly makes a point about the lockout talks that I hadn’t heard as pointedly before, or from such an involved and intelligent source. The Mavericks owner said the cost in “hours” outweighed the league’s gains in the f0rm concessions made by the players. But he wasn’t talking in metaphorical terms, hours of the day or hours of fruitless negotiating. Cuban was speaking of billable hours.
Staggering increases in recent decades of billable hours charged by attorneys have changed the face of litigation. In a lawsuit, the charges for discovery (when sides show each other the evidence they have) alone skyrockets. Elite-level litigators make millions each year just on gathering and analyzing information given to them my elite-level litigators representing the opposing party in mega-lawsuits and mega-negotiations like the NBA lockout mess.
Both sides clearly spent millions on attorneys alone, not counting economists and consultants. These are the types of guys who get paid $1,000 an hour to sit in first class or private jet, paid for by the client, on their way to meetings. So the NBA spent $2 to win $1, and the players paid $2 to lose $1, and so on. The swelling of legal bills has finally forced the market to create alternatives in the form of new firms that charge clients a set fee, splitting the difference with the client if they finish early and eating it if they don’t.
The light bulb then went on for me. When it comes to the money, especially big money, there’s always something else at play, lurking, that can be the real deciding factor. And there’s at least a chance there’s something lurking for the Thunder right now.
Rolling Stone’s artillery strike on Chesapeake, quickly rebutted by CHK, along with a (less activist) Forbes story on the Oklahoma energy giant’s short-term debt, have raised the profile of issues that bear watching for Thunder fans. In the world we live in, as depressing as it may seem, fans need to keep an eye on things like the price of natural gas even when they’re sweating out close wins against the Mavericks. (And their jerky fans that somehow always wind up at The Peake — speaking of Chesapeake. Ugh.)
Chesapeake’s Aubrey McClendon is the No. 2 guy in the ownership pyramid under Clay Bennett. Bennett is not an oil and gas guy, but if you’re in that income bracket, and you live in Oklahoma, and you sit next to McClendon on the owners’ row and have three major energy companies as headline sponsors of your Cadillac investment, it’s safe to assume your business and personal portfolio is at least somewhat at the mercy of the energy market.
It’s undeniable that what happens in the energy market could have at least a marginal effect on how far Oklahoma City could one day go into the NBA luxury tax. And, let’s face it, if there were big energy company issues in Oklahoma, there would be worse problems for the people who live here and support the Thunder than whether or not Sam Presti gets approval to pay up for both Serge Ibaka and James Harden. But there’s at least a chance that problems seemingly so far away from an NBA arena could have a direct competitive impact on the Thunder for years to come.
Now, whatever situation the energy market and Chesapeake is going to be in a year from now, it’s not going to be what Rolling Stone says. And it might not be quite as rosy as Chesapeake says it is. It’s probably going to be somewhere in between. It almost always is. That will probably be enough for there not to be much of a link, at least negatively, between the price of natural gas and the Thunder’s winning percentage. One can only hope, to be sure.
It’s another lesson when it comes to the less appetizing parts of doing business. Just because the lockout is over doesn’t mean you don’t have to sharpen your knowledge of certain kinds of legal or business or financial jargon to be able to pay attention to what could soon be important. Like a good point guard, you’ve got to keep your head on a swivel.
