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The First Key To A Career In Sports: Relationships.

Originally written by Leonard Armato for

Originally written by Leonard Armato for

It was David Stern and his protégé, Adam Silver, who taught me about the power of marketing partnerships and how to enlist a coalition of marketing partners to use their marketing budgets to build your brand. Stern did this brilliantly for the NBA and I applied the same principles to create and grow the Shaq brand.

Shaquille O’Neal with his signature dunk when I was representing him during his NBA career. credit: Jed Jacobsohn /Allsport

It was David Stern and his protégé, Adam Silver, who taught me about the power of marketing partnerships and how to enlist a coalition of marketing partners to use their marketing budgets to build your brand. Stern did this brilliantly for the NBA and I applied the same principles to create and grow the Shaq brand.

These are two of the essential relationships I built throughout my career. In my upcoming book, “Managing Giants, 7 Keys To Enabling Greatness,” I examine those traits and characteristics necessary to maximize your potential and enabling greatness in those around you. These keys are essential to develop and build a career in sports or any profession for that matter and have been extracted from my experiences managing and representing some of the giants of sports, like Shaquille O’Neal, Kareem Abdul-Jabbar, and Oscar De La Hoya, the Golden Boy, as well as giants in the industry like former NBA commissioner David Stern, Quincy Jones and current commissioner, Adam Silver.

The first Chapter in my book is dedicated to building powerful relationships and the remainder of this article will be devoted to explaining why relationships are so important in business and life and what type of relationships to look for. In future articles, we will cover how to make a good first impression; how to build a relationship of trust and credibility, the importance of storytelling in building relationships; how to exceed expectation and how to tap into the power of reconciliation when a relationship goes bad.

One important relationship that was pivotal in my career was the one I established early on with my college basketball coach, Stan Morrison It was Coach Morrison that introduced me to my first client, NFL Hall of Famer and four-time Super Bowl Champion, Ronnie Lott. He also connected me with his good friend, Coach Dale Brown of LSU, who in turn recommended me to a basketball player on his team, Shaquille O’Neal, my most famous client.

And Quincy Jones continually inspired me to think and dream bigger and more expansively in everything I did. “Q”, as his friends call him, was constantly telling me that “only those who dare to fail greatly can succeed greatly”. He borrowed this phrase from Teddy Roosevelt and Robert Kennedy but it always resonated with me.

The reason I chose relationships as the first Key to Enabling Greatness is that fundamentally relationships are the foundation of what enriches our lives and reinforces our reason for living. A Harvard study shows that healthy relationships are the single most important factor in determining longevity: more important than genetics, a good diet or even exercise. The importance of these relationships include everyone from family, to business, to the local merchants in your community that you interact with regularly.

Another reason relationships are so important is that they are a foundational element in people maximizing their potential. There have been several researchers and institutions that have conducted studies on the impact of teacher expectations on student performance, also known as the “Pygmalion Effect.” One such study was conducted by psychologists Robert Rosenthal and Lenore Jacobson in the 1960s, where they tested the effect of teacher expectations on the intellectual performance of elementary school students. The basic concept is that average IQ students were taught by teachers who had been tricked into believing they had a class of geniuses and the high IQ students were taught by teachers who were told they were average. The surprising result was that the average students performed better.

We have often heard the advice: “you are defined by the company your keep” or “you are only as good as the people you surround yourself with”. This counsel has been given by historical figures such as Confucius, Aristotle, Saint Augustine and even Benjamin Franklin. More recently, we have heard it echoed by modern day icons like Oprah Winfrey and Tony Robbins. This underscores the importance of building the right kind of relationships with people that believe in your potential and will inspire you to strive and be better than perhaps you originally thought you could be.

In my case, I was influenced and inspired by some extraordinary people in sports and business: people like David Stern, Quincy Jones, and even Stan Morrison, my college basketball coach.

Quincy Jones has a most extraordinary infectious and inspiring spirit (Photo by Arnold Turner/Getty Images for Netflix)

As Steve Jobs says, it is not always instantly apparent how these relationships will benefit you down the line and you often will connect the dots later. However, you can control the quality of the people that you surround yourself with and trust they will make you the better for it. Show me who you are spending the greatest amount of your time with and I’ll have a clear indication of where your career is heading.

Kyrie Irving Trade Is Tipping Point For NBA Collective Bargaining Talks.

Originally written by Leonard Armato for

Originally written by Leonard Armato for

What just happened with Kyrie Irving and the Brooklyn Nets is a foreshadowing of what will become a big issue in collective bargaining negotiations starting at the end of next season between the NBA players and owners. Star players now seem to be dictating where they will play, which coach and general manager they will have, and what players they want around them. They are exercising their power and influence both on and off the court.

Kyrie Irving’s frustrated look mirrors his view of the Brooklyn Nets which led him to demand a trade (Photo by Matt Stone/MediaNews Group/Boston Herald via Getty Images)

What just happened with Kyrie Irving and the Brooklyn Nets is a foreshadowing of what will become a big issue in collective bargaining negotiations starting at the end of next season between the NBA players and owners. Star players now seem to be dictating where they will play, which coach and general manager they will have, and what players they want around them. They are exercising their power and influence both on and off the court.

This is in marked contrast to the way it used to be in the NBA. Owners want to turn back the clock. In 1975, Kareem Abdul-Jabbar politely requested a trade after 6 seasons, 3 MVPs, and 1 Championship in Milwaukee. Abdul-Jabbar’s request was an anomaly, but it was conducted in a highly emotionally intelligent manner. The reason such request happened so seldom is that there was an unwritten rule that players would play their entire career for a franchise. Think about Bill Russell and Bob Cousy with the Celtics, Jerry West and Elgin Baylor with the Lakers, and Willis Reed and Walt Frazier with the Knicks. Fans lived and died by their teams and star players who they rooting on their entire careers.

However, things started to change and the players began gaining more star power. It began 1980s when Magic Johnson and Larry Bird ushering in “Showtime” and David Stern and his star pupil and ultimate successor, Adam Silver, started marketing NBA players as aspirational. Soon NBA players became household names and universally admired. This trend became even more evident and powerful when Michael Jordan came into the league and brands like Nike began using “Air Jordan” in creatively compelling advertising. This exploded NBA TV ratings and made NBA star players even more well-known and in the case of Jordan, idolized.

As a result, the players, particularly the stars like Jordan, began to feel as if they were indispensable to the success of the league and wanted to exert more influence. In the collective bargaining negotiations of 1999, this power struggle surfaced in the form of a lockout where half of the season was lost due to a work stoppage before a compromise was reached resulting in a new collective bargaining agreement. During that lockout period the players seriously considered forming a league separate from the NBA but those plans were abandoned when the compromise was reached.

However, in the years after, star players like Shaquille O’Neal, Kobe Bryant and LeBron James became synonymous with NBA basketball and the power wielded by players began growing, much to the chagrin of owners. The prime example of this, is players have increasingly dictated where they want to play, who they want to play with, and who they want to coach them.

Shaquille left the Orlando Magic for the Lakers. After several years struggling to win a championship with the Lakers, he insisted they bring in Phil Jackson to coach the team because he felt the Zen Master was the only coach who could navigate the relationship between himself and Kobe. I happen to know this because I was representing Shaq at the time and in his defense, it actually worked and the Lakers won three straight NBA championships.

Then James famously said he was taking “talents to South Beach” when he signed with the Miami Heat and convinced Chris Bosh to come with him to form a triumvirate with Dwayne Wade, winning 2 championships in a row. It started the trend of players deciding who they want to play with and where. On the heels of that a string of star players the likes of Kawhi Leonard, Anthony Davis, James Harden and Ben Simmons began demanding trades.

Most recently, as this season began Kevin Durant was entering the first year of a four-year, $194.2 million contract extension with the Brooklyn Nets when he requested a trade unless the GM and coach were fired. It shocked everyone and became water cooler conversation. Durant eventually withdrew his request, but now he and his teammate Irving were traded out of Brooklyn at the trade deadline spearheading the most recent national topic of sports conversation.

Kyrie Irving’s recent trade punctuates the trend that players are exercising their power to dictate where they play and have usurped that power from the owners of NBA teams Needless to say, this is very unsettling to those owners. Look for this to be front and center in the upcoming discussion between the NBA and the NBA Players Association as they square off in collective bargaining.

ChatGPT Shows Scary Implications Of AI As Insiders Fear The Robot.

Everyone is talking about the latest AI project, ChatGPT, and the responses have ranged from excitement to terror. In fact, ChatGPT has become such a cultural phenomenon that the site is operating at overcapacity, and you can’t even get on right now. Kind of like when you call the airline and they ask for your number and say they will text you when you are next in line.

Everyone is talking about the latest AI project, ChatGPT, and the responses have ranged from excitement to terror. In fact, ChatGPT has become such a cultural phenomenon that the site is operating at overcapacity, and you can’t even get on right now. Kind of like when you call the airline and they ask for your number and say they will text you when you are next in line.

Chat GPT Artificial Intelligence Chatbot Technology, ChatGPT OpenAI Conversation Automation

In the meantime, AI is already impacting various industries but none more visible or game changing than the sports business. The reason is that predicting future outcomes are essential to everything in sports. Think about some of the decisions that need to be made in real time. This type of predictive analysis based on data analytics has been around for a while introduced by the Oakland Athletics and its general manager Billy Beane who with a payroll of $44 Million was able to compete favorably with teams like the Yankees with a payroll of $125 Million. His character was famously played by Brad Pitt in the movie ‘’Moneyball,’’based on a book about Beane by the same name.

The basic premise of Moneyball was that statistical analysis, such as slugging percentage and on base percentage, was a more effective way to predict success that the business intuition of baseball insiders comprised of scouts and managers. The owner of the Oakland Athletics at the time, Lew Wolff, took a big gamble in giving Beane the latitude to test his thesis at a time when it was completely unknown. When I spoke to him, Wolff said, “People thought I was crazy to allow Billy to used statistics to make decisions instead of the intuition of the baseball experts.’’

All the major sports league are incorporating AI into everything they are doing particularly from a fan engagement perspective.

The NFL has already joined with AmazonAMZN -2.4% to gather AI insights. For example, they have launched an AI tool that combine seven AI models, including a new model to predict the value of a pass before the ball is thrown, to evaluate quarterback passing performance. The NBA is also incorporating AI into an engagement tool to provide fan with a deep analysis of the performance of teams and player in nearly every conceivable situation.

While ChatGPT currently doesn’t engage in predictive analysis it has made clear the power of AI to gather massive amounts of data can lead to better decision-making as relates to player and game time decisions and the implication for scouts, coaches and general managers These folks have so many important decisions to make critical to the success of the franchise such as:

Who to draft or trade for?

Should a particular player start or be inserted into the game?

In baseball the biggest decisions we see are when to yank a pitcher and which reliever to bring in, or when to pinch hit and who to call on. In basketball and football we have the same type of dilemma— who and when to substitute. Every part of the game is different with different statistics around every single play that occurs. With the power of AI we can literally examine millions of data points in real time to determine a far better predictive analysis than Billy Beane could using just slugging and on base percentage. AI can predict everything from expected performance if a player is inserted in the lineup or game, or a players career expectancy and likelihood of injury.

The implications of all this is that in the future with advance machine learning is daunting. The Lakers are a great example struggling to find the best supporting cast for LeBron James. With advanced AI, you don’t need a general manager to make decisions based on scouting reports or intuition to make the trade, the data will let you know the player that best fits the system. So gone will be GMs and scouts.

SAN DIEGO, CA – SEPTEMBER 30: LeBron James #23 of the Los Angeles reacts during a preseason game against the Denver Nuggets at Valley View Casino Center on September 30, 2018 in San Diego, California. (Photo by Harry How/Getty Images)

Next you talk about the coach. Predictive analysis will tell you when substitutions need to be made. And what plays need to be called. No guess work involved. Imagine the robot coach takes a time out and diagrams the play courtesy of AI. The only caveat is when a super star like LeBron James waives off the play and says he doesn’t want a robot coaching the team. Then the whole thing falls apart.

Lots of people feel that too much AI will lead to a dystopian world. I’m not so sure I disagree. Lebron, what do you think?

The NBA GOAT Debate Must Start by Setting the Ground Rules.

Written by Leonard Armato for

Written by Leonard Armato for

As we approach Lebron James passing Kareem Abdul-Jabbar as the NBA’s all time scoring leader, the question of who is the NBA’s Greatest of All Time (GOATGOAT-0.8%) intensifies. Usually, the debate is whether it is Lebron or Michael but very few times does Kareem’s name enter the field. However, with Lebron about to pass Kareem’s record there will be more focus on Kareem’s accomplishments, besides his scoring milestone. So perhaps this becomes more of a 3-way conversation.

ATLANTA, GEORGIA – DECEMBER 15: LeBron James #23 of the Los Angeles Lakers dunks against the Atlanta Hawks in the first half at State Farm Arena on December 15, 2019 in Atlanta, Georgia. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Kevin C. Cox/Getty Images)

Debating the GOAT is always lots of fun but first we have to define the criteria for determining the GOAT. Is it just NBA performance that include MVPs, Championships, All Pro Selection, All Star appearances, points scored, rebounds and assists? Does it include influence on the game of basketball outside the NBA, such as high school and college basketball. And should it include impact on the business of sport or even social activism.

I would argue that each of these 3 have a legitimate claim on the title of GOAT depending on the criteria you use. For Michael, he won 6 championships and was 6-time MVP. He never lost in the Finals and was always Finals MVP. Michael was the ultimate “winner” and competitor, whose philosophy was “give no quarter and seek no quarter” from opponents or even teammates.

He also single handedly supercharged the NIKE brand with his “Air Jordan” moniker and besides NIKE became the ultimate pitchman for brands from Coke to Gatorade to McDonald’s to Fruit of the Loom.

Michael’s charisma was also largely responsible for making the NBA aspirational. He fit in perfectly with David Stern’s image of the NBA athlete: well spoken, dapper and remarkably gifted athletically. During Michael’s tenure the NBA sored so much in popularity so that David Stern once whispered to me: “how are we going to survive without him”. Somehow David and his successor, Adam Silver, found a way to do so. When Michael retired the NBA had roughly $2B in revenue where Adam Silver recently announced that the NBA’s 2022 revenue would surpass $10B.

(Original Caption) Michael Jordan of the Chicago Bulls gets set to dunk the ball during the slam dunk contest 2/8. Jordan won the contest.

Lebron came along in a era when high school athletes could go straight to the NBA and he did so with lots of fanfare. From the beginning it was clear he was a man among boys—big, extremely athletic and a virtually indestructible body. He developed an extraordinary feel for the game and has been the model of consistency… Perhaps he did not have Michael’s passion and tenacity for winning from the beginning, but Lebron developed more of that killer instinct over time and was able to display it in many key moments, winning 3 NBA Titles and 4 MVP awards and a record 18 All Star appearances. Lebron is about to break Kareem’s scoring record, a testament to long term consistency and at 38 years old playing some of the best basketball of his career. It has been reported that Lebron spends $1M per year maintaining his physical conditioning with the latest technologies and whatever he is doing is working. Off the court, Lebron has had quite an impact as well. His sports marketing deals are numerous, and he has built a highly successful entertainment company. Lebron has also led a movement to shift the balance of power in the NBA more if favor of the players and is known for his social and political activism. Some applaud him for his courageous stance on social justice issues while others believe he sometimes fires off social media posts that rush to judgment without full investigation and due consideration of the facts.

Kareem Abdul-Jabbar #33, Center for the Los Angeles Lakers jumps to make a single handed lay up shot to the basket over #18 Hot Rod Williams, Center for the Cleveland Cavaliers during their NBA Pacific Division basketball game on 7th March 1987 at the The Forum arena in Inglewood, Los Angeles, California, United States. The Lakers won the game 122 – 118. (Photo by Stephen Dunn/Allsport/Getty Images)

While Kareem is rarely mentioned in this GOAT conversation, his accomplishments are extraordinary and his impact on the game of basketball second to none. When Kareem was in high school, he was so dominant that the NCAA changed the rules of the game to prevent dunking the basketball because they felt he would dominate the game so much if allowed. Kareem adjusted to that rule change and developed his famous “sky hook”, the most unstoppable shot in NBA history. Moreover, when Kareem was playing no one was allowed to play in the NBA until their college class had graduated. So Kareem played 4 years at UCLA before entering the NBA. 2,325 plus about 750 as a Freshman, so roughly 3,000 points. With 4 more years in the NBA Kareem would have certainly extended his scoring record well beyond where it is now, likely over 40,000 points. He also may have even extended his number of 6 MVPs and 6 NBA Championships to go with his 15 All Star appearances. People may not recall, but Kareem preceded Lebron in social activism. He was photographed with Martin Luther King at age 17 and was front and center during many gatherings protesting racial injustice. He continues to be an accomplished author, social commentator and respected intellectual.

As the GOAT debate continues to simmer, my view is that it cannot be resolved in a truly objective manner. No one can agree on the criteria, context or what’s most important in settling this debate. Let’s just celebrate as Kareem says, “The Evolution of Excellence” and appreciate the one thing these amazing athletes share: that they are truly remarkable on and off the basketball court.

Damar Hamlin’s Life-Threatening Injury Is Wake-Up Call For NFL.

Written by: Leonard Armato for

Written by: Leonard Armato for

When Damar Hamlin collapsed and was administered CPR on the field during the NFL game between the Buffalo Bills and the Cincinnati Bengals it seemed as if the world stood still—on the field, in the broadcast booth, among those watching on TV, and soon those connected via social media. Hamlin’s heart had stopped and had to be resuscitated via CPR combined with the use of a defibrillator.

CINCINNATI, OHIO – JANUARY 02: Buffalo Bills[-]
players huddle after teammate Damar Hamlin #3 collapsed following a tackle against the Cincinnati Bengals during the first quarter at Paycor Stadium on January 02, 2023 in Cincinnati, Ohio. (Photo by Kirk Irwin/Getty Images)

When I spoke with Dr. Mariell Jessup, Chief Science and Medical Officer of the American Heart AssociationAHA (AHA) about the incident, she said, “treatment like this within moments of collapse is absolutely essential in saving someone’s life.” Fortunately, the Bills staff was prepared to administer treatment on the spot and most recently the team issued a statement that Hamlin has made “remarkable improvement” towards recovery.

People often search for purpose in their life, wondering, what they were put on earth to do and what type of mark they will make to improve the lives of others. Hamlin, who showed his commitment to giving back, may also have a lasting effect on the culture of the NFL as his case can change the way the NFL treats its players as compared with others sports.

Historically, NFL players were viewed by the public and thought of as gladiators, willing to sacrifice their bodies at all costs for the good of the team and the fans. All this despite death, paralysis and even dismemberment.

During the period of the San Francisco 49ers dynasty in the 1980s, I was the agent for NFL Hall of Famer and perhaps the greatest defensive back of all time, and fiercest hitter in the game, Ronnie Lott. When Lott was playing his goal was to “knock people out” on the opposing team. That’s how you gained respect among your peers. That was the culture of a combatant in battle.

Lott was such a warrior that nothing was more important to him than the game he was playing for his teammates and for the fans. I was with him at the doctor’s office when Lott famously ordered the doctor to cut off the tip of his pinky finger, so he could resume playing the following weekend. While it is part of the folklore that will follow him forever, Lott looks back on that day introspectively. When asked why he chose to amputate his finger rather than miss a game, Lott said it was all about the culture of football.

“I was brought up in a military family who would sacrifice themselves for others and I admired the players before me played injured and with broken bones, people like Larry Wilson and Jack Youngblood,” Lott said at the time. But looking back Lott regrets the decision: “We have become gladiators and we need to bring more compassion to the game.” This “gladiator” culture has produced a number of tragic NFL incidents that have historically been swept aside.

UNITED STATES – OCTOBER 13: Football: Chicago[-]
Bears Walter Payton (34) in action, scoring TD vs San Francisco 49ers Ronnie Lott (42), San Francisco, CA 10/13/1985 (Photo by Peter Read Miller/Sports Illustrated via Getty Images) (SetNumber: X32223)

Charles Frederick Hughes who played for the Detroit Lions, suffered a fatal heart attack in the middle of a game with the Chicago Bears in 1971. The game continued.

In 1978, Jack Tatum of the then Oakland Raiders administered a hit on New England Patriots wide receiver Daryl Stingley. The result was that Stingley was paralyzed and spent the remainder of his life in a wheelchair until he died at age 55. The game went on.

In 1991, Detroit Lions guard Mike Utley hit his head on artificial turf in the 4th quarter of a game, paralyzing him from the chest down. He was taken off the field and the game resumed.

In 1997, Detroit Lions linebacker Reggie Brown suffered a severe spinal cord injury after being tackled leaving him motionless on the turf for 17 minutes. After he was administered CPR and carted away, the game recommenced.

In 2001, Pro Bowler Korey Stringer of the Minnesota Vikings collapsed and died from heat exhaustion during a scorching hot day at training camp and nothing stopped.

In 2007, Buffalo Bills tight end Kevin Everett spinal cord was nearly severed by a hit and lay motionless on the field for 15 minutes as medics worked to stabilize him, get him on a stretcher and take him to the hospital. The game continued.

Moreover, there have been numerous instances of players and former players suffering from chronic traumatic encephalopathy (CTE), a neurodegenerative disease associated with repetitive head trauma. According to a study of former college football players, 87% showed the diagnostic signs of CTE and among former National Football League (NFL) players in the sample, that number jumped to 99%.

To their credit, in the case Damar Hamlin, the NFL stopped the game, and whether it will in fact be finished has yet to be determined. Dr. Jessup believes that our culture is becoming more compassionate when witnessing the possibility of death or grave injury and the NFL’s reaction is a reflection of that cultural shift. In recent years, the NFL has also tried to address health issues by instituting a series of rules that addressed spinal cord injuries (no helmet first spearing or hitting a defenseless player or blows to the head) which dramatically decreased spinal injuries and the most vicious of collisions which are primary cause of concussions and CTE. However, it is less than clear the long term effects of the continual impact that is the essence of what football is all about.

This is the elephant in the room because football is the most popular sport in the USA and there are rabid fans and massive amounts of money generated by the sport. So I don’t expect anything drastic to happen soon. But if you ask parent’s these days whether they want their kids to play football, the majority answer with a resounding no.

ORCHARD PARK, NY – SEPTEMBER 19: Damar Hamlin #3[-]
of the Buffalo Bills after a game against the Tennessee Titans at Highmark Stadium on September 19, 2022 in Orchard Park, New York. (Photo by Timothy T Ludwig/Getty Images)

However, the Hamlin situation shines a light on something that can be changed immediately, namely the way the NFL treats its players compared to the other major sports leagues. The NFL stands alone as the only major sports league that does not guarantee player contracts despite the fact that football is the most violent and dangerous of all sports, and has the shortest average career length of 3.3 years compared to the NBA 4.8 years and MLB 5.6 years.

Moreover, the NFL requires 3 years plus of service in order to “vest” and qualify for pension benefits and health care post retirement. Since Hamlin is only in his second year of service, he does not qualify for any of this.

As we pray for Hamlin’s full and complete recovery, we have hope that he will be able to look back and say that the suffering he endured improved the compassion and culture in the NFL and secured salary, medical and pension benefits for rank and file NFL players. The time is now for the NFL to step up and proactively grant these important rights to all players and should become a standard part of every NFL contract.

Sale Of Phoenix Suns Proves That Small Market NBA Teams Will Spike In Value.

Written by: Leonard Armato for

Written by: Leonard Armato for

The sale of the Phoenix Suns sent shock waves through the sports world when Robert Sarver agreed to sell the team to Mat Ishbia for $4 billion. When the sale closes it will be the largest purchase in NBA history. Sarver had purchased the Suns for $401M in 2004. That is a pretty nice return on investment.

PHOENIX, ARIZONA – MAY 15: Chris Paul #3 of the Phoenix Suns stands on the court with Mikal Bridges #25, Devin Booker #1 and Cameron Johnson #23 during the first half of Game Seven of the Western Conference Second Round NBA Playoffs at Footprint Center on May 15, 2022 in Phoenix, Arizona. The Mavericks defeated the Suns 123-90. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Christian Petersen/Getty Images)

The Brooklyn Nets sold in 2019 for $3.3 billion and Steve Ballmer bought the Los Angeles Clippers for $2 billion back in 2014. While both these transactions involved teams in large markets, the sale of the small market Suns have eclipsed both of these sales by a large margin. which is contrary to past sales where small market teams were value at significantly less the their counterparts in large markets.

LOS ANGELES, CA – AUGUST 18: New owner of the Los Angeles Clippers Steve Ballmer reacts after being introduced for the first time during Los Angeles Clippers Fan Festival at Staples Center on August 18, 2014 in Los Angeles, California. (Photo by Jeff Gross/Getty Images)

The reason that this sale is such good news for the future valuations of NBA small market teams like Phoenix is that the price of teams can only be attributable to one thing: projected future revenues. Here is a breakdown of how money is distributed in the NBA and why the small markets will experience a disproportionate growth in their valuations.

The general rule of the NBA is that all revenue outside of a 90 mile radius surrounding the location of each team is controlled and exploited by the league. This includes media and IP rights for all NBA teams. These revenues are distributed equally to each NBA team without regard to the size of the market. While it is left to the NBA to exploit these national and international rights, the teams are free to make deals in their local markets and this is where the big markets have the advantage.

Historically the teams in these large markets, like the Lakers and Knicks, would enjoy exponentially greater revenues than their small market counterparts from sources such as ticket sales, and local sponsorship and media rights. Even when combined with the revenue contributed by the NBA, the result was a huge difference in total revenue, and in turn, franchise value, with large market teams worth significantly more than those in small markets However, the recent sale of the Phoenix Suns for $4Billion may be a sign that that percentage of the valuation gap will decrease significantly in the future.

While the big city teams still will be able to extract more revenue from their larger more affluent markets, Adam Silver, and his team at the NBA, have either created or identified many new sources of revenue at the national and international level resulting in NBA proceeds increasing dramatically with no end in sight. And small market teams like Phoenix are entitled to their equal share of those proceeds.

Historically, the NBA revenues came from limited sources: media, sponsorship and licensing. In 2001 the total revenues at the league level were roughly $2 billion per year. Last year Adam Silver announced that the NBA had eclipsed $10 billion in revenues. There are a number of reasons for this dramatic increase in revenue and a good indication that this growth will only continue at a rapid pace.

OAKLAND, CA – JUNE 01: NBA Commissioner Adam Silver speaks to the media before Game 1 of the 2017 NBA Finals at ORACLE Arena on June 1, 2017 in Oakland, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Ronald Martinez/Getty Images)

The primary reasons are the growth of international markets and new forms of consumer engagement and monetization. Regarding international, the NBA has enjoyed explosive growth in revenues from the distribution of international media, sponsorship, licensing and merchandising. NBA “League Pass”, a DTC media offering, has been fueled not only by current stars like LeBron James and Stephen Curry, but by internationally popular players such as Luca Doncik and Nicola Jokic. Also, NBA teams can now sell patches on uniforms which are visible throughout the world due to their international broadcast deals, spawning investment from international companies looking to reach their audiences outside the USA that are fans of the NBA.

DALLAS, TEXAS – JANUARY 03: Nikola Jokic #15 of the Denver Nuggets dribbles the ball down court against the Dallas Mavericks in the first half at American Airlines Center on January 03, 2022 in Dallas, Texas. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Tom Pennington/Getty Images)

Another source of revenue growth for the NBA will be in its domestic media rights deal which expires at the end of the 2024/25 season where they are reportedly seeking $75 billion from domestic broadcasters alone. This deal will be offered to the traditional players like Disney/ESPN and Turner, but there are new kids on the block like AmazonAMZN -0.9%, Apple and GoogleGOOG -1.5% , all of whom have all have expressed interest in these rights. These tech giants have huge market caps and a lots of dry powder to throw at a prize property like the NBA and will likely drive up the price. We have already seen this play out a bit in the NFT’s media negotiations. Also a component of that media deal will likely include a smorgasbord of direct to consumer (DTC) offerings which may be more appealing to younger audiences with a shorter attention span. Many of those younger NBA fans often interact with the league via highlights, social media and gaming rather than watching live games. The NBA media deal of the future may solve that problem through some form of micro transaction perhaps even facilitated by blockchain technology.

Moreover, the NBA has been working diligently on engaging fans in every way possible to increases their affinity for the NBA and extract more money from them. That includes AR/VR, alternative broadcast streams, and more interactive elements where the NBA can charge fans directly or monetize these new forms of engagement through sponsorship. Digital collectables in the form of NBA Top Shots was all the rage generating more than $1 billion in revenue (although that market has cooled a bit). And finally, the league is looking to gambling as the holy grail of new revenue with the NBA feeding betting odds to fans throughout the game to stimulate their interest in wagering and facilitating it through the NBA app capable.

All of this new or increased revenue will be shared equally among the teams in small as well as large NBA markets. This augurs well for the future value of all league franchises and bodes even better for the small market teams that will realize an equal share of the most powerful growth engine of future revenue.

Despite FTX And The Crypto Winter NFTs Are The Future Of Fan Engagement.

Written by: Leonard Armato for

Written by: Leonard Armato for

Forget the “crypto winter” and the collapse of FTX. Blockchain technology is still the future of consumer relationship management (CRM) and holds the key to unlocking amplified consumer/fan engagement in the sports world. Many of the leading consulting firms including Accenture, Deloitte, PwC, KPMG and McKinsey & Company have published research reports expressing positive views on the potential for blockchain technology and NFTs to transform the way the sports teams and leagues promote fan loyalty.

The reason, according to their research, is that blockchain technology provides valuable tools for both the issuer of the token (NFT) as well as the recipient. For the issuer, it improves the quality of the data on their fans. For the recipient, (the fan) blockchain technology, through NFTs, provides those fans with unprecedented benefits they can actually own, trade or sell in a controlled marketplace.

Lisbon , Portugal – 4 November 2022; Speakers from left, Molly White, Creator, Web3 Is Going Just … [+]

And it is coming faster than you think. The primary barrier to mass adoption was the necessity to create a crypto wallet, such as Metamask, which required some knowledge of crypto currency. As a result, adoption was limited to a rabid, yet niche, community. However, recent advances in technology have made the adoption friction-less and makes issuing and collecting these NFT simple for anyone even those without any knowledge of crypto currency or how to set up a traditional “wallet.”

Think of an NFT simply as a receptacle or the connective tissue for anything a fan values, whether that be digital goods or access (collectibles and admission to special places in the Metaverse) or things in the real world such as tickets, merchandise, food and beverage, experiences and even voting rights. The beauty of issuing these assets in the form of an NFT is that they are registered on the blockchain and can be used, traded or sold by fans in a marketplace created by the issuer.

NEW YORK, NEW YORK – JUNE 23: Stickers of NFT projects are seen inside Marriott Marquis during the … [+]

For the issuer, the “wallet” provides a treasure trove of data that helps them better understand the fan and they learn from the “wallet” their fans behavior patterns which allows the issuer to understand them better and provide incentives for engaging in desired conduct.

It has its origins in the collectible space fueled by the breakout success of Dapper Labs NBA Top Shots. Dapper and the NFL have partnered on a similar project called NFL “All Day” that allow fans watching a game to own collectable moments.

Toronto , Canada – 22 June 2022; Speakers from left, Josh Hart, NBA Player, Portland Trail Blazers, … [+]

FIFA has also entered the space by partnering with the blockchain AlgorandALGO+2.1% to launch their FIFA+Collect program which allows fans to own digital collectibles featuring iconic moments from the FIFA World Cup and FIFA Women’s World Cup, claiming to reach 3 to 5 Billion people.

LUSAIL CITY, QATAR – DECEMBER 18: Lionel Messi of Argentina lifts the FIFA World Cup trophy as he … [+]
Argentina v France: Final - FIFA World Cup Qatar 2022
LUSAIL CITY, QATAR – DECEMBER 18: Lionel Messi of Argentina lifts the FIFA World Cup trophy as he … [+]GETTY IMAGES

However, the collapse of the digital collectable market has caused many of these stakeholders to pull back. The creators of NBA Top Shots, Dapper Labs, just laid off 22% of its workers as the collectible market cratered and Candy Digital, a division of fanatics, did the same with 1/3 of its employees

Notwithstanding all this, the market opportunity is ripe for growth as attention turns from NFTs as simply collectibles to NFTs representing the fan’s right to “own” the things most engaging and valuable to them often sometimes through dynamic gamified experiences. NFTs will unlock for the first time the fan’s right to own, trade or sell these assets in a controlled marketplace and will be used to track and reward fans for attending games or events, purchasing merchandise, or participating in social media campaigns and could even give them voting rights on team related decision (solely at the discretion of the team, of course) This will create a more immersive and interactive experience for fans, and help the team better understand and engage with their audience. All of this is coming and it is just a matter of how quickly.

Pay For Play Is Alive In College Sports And Free Agency Has Arrived.

Written by: Leonard Armato for

Written by: Leonard Armato for

A few days ago, a report came out of Ohio State University (OSU) that they lost a 5 star recruit to #1 ranked Georgia because OSU only offered the recruit $750K as compared to Georgia’s $1.8M.

ATHENS, GA – AUGUST 30: Todd Gurley #3 of the Georgia Bulldogs returns a second-quarter kickoff for … [+]

While the player has yet to be identified we know that there’s lots of shenanigans going on and it is only a matter of time before it surfaces. It is equally clear that a whole new subculture has emerged of “under the table” negotiations between athletes (now represented by their agents) and boosters or collectives representing schools hoping to land these athletes for their athletic program. There are now more than 100 collectives exist for the purpose of attracting top athletes to the college sports program they support.

Not long ago, Arch Manning, a top recruit and nephew of former NFL stars Peyton and Eli Manning, and eight other recruits visited Austin during the weekend of June 17. Texas spent over $600K including such things as rooms at a five-star hotel, open bars for parents, food and entertainment, like a visit to a Top Golf driving range.

The visit apparently paid off, as Manning and his high school teammate, three-star tight end Will Randle, both committed to the school within days of their official visit. Twelve of the 14 recruits that visited the following weekend—when the school spent almost $350,000—committed to Texas.

AUSTIN, TX – NOVEMBER 12: Texas Longhorns recruit Arch Manning watches warm ups prior to Big 12 … [+]

In all, The Athletic reported that 16 of the 23 combined recruits that visited over the two weekends landed with the Longhorns, accounting for almost two-thirds of their 2023 class and ranks them second overall behind Alabama, per 247Sports. After spending roughly $1M to entertain these recruits, it makes you wonder what else was promised to them in exchange for their commitment to join the Longhorns football team in 2023?

While the NCAA now permit athletes to profit from their NIL, NCAA rules still prohibit schools or from paying athletes or directly participating in NIL deals. In fact, in May the NCAA issued a new set of guidelines applying to the recruitment of student-athletes indicating that “booster/NIL entities” cannot talk to recruits about enrolling at a school or offer deals based upon whether athletes select a particular school.

For years, college booster supported athletic programs with financial contributions directly to the school. However, the NCAA has always had a strict rule prohibiting “pay for play” in recruiting student-athletes to participate in sports at their college or university. Notwithstanding, it was common knowledge that those boosters often provided “under the table” payments or benefits to athletes as a means of recruiting them.

There were many schools that cheated in this way and some even got caught and punished. But no case was more publicly visible than the one involving Southern Methodist University (SMU) which resulted in SMU receiving the infamous “death penalty” and barred from NCAA competition for 2 years. The program never really recovered from this sentence.

However, with the NCAA’s recent setbacks in court, it has embolden schools across the country with high-level boosters to use NIL deals as a guise to stock pile talent. It is “back to the future” with no end in sight. The result is “black market” free agency for student-athletes being recruited from high school or through the “transfer portal” (the NCAA created system which allows athletes to freely move from one school to another).

The sooner we come to grips with the realities of this, and establish some uniform rules, the better. It is the same argument used to legalize the gambling business—they are doing it anyway, so why not legalize it so there is transparency and protections.

So let’s scrap these silly ineffectual NCAA rules that no one is following anyway, and allow free market conditions to prevail. College athletes should be paid fair market value by the schools for the services they provide, and let this process become open, transparent and visible to the general public. Not only will this create good sports stories, but is consistent with the tenets of capitalism based upon competition and free market conditions.

FTX Crash Has Sports Leagues, Teams, And Athletes Running Scared.

Written by: Leonard Armato for

Written by: Leonard Armato for

The entire sports world has been turned on its head following the arrest of FTX CEO Sam Bankman-Fried Monday. Before the scandal, FTX had sponsorship deals with sports leagues, teams, arenas, celebrities and even made its way onto the chest of Major League Baseball umpires.

DETROIT, MI – AUGUST 19: MLB umpire Hunter Wendelstedt looks on during the game between the Los … [+]

FTX was a major sponsor of several high-profile sports teams and events including the Miami Heat, the Dallas Mavericks, and the Ultimate Fighting Championship (UFC). It is unclear how these organizations will be affected by the loss of FTX’s sponsorship, but it is likely that they will need to find new sponsors to make up for the lost funding.

In addition to sponsoring sports teams, FTX trotted out a host of athletes and celebrities such as Tom Brady and his ex-wife Giselle BundchenSteph Curry and Trevor Lawrence, among others, to promote the crypto exchange in a highly public fashion. All these athletes and celebrities are being sued in a class action lawsuit for promoting FTX through advertising.

FTX even ran a Super Bowl ad starring Larry David, and it was reported that the company used customer deposits to fund that ad. This has implications not only for FTX, but the agencies and media companies associated with that deal. Namely the money FTX spent with its agency, Dentsu, and Super Bowl broadcaster NBC, which was likely misappropriated customer funds. Wow!

But we may be only scratching the surface of what is yet to come. Crypto firms have spent $2.4 billion in sports sponsorships in 2022. One example is ,which has leveraged sports for brand recognition, agreeing to pay $700 million (over 20 years) to put its name on the arena formerly called the Staples Center. Around the water cooler, people are asking how much of the $700 million committed to the arena is “at risk?” And beyond, how much of future sponsorship commitments secured from Crypto firms, which total in the billions of dollars, are at risk for sports leagues and teams? The short answer is “all of it.”

A man takes a picture of the statue of former Los Angeles Lakers player Elgin Baylor in front of … [+]

This latest controversy has grave implications regarding the role of cryptocurrency in the sports sponsorship industry for leagues, teams and athletes, so what does the future look like? Normally, these types of deals are led by sponsor sales agents looking to maximize company revenue and have but one mantra: show me the money. Generally speaking, money is the determining factor in sizing up the available opportunity. It leaves the potential for oversight on the risk versus benefit analysis and due diligence that should follow any initial pitch, including whether or not the business in question will be able to follow through on promised future payments.

With the FTX collapse and spate of lawsuits involving athletes and celebrities that endorsed the company, a whole new level of scrutiny will emerge. The risk factors that will be examined include such things as company history, their regulation and governance practices, as well as the financial stability of company and the track record of the management team. Akin to the process that a private equity firm puts in place for the potential acquisition of any given company.

Overall, the highly public and far reaching implications of FTX’s implosion has magnified the risks, and challenges associated with the cryptocurrency market. But expect that same trepidation to carry over into all sponsorship deals in the future that will necessarily trigger greater diligence and less tolerance for risk. Sports organizations will adopt a highly cautious approach when considering partnerships with cryptocurrency-based companies, because of the highly volatile and virtually unregulated nature of the industry, but a higher level of scrutiny will also be applied to company partners bringing anything less than a long standing and proven track record of excellence and trust.

High School Athletes Facing Discrimination And Lost Opportunity In Exercising Their NIL Rights.

By Leonard Armato for

By Leonard Armato for

The National Collegiate Athletic Association (NCAA) recently voted to allow student-athletes to profit from their name, image, and likeness (NIL), a major victory for college athletes who have long been unable to monetize the value of their public persona. This decision, however, does not apply to high school athletes. Most jurisdictions have strict rules prohibiting them from profiting from their NIL, including the state of Georgia.

Julian Lewis is a 14 year old prodigy and Freshman quarterback for Carrollton High School in Atlanta, Georgia. Last weekend Julian set a State Finals record by throwing for 531 yards and 5 touchdowns in the State Championship Game. Although he is already a star athlete with influence, over 100K Instagram followers, and recognized as a phenomenal college prospect, laws in the state of Georgia do not permit Julian to profit from his NIL.

Julian Lewis 14 year old record setting quarterback : JULIAN LEWIS

He and his family have already begun to feel the effects. Julian’s father, TC Lewis said: “We have turned down multiple money making opportunities over the past year that would sure help offset the expense our family must undertake to ensure that Julian receives the best training. We are aware of high school athletes from other states, no more talented or influential than Julian, generating substantial income through their NIL. We love the football program, education, and culture at Carrollton and it is sad that if Julian wanted to capitalize on his football achievements and influence the only option we have would be to move to another state which allows high school athletes to capitalize on their notoriety”.

Justin Giangrande is the CEO of the The Network Advisory (TNA) and an NIL pioneer who advises and represents college and high school athletes said: “This amounts to outright discrimination and lack of equality for young athletes that are similarly situated. NIL must be applied equally to everyone and it is incumbent on each state to recognize that and protect its resident athletes”.

Notable sports attorney Tabetha Plummer, who represents Deion Sanders among others, cut to the heart of the problem stating: “states are slowly coming on board but unless they move quickly many good people will be adversely affected. The families of talented athletes will have no choice but to move or send their kids off to schools in states that permit high school athletes to profit from their NIL. In states that do not recognize these NIL rights the result will be that coaches and local communities will suffer by losing these outstanding young men and women.”

Plummer believes that time of the essence for state lawmakers to take action and pass laws that allow high school athletes to profit off of their NIL. This would level the playing field and give young athletes like Julian Lewis the same opportunities as college athletes and certain of their their high school counterparts.

NIL legal specialist Darren Heitner sums it up nicely: “The biggest mistake states made when they passed NIL legislation leading up to the NCAA removing its prohibition on NIL transactions was that they stopped at college athletes and did not mandate that high school athletes have the same rights.”

Julian Lewis is just one example of the many high school athletes who are just as talented and deserving of the opportunity to earn income from their NIL as college athletes. The NCAA’s decision to allow college athletes to profit off of their NIL is a step in the right direction but neglecting to address the issue of high school NIL was a huge misstep that must now be corrected by state legislation. Until then, high school athletes in states like Georgia and Texas will be unfairly disadvantaged and unable realize their full potential to earn the income they deserve.