Is Brown good for business?
Can Larry Brown earn all the money the Knicks are set to spend on him? It depends on who you ask, writes Darren Rovell.
For years, sports fans have stood at office water coolers debating whether their teams' owners paid too much money for their favorite teams' latest stars, consumed by the fact that the new commitments could lead to a rise in ticket prices.
But perhaps since coaches' salaries are unregulated by the cap, fans rarely discuss the merits of coaches' new contracts.
This week, the New York Knicks are likely to name Larry Brown their coach, a deal that is expected to cost Cablevision chairman James Dolan at least $10 million a year.
|HIGHEST PAID COACHES/MANAGERS (*Estimated)|
|NBA||Larry Brown||$10 million*|
|MLB||Joe Torre||$6 million|
|NFL||Joe Gibbs||$5.7 million|
|College Football||Steve Spurrier||$5 million|
|College Hoops||Tubby Smith||$2.5 million|
|NHL||Pat Quinn||$1.6 million|
|NASCAR||Robbie Loomis||$1 million*|
Knicks guard Stephon Marbury called the decision to hire Brown a "no-brainer." But even with the largest market to work with and plenty of on-the-court improvements to be made, it's not clear if Brown will be worth the money.
In order to figure out a coach's value to a team, the club first must be convinced a coach actually makes a difference. Washington State sports economist Rod Fort recently wrote a paper that quantified such things, called technical efficiency, and discovered some NBA coaches are more able to manage the talent given to them, which can lead to greater success.
Last year, sports economist David Berri published a paper called "Stars at the Gate," which concluded there is a direct correlation between winning percentage and attendance in the NBA.
"Research we've all done makes it clear that the price for some coaches should be higher than others," Fort said.
But Brown is entering a unique situation.
For 13 straight years, the Knicks have averaged more than 19,000 fans per game. That current streak is an NBA record, even though the team's mark over the past four seasons is 139-189, a .423 winning percentage.
Last season, the Knicks sold 98.7 percent of total tickets available, while having one of the worst seasons (33-49) in the past two decades.
"If there doesn't seem to be a correlation between winning and attendance with the Knicks, why are the owners paying Brown this kind of money?" asks Berri, an associate economics professor at Cal State-Bakersfield. "They'll make more money keeping Herb Williams as the head coach at $1 million a year and pocketing the rest."
Cablevision also owns the Rangers, who despite missing the playoffs for the last seven seasons, haven't experienced any drop in attendance. This trend is unlike that of New York's baseball teams, whose attendance seems to be more rooted in performance on the field.
Brown had a chance to sell more tickets in the last two markets in which he coached.
Under Brown's six-year tenure with the 76ers, the average per-game attendance was 18,633, a bump of more than 5,000 fans per game over the previous six-year attendance average. In his two years with the Detroit Pistons, Brown led the team to an NBA championship, and average attendance during his reign ballooned to 21,683 fans per game -- an increase of more than 4,000 per game, compared with the five-year period before Brown arrived in the Motor City.
But some sports economists say the $10 million New York will be paying Brown still could be seen as sensible when compared with the $6 million Brown earned in each of his last years with Philadelphia and Detroit.
According to Team Marketing Report, the Knicks charged an average of $70.51 per ticket last season, compared with Detroit's $36.75 per seat. That means New York earned about $20 million more at the gate last year than Detroit did.
Forbes Magazine estimated that in the season the Pistons won the championship (2003-04), the Knicks' overall gross revenues surpassed that of the world champions by $89 million.
"If Larry Brown was worth $6 million in Detroit, I believe he is worth $10 million in New York, just given the difference in revenue streams," Fort said.
Brown can help pay off some of his salary if the Knicks play additional games, as in make in the playoffs. It's estimated that the Knicks could earn more than $1 million per home playoff game. So if the team somehow manages to make it to the Eastern Conference Finals, having home court in at least one series, $10 million can be made.
The Los Angeles Lakers recently rehired Phil Jackson after missing the playoffs for the first time in 11 years. The Lakers, like the Knicks, still sold 98 percent of their arena, but Berri says since the team has never been consistently bad, it's hard to tell if the basketball fans in Los Angeles are as loyal as those in New York. Jackson will be making at least $7 million per year. His replacement, Frank Hamblen, was making $1 million, which is $1.86 million less than last year's league average for NBA head-coaching salaries.
Other economists point out that winning can increase television ratings for Knicks broadcasts shown on the MSG Network, which also is owned by Cablevision. In February, ratings of New Jersey Nets telecasts on the YES Network tied the ratings of Knicks broadcasts for the first time ever.
"They're obviously not paying Larry Brown that kind of money to fill the seats," Steven Levitt, an economics professor at the University of Chicago, said. "I think it's more about the fact that they own their own network and any profit that they make on advertising, they don't have to split with anyone."
But the ultimate goal in a sports world filled with billionaire owners isn't always to make money.
Washington Redskins owner Daniel Snyder surely didn't give Joe Gibbs a league-high four-year, $28.5 million contract in order to sell tickets -- the team has sold out every game since 1966 and has a waiting list of more than 80,000 names. Snyder presumably did it because he believed having an experienced coach could give him a chance to get to the Super Bowl.
Much like the players they manage, coaches don't necessarily get paid for what they are worth. A recent NFL Coaches Association Survey showed the Super Bowl champion New England Patriots had the fifth highest-paid staff. Ironically, the four teams with the highest-paid staffs -- Dallas, Tampa Bay, Washington and Kansas City -- didn't even have winning records last season.
Even though the Knicks' publicly owned status should affect how they spend, Dolan has approved almost $450 million for the Knicks' payroll over the past five seasons. During this time period, he has written checks to eight players for more than $10 million for a season's work.
That list includes Anfernee Hardaway, who was paid $14.6 million last season without starting a game.
It's just hard to figure out the math for a team that pays that kind of money for a Penny.
Darren Rovell, who covers sports business for ESPN.com, can be reached at Darren.email@example.com.
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