Meet David Stern, the man behind the NBA's business model...
The NBA success story, conceived and developed in the 80s, is also the result of lawyer and businessman David Stern, Commissioner of the National Basketball Association. As the precursor of the NBA's global marketing strategy, he shaped the image and success the league enjoys today.
Born in 1942 in New York, he became vice-president in 1980, then took over from Larry O'brien in 1984, becoming the fourth commissioner in NBA history. At the time, the league was in deficit, and plagued by racism and drug problems. Fans were beginning to abandon it.
"When David took over the NBA in 1984, the league was at a crossroads. But in his thirty years as commissioner, he invented the modern global NBA. Thanks to him, the NBA is now a globally recognized brand. This makes him not only one of the greatest sports leaders of all time, but also one of the most influential business leaders of his generation." Adam Silver, current NBA Commissioner in a statement on David Stern's passing.
The creator of an original business model
Thanks to David Stern, the NBA had already understood the concept of brand equity in the early 1980s, when few companies were even considering it. Brand equity is a marketing concept that emerged when marketers realized that the value of a brand was not based solely on the sales it generated, but more on the perception, attitude and consumption habits of sports in the USA in particular.
For David Stern, the league, basketball, players, fan behavior and consumption patterns formed the pieces of a puzzle. "The challenge for the NBA was to try to put them all together," adds Adam Silver.
He applied his vision to the league, seeing it as a brand rather than an association of clubs. He built this brand by guaranteeing the same quality assurance for all franchises, evolving them and managing them through centralized administration. "If they have such control, it's partly because the teams have given it to them," analyzed international businessman Andrew Levin in a benchmark on the best-practices of major international brands carried out for Booz-Allen & Hamiltons in 2017.
Stern demonstrated his negotiating skills when player salaries spiraled out of control by proposing trade agreements for players and franchise owners to respect a salary cap. He also put in place a collective labor agreement designed to share each team's revenues with their players. These agreements created a new economic model never before seen in sports history, echoing Stern's brilliant management techniques and unique vision for his league.
The 1992 Olympic Games, the turning point in the league's international media expansion
David Stern soon found himself faced with a major challenge for the development of his league. The NBA realized early on that its biggest potential market was not in the USA, as the American tradition of soccer and baseball was too deeply rooted in the habits of its citizens.
The graph below shows the difference in popularity between different sports among Americans. It shows that basketball has historically lagged far behind baseball and American soccer in terms of popularity.
The NBA really understood the international reach of its league with the impact of the 1992 Olympic Games in Barcelona. At these games, David Stern decided for the first time to send a team of NBA superstars to use the Olympics as a showcase for his league.
The "Dream Team", made up of basketball legends such as Michael Jordan, Magic Johnson and Larry Bird, crushed the competition by winning all their games with an average of 44 points, showing the world the dominance and talent of NBA players.
Since then, international media coverage has grown exponentially. Today, the NBA is the most widely broadcast sports license in the world, with its games shown in 180 countries. "When I started covering the NBA nearly 30 years ago, there was no international media at all," Japanese NBA reporter Yoko Miyaji told ESPN reporter Kevin Wang in 2017.
David Stern and the management of the Magic Johnson crisis
The crisis began when legend Magic Johnson told Commissioner David Stern in 1991 that he had tested positive for the HIV virus. At the time, the disease was unknown and highly controversial. "David Stern immediately understood that this was going to be a serious problem for the NBA, but that wasn't his concern. At that point, all he was thinking about was Earvin (Magic Johnson's first name - ed. note)," said Earvin "Magic" Johnson's agent Lon Rosen in a 2014 interview with ESPN reporter Jackie MacMullan.
It was both a commercial and a health catastrophe for the league, since at the time little was known about the transmission and consequences of the virus. The way it was handled showed once again the genius of David Stern. He spent several days studying medical reports and research studies and drew up a crisis communication plan. Instead of trying to quell the situation, Stern supported his superstar and the AIDS community, trying to educate the public and the players at the same time, with his business and reputation at stake.
He informed all team owners and players about the disease by sending doctors to visit each franchise, and forced them to accept Magic Johnson's participation in the all-star game alongside the other players. "You have to remember that at the time, everyone thought that if Earvin shook their hand, they would die," adds Lon Ronsen for ESPN.
The 1992 All-Star Game, a communication platform for the fight against AIDS
Stern turned 1992's All-Star Weekend (an annual televised event bringing together all the NBA's superstars and celebrities) into a referendum on HIV and AIDS awareness, with medical experts and activists holding press conferences and Q&A sessions. By 1996, no one was talking about Magic's HIV status. He also managed to convince the Olympic Committee to let Magic play at the 1992 Olympic Games, giving the situation global reach.
It was an intense crisis for the NBA, which received worldwide coverage, and the league succeeded in using this coverage to really educate the public. The episode opened David Stern's eyes to the impact that sport could have, as the NBA became a major player in the process of educating the public about AIDS and HIV.
"It kind of helped us confirm our view that there was something in sport that resonated with people. Whether it was Magic Johnson and HIV, the values we stand for in China, where we promote health and fitness, or in India, where we want to instill in young people a sense of confidence and achievement. We could make a difference," said David Stern himself in an interview with amfAR, the American AIDS Research Foundation.
David Stern is one of the pillars of what we know as the modern NBA. He was the man behind the guidelines that the league follows to this day. He passed away in 2020, leaving behind him a booming league. Thank you Commish!
This article was published on ISG Sport Business Management's website : link
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