Herb Kohl’s actions may be betraying his words
Within the past year, Herb Kohl has been one of the senate’s most ardent crusaders in the way of competitive balance in private business. As leader of a Senate Antitrust Subcommittee, Kohl was vocal in protest of an AT&T/T-Mobile merger. The merger, he wrote in July, would “cause substantial harm to competition.”
Months later, Kohl was among senators that grilled Google CEO Eric Schmidt on competition issues. Kohl wondered if Google’s transformation into something more than just a search engine “created an inherent conflict of interest which threatens to stifle competition.”
Competition is a recurring theme for Kohl, be it as a senator or as an NBA owner. As much as he wants to be sure major companies like AT&T and Google are operating on a level playing field, he says he wants his small market Milwaukee Bucks to be given the chance to compete with teams from big markets like Los Angeles, New York and Chicago.
“I’m not in this business to make any annual profits,” Kohl said after dismissing General Manager Larry Harris in 2008. “The value of the asset fortunately has appreciated over the years. On an annual basis, it’s a money-losing proposition. I’m in it because I love the sport, I love the competition and I love winning.”
At what point does our current reality, the reality that has connected Kohl with a group of owners now looking to tip the basketball related income scales heavily in their favor while making other radical system changes, contrast with Kohl’s traditional motives that don’t involve making money, rather just competing and keeping the team he loves in Milwaukee?
Kohl and Charlotte Bobcats owner Michael Jordan gave a presentation to fellow owners this year calling for a robust revenue sharing package, something Kohl spoke about back in 2008.
“They have a fabulous revenue sharing program in Major League Baseball, primarily due to (Commissioner) Bud Selig,” Kohl said in the aforementioned 2008 press conference. “It has put teams like Milwaukee in a position to be successful and make money and spend what is necessary.”
Revenue sharing is Kohl’s way to keep big and small markets playing the same game. Kohl believes in a situation that encourages competition between markets regardless of size, one where it’s performance that matters. He wants an NBA in which the Bucks can reap the rewards a successful team should bring, not one in which he’s struggling to stay afloat even in the best of times.
But owners like Kohl who are now reportedly attempting to insist on not only a 53-47 split of BRI in favor of the owners (Note: owners took an agreed upon amount of more than $500 million in operating costs off the top before the split last season), but a hard cap as well, aren’t just trying to fix the system to encourage competition. More accurately, it seems like they are attempting to fool proof the system to ensure profits, regardless of what’s happening on the court. A system that’s tipped so heavily in the favor of the owners, one that protects them from themselves essentially, could assure profits whether a team is a success or a failure.
If the league is honest about its losses, and there are many who feel it hasn’t been, the $300 million it claims to have lost last year would nearly be offset in the first year of a 50-50 split of BRI alone. Over a ten year lifespan of a 50-50 split, the players would give back three billion dollars, more than enough to keep owners operating when coupled with intensified revenue sharing. Especially owners who claim they aren’t out to make a year-to-year profit.
ESPN cap expert Larry Coon has estimated that for every one percent of BRI split the owners gain, their team evaluations could go up by as much as $3-$12 million dollars. For owners like Kohl, who have lauded his asset’s appreciation over the years, this should be no small victory in itself. And for Kohl himself, who is reportedly looking into selling the Bucks regardless of how the lockout plays out, that boost surely will be valuable.
Kohl has positioned himself as a fighter for the regular guy from Wisconsin, out to make sure the little guy is allowed a shot at the big guy, and that’s admirable, so long as that’s actually what’s happening. But this seems like something more than that. We can’t say for certain, as no NBA team would ever open its books, but something is up here.
Kohl and the other small market owners certainly look like they are out to get repaid after years of losing money in an unfavorable system. They don’t just want an even playing field, they want revenge. And since no one wants to hear owners worth hundreds of millions or billions of dollars complain about operating losses, they’re selling it as competitive balance.
Given his track record and the Bucks struggles over the years, competitive balance could be music to the ears of Bucks fans. But Kohl and the other small market owners look to be out for more than competitive balance. If I didn’t know better, if he hadn’t specifically said otherwise, I would swear he and the other owners were after some pretty big profits, under the guise of increased competition.
Jeremy Schmidt writes the Milwaukee Bucks blog Bucksketball.com. Follow him on Twitter and become a fan on Facebook.
Categories: The Off Season
Tags: Herb Kohl