Mark Cuban on Flopping, the Salary Cap, and the True Secret to Success
We ran Part 1 of our Q&A with Mark Cuban yesterday; here is Part 2. Thanks again to all of you for the good questions and to Mark for the great answers.
Q: I loved your early bet on HD entertainment – it was spot-on. What industries do you see on the horizon that offer similarly explosive potential?
A: If I knew, I wouldn’t be here answering questions. What I do know is that they are never obvious.
Q: I believe you posted about having inexpensive tickets to Mavericks games so everyone can enjoy the game, not just the super rich. Have you thought about any ways to not only give everyone an opportunity to attend the games, but to sit in great seats as well? For example, setting aside a small section of expensive seats for randomly selected nose bleed ticket holders?
A: We have $2 seats and every game we bring kids downstairs to sit in the expensive seats.
Q: I appreciate your passion as an owner, but do you think that disinterested owners/investors (or hedge funds one day) buying up teams as a hobby or as just another page in their portfolio will be good for the game? What’s better in your mind, an owner who loves the game and the team but can’t afford a contender’s elite roster, or Goldman Sachs coming in and forming the Yankees?
A: I don’t think corporate owners can or will be disinterested. The impact on the corporate brand of being a disinterested owner of a losing team would be consequential to the business. Sports are not just a business, or a game; they have an immeasurable impact on the psyche of an entire city/region/state. When the Mavs made the finals last year, the city shut down to watch the games. When we won, the entire city was abuzz, when we ended up losing, the entire city lost with us. That’s a responsibility that no corporation can get away from.
I will give you another example of the impact of sports. When we took Broadcast.com public, the stock achieved what was, at the time, the largest one-day gain in the history of the stock market. Although the stock made the front page of every business section and many front pages of newspapers, its media coverage that day, both in Dallas and nationally, paled in comparison to the media of the Mavs signing a free agent or making a trade.
A major corporation might get noted on the business pages a couple times a week if something significant is happening to the company. A professional sports team has beat writers that follow its every move, and typically has at least one story in every paper in town and in many national media outlets, every day of the week. That’s tough for any corporate owner to ignore.
Q: Would you prefer that the NBA abolish the salary cap, and allow those front offices who want to spend the most to do so?
A: No. I don’t think it would be smart for the league, and it would impact our ability to offer fans a great value.
Q: When sports team owners ask for public funds to build a new stadium because their team is so unprofitable, should we believe them?
A: Usually, yes. The community impact of any team makes it tough for many owners, like myself, to run the business purely based on P&L. That’s not to say that all owners feel that pull, but most do.
Q: What do you think of public subsidies for sports franchises generally?
A: It’s circumstance-dependent.
Q: Do you think that flopping to draw fouls is becoming a problem in the NBA?
A: Yes. We handle it backwards. We reward the defender who falls down. Instead, proof of being in position to defend should be the result of the defender who is able to stay on his feet. It’s rare in football that a defender is pancaked with a block, yet every time there is contact with a ball handler [in the NBA], defenders act like they have been pancaked by Orlando Pace. Instead we should reward staying on your feet as a reflection that the defender has beaten the ball handler to a spot on the court.
Q: The NBA playoffs sometimes feel like the World Cup with all the dives. What would you think about a new rule against flopping, similar to the defensive three-seconds rule or the old illegal-defense rule (warning, followed by technical foul that doesn’t accrue towards getting ejected)?
A: I have suggested to the league that they retroactively assign a flagrant foul to a player for flopping. It costs them some money, but it doesn’t get them suspended until they get five of them.
Q: Could the NBA institute an auction to replace its draft lottery? Thus teams would be paying players what they were worth, thereby eliminating this strange fiasco where teams like the Bulls have stockpiles of cheap draft talent that should be spread throughout league. And players would be giving maximal effort right away, rather than waiting for their contract year on a rookie contract. It would also eliminate one incentive for great prospects to enter the league too early.
A: It’s an interesting idea and would probably make for amazing TV. The problem is that richer teams would always have the advantage. So the “currency” would have to be something other than money.
Q: How much is the NBA affected by unintended consequences?
A: How could I know?
Q: What advice do you have for a college graduate like myself who is looking to be successful in the business world?
A: It doesn’t matter how many times you fail; you only have to find the one thing you love to do and be great at it. No matter how long it takes. Now is the time to take chances. Live like a student for as long as you can, stay debt-free and do all you can to have a blast.
Q: What is the one thing that you personally believe is the true secret to success?
A: Find what you love to do and be the best you can be at it. Simple, right???