The Grassroots Economics of Youth Basketball

In a September AC article entitled The Economics of Basketball Development, I argued the United States’ professional sports system eliminated the professional investment in youth basketball development because professional teams receive no benefit from local talent development. An NBA team does not benefit from a local player’s development, as he enters the draft like any other player; if no local players develop, an NBA franchise looks across the globe to find the talent it needs.

The argument was a top-down argument, as it looked at the economic investment or lack thereof from those organizations which eventually profit most from youth basketball development: shoe companies, DI universities and the NBA.

However, without the economic investment from professional organizations, youth sport is a billion dollar industry. Therefore, the finances exist to create a better developmental model. However, despite the money involved, few development programs exist because they are not guaranteed moneymakers. One such organization tries to provide professional development for players, but charges $100 per workout. With three workouts per week, that’s $1200 a month or over $14,000 per year, beyond the means of almost everyone.

Development programs are not cost-effective compared to other basketball activities. Basketball organizations and facilities run tournaments and leagues because they make more money compared to a development program. To run a league, a company does not need any employees, which saves on costs like insurance and worker’s comp. Instead, they hire some officials and rent a facility. The costs are fixed and they charge as much for the tournament as the market allows. Small tournaments run as much as $300 for a 3-game guarantee over a weekend. A team of ten pays $30/player for each tournament. But, it’s easy to reconcile the costs because the parents see the action, the games: the proof that the money is spent on something. And, organizers make money from ticket sales (guaranteed audience since kids cannot drive themselves) and concessions.

Exposure events are even bigger moneymakers because they require minimal staff, but the price to the consumer is even higher because players sign-up as individuals, not teams. For a weekend exposure camp, which basically is unorganized games in front of college coaches, organizers can charge $300 or more per player. Plus, organizers make money by charging college coaches to provide rosters and information.

Exposure camp organizers are so greedy that they continue to run camps for younger and younger players. Once just for elite players trying to get more exposure for colleges, now these organizations run events for 3rd graders to gain exposure or to compete for a national ranking. And, parents are easily convinced these events are important, especially if the parents already have their eyes fixed on college scholarships for their precocious athletes.

Unfortunately, these events, leagues and tournaments provide little in terms of development. In fact, if players compete in frequent tournaments and leagues all year, these activities may inhibit development because coaches and players focus on game preparation, not developing player’s skills. The off-season provides an opportunity for players and coaches to work on basketball and athletic skills without focusing on results. This is the time for development, so players improve their skills for the next season. Without the off-season, development is stunted. Coaches and parents tend to believe that the more players play, the more they will improve. However, game preparation and results shift the focus away from improvement and player development.

Just as the lack of professional investment hinders true player development, the economics of the grassroots system drives competitive events, not development programs. Until the economics of the system change, the businessmen and basketball entrepreneurs will flood the market with the events, leagues and tournaments which make the most money.

At the grassroots level, the consumer must change the economics. When the consumer demands greater emphasis on development and a more rationale development system, more programs will develop and the emphasis will shift. But, as long as the consumer buys whatever the salesman is selling, without thought as to what is the best system or the best option for the athlete, the current economic model will persist because it is the easiest model to capitalize on the billions spent in the youth sports market.

If the system is not going to change from the top down, the consumer must change his tastes and demand better programs with an emphasis on development or the current model wins and businessmen and entrepreneurs see no reason to change a system which benefits their pocketbook. The consumer must provide the impetus for change.


Health Care Reform: Good for the Ambitious

One generally ignored, yet very important benefit to the fight to reform the nation’s health care system is what the health care reform bill can potential do for those with entrepreneurial ambitions. Instead of taking away personal freedoms, reform actually expands and creates new freedoms.

Thousands of workers in this country who wish to become self-employed are chained to their employers in order to continue receiving the group medical care their employer provides. These erstwhile entrepreneurs know that if they quit, they will have to buy health insurance for themselves and their families on the open market. The health insurance market for single purchasers is largely unfettered by price competition or regulations – and it will cripple them financially. That is, if they can buy health insurance at all.

Some of them or their families have a preexisting condition, making it impossible for them to buy any insurance at any price. So they remain on the job, year after year, tamping down their ambitions.

Small business persons and self-starters are what gives the United States its dynamic component. Yet these ambitious persons remain trapped in their cubicles with no way out due to this difficulty.

The mandate to cover everyone is a new, small mandate that is a small imposition on personal freedoms. But the freedoms the new system creates are different and so much better. It will unshackle Americans who wish to strike out on their own, and give them the flexibility to live their dreams.

Their concerns that insurance can’t be purchased will be over. Ditto that it will be canceled once they get sick with a major health problem. The ambitious will be able to quit their jobs and strike out on their own, knowing coverage they can afford is out there.

The struggle for passage has been acrimonious and controversial. The bill isn’t perfect.

But the status quo was unsustainable. The weight of the system’s dysfunction has been crushing to the economy, the nation’s people and had to be addressed. We will be a happier, healthier and more prosperous nation when there is health care security for all.