By Kevin Duffy
Why do people watch sports? My mother believes it’s because “people want to be uplifted.” This may explain why many are upset about how basketball phenom Caitlin Clark, who broke the National Collegiate Athletic Association (NCAA) women’s and men’s scoring records, is being treated—or mistreated—in the Women’s National Basketball Association (WNBA).
As a longtime basketball fan, I’ve rarely given women’s basketball a second thought. Women play below the rim and lack the athleticism and WOW factor of their male counterparts. The WNBA brings in less than one-fiftieth the revenue of the National Basketball Association (NBA) for good reason ($200 million compared to $10.58 billion).
Earlier this year, Clark hit a game winning, buzzer beating, deep three-point shot that got my attention. I kept hitting replay, not believing what I was seeing. This wasn’t a 1950s-style push shot but a jump shot with perfect form that looked like it came from the present-day men’s game. And it was from nearly thirty feet, truly a game changer. The hype surrounding Caitlin Clark was real, and the viewership records are no fluke.
Amid much fanfare, Clark was drafted number one by the WNBA and immediately tossed into a grueling schedule playing heavy minutes for the worst team in the league. The fangs came out early, even before she stepped foot on the court. Ten games into the season, Chicago Sky guard Chennedy Carter blindsided Clark on an inbound play that looked more like roller derby, then went to the bench where she was exuberantly greeted by her teammates. Carter’s coach downplayed the cheap shot, and Carter showed no regrets: “I’m a competitor. . . . It’s basketball. It’s all hoops. After we finish the game it’s all love.”
Whatever it is, it’s not good for business. Charles Barkley, NBA commentator and Hall of Fame player, reacted: “Y’all should be thanking that girl for getting y’all [expletive] private charters, all the money and visibility she’s bringing to the WNBA. Don’t be petty.” A few days later, Barkley lamented, “Instead of talking about all the good things happening in the WNBA, we’re talking about negativity. There used to be the old saying, ‘All publicity is good publicity.’ No it’s not, not when you’re a niche sport trying to get the consumers to buy into your product.”
With a league in dire need of eyeballs, why would so many (not all) WNBA players be hostile to the one player who brings with her a massive fan base? According to Clay Travis, founder of OutKick, “The average WNBA player does not like Caitlin Clark because she is white, because she is straight and because now she is rich and getting a lot of attention. And there is a great deal of resentment about that.”
At the root of this envy is egalitarianism, the theory that all people are equal and that any differences in outcomes must be unjust and therefore remedied by the state. While inequality in nature is the norm, the sport of basketball provides one of the starkest examples on the planet: Victor Wembanyama, the top overall draft pick in the NBA, was paid $12.2 million his first year, 160 times that of Caitlin Clark ($76,000).
From a free-market perspective, however, outcomes in sports are determined by voluntary exchanges—fans, sponsors, and media pay for what they value. Only the process can be judged to be “fair” or “unfair.”
The Economics of Sports
The business of sports is highly scalable: games can be streamed to billions of viewers at practically zero marginal cost. Naturally, people have limited free time and prefer the highest quality product so outsized rewards accrue to a limited supply of top athletes. Demand for sports and sport figures is based on multiple factors: excitement, competition, spectacle, inspiration, achievement, fairness, community, relatability, likability, and physical attraction. Marketability of the product as well as individual athletes is based on checking as many of these boxes as possible. In contrast, the egalitarian is only interested in checking as many victim group boxes as possible—e.g., female, minority, gay, poor, short, ugly, etc.
Within a league and even within a team, inequality is the rule. Superstar NBA players like Michael Jordan, Lebron James, and Stephen Curry are exceedingly rare, but they can’t win by themselves. Teams need role players to complement their stars. For example, Jordan needed outstanding defenders and rebounders like Dennis Rodman as well as sharpshooters like John Paxson and Steve Kerr. You could not cobble together a more disparate group. Even though Jordan received most of the accolades and a disproportionate share of the financial pie, he elevated everyone around him. Kerr won five championships as a player (three with Jordan) and went on to become a successful NBA commentator and coach, adding another four championships with a team led by Curry. Not bad for a 6′ 2″ white guy who can’t jump.
Sports leagues are constantly innovating to add excitement, competitiveness, and fairness. Basketball was once painful to watch as teams would get the lead and try to run out the clock without taking a shot. In 1954, the NBA introduced the twenty-four-second shot clock, ushering in the modern era of professional basketball. In 1951, the lane (an area below the basket where players can only spend three seconds) was widened to counter the dominance of big men like George Mikan and expanded further in 1964 due to Wilt Chamberlain.
During the 1979–80 season, the NBA added the three-point line which was initially dismissed as a gimmick. While its adoption was gradual and took decades, Stephen Curry’s entry into the league in 2009 revolutionized the three-point shot, making it a lethal offensive weapon and focus of the game. Caitlin Clark is the female version of Curry, which explains why she has NBA legends buzzing.
A Tale of Two Business Models
Following this meritocracy playbook, the NBA became a model of success: It boasts the third highest revenue among sports leagues in the world and attracts a truly global audience. China is its biggest international market with an estimated eight hundred million viewers.
In contrast, the WNBA failed to turn a profit throughout its twenty-seven years in existence, propped up ironically by the NBA, which owns 42 percent. Its primary mission is social activism, even if that means turning away paying customers. In February 2022, after raising $75 million from investors including Nike, WNBA commissioner Cathy Engelbert said, “Our strategy is to deploy this capital to continue to drive the league’s brand as a bold, progressive entertainment and media property that embodies diversity, promotes equity, advocates for social justice, and stands for the power of women.”
To many, the WNBA’s brand image is a welfare league of angry women. Leaving Caitlin Clark off the Olympic team was another missed opportunity, surely one of the biggest marketing blunders in sports history.
Despite the WNBA’s ineptitude, market forces threaten to rescue it from extinction. Three years ago, the NCAA allowed college athletes to profit from their name, image, and likeness. Companies like New Balance, LegalZoom, and State Farm feature WNBA players alongside NBA players in commercials. After all these years, the sport of basketball is finally becoming lucrative for a dozen or so women, even though the maximum salary in the WNBA is just $250,000. Clark recently signed a $28 millionendorsement deal with Nike.
Among Caitlin Clark’s most ardent defenders are black men associated with the NBA. Never at a loss for words, ESPN analyst Stephen A. Smith said,
Caitlin Clark is bringing more attention. When you get on the court with her and you perform and somehow, someway, you’ll find a way to attach yourself to that level of magnetism that she surely has, who knows what could be out there for you? And if suddenly the maximum salary goes from $250,000 to $450,000, and suddenly you’re on chartered jets instead of commercial flights, and suddenly you’re maximizing the potential of your name, image and likeness, what do you care? At the end of the day, the rising tide lifts all boats . . .
See how simple it is? It’s capitalism! It’s marketability! It’s taking advantage of the moment! That’s business! Why be resentful of any of them? What is wrong with people? How do you not see that?
Russell Lamberti recently tweeted, “Sport is a radical hierarchy of excellence sorted by genetics, upbringing, resources, luck, volition and character. Egalitarians therefore hate sport and are driven relentlessly to disfigure it with ideology.”
These forces are colliding on the basketball court.
Think of this as a teaching moment for the WNBA and its players. Life isn’t fair. Capitalism uplifts and grows the pie for everyone but doesn’t split it equally. The alternative is to tear down the most successful and fight over crumbs.
I hope Caitlin Clark and the profit motive will ultimately win out and that better days lie ahead for the WNBA. If so, perhaps the business of basketball will one day dissuade promoters of equality and zero-sum economics. One can dream.
- About the author: Kevin Duffy is principal of Bearing Asset Management which he cofounded in 2002. The firm manages the Bearing Core Fund, a contrarian, macro-themed hedge fund with a flexible mandate.
- Source: This article was published by the Mises Insitute