The Process

“Tanking” is quite possibly the most bizarre and counterintuitive concept in the strange world of professional sports. In North America, a franchise system is used rather than the promotion/relegation system commonly found in Europe, where, for example, the three worst performing teams are replaced by the three best performing teams by the league below every year. In North American leagues such as the NBA, there are a fixed number of franchises, and no matter how poorly managed and dysfunctional a team is, there is no danger of said team being forced out of the league. In fact, bad teams in North American leagues are often rewarded for their poor performance.

The draft is a ubiquitous feature across American sports leagues. Every year, the premier young prospects (generally from college) are selected by teams in a draft; the order in which the prospects are picked is based on the performance of each team during the just-concluded season. Ironically for proudly capitalist America, this essentially amounts to a form of wealth redistribution for these multimillion dollar franchises, with the teams with the worst win-loss record typically picking first.

The organization of the draft raises certain issues. Young players out of the draft are typically obliged to sign relatively long and cheap “rookie contracts.” This means that with just a teensy bit of luck (the NBA, for example has a lottery system for teams that did not qualify for the playoffs to determine the draft order), a team could theoretically acquire one (or multiple) star players for essentially free. This is especially attractive for teams located in small markets that are not typically popular free agent destinations (given the choice of playing (and living) in Cleveland or Los Angeles, which would you choose?), and oftentimes is the only plausible way for said teams to acquire the sort of franchise superstar necessary to win a championship. This creates perverse incentives. Beyond the implications of being able to draft a superstar as a small market team or some other historically irrelevant team (such as the Los Angeles Clippers), it can dissuade otherwise competently managed organizations from putting together the best product possible on the court. After all, with what rational reason would a mediocre team with no viable pathway to championship contention continue to scrape together a team good enough to challenge for the playoffs but not for the NBA Finals if they could just trust in their scouting and player development departments to properly identify and develop enough great young talent to be able to actually mount a serious challenge for the title?

Rationally speaking, tanking is most certainly a sound strategy. Revenue sharing in the NBA guarantees that small market teams, no matter how aggressively terrible, will receive a substantial yearly payment from the league (essentially a transfer payment from rich teams to less wealthy ones). If the cost of potentially obtaining a franchise altering superstar with a high draft pick was nothing more than losing a few more games a year, why not tank? The hypothetical cost would just be a pittance compared to the possible revenue windfall from having and marketing a superstar player (a study found that NBA icon LeBron James had a “statistically and economically significant positive effect on both the number of restaurants and other eating and drinking establishments near the stadium where he is based [in Cleveland], and on aggregate employment at those establishments”).

The Philadelphia 76ers, under the stewardship of an analytically driven general manager named Sam Hinkie, decided to accumulate as much draft capital as possible through trades and lose as many games as possible to maximize their chances of building a title contender. Over the span of three years, Hinkie’s Sixers won 47 games and lost 199, meaning that his putrid teams would only win two out of ten games on average (teams that qualify for the playoffs typically win at least half of their games). Hinkie and his supporters called it “the Process.” The Process of building a contender. The Process of building a winner. A process that held that deliberate losing, that deliberate incompetence would engender a cycle of winning, of excellence.

After three years of horrible on-court performance (albeit with great success in amassing a veritable stable of assets and young talent), Hinkie abruptly resigned, sparking rumors that the NBA had pressured the Sixers for his removal. The Sixers fanbase protested, but the NBA held firm. Hinkie had tried to game the system. He had not played the game. The Sixers are a big market team, and have the privilege of being able to afford a few years of futility. Some teams cannot, lest they become irrelevant and financially unviable. For the sake of its popular image, the NBA’s top brass simply could not condone deliberate losing, especially considering the message it would send to the rest of the league, and to the viewing public?

The NBA draft includes a draft lottery, meaning that “lottery teams,” the teams that failed to qualify for the play offs, are assigned odds for different spots in the draft order (for the teams that qualify for the playoffs, their season record determines their spot in the draft order). The existence of the draft lottery, which adds an element of randomness (and drama: the NBA Draft Lottery is a televised event every year) into the draft proceedings acts as a mild deterrent to would-be tankers, as having the worst record in the league would not guarantee the top pick in the draft, but merely the highest probability of being assigned the first pick of the draft. In 2019, NBA, in response to perceived bifurcation of the league into a class of teams with serious championship aspirations and a motley crew of teams shamelessly losing as many games as possible in order to better their chances of being able to draft the next LeBron James, decided to “flatten” the lottery odds; in other words, deterring tanking by increasing the risk that the worst team could end up with a lower pick and also reducing the likelihood of the worst team winning the first pick.

But does tanking work? A quick look at a list of recent NBA title winners suggests that organizational stability and competence counts for much more than luck in the lottery. The recent Golden State Warrior dynasty, one of the most formidable forces in the history of the NBA, boasted four stars, but none of the three “homegrown” stars were selected in the top 5 of the draft. The fourth, Kevin Durant, a former #2 in the overall draft selection, had been attracted to the team because of its organizational competence. The Toronto Raptors, champions in 2019, similarly won on the back of a strong organization that prioritized player development and smart acquisitions. The same for the San Antonio Spurs, long held to be the paragon of organizational competence, and the Miami Heat, who famously attracted three superstars due to its famous “Heat culture” (among other factors).

Success is a long, arduous process. The Sixers, following Hinkie’s departure, attempted to leverage their treasure trove of assets to build a title contender. They managed to acquire a star in Jimmy Butler in 2019, but promptly lost him half a season later due to organizational incompetence and a lack of accountability. Butler, now with the aforementioned Miami Heat, made the Finals the following year, where they lost to the Los Angeles Lakers. The Sixers have not made it to the Finals since 2001. It is easy to leave hard decisions up to chance, to pray that a superstar will arrive after a year or two of being incompetent. But the plight of continuously bad teams points to one thing: without putting in the requisite effort, without striving to set a standard of excellence for oneself, all of the luck in the world will amount to nothing.

During the 1996-1997 season, the aforementioned San Antonio Spurs lost their star player David Robinson to injury. Finishing as the third worst team in the league, the Spurs won the first pick of the draft, which they used to draft Tim Duncan. The following year, the hypercompetent Spurs won the NBA championship. They would go on to qualify for another 21 consecutive NBA playoffs, an NBA record, en route to winning four more NBA titles. The Spurs were lucky, but to be consistently lucky? That takes hard work.

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