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Is Free Agency Ruining the NBA?

Keith Allison, Flickr.

NBA free agency is upon us, and this summer may see superstars LeBron James, Carmelo Anthony, and Chris Bosh switch teams, along with a host of other exciting players like Kyle Lowry and Gordon Hayward. But is this process, which the league has allowed for nearly four decades, ruining professional basketball? A group of researchers might have found an answer.

The big question
It's reasonable to think some fans are turned off by free agency and the roster turnover it creates. In many cases, teams lose their best players as a result. The departures of James and Bosh from Cleveland and Toronto in 2010 are recent examples.

On the whole, sources estimate about a third of all NBA pros switch teams each offseason. So, the question remains: Do fans stop supporting their team when players leave town?

Finding an answer
In a paper set to be published in the International Journal of Sport Finance, researchers Alan Morse, Stephen Shapiro, Chad McEvoy and Daniel Rascher analyzed the issue, and found -- somewhat surprisingly -- no statistical link between roster turnover and NBA game attendance.

This flies in the face of similar research in professional baseball. California State University researchers discovered that attendance falls when MLB players change clubs. "Contrary to popular opinion, the findings showed a distinct difference in the effect of roster turnover in the NBA in comparison to MLB," Morse et al. write.

After looking at a half-decade of data, the researchers uncovered several variables -- winning percentage, number of All-Stars, and team history -- that move in step with NBA attendance. The absence of roster turnover from their list, though, indicates criticisms of basketball's free agency process may be unfounded.

Digging deeper
So why do NBA fans care less about player movement than their MLB counterparts? Morse et al. hypothesize that a "purist mentality" could exist in baseball, more so than in basketball. "NBA fans may be more willing to except roster changes in the interest of winning, where MLB fans may have a stronger affinity for specific players," they write.

There's also a chance, according to the study, that "[NBA] fans have become more accustomed to the increase in player movement." This is certainly possible. Reaction to Jason Kidd's move from Dallas to New York a few years back, for instance, wasn't overly critical. Many MLB fans, on the other hand, crucified Johnny Damon after he left Boston for New York in 2005. Randy Johnson, Alex Rodriguez, and Albert Pujols were all similarly vilified because of their decisions in free agency.

The business implications are enormous
This study also has major business implications. Altogether, the NBA's 30 teams are worth nearly $20 billion, according to Forbes, and free agency plays an important role in determining the competitive balance between them. As I wrote last week, the migration of superstar free agents could generate millions in brand income for their winning teams. James' four years in Miami, for example, coincided with a $406 million increase in the Heat's franchise value.

It's also worth pointing out: NBA executives don't need to worry about ticket sales taking a hit if a key player leaves in free agency, holding all else constant. Although specific numbers vary, gate receipts typically make up $1 billion of the league's $5 billion in annual revenue. And equally as important, Morse et al.'s findings imply franchises needn't cater to superstars' offseason demands if they don't improve team play. MLB owners, conversely, must keep this in mind.

The bottom line
Ultimately, more research on this topic is needed. Do NHL and NFL fans care about roster turnover? Or do they cheer on their teams regardless of which players leave? These questions -- and plenty of others -- will hopefully be addressed in the coming years.

Hence the reason why Morse et al.'s conclusions are so important. They indicate that, despite the LeBron hate, free agency is not ruining the NBA.

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Jake Mann

Jake Mann covers sports, economics and politics for the Motley Fool.

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