Derek Thompson on the American Sports Plutocracy, the NBA’s 2016 Black Swan Event, and the WNBA’s Growing Pains

Bill Simmons welcomes Derek Thompson, staff writer at The Atlantic and host of the Plain English podcast, for a wide-ranging discussion on the economics and culture of American sports. Thompson, who Simmons jokingly refers to as his "big picture, what the fuck guy," offers sharp insights into the intertwined worlds of sports ownership, media, and the evolving fan experience.

Billionaires, Owners, and the Socialist Nature of Sports

Simmons kicks off the conversation by highlighting the recent news surrounding Mark Walter, owner of the Los Angeles Dodgers and a minority owner of the Lakers. Thompson delves into Walter's alleged financial improprieties, noting that Walter seemingly used life insurance payments to illegally loan himself billions of dollars. This situation, Thompson explains, has forced Walter into a selling spree, divesting assets like the Lakers and Chelsea Football Club to cover a staggering $15-20 billion shortfall.

Thompson then broadens the scope, expressing his personal offense at how billionaires profit immensely from simply owning sports teams. He points out that the Lakers' value appreciated by $2.5 billion in just 14 months under Walter's ownership, despite Walter doing "absolutely nothing." This leads Thompson to a provocative thesis: American law treats sports like socialism. He argues that professional sports leagues operate as legal oligopolies, enjoying antitrust exemptions, colluding on salary structures, and receiving tax breaks. This artificial scarcity, combined with legal protections, guarantees that team valuations will only go up, creating a system where the rich get richer without contributing much beyond their initial investment.

Thompson elaborates on the absurdity of this system, contrasting it with other industries. He asks, "What's the salary cap for corporate CEOs?" or for engineers at SpaceX. He highlights that it's illegal for airlines to collude on prices and share revenue, yet sports leagues do exactly that with TV deals. He concludes that sports owners exploit this socialist framework to extort cities for stadium subsidies, threatening to relocate teams if their demands aren't met. This practice, which Simmons has long criticized, is exemplified by the Portland Trail Blazers' current situation, where the team's owner is holding the city hostage for a new arena despite the existing one being perfectly functional.