The Economics of Basketball Development

USA Basketball and the NBA abdicate its leadership role, leaving savvy, profit-seeking businessmen and sneaker companies to fill the void and create a youth development system for profit, not development. While I typically champion entrepreneurship, the lack of involvement from the professional and national organizations creates a giant chasm and the present system of high school to college to the pros with different, unaffiliated organizations absolves these organizations of their grassroots duties because they have zero financial incentive.

In Europe, as best as I know, economics drive development because of the club system. The cheapest way to sign a player for a professional club is to develop that player through the club’s youth system. If a player plays with a club from a young age, through its youth system, and reaches the club's first or second team between 16-18 years old, the club holds his rights.

The club signs the player to a contract and he plays for the professional team. Now, what if the player develops into an NBA prospect, enters the draft and signs with an NBA team? His club reaps the benefit from the buyout in his contract, often around $500,000. The $500,000 is re-invested into the youth club to develop more players or can be used to sign another player to take the young star’s place. For a smaller club, producing an NBA player, or even developing a player who is bought by a larger club in a better (Italian, Greek, Spanish) league can contribute as much to the operating budget as the rest of the club’s revenue combined. Plus, the added benefit of attracting young players to a club which has developed young NBA players, which is the appeal of a club like Bennetton Treviso, which had Andrea Bargnani drafted #1 this year.