November 7, 2013

Is it time for the PBA to expand?

After the 7-round-deep PBA draft, several drafted rookies after the 1st round would not be signed. Several veterans would lose out roster spots to younger players. So the easy solution would be, when would it be time for the PBA to expand?

The better question would be, would it be feasible for the PBA to expand? If yes, by how many teams?

The PBA has had 10 teams since 2000, when Batang Red Bull became the newest -- and last -- "new" expansion team. There had been expansion teams since then, but all bought old franchises, such as Sta. Lucia buying Meralco, buying Barako Bull, and Welcoat buying Shell. Since then, the team has had 10 teams, with probably a couple "farm" teams.

Unfortunately, league expansion is almost always not because of "basketball" reasons. Leagues expand and contract due to economic reasons. When the economy goes bad, teams fold, when it gets better, new teams arrive. This is more so in the PBA, where teams do not really earn by playing basketball. Unlike the Lakers which can negotiate local TV deals and directly earns from the box office, PBA teams earn money via the league as a "middleman".

No team and league in the country in any sport has successfully ran a home-and-away league and made a profit. The MBA chugged along for four years solely because of ABS-CBN. After ABS-CBN realized that the MBA isn't making any financial sense, it withdrew support from the league, which led to its much-delayed death.

One can argue that the economy is better now than in 2013. In early 2000, the PSE Index was at the 2,000-point level. Now, it is at the 6,500-point level. The present administration has been harping economic gains all the time lately, so surely there must be something true about that?

But first, let's see how many teams are there in the leagues of other countries:
  • China: 17 teams
  • Korea: 10
  • Japan: 12
  • Australia: 8
  • Lebanon: 10
  • Taiwan: 7
  • Iran: 10
  • New Zealand: 9
The average is between 10-12, with the CBA in China being the aberration with 17 teams. Probably makes sense since China has been the Asian basketball powerhouse since God knows when, and they had billions of people both as market and as potential player pool.

Why not see the number of teams amongst ASEAN football leagues? Granted, you'd need more players in football, hence a deeper talent pool, but with the rest of SEA as a football-crazed, if not football-incapable, region, looking at how nearby countries organize their sport would tell us how to organize ours:
  • Malaysia: 12
  • Thailand: 20
  • Singapore: 12
  • Indonesia: 16
  • Vietnam: 12
Again, the average is 12, with Thailand being the aberration with 20. The Thai Football League is the richest football league in SEA and the league champion automatically qualifies to the AFC Champions League. Plenty of money to go around there. Even Azkal Javier PatiƱo plays for the champion team Buriram United. Also, all SEA football leagues, and virtually most basketball leagues stated earlier all use the promotion and relegation system, with only the PBA, Australasian NBL and probably a few others using the franchise format.

What does this tell us? Twelve teams seems to be the magic number for the PBA. If the league's sticking at the 3-conference format, this means a conference of 16 elimination round games per team, and two conferences of 11 elimination round games per team, assuming we'd use the current format. (compare to one conference of 14 games and 2 conferences of 9 games now).

So the question is, is the time ripe? Is the PBA willing to allow two more teams signing up? Remember that San Miguel Corporation blocked Phoenix Petroleum's application last year.

There are several factors fans would want in an expansion club. One is that there should be passion from the owners, and that the other is the company has deep pockets. A company may have deep pockets, but it must see its PBA team as advertising vehicle. Most companies that have deep pockets do not really need the PBA to further their brand: Jollibee, for example. Coca-Cola recently withdrew, because let's face it, whether it has a PBA team or not, people would still be guzzling Coke, and Filipinos aren't health conscious yet to try out other Coke products, such as Powerade.

The PBA Board has its own reasons. Since this is not a home-and-away league, where each team can earn by itself, other than the money the league gives to it, the amount of money the league earns via TV and the box office would be split by 10 teams. Adding teams splits the pie even more, giving the teams less for their efforts. And it's not like an expansion team guarantees more games: the PBA has a fixed schedule (sure they can "fix" this again in the future), but you can cram just so many games in a day, and so many game days in a week.

With the current 3-conference format, a 11-game elimination round will be torture for the players if the PBA is expecting for it to be finished at the same time a 9-game eliminations is. So unless an expansion team guarantees the board that they can provide fans both in the arena and on TV, any expansion club would have to see rough sailing.

This is unlike home-and-away leagues, where teams, if they have large enough venues, earn enough money by themselves, and if they're in a large media market, can negotiate for a bountiful TV contract. Also, home-and-away leagues do have more leeway in scheduling. Again, this is not applicable in the Philippines since travel is too expensive, venues are too small, the provinces are too poor, and the games are too few.

PBA teams do not earn money by themselves, so would a company would have shell out plenty of money to maintain a competitive team? We're already seeing this in the PBA where Barako Bull and Air21, the Lina teams, simply can't even compete even with a salary cap in effect. Can you imagine teams such as Phoenix or even Lhuillier from Cebu wasting their money in the PBA? How long can they sustain that until they just give up and do a Barako Bull?

Currently, the only company that has its sights on the PBA that is perfect is the SM conglomerate. They had just set up a PBA D-League team, something Phoenix and Lhuillier aren't doing now, and are almost on a lock on an expansion team, if the PBA allows it. And the SM conglomerate is in an industry where the PBA can help in advertising. BDO is in the cutthroat banking industry, and even if it is the #1 bank in the country, its position isn't as safe as say, Jollibee in the fastfood business.

Since PBA expansion is quite a hard to do, why not the creation of a "second league" that pays more than the D-League, but not as much as the PBA? The D-League has 14 teams now, which shows us that having a D-League team is much more feasible than the PBA's, as expenses -- player salaries -- are a fraction of the PBA's. Even the NCAA now has 10 teams. If the expenses are not too high, companies would be enticed to join. More so if there's plenty of TV money and exposure to go around.

The issue here is if there's a TV outfit that's willing to shell big bucks to a "second league" since TV money is the biggest way to earn money in sports, at least in the Philippines. If a TV outfit has pockets deep enough and airtime long enough for a "second league", we might as well don't need a PBA expansion for the short term.

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