Authors: Mahmoud M. Nourayi
Mahmoud M. Nourayi, Ph.D., CPA
One LMU Drive, MS 8385
Los Angeles, CA 90045
Mahmoud Nourayi is the Paul A. Grosch Professor of Accounting and former Associate Dean and Department Chair at Loyola Marymount University, College of Business Administration. He teaches cost management and quantitative courses.
Strategically Driven Rule Changes in NBA: Causes and Consequences
This study presents a review of NBA Business Model instituted by the league’s Select Committee and related rule changes, as well as the effect of such changes on the style of the game. The author analyzed the play-off games’ statistics for periods before and after the changes in the rules. The results show increases in the speed and pace of the game as indicated by the field goal attempts and fewer interruptions due to foul calls as well as higher scoring games after the rule changes. The results also indicate the improvement in the close range field goal percentage in post-change games.
Keywords: NBA, Business Model, Rules Changes, Pace, Speed
The National Basketball Association (NBA) under the leadership of Maurice Podoloff, the first NBA commissioner, understood the importance of a good business model. Peter Drucker (1954) suggested that a good business model identifies the customer and specifies what the customer wants. Podoloff knew that the spectators were supporting the league financially and believed they wanted exciting high-scoring games. Popularity of the professional basketball in United States stems from athleticism of the professional players and the excitement the game offers the fans. The league experienced unprecedented popularity over the first five decades of its history. The NBA has successfully promoted the sport and continuously increased its revenue sources by effectively governing the league.
Successful NBA franchises for fifty years relied on the team’s dominating centers, who were usually the first draft choices, and skillful ball handlers in the guard position. The dominance of “big men” in the middle provided teams with an easy reach to the basket on the offensive side, and a reliable defense around the basket. While talented guards with agility and athletic ability have been instrumental in the success of their teams, the centers clogged the middle and used their strength to attack the basket.
Over time, the games became more physical and fights would break out. The league had become concerned with major altercations and brawls that hindered the popularity and excitement of the sport. The league office tried to increase scoring and the pace of the game by experimenting with three-point shots and by increasing penalties for violence in the game. By 1998 the scoring had dropped to the lowest in over four decades. David Stern, then the NBA commissioner, based on the concerns raised by Jerry Colangelo, then-Phoenix Suns owner, appointed Colangelo as the chair of a select committee of experts to review the league’s policies and rules and bring recommendations for appropriate changes.
Colangelo, who believed that game had become too physical and that too much hand-checking had slowed the game, was set to devise the league’s “Small Ball” strategy by developing a business model that reflects this innovation where franchises would not necessarily need a big center to be a successful team. Baden-Fuller, et al. (2010) define business model as “the logic of the firm, the way it operates and how it creates value for its stakeholders.” Brea-Solís, et al. (2015), show the importance of the business model in implementation of the strategy, as well as the need to manage the business model with respect to changing conditions of the organization’s environment.
The leagues, seemingly, had recognized the limitation of existing model that, for the most part, was dependent on the pool of big center with perquisite skill-set and ability. Priem, et al. (2013) emphasized the need for a business model to consider both supply and demand dimensions of the operations and to devote “more balanced attention not only to value capture to the firm, but also to value creation for the firm’s customers and, ultimately, consumers” (p. 471). Business models are designed to achieve strategic goals and the design process accommodates different strategy design inputs and processes (Casadesus-Masanell and Ricart, 2010).
The Select Committee was set to make changes to attract larger numbers of fans by increasing the speed and pace of the game and allowing a better flow of the game with fewer interruptions. This focus, while on value creation for spectators, provided the league with a larger pool of talented players that could effectively deliver such value to fans. The league’s new business model supported a system where smaller players would have an opportunity to be involved, what Amit and Zott (2001) referred to as the “content” of Business model design. Furthermore, opening up the space in the “key”, as the new rules prevented center players from camping under the basket, made it possible for the guards and forwards to use their speed and jumping abilities to more effectively drive to the basket. Amit and Zott describe the “Structure” and “Governance” aspect depicted by NBA’s new business mode (Amit and Zott, 2012). Timmers (1998) was one of the first to suggest that “a business model includes architecture for the product, or service, an information flow, a description of the benefits for the business actors involved, and a description of the sources of revenue.” (p. 4)
The primary purpose of this article is to examine the effect of rule changes by the National Basketball Association (NBA) on pace, speed and flow of professional basketball games. The impact of rule changes will be assessed based on the comparison of playoff games prior to the major changes in 2001 with the most recent playoff games to discern differences in the style and the competition. The playoff data provide more refined measures of intensely competitive games and allows for more clear interpretation of the impact of rule changes.
The balance of this paper is organized as follows. First, a brief review of NBA rule changes will be presented. Research questions and data will be described in section three. Then, the results of analysis will be presented and discussed. Concluding comments appear in the final section.
NBA Rule Changes
The league adopted three-point shots in 1979, the high-scoring games throughout the 1980’s was for the most part attributable to the “Show Time” style of the game played by Los Angeles Lakers in their competition with arch rival, Boston Celtics.
Team Field Goal Attempts (FGAs) that had gradually increased after the 24-second clock introduction in 1954, was trending down after 1970 through 1998-99 season. However, the Field Goal Percentage (FG%) improved during the 1970-80’s and reached its historical high of over 49% by mid-1980’s. The shooting accuracy over this period had helped the league with high-scoring games through 1980’s in spite of declining FGAs. By the end of 1980’s the one-on-one isolation offense, post-up plays, emphasis on defense and physical plays, and hard fouls had slowed down the game to 78 FGAs per team, resulting in decline in scoring.
The rules were modified to eliminate resetting of the 24-second clock after technical fouls in 1980. In 1992 the 24-second resetting was limited to when the ball hit the rim, as opposed to the rim or backboard. In 1981, the league revised the free throw rule: ‘three free throws to make two; two to make one’, omitting the extra attempt. The rule changes theoretically increased the playing time. The area under the basket at times seemed more like a wrestling ring in the late 80’s when the league added an additional referee to the officiating crew starting in 1988-89, bringing the number of referees in the game to three, presumably to better control players’ actions on the court. Concerns for safety of players and the fans as well as public perception of the sport, the league had begun to increase financial penalties for teams and players involved in altercations during games.
While scuffles between players in the 1980’s would normally be settled by the referees, it was the altercations and brawls among teams that had caused great concern for the league and franchise owners. During the 1993 playoffs, the league instituted harsher financial penalties, and player ejection and suspension rules resulting from fights and altercations. Teams would be fined for their players’ violations, and individual player fines increased five-fold.
The NBA successfully negotiated multi-billion dollar contracts with the network and cable television outlets, as well as other broadcasters during the late 1990’s. The league and the commissioner were cognizant of the importance of television viewership and its impact on the league’s revenue streams. Once again, the league took note of declining scoring and shortened the 3-point line in 1994 and increased the number of free throws awarded to players who were fouled while attempting 3-point shots from 2 to 3. Rules were also modified to eliminate hand-checking in the backcourt and above the opponent’s free throw line to open up the court and allow offensive players more freedom to move the ball.
The number of FGAs and scoring continued to decline in spite of the increase in the number of 3-point attempts (3FGA), 3-point shots made (3FGM), and the 3-point percentage (3FG%) during the next three regular seasons. The 3-point line was moved back to its original distance of 23 feet, nine inches (22 feet in the corners), for 97-98 season. The no-charge zone under the basket was better defined by a half circle under the basket, and the use of forearms by defense was disallowed. Yet, FGAs, FG%, and scoring continued to dip, reaching their lowest levels during the 1998-99 season. The rule for a shot-clock reset was modified such that the shot clock would either remain where it was or be reset to 14 seconds, whichever was greater, on kicked balls, defensive technical fouls, and non-shooting fouls, instead of being reset to the full 24 seconds (Wyche, 1999.) During the following season, the 5-second rule was implemented. “The new five-second rule will force post-up players who back into the basket, … to either pick up their dribble, shoot or pass the ball within five seconds once they are below the foul line. An infraction results in the loss of possession” (Wyche, 1999).
To further enhance the flow and pace of the games and in response to the criticisms by fan and sportscasters, the league appointed a “select committee” to review and revise the rules. The select committee, chaired by then-Phoenix Suns owner Jerry Colangelo, to make changes to the rules in order to make the game faster, provides for freedom of movement by the offense and level the playing field for smaller players (Blinebury, 2006.) “Many of the people in favor of these changes have been in the game over the last three decades,” Colangelo said (Wise, 2001). “The game has changed in the sense that we’ve lost a lot of fluidity. We’ve evolved into an isolation game because of our defensive guidelines, and we weren’t satisfied with the way the game looked.” (Jerry Colangelo quoted in (ESPN, 2001))
The new rules seemed to de-emphasize isolation play and big men’s control of the paint by introducing a defensive 3-second rule, eliminating illegal defense guidelines and allowing “Zone Defense”; the mid-court 10-second rule was reduced to 8 seconds in order to further increase the speed of the game. In the following years the league also changed the rules to reduce the length and number of time-outs during the game in order to reduce disruption in the games. “It was boring, and it wasn’t the intent of how the game should be played … We were going to try to dictate a faster game,” Colangelo said (ESPN, 2001). Further refinement of hand-checking in 2004-05 reduced the subjectivity of the foul calls by referees, and adjustment of block calls provided the offense a better chance to move the ball (ESPN, 2001).
Data and Research Questions
The data from playoff games prior to major rule changes (1996-2000) is compared, on a paired-year basis, with the data for the most recent NBA playoffs (2015-18) to discern the impact of rule changes and the extent to which NBA has achieved its strategic objectives. The data covers two distinct periods as shown in Table 1. The Pre-Change period includes years 2 and 3 (1996 and 1997) of the 3-year period when the NBA shortened the 3-point line, temporarily, and the 3 years, 1998-2000, when the scoring during regular seasons’ games dipped to the lowest level in four decades. The Post-Change period, 2015-2018, provide the most recent playoff data and follows the NBA signing its largest television contact in 2014.
The author examined the effect of rule changes on playoff games by comparing game statistics for periods before and after rule changes using t-tests to determine differences in the means of variables believed to be instrumental in speed and efficiency of the games. More than a decade after major rule changes and continuous adjustments to the rules, sport analysts and coaches seem to agree that the new rules have increased the speed and flow. FGAs are expected to increase in a more free-flowing game, with fewer fouls and stoppages, and shorter possession time in the faster games.
Analyses and Results
Pace and Space:
To examine the change in speed of the game, author compared the difference in the number of Free Throw Attempts (FTAs) and FGAs per game by each team comparing the data for pre-rule change (Pre-Change) years and most recent playoff games (Post-Change). The test of equality of the FTA means is rejected for every pairing of the pre- and post-period years. The results (Table 2, Panel A) indicate teams attempted 2.5-4.5 fewer free throws during 2016-18 Playoff games compare to prior to the rule changes with the statistically .001 significance level. Additionally, the number of FTAs for 2015 is 1 to 2 fewer than the Pre-Change at a 0.1 significance level. The results suggest fewer foul calls, arguably, resulting from the hand-checking rule changes, and 3-second defensive rule providing for more freedom of movement and less physical plays under the basket.
Next, author examined the number of FGAs comparing the Pre- and Post-Change years. The results show no significant differences in the variance of the FGAs while the t-tests show 6-10 more FGAs in the Post-Change years that are statistically significant at .001 level, with an upward trend (Table 2, Panel B). The results suggest that rule changes have effectively enhanced the pace and increased shooting opportunities during the recent playoffs.
To further examine the effect of rule changes on spacing of offense as a result of rule changes, author examined the 3FGAs. The data show no significant change in variance comparing the Pre-Change and Post-Change playoffs’ data. The t-tests of the means suggest a statistically significant, at .001 level, increase in number of 3FGAs during 2015-2018 playoffs compared to the Pre-Change data (Table 2, Panel C) ranging from 6.3 to 16 additional attempts, with an upward trend.
To measure the increase in 3FGAs, in relative terms, author computed the 3FGAs/FGAs ratios. The ratios during the Post-Change years were higher by 5-17 percent (Table 2, Panel D) with an upward trend. These results are statistically significant at .001 level.
The results suggest that NBA rule changes not only have increased the speed and pace of the game, they have also reduced the number of fouls and game disruptions providing more opportunity for the players to shoot the ball.
Scoring and Shooting Efficiency:
One of the concerns prior to rule changes was about low-scoring games. However, increased pace will only result in higher scoring games if the number of Field Goals Made (FGM) increases and FG% improve or stay approximately the same as Pre-Change levels. Therefore, author compared the number of FGM and 3FGM, as well as 2FG% and 3FG% to determine the impact of rule changes on these statistics. Author computed the 2FG% as:
2FG% = (FGM -3FGM) / (FGA-3FGA) (1)
Total number of Points scored will also be compared for the Pre- and Post-Change paired years to discern the overall impact of FGA and FG% changes, if any.
Author compared the mean of FGM for Pre and Post-Change and the results indicate higher number of FGM, on average per game, for every Post-Change games by 2 to 5 FGM, particularly in 2017 and 2018. These results are statistically significant at .001 level (Table 3, Panel A) with an upward trend. The t-test analysis was repeated for the 3FGM data as well. Again, the number of 3-point made shots for Post-change period was higher, on average per game, by 2 to 6 shots. These differences were statistically significant, at .001 level and project an upward trend with the largest differences observed in comparison to 1999 playoff games (Table 3, Panel B).
Table 3, Panel C shows the difference in the 2FG%, as computed in equation (1) above, for the pre- and Post-Changes games. The change in this measure was not significantly different as I compared 2015 or 2016 data with Pre-Change years, 1996, 1997, or 1998, but the differences with 1999 and 2000 were 2-3% higher and statistically significant at .001 level. The differences for 2017 or 2018 compared with Pre-Change years were statistically significant at .001 level ranging from 2.7% to 6.5%. The largest increases in this measure are observed in comparison of Post-Change years with 1999 playoff games, which happened to follow the lowest scoring regular season since the 24-second clock was instituted.
Examination of 3FG% for Pre and Post-Change reveals statistically significant differences in variance for the paired-year data. The t-test of the means produce no significant differences between Post-Change years and Pre-Change years with one exception. The comparisons of 3FG% for 1999 with those for 2015-18 show significant differences in mean at .05 level. It should be noted that the 3FG% for 1999 playoff games was at the lowest, 32.2%, among Pre-Change years (for details see Table 3, Panel D). Incidentally, the 1998-99 regular season’s 3FG% was the lowest since 1994-95 season.
Table 3, Panel E, shows the results of similar analyses of the difference in number of points scored by teams in paired-year comparisons of Pre and Post-Change periods. The results show statistically significant higher scoring in the Post-Change years at .001 level. Scoring in 2017 and 2018 were also much higher than 2015 and 2016.
These findings indicate that, Post-Change, 2-point shots have been more efficient given significantly higher 2FG% in recent playoff games. Furthermore, the higher game scores in recent games is noteworthy. It appears that rule changes have accomplished the major strategic objective of the league to a great degree.
“We want to make it a more free-flowing, fluid, wide-open game,” said Rod Thorn, a former NBA’s vice president of basketball operations. The rule changes were intended to increase scoring and cut down on physical play (Wyche, 1999). According to Stu Jackson, a former NBA’s vice president of basketball operations, the new rules discourage the bigger players staying in middle of the lane and preventing passing, player movement, and therefore, improving shooting percentage close to the basket. The rules also speed up the ball movement to the front court and bring about full court press, as well as reducing disruption by touch foul calls (NBA, 2002).
Under new rules the offense has been given the advantage by disallowing hand-checking and limiting the big men’s ability to stifle smaller guards and forwards. The ball handlers can no longer hog the ball below the foul line, or dribble with their back to the basket. Changes in defensive rules have made the two-man game and post-up less likely and promote the five-man offensive schemes. “Rather than impede the game, zone defense arguably has helped foster the offensive renaissance by giving teams more incentive to score on fast breaks” (Beck, 2005). The rules have stretched the defense to the limit and reward the offense with fast break and 3-point shooting opportunities by eliminating defensive contacts (Scaletta, 2014.) Portland Coach Terry Stotts said. “They wanted to bring freedom of movement and skill and opening up the court and moving it from the side of the court to the middle of the court.” (Bontemps, 2017)
The findings of this study confirm that the rule changes by the Select Committee of NBA have achieved the strategic goals of the league in enhancing flow of the game, significantly increasing scoring, 2-point field goal percentage (2FG%), relative and absolute number of 3FGA and 2 and 3 –point field goal made in most recent playoff games, compared to those prior to rule changes.
The changes appear to have reduced the number of foul calls by referees as indicated by the number of free throw attempts. However, the results do not show significant improvement in 3FG%, in general. It is not clear the extent to which 3-point shooting has been the catalyst in opening up the court, and in turn how the area close to the basket has opened up, thereby improving the team’s 2FG%. The scope of this study did not include the examination of 2-point shot distance from the basket, and how such spacing has helped improve the 2FG%, as was reported above.
The NBA success in Network and Cable Televisions contracting in 2014, for nine years, at three times in amount of annual revenue compared to the contract signed by the league in 2008, and six times the contract the league signed with the network and cable television in 2002. The salary cap for teams has significantly grown over the years. NBA owners and players have financially benefited handsomely by the strategies bringing about larger viewership for the games on television and increased attendance in the arenas.
Yet, there are other basketball enthusiasts who long for the more physical and power game of the 1990s. As such, the new BIG3 league has been created, perhaps, to serve that market. The Olympics have announced that the 3 on 3 basketball games will be included in the Tokyo Olympics in 2020. It remains to be seen if the new league populated by retired NBA players, for the most part, closely resembles the style of basketball played before the new rules implemented by the NBA, and if it will present formidable competition for the NBA.
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