Trust the Process: How the NBA Can Combat Its 'Tanking' Problem in Court

• Author: Allen T. Paxton
• Position: J.D. Candidate, The University of Iowa College of Law, 2019; B.A., Hood College, 2016
• Pages: 1551-1580

1551

Trust the Process: How the NBA Can

Combat Its “Tanking” Problem in Court

Allen T. Paxton*

ABSTRACT: “Tanking” (when teams purposely lose in the short term to

obtain higher draft picks that (they hope) will help them win in the long term)

is one of the most pressing problems facing the National Basketball

Association (“NBA”). Tanking harms the integrity and, more importantly,

the financial health of the NBA. Prior and proposed changes were and are

inadequate to remedy the problem of tanking. This Note argues that tanking

is a breach of fiduciary duties owed by NBA teams to each other, based on the

theory that the NBA is a partnership and the teams are its members. By suing

tanking teams, non-tanking teams can utilize the judicial process to extract

damages from tanking teams. This will deter teams from tanking. This is a

new solution to this problem—a legal solution.

I.INTRODUCTION ........................................................................... 1552

II.TANKING IN THE NBA ................................................................. 1553

A.THE ORIGINS OF TANKING IN THE NBA .................................. 1554

B.THE DRAFT LOTTERY AND REFORMS ...................................... 1556

III.THE HARMS OF TANKING AND THE INADEQUACY OF

OTHER SOLUTIONS ..................................................................... 1563

A.THE HARMS OF TANKING ...................................................... 1563

1.Tanking Damages the Brand of the NBA .................. 1564

2.Tanking Lowers Ticket Sales and Revenue ............... 1565

B.THE INADEQUACY OF OTHER SOLUTIONS ................................ 1569

1.Prior Solutions ............................................................. 1569

2.Other Proposed Solutions .......................................... 1569

*

J.D. Candidate, The University of Iowa College of Law, 2019; B.A., Hood College, 2016.

Many thanks to Professors Yockey and Diamantis, in addition to Cecelia MacDonald, Ryan Foley,

and other members of the Iowa Law Review who provided valuable guidance in writing and

assistance in editing this Note. I also want to express my profound gratitude to my parents, Jerry

and Michelle, and Professors Bean, Judson, and Eager, as well as innumerable other family and

friends for their unwavering support and valuable contributions to my life.

1552 IOWA LAW REVIEW [Vol. 104:1551

IV.A NEW SOLUTION—A LAWSUIT .................................................. 1572

A.THE NBA IS A PARTNERSHIP .................................................. 1572

B.PARTNERSHIPS AND FIDUCIARY DUTIES ................................... 1574

C.HOW TO DETERMINE WHEN A TEAM IS TANKING .................... 1577

D.EXTRACTING DAMAGES FROM TANKING TEAMS ...................... 1578

1.Calculating Damages ................................................... 1578

2.The Deterrent Effect of Damages .............................. 1579

V.CONCLUSION .............................................................................. 1580

I. INTRODUCTION

“Tanking” is one of the most pressing problems facing the National

Basketball Association (“NBA” or “the league”).1 In a broad sense, “tanking”

is a term used to descr ibe when sports teams lose ga mes on purpose to secure

some sort of future competitive advantage.2 The pervasiveness of tanking in

the NBA presents significant problems to the league.3 The Commissioner of

the NBA, Adam Silver, has recognized this, saying, “We are gonna have to

react and change incentives a bit. I do think it’s frustrating.”4

First, this Note explores the history of tanking in the NBA, from its

origins to the many attempts to stop it.5 Next, this Note identifies the harms

tanking inflicts on the NBA and argues that the prior (and other proposed)

solutions were and are inadequate.6 Finally, this Note offers a solution to the

tanking problem. While most suggestions for fixing the tanking problem

center around reforming and revising the NBA draft, this Note offers a new

solution—a legal solution.7

This Note contends that the NBA is a partnership, its teams are its

members, and the teams thus owe each other fiduciary duties. Tanking

1. Associated Press, In a Thriving NBA, Tanking Is the Problem Silver Can’t Solve, USA TODAY

(Apr. 13, 2018, 8:03 PM), https://www.usatoday.com/story/sports/nba/2018/04/13/in-a-thriving-

nba-tanking-is-the-problem-silver-cant-solve/33821481 (“Tanking is the problem the NBA

commiss ioner ca n’t solv e.”). The NBA is a sports league that generates over $5 billion in revenue

annually. Michael Bohlin, Report: NBA Revenue Projected to Reach $8 Billion Next Season, CBS SPORTS

(Sept. 16, 2016, 3:34 PM), https://www.cbssports.com/nba/news/report-nba-revenue-projected-to-

reach-8-billion-next-season.

2. See Mark Deeks, What Actually Is Tanking, and Which NBA Teams Actually Do It?, SBNATION

(Jan. 10, 2014, 10:52 AM), https://www.sbnation.com/2014/1/10/5266770/nba-draft-lottery-

tanking-gm.

3. See infra Section III.A.

4. Scott Gleeson, Mark Cuban Says M avs ‘Did Everything Possible to Lose’ After Missing Playoffs,

USA TODAY: SPORTS (May 17, 2017, 1:05 PM), https://www.usatoday.com/story/sports/nba/

mavericks/2017/05/17/mark-cuban-admits-mavericks- did-everything-possible-to-lose/101792012

(quoting NBA Commissioner Adam Silver).

5. See infra Part II.

6. See infra Part III.

7. See infra Part IV.