Mr. Donaghy was Doing a Good Job

July 24, 2007 (Comments)

This morning, the commissioner of the National Basketball Association ("NBA"), David Stern, gave a press conference. The purpose of the conference was to convey to the sporting public Mr. Stern's claim that the actions of former referee Tim Donaghy was that of a "rogue employee". As of this moment (1:26 p.m. PDT, 07/24/07), the headline reads: "'An isolated case'". Perusing the corporate sports media -- ESPN, CNNSI, FoxSports -- it would seem these corporations are only happy to accept Mr. Stern's offering.

Last Friday, four days ago, the FBI leaked the Donaghy story to New York Post crime columnist Murray Weiss. Thirty days before this, on June 20, the FBI had privately filled in Mr. Stern on this story. But last Friday, the FBI went public by tipping off Weiss.

The FBI revealed to Weiss that Mr. Donaghy was soon to be arrested for point shaving, and for assisting the Gambino mafia family in doing so. Essentially, Mr. Donaghy will be arrested for refereeing NBA games in such as way as to assist certain people (mobsters in this case) to make money from those games (via gambling in this case). Mr. Donaghy is also accused of helping these mobster gamblers by giving them certain "NBA inside information" related to the games.

This essay argues that, far from being an isolated case, the case of Mr. Donaghy is merely the standard case for NBA referees, spiced up with a little self-interest. In other words, Mr. Donaghy's actions were not so far out of the norm of his profession to be unrecognizable. On the contrary, he was a "good" ref.

The Hanging Questions

The most facile evidence for Mr. Donaghy doing a good job starts with the observation that this "rogue employee" case concerns behavior engaged in by an employee in the course of performing his corporate duties. This is not a case of an employee committing crimes unrelated to his work (see, e.g., Gary Ridgway, the "Green River Killer", who held down a job at a truck painting plant while he serially murdered prostitutes on the side).

So the fascinating dynamic at play in this case is that three very different parties were equally interested in how well Mr. Donaghy was performing his job as an NBA ref. Those three parties are: the NBA, the Gambino crime family, and the FBI.

What is even more fascinating is that the first two of these parties rated Mr. Donaghy's job performance highly; while the last considers the same performance worthy of imprisonment. That's about as big a gulf between performance reviews as one can have. Imagine yourself as a corporate employee with three bosses who review your job performance. Two rate you so highly that they promote you; the third wants you fired and sent to jail.

So this begs the question: How the heck could Mr. Stern's method of evaluating his referees dovetail with the way the Gambino crime family evaluates referees?

But this isn't the only hanging question the sports journalists failed to ask Mr. Stern at this morning's press conference. Here's another: Why did Mr. Stern wait four days after Mr. Weiss made the Donaghy case public to hold his press conference? Why didn't Mr. Stern hold it on Friday afternoon? By last Friday, he had had 30 days to prepare for this conference. And 95% of what he said today, including the key "an isolated case" theme, he could have said last Friday.

This "why wait four days" question is germane because during the past four days, the world sports press has been howling over the Donaghy case. Mr. Stern is being credited by the corporate sports media as having performed admirable "damage control" today. However, had he given this press conference last Friday, Mr. Stern's damage control efforts would have been significantly more effective. So why wait the four days?

Now I suppose I could just wait for the corporate sports media to get around to asking these two questions. But I'm not at all confident they will get around to it. Moreover, I think the questions are interesting to look at for reasons going well beyond the world of sports. Specifically, I find these questions interesting because they highlight the gulf between the interests of money, and the interest of us people.

Money vs. Humanity

This Duck! and Gather blog, podcast, and web site of mine looks into this money versus humanity gulf, and it does so in various domains, e.g. health, software, energy, etc. Here, in the Donaghy case, the domain is sports. Different domain; same dynamic.

In this domain, the interests of people are the interests of sports fans. The core interest of all sports fans boils down to fair competition. True, there are ancillary sports fan interests like team fandom (e.g. "I'm a Lakers fan"), player worship (e.g. "I have LeBron's jersey"), analysis (e.g.,, and gambling. But the core interest that all fans share is about fair competition. Without that, there is no sports.

The money interests in sports depend on who is trying to make the money. In the Donaghy case, one set of money interests concerns gambling. But another set of money interests concerns the NBA and its business models.

The NBA is not a 501(c) non-profit corporation. Rather, it is a for-profit corporation -- a rather old one at that, exceeding 50 years in age.

Presumably, the corporate NBA and the public sports fans share the same core interest in the game: namely, fair competition.

But just as the sporting fan has ancillary interests (e.g. team fandom, player worship, analysis, and gambling), so does the NBA. The NBA's money interests go beyond mere fair competition. Like any corporation, the NBA seeks new customers and new markets. The new markets are both geographic in nature, and concern new product lines.

In the NBA, geographic expansion currently concerns places like Europe and China. Market expansion primarily concerns licensing fees. One class of these fees derives from the promotion of individual NBA stars. This sort of marketing results in jersey and shoe sales associated with one player (e.g. "Jordan" Bulls jersey and Air Jordan shoes).

Another class of licensing fees arises when the NBA licenses its games to television networks like ABC and ESPN.

All of these ancillary forms of revenue derive from something other than simple, basic fair competition. Furthermore, revenue attributed to fair competition (i.e. gate revenue derived from fans who attend the games) is superceded by the ancillary revenues mentioned above. Beyond revenue, costs of the earning the ancillary revenues are lower because these are about mere licensing fees, whereas gate revenue is offset by player salaries and cost of arena operation.

So as a corporation, the NBA is naturally highly interested in its highly profitable ancillary licensing business, and less interested in the questionable profitability of the fair competition business.

To this point, the analysis is just a statement of facts. A core assumption here is that more money is better than less money, especially if you are a corporation.

Now the question that naturally arises here is: Does the NBA's interest in its primary business (offering fair competition) ever conflict with its interest in its ancillary licensing businesses? And if so, what does the NBA do in the case of such conflicts?

Bill Simmons

The main reason I am even aware of the Donaghy case is that I struggle with a boyhood sports addiction that has me perusing the corporate sports media from time to time. One sports writer that I usually read is Bill Simmons. Simmons is notable for speaking his mind, even when his thoughts conflict with corporate interests, and he does so in an entertaining way. He is so popular among sports fans, that ESPN features him on its web site.

One reason I believe Simmons is so popular is that wacky things have been happening in the sports world since 9/11, and Simmons directly tackles these things with insight and humor. For myself, I've noticed a reasonably sharp change in the major American sports (football, baseball, and basketball) since around 9/11. That change can be described as a shift from "stars" to "teams". That is, after 9/11, team-teams started beating star-teams to win the major championships.

You could tell a team-team from a star-team by asking the following question of the championship team: How many players on the winning team could legitimately be considered as the MVP of the championship series or game? After 9/11, we started seeing winning teams with three or more possible MVPs. We saw winning team-teams like the football Patriots, the baseball Red Sox and White Sox, and basketball Pistons and Spurs. And there were more.

To the sports fan, these team-teams were like a breath of fresh air. They reminded us of the joy of team sports that we had learned as children. The men on these teams didn't merely share the glory, they shared the ball, and they shared obvious admiration for each other.

But the problem with these winning team-teams is that they ran afoul of the sports corporation money interests. The basketball case is most obvious. Hey, maybe it was nice a blast from the past to see the Pistons and Spurs win, but NBA profits suffered because the NBA's profitability model does not grok team-teams.

So in 2006, the strangest things happened in football and in basketball. The strange happenings concerned the officiating in the championship series or game. In Superbowl XL, Seattle was the first Superbowl losing team to win the battles for time of possession, yardage, and turnovers. About the only battles that Seattle lost concerned final score, and, notably, officiating. After the game, something like 80% of ESPN users in a poll said they believed the refs were the biggest factor in Pittsburgh winning the game.

Then in the Spring of 2006, history repeated itself in the NBA championships. In that series, as has been discussed ad nauseam by sports fans and writers, the officials began treating Miami's Dwayne Wade as an untouchable deity. In one particularly memorable game, Wade was awarded more free throws than the entire Dallas team. For the second time in one year, the refs had determined the league champion.

Sports fans nationwide vented in their disgust. Yours truly responded with a blog posting and podcast entitled "Revenge of the Sports Corporations". Basically, my argument ran that the sports corporations could well see what has been happening since 9/11. These corporations, like the sports public, could see that team-teams were winning. But unlike the sports fans, these corporations were not at all happy about these outcomes. So, to me, 2006 struck me as the ham-handed efforts of the sports corporations to crudely "engineer" outcomes consistent with their business models.

But, you know, that was just a gut sense of mine. I didn't really have much of any idea how these corporations could influence their refs to engineer the desired outcomes. I'm not one who believes in large conspiracies of refs and commissioners who meet in secret before the championship games and plan out how things will go. I don't think that could happen in America without a "whistle blower" coming forward.

So if there is corporate engineering going on, it must be of an exceedingly subtle, and limited variety. But what variety? Enter the case of Mr. Donaghy, and the insight of Bill Simmons.

Subtle Engineering

In his scathing article in the wake of the Donaghy affair, Bill Simmons wrote the following fascinating assessment:

[T]he NBA employs a handful of good referees and an astonishing number of bad ones. In the playoffs, there never seems to be enough quality officials to go around. If that wasn't bad enough, the league displayed a nasty "habit" (note: I'm using quotation marks because you could never prove anything more than a series of coincidences) of assigning better referees if they needed road teams to prevail (like a marquee team trailing 2-1 and playing Game 4 on the road) and weaker referees if they needed home teams to prevail (because weak referees are more likely to have their calls prejudiced by a raucous home crowd). This "habit" was miraculously cured this past spring, one year after the fallout of the 2006 Finals, when the officiating assignments became noticeably more haphazard and we ended up with just one Game 7 in four rounds. Maybe it was a coincidence, maybe not.

And that's before factoring in the public's perception (well-earned, by the way) that superstars receive more favorable calls than nonsuperstars. It's like Chris Rock's bit about dad getting the biggest chicken leg at the dinner table -- once you reach a certain level in the NBA, the whistles will come. This perpetual leeway allows gifted athletes like Wade, Gilbert Arenas and LeBron James to drive recklessly into traffic in crunch time, knowing they can either score or draw a foul. (Even when Michael Jordan won the '98 Finals on what everyone believed was his final shot ever, he famously shoved Utah's Bryon Russell to the ground before launching that jumper. No whistle.) If anything, LeBron's pre-2007 game depended on this leeway so much that he was completely ineffective in the 2006 World Championships; he kept bowling his way into the paint and waiting for calls that never came. The international refs almost seemed amused by him. The NBA refs would have been bailing him out.

So when news of the Donaghy scandal broke, everyone's reaction was the same: "Which one?"

Simmons mentions two dynamics: (1) selection of referee crews; and (2) star favoritism. The first is within the purview of Mr. Sterns and his head of officiating. Not many "co-conspirators" needed there. But what about "star favoritism"? How does that come about without direct instruction to refs and an ensuing ref "whistle blower"?

We find our answer in the case of Mr. Donaghy. As mentioned, Mr. Donaghy was a highly rated ref according to the NBA's rating system. Highly rated refs are rewarded by being allowed to ref playoff games. The deeper in the playoffs a ref appears, the more highly rated the ref, as Mr. Stern explained this morning.

So if you were a ref and you wanted to advance your status, you need only watch the refs who ref deep into the playoffs and copy their behavior. After a few years of trial and error, you the ref could piece together what sort of behavior advances your career, and what sort of behavior retards it.

Mr. Donaghy had been an NBA ref for 13 years. In the last two years of his career, his career started taking off -- both from the perspective of the NBA, and from the perspective of the Gambino crime family. That is, Mr. Donaghy's illegal point shaving activities are said to have occurred over the last two seasons. Concurrently, these are the two seasons when Mr. Donaghy finally "broke through" in his NBA career, being awarded playoff duty, including crucial second-round duty this year.

Observe that, once again, Mr. Stern and his head of officials are the only ones who need to know the criteria for promoting and demoting refs. Again, not many "co-conspirators" needed there.

Now one wrinkle Simmons threw into his analysis in the paragraphs above is that 2007 seemed strange. Long-standing patterns were broken.

Mr. Stern had long been accused by fans of engineering the outcomes of the games to favor the NBA's revenue models. But this past Spring, Mr. Stern seemed to go out of his way to harm the money interests of the NBA by taking steps to all but ensure that the unpopular San Antonio team would win. Many users pointed to this strange action of Mr. Stern as "proof" that he is no fixer.

I, on the other hand, share the suspicion of Bill Simmons who seems equally dubious of "miraculous[] cure[s]". I suspect that Mr. Stern, who is no dummy, was well aware after 2006 that many sports fans and writers were on to his game, even if they had no proof. This would explain not only his "anti-fixing" actions this year, but also his extreme testiness over the past year concerning any hint of criticism about his refs or about his system for managing the refs. As Shakespeare once wrote, Mr. Stern "doth protest too loudly" about his refs this past year.

But then came the Donaghy affair.

Mr. Donaghy was Doing a Good Job

Evidently, Mr. Donaghy was clever enough to fool both Mr. Stern, and the latter's cadre of security officials charged with looking out for just the sort of point shaving and secret sharing activities that Mr. Donaghy engaged in. Well if he was that clever, surely he was clever enough to notice that Mr. Stern, and the league, engineers the outcomes of playoff games through referee crew selection (as Mr. Simmons explains). Moreover, Mr. Donaghy was de facto clever enough to figure out the secret criteria according to which Mr. Stern promoted and demoted officials. And evidently, he was clever enough to see how succeeding at Mr. Stern's criteria could be consistent with succeeding at the criteria of the Gambino crime family.

And since, Mr. Donaghy is reported to be a hound for money and the "finer things in life", surely he noticed what Mr. Simmons wrote about referee crew selection. That is, he noticed that Mr. Stern was selecting referee crews in such a way as to maximize NBA corporate profits. In other words, he could see that the information about the identity of referee crews was a valuable commodity that the NBA was trading upon. So perhaps it seemed to him to be not much of a stretch to profit off of the same information himself. So when he (presumably) gave the Gambino crime family secret information about referee crew selection before the close of betting, it must not have seemed that much morally worse than what Mr. Stern was doing with the same information.

So this is why I say Mr. Donaghy was doing a good job. His own employer rated him highly, and promoted him at the precise time he began his life of crime. And to the extent he profited off of secret information like referee crew selection, he was just following the lead of his employer and making a little money on the side.

Mr. Stern's Delay

So why did Mr. Stern wait four days to hold his Donaghy press conference? My guess is that he was taken by surprise by Weiss's article last Friday, and he spent the past four days meeting with the FBI, the U.S. attorney, Donaghy's lawyers, and his own lawyer, to get his story straight before facing the public.

Why did the FBI surprise Mr. Stern last Friday? Back on June 20, they had granted Mr. Stern the courtesy of notifying him in private about the Donaghy affair. If the FBI was courteous to Mr. Stern on June 20, why did they lose their patience 30 days later on July 20?

My best guess is that the FBI was looking for full information and data from the NBA concerning both the refereeing of games, and the process of referee crew selection. I suspect that Mr. Stern was reluctant to let the FBI look closely at this information for fear the FBI would uncover his own shenanigans.

I think Mr. Stern was spending the last four days getting assurances from the FBI and the U.S. attorney's office that the investigation would not go beyond Donaghy and reach into his and the NBA's shameful actions.

Furthermore, I can see why the FBI and U.S. attorney would sign off on such a deal. Sports corporations gerrymandering their own results for the purpose of increasing corporate profit may enrage us fans, but it does not run afoul of the laws of the United States. Otherwise the WWF would be illegal. As such, such shameful actions are of no professional concern for the FBI or Justice Department.

Mr. Stern Ought to Send His Resume to the Gambinos

Well, if I'm anywhere close to being right about Mr. Stern's reason for delaying today's press conference, then it becomes clear how Mr. Stern and the Gambino family could both rate Mr. Donaghy's performance highly. What is the mafia? It's an organization interesting in making money ... by any means necessary. In other words, they don't much care how they make their money, so long as they make it, and avoid jail. In the case of Mr. Donaghy, their "means" was having this ref perturb the games by purposely making incorrect calls or non-calls, especially during the crucial moments of the game, thus ruining the game for fans.

If the above theory of Mr. Stern is correct, how are his actions any different? He perturbed the game through his referee crew selection and his system of promoting/demoting referees. The mafia obtained the same result through threats to Mr. Donaghy. So comparing Mr. Stern with the Gambino family, we have:

Since referees are measured on results, we now have an obvious answer why and how Mr. Stern and the Gambinos could see eye-to-eye concerning Mr. Donaghy's performance. But since Mr. Stern will, as mentioned above, avoid jail time, perhaps he could teach a thing or two to the Gambinos about making money.


In conclusion, don't get me wrong. Mr. Donaghy, as far as sports fans like myself are concerned, is a scumbag. When he found out that he was working for a scumbag corporation and for a scumbag commissioner, he should have found another line of work, rather than soiling the game we love.

But like the rest of us, he's only human. As is Mr. Stern.

What's inhuman is the corporation. It's a mere legal fiction. The core problem is not with weak humans like Messrs. Donaghy or Stern. The core problem is with the old, rusty corporation, and its antiquated, bloated business model. To succeed in leading this diseased corporation, Mr. Stern must corrupt himself. To remain a decent human would mean being a shitty commissioner.

Similarly for Mr. Donaghy. To rise in the profession of NBA refereeing, he needed to become corrupt. That he extended the systemic corruption of NBA reffing to embracing organized crime is a matter only of degree, not of kind.

With the corporate sports media eager to parrot Mr. Stern's "an isolated case" theme, the message boards of their web sites are hopping with users debating whether Mr. Stern bears any responsibility for Mr. Donaghy's actions.

What most users apparently fail to grasp is that all of reality is a holon. A holon is something that is simultaneously a part of a larger whole, and is itself comprised of smaller parts. For example, I am one part of my extended family, and the cells of my body are part of me. I am a holon, as is my extended family, and as are my cells. And so on.

The NBA is a holon. Its parts include Mr. Stern and Mr. Donaghy. For Mr. Donaghy to be employed for 13 years by the NBA, and to do what he did for two years, and to be commended for it by the NBA says that not only is Mr. Donaghy diseased, so is the NBA.

Thus not only must Mr. Stern go. The NBA as we know it must be dismantled, and rebuilt from scratch. For it is diseased beyond repair.