At an NBA game, a player attempts to block a player from the rival team who has the ball.
New Orleans Pelicans forward Anthony Davis drives past Milwaukee Bucks forward Giannis Antetokounmpo during the first quarter of a game at the Smoothie King Center in New Orleans on March 12. Derick E. Hingle-USA TODAY Sports/AP

Pro basketball follows the winner-take-all geography of America as a whole, with free agents gravitating to New York, L.A., and other big cities.


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The NBA season is just behind us, and free agency is about to swing into high gear. Not only are a number of marquee stars likely to become free agents, but as many as 40 percent of all players may go that route, according to one report. These decisions will alter the competitive landscape of professional basketball—and the hopes of fans in cities across North America.

If the conjectures hold true, free agency is likely to follow the winner-take-all geography of America as a whole, with a disproportionate share of free agents headed to the superstar cities of New York and Los Angeles. The reason has much more to do with the allure and power of big cities than their basketball prowess: It’s been a decade since any of the four franchises from New York and L.A. made it to the NBA finals. The Knicks are widely acknowledged to be the NBA’s most dysfunctional franchise, and last year, Lakers CEO Magic Johnson abruptly announced he was quitting on national TV.

Even before free-agent season started, Anthony Davis, who in January requested to be traded from the New Orleans Pelicans—an episode one writer dubbed “pre-agency”—was dealt to the Lakers. There, he joined LeBron James, who moved last year from his hometown and perennial NBA finalist, Cleveland. James’s move was widely thought to be driven by his expanding brand and media empire.

Before Kevin Durant sustained an Achilles heel injury, it was a foregone conclusion that he would leave three-time champions the Golden State Warriors for the Knicks—or if not for them, then the Brooklyn Nets or the Los Angeles Clippers. At the Knicks, it was thought, he might be joined by Kyrie Irving of the Boston Celtics (who now seems more likely to head for the Nets).

Kemba Walker, who currently plays for Charlotte and has said he may sign a higher-paying “supermax” deal there, is also rumored to be considering a move to New York or L.A. Durant’s Warriors teammate Klay Thompson is said to be eyeing L.A. if he does not re-up in San Francisco. Finally, although Kawhi Leonard is now likely to re-sign with the Toronto Raptors, it was long predicted that he would return home to Los Angeles.

In short, very few big-name free agents seem to be headed to smaller cities. When they leave the team they currently play for, it’s usually for a superstar city.

Superstar NBA cities

Big-market teams in superstar cities have long had an advantage in luring free agents, according to a detailed analysis of the location decisions of more than 1,600 NBA free agents between 2012 and 2018, conducted by my colleague Patrick Adler at the University of Toronto School of Cities.

Adler grouped NBA teams and cities into three buckets, based on Forbes data on NBA team valuations. The first bucket, the high-value teams, includes the teams in superstar cities and the more successful teams in not-quite-as-big cities: Chicago, Boston, Dallas, Houston, and Miami. The second bucket has mid-market, middle-value teams, in cities such as Toronto, Washington, D.C., and Philadelphia. And the third bucket has lower-value teams in smaller cities like Detroit, Cleveland, Memphis, and Oklahoma City.

10 most valuable teams

Value
(billions)

10 middle-value
teams

Value
(billions)

10 least valuable teams

Value
(billions)

New York Knicks

$4.0

Toronto Raptors

$1.7

Denver Nuggets

$1.4

Los Angeles Lakers

$3.7

Philadelphia 76ers

$1.7

Milwaukee Bucks

$1.4

Golden State Warriors

$3.5

San Antonio Spurs

$1.6

Orlando Magic

$1.3

Chicago Bulls

$2.9

Portland Trail Blazers

$1.6

Atlanta Hawks

$1.3

Boston Celtics

$2.8

Sacramento Kings

$1.6

Cleveland Cavaliers

$1.3

Brooklyn Nets

$2.4

Washington Wizards

$1.6

Detroit Pistons

$1.3

Houston Rockets

$2.3

Phoenix Suns

$1.5

Minnesota Timberwolves

$1.3

Dallas Mavericks

$2.3

Oklahoma City Thunder

$1.5

Charlotte Hornets

$1.3

Los Angeles Clippers

$2.2

Utah Jazz

$1.4

New Orleans Pelicans

$1.2

Miami Heat

$1.8

Indiana Pacers

$1.4

Memphis Grizzlies

$1.2

Adler then looked at the shares of free agents and All-Star free agents who went to and left these three types of teams/cities. As a control of sorts, he also looked at the flow of free agents out of and into teams/cities that made the NBA finals.

Superstar cities pursue a superstar strategy: These big-city teams are free-agent magnets. They attract both more All-Star free agents and more free agents in general. They also retain a larger share of their own free agents.

New York and L.A. teams landed nearly one-fifth of all free agents (19 percent) and of All-Star free agents (18 percent) in the period Adler studied. Teams in smaller cities—both middle-value and low-value franchises—acquired and retained All-Star free agents at lower rates.

Franchise type

Share of acquired All-Star free agents

Share of retained All- Star free
agents

Share of all acquired free agents

10 most valuable franchises

46.8% (36)

47.3% (26)

41.8% (396)

10 middle-value franchises

28.6% (22)

30.9% (17)

28.0% (265)

10 least valuable franchises

24.7% (19)

21.8% (12)

29.4% (79)

The top 10 franchises got more than 40 percent of their players through free agency, compared to roughly one-third for medium-market and smaller teams. The geography of the NBA mimics the broader winner-take-all geography of the country, with the preponderance of talent, and especially top talent, flowing to superstar cities.

Grow your own talent

Smaller-market teams pursue a very different strategy: They grow their own talent. They draft well, and cultivate and build around that talent. The NBA draft acts as an important calibration mechanism, giving the worst-performing teams the highest draft choices.

Teams in middle-value markets got 30 percent of their players from the draft, while teams in smaller markets got just shy of one-quarter of their players that way. By comparison, the 10 most valuable teams in bigger cities got only 20 percent of their players via the draft.

Franchise type

Acquired
through
free agency

Acquired through
draft

Acquired
through trade

10 most valuable teams

45.6%

19.5%

24.6%

10 middle-value
teams

34.1%

30.1%

24.5%

10 least valuable
teams

33.4%

23.9%

33.2%

When superstar players on small and mid-market teams turn to free agency, the smartest franchises strive to trade them for capable players before they can simply walk away.

San Antonio has used this grow-your-own strategy of smart drafting and strategic trades to become one of the most successful franchises in recent years. Milwaukee, Toronto, Oklahoma City, and Indiana, among others, have successfully employed variants of it. Toronto’s recent run of success was enabled by savvy draft selections and smart trading. The Raptors also brought on hip-hop star Drake as their “global ambassador.”

What cities can learn from pro basketball

The team-building strategies of NBA franchises don’t map directly onto cities, but there is still a lesson to take from them. Just like pro basketball teams, different kinds of cities need to pursue different strategies. As my University of Toronto colleague, the business-strategy expert Roger Martin, has long argued, successful strategy means not emulating what others do to win, but playing the kind of game that best positions you to win.

Superstar cities have the assets and resources to play the superstar game. Smaller cities simply cannot compete this way. It makes little sense for them to go toe to toe with superstar cities. In fact, smaller places should do everything in their power to avoid competing directly with superstar cities, either by getting involved in expensive, incentive-financed competitions to lure marquee companies such as Amazon, or in efforts to grow the next Silicon anything.

Instead, they should play a different game, one that revolves around cultivating, retaining, and developing their own talent, and bolstering their entrepreneurial and creative ecosystems. Like the best smaller and medium-market NBA teams, they need to let go of the fantasy that every kind of place can play the superstar game, and focus on intentional strategies to grow their own success.

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