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The Psychic Benefit of Owning an NBA Team (or a Yeshiva)

It has been a while since my last Malcolm Gladwell post. That streak ends today.

On Grantland.com, Gladwell is critical of the owners of NBA teams. Currently, the NBA owners have locked out the NBA players. The collective bargaining agreement expired and the owners want a better deal this time around. Small market owners are claiming that they are losing money. They want to cut costs. The players have not assented to the terms of the owners, namely, lower salaries so that the owners can make more money.

On the face of it, the owners seem to be taking out frustration with each other on the players. If they want to pay the players less money they should simply pay the players less money. The exorbitant salaries for players who are being overpaid are not the fault of the players. They are the fault of foolish owners and bad management.

Further, there is an easier solution for NBA owners to make more money. Revenue sharing. That is how it is done in other sports. The NBA should follow suit and create a more equitable revenue sharing model.

Gladwell however, believes that the owners entire premise is wrong. His opinion is that NBA owners have no right to demand that their teams make money. The reason someone buys an NBA team is not to make money. Billionaires buy teams to satisfy a different need; not financial gain. This is called a “psychic benefit”. Gladwell compares it to owning a Van Gogh. One does not buy a Van Gogh as an investment. One buys a Van Gogh simply to have the Van Gogh. If the painting does not increase in value, that is not really a concern. After all, you have the Van Gogh.

The argument is compelling and he might be correct. Gladwell is basically saying that NBA owners have no right invoking economic principles when discussing their costs and profits. They did not buy the team as an investment so they can’t complain when their non-investment is not turning a profit.

Reading the article and thinking about the argument reminded me of a guest post on DovBear from last year. The guest poster is an administrator at a Yeshiva and he expressed displeasure with another guest poster complaining about tuition costs. Further, he expressed frustration with parents who don’t pay their bills as per their tuition contracts and prioritize their spending by placing education near the bottom of the list.

A serious, sometimes passionate discussion ensued in the comments. Perhaps the most salient point of all was made by DovBear: (And I paraphrase) “A school should be treated like a business and if it cannot run efficiently then it should not run at all.”

I think Malcolm Gladwell would disagree. Not everything that looks like a business is a business. An NBA team is only somewhat like a business. But it is more like a Van Gogh. You cannot apply standard rules of economics to NBA teams. Yeshivos also look like businesses, but I think Gladwell’s point about NBA teams can be applied similarly to our yeshivos.

People don’t open schools to make money. They are not an investment. The standard rules of economics cannot be applied to yeshivos.

Yeshivos are opened for to serve the community. They are opened simply so that there are yeshivos for our children to attend.

I think it might be unfair to try to apply the common rules of economics to our schools. They do need to be run efficiently. They do need to be able to stay afloat. But above all, they need to stay open so that our children get the education that they need.

Certainly, we can demand excellence and we can demand responsible spending of communal funds. But I don’t think we can demand that our schools run like an investment firm, supermarket, hospital or coffee shop.

Unfortunately, most of our yeshivos are not (yet) “Van Goghs”, but practically speaking, they really are.

More discussion on DovBear.

Links: Grantland, DovBear


7 Comments
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  • http://www.facebook.com/profile.php?id=509509604 Shlomo Pill

    It’s a good point, but I think there is one major flaw in your analogy.  A millionaire might spend hundreds of thousands of dollars on a Van Gough, even though its a losing proposition financially, but at the end of the day, he’s a millionaire and can afford the financial costs of his psychic benefit.  The guy making a few hundred grand a year, on the other hand, may be able to scrape together all his savings and buy that same Van Gough, but unless he can be fairly sure that the work will go up in value, the purchase would be obviously ill-advised indeed.  True, our schools and Yeshivos cannot be run simply as businesses, but I think its a bit misguided to treat them as paintings by the masters either.  The truth is, we as a community have limited resources.  We can’t just “invest” our money into pet project schools simply for the psychic benefit, just because a school is there and is teaching our children doesn’t mean we can or should pour our money into it as it continues to lose “value” (financial or educational).  Just as we wouldn’t support a school that does not offer a decent educational return on our investment, so too should we be cautious about putting our money into schools that, while perhaps educationally viable, cannot be expected to survive due to gross financial mismanagement.  Administrators shouldn’t run their schools as businesses, the bottom line must always be educational success.  Nevertheless a balance must be struck between meeting educational goals and recognizing financial realities.  Drawing the line is hard, and it is to the skilled few who do so well that we should be turning.

    • http://finkorswim.com E. Fink

      Great comments as always.

      In my analogy, the community is the owner.

      • Anonymous

        In my analogy, the community is the owner.

        Really?!? So what say/power do we have over its operation?

        • http://finkorswim.com E. Fink

          I’m suggesting the entire paradigm is wrong.

          • Anonymous

            I agree. The paradigm is absolutely wrong. A community should not devote such a large percentage of its wealth to education while stifling other important areas of communal need. And this even applies to communities of “people of the book”.

      • http://www.facebook.com/profile.php?id=509509604 Shlomo Pill

        That may be true in a past era when schools, yeshivos, cheidarim, mikvaos, tzedakos, and other “communal” organizations really were run by the community – i.e., by the local kehillah as a political entitiy either directly or through elected representatives, reviewed and overseen in an “abuse of discretion” manner by the kehilla-appointed rav or beis din.  Now, the reality is that these institutions are most often privately owned and run, in this paradigm, we can vote only with our wallets . . . 

  • Anonymous

    Yeshivos are opened for to serve the community. They are opened simply so that there are yeshivos for our children to attend.

    This is completely untrue as a general statement. There may be some yeshivot opened as a community service. But there are MANY opened to make money and often primarily to provide [lifetime] employment for family members and extended family members.