Is trading Luka Doncic like selling Nvidia too early?

By Tyler Cowen

When I first saw the news, I thought it was an internet troll. The Dallas Mavericks had traded superstar Luka Doncic to the Los Angeles Lakers for superstar Anthony Davis.

The Mavericks, who went to the National Basketball Association finals just last year, have been building their team around Doncic, who is one of the league’s very best players and is only 25 years old. Davis is also one of the NBA’s top players, but is 32 and has had injury problems.

The deal, which was finalized Sunday and involves several other players, came as a shock — not only to the sports reporters, but also to Doncic, his new teammates and his former coach.

But can it still be considered rational in the financial market sense? Or is Dallas the equivalent of an impatient Nvidia investor, who sold early and got some value but would have done better to hold on for further gains?

The first point is that the trade shows how the economics of basketball have changed in some fundamental ways.

One relatively recent development is that many NBA owners are now billionaires. Buying a sports team has become an increasingly attractive way to invest your money, since valuations have been rising for decades.

The wealthier the owner, in my view, the more likely that he or she wants the experience to be fun, maybe because so many other parts of their lives are so serious. And Doncic does not seem like he was a whole lot of fun to deal with.

His on-court style was often flippant and irritating. His fluctuating weight has been a problem and he has been unavailable to play for more than a month, due to interrelated injuries and conditioning issues.

When the star player behaves in such a manner, the morale problems can spread to the entire team. Dallas has been hovering around the .500 mark this year, hardly a distinguished record for a Western conference champion loaded with talent. If you are the Adelson family, the majority owners of the Mavericks, do you need these headaches?

Yes, NBA players have been known to change their ways. Early in his career, for example, Boston Celtics great Larry Bird was known for his partying, and he turned into an obsessive winner.

But most top NBA stars, such as Michael Jordan and Steph Curry, have exhibited traits of leadership and conscientiousness from the start. So the Mavericks’ pessimism about Doncic may be justified.

Another development is that these owners are placing greater emphasis on winning a title, in part because doing so — or at least seriously trying — can help the team attract more attention, and attention has increasing economic value. Dallas apparently decided that Doncic was not going to lead the team to the promised land, so pulled the trigger on the trade.

There is also a narrow regulatory angle here. Doncic was due for what is called a “supermax contract extension” when his current agreement expired.

The Mavericks were expected to commit this summer to paying him $345 million over a five-year period. Were they crazy not to want to do that? If the team was going to finish below first place, which seems likely, then maybe it should keep that money in the bank.

What about the Lakers? They are in one of the NBA’s two largest markets, and a city that thrives on glitz. If nothing else, Doncic — with his flamboyant offensive game — has that. And the Lakers were not favored this year anyway, with LeBron James now 40 years old.

Doncic gives them a new signature player who will attract attention for years to come. If the result is more drama than championship rings, well, LA is the place where that fits best.

A final lesson: The NBA’s complex system of salary cap and collective bargaining rights may be more workable than many people think. The conventional wisdom has been that it makes major trades and free-agent signings, which bring an element of surprise and excitement to the league, far more difficult and rare.

Those concerns remain. But sometimes, all it takes is one daring move to show that things are not as stagnant as they may seem. Perhaps a lot of other NBA teams — or even organizations outside of sports — are now wondering whether they should be content with their status quo. And many players — and workers more broadly — are probably asking themselves if they really are “indispensable.”

Doncic was not, and neither are you. Maybe the real surprise is that anyone is still surprised by this fact.