Business Blog: Hoover’s Business Insight Zone

Potentially the worst stain in the history of the National Basketball Association is attached to the name of Tim Donaghy, a former NBA referee who has just pleaded guilty to felony counts of “conspiracy to engage in wire fraud and transmitting betting information through interstate commerce.” We know now, beyond any doubt, that Donaghy bet on games for which he was a referee.

Donaghy faces up to 25 years in prison for his sins. NBA commissioner David Stern faces the task of restoring the public’s confidence in his league, which has long come under fire for the inconsistent, not to say frequently poor, quality of its officiating. (By what must have been a herculean task of self-restraint, Dallas Mavericks owner Mark Cuban — by a mile the most prominent critic of NBA officiating — has kept mum about l’affaire Donaghy on his highly trafficked blog.) There’s more than honor at stake here: the financial consequences of the Donaghy scandal — for the league and for individual teams — could be enormous.

So far, Stern has responded gravely to the revelations about Donaghy’s crookedness, and given Stern’s long track record of probity and smarts, I’ll wager that he comes up with the right package of actions and rhetoric to ensure that nothing like this happens again. (Okay, given the circumstances, maybe “wager” isn’t the word we need here . . .) He’ll need to do the same thing that Judge Kenesaw Mountain Landis did when he served as commissioner of baseball in the wake of the Black Sox Scandal: reassure a dubious public that his game’s integrity is above reproach. If Stern’s league gets bailed out by a Babe Ruth- or Michael Jordan-caliber superstar (Kevin Durant, anyone?), so much the better.

• For more on the legal aspects of the Donaghy case, read this informative summary by sports law expert Lester Munson.*
• For an expert view of the impact that bad refs have on NBA games, and the likely impact the Donaghy scandal will have on the NBA, check out this column from Bill Simmons. Simmons is well-known for his smart-alec, tongue-in-cheek humor, but his knowledge of pro basketball runs very deep, and his take here is on point.

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* Several years ago I happened to meet Munson when we were both guests at the same wedding. I can confirm that, besides being a legal expert and a sharp writer, he’s a prince of a guy.