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October 2, 2008

Joel Litvin

David Stern

COMMISSIONER STERN: My brief opening statement is that we are very, very appreciative to Larry Pedowitz for the breadth, scope and directness of his report, and to Larry and his colleagues for all of the work that went into it, and the many recommendations that accompany their findings.
I have asked Larry and his firm to continue our retention of them so that on an annual basis they can check back to make sure that the issues that they spotted and the recommendations that they made are being effectively dealt with and effectively implemented and to determine whether there are yet additional ways where we can maintain the integrity of our refereeing program and demonstrate to the public and to the basketball fans of the world that they should have the confidence in it that we have in it.
With that, I would like to take whatever questions you may have.

Q. How was it that Donaghy, Martino and Battista were so successful that they were able to pick games, make the correct pick 60 or 70 percent of the time?
COMMISSIONER STERN: I don't know. I've thought about it and I cannot tell you other than what may be the fact of inside or information of a type having to do with player injury and the status of rosters, which Mr. Pedowitz mentioned in his report.

Q. Does it signify maybe some other changes may need to be made here? It seems improbable that any person would be able to be able to bet that successfully?
COMMISSIONER STERN: What is the statistic that you're using?

Q. There have been reports that it was somewhere above 60 percent, their success rate.
COMMISSIONER STERN: That's news to me. I don't know what a successful better might run, so I don't have a frame of reference. I thought you had some hard information on that. I hadn't seen that and I don't know if that is accurate.
But what we tell everyone, that if you have a little bit of information that the public doesn't have, that increases your odds. And I guess if you start with a dartboard or what have you, and you're doing 50/50, every little bit of information tips the scales over a period of time in your favor and I imagine it moves the percentage up. But I'm not an expert in that and I don't know the answer.

Q. David, if I remember correctly, Mr. Pedowitz's firm reviewed the games that Donaghy was thought to have bet on with NBA officials, is that correct?

Q. Who were the officials that reviewed the games with him?
JOEL LITVIN: The individuals who reviewed the game from our office for Mr. Pedowitz were Ronnie Nunn, Paul Brazeau, Bernie Fryer.

Q. I'm not trying to raise doubts about the credibility or the integrity of anybody, but were there concerns that in any way it might be in the best interest of NBA officials to dispel any doubts that Donaghy was, in fact, influencing the course of a game? Do you understand where I'm coming from?
COMMISSIONER STERN: Yes. But we encouraged Mr. Pedowitz to review that review. So he participated in the review, as well. And I can assure you that the instructions that went out to the people who were doing the reviewing, and by the way the tapes were turned over to the FBI and the Justice Department for their review, so we were pretty much feeling a good handle on that, and we subjected each of our reviewers to cross-examination by Mr. Pedowitz as well.
So there was a community of interest that was designed to get to the facts as best we possibly could. And we also had observer reports from those games and pre-existing reviews on a correct and incorrect basis. So there was a pretty extensive set of reviews done on those games.

Q. You can understand, though, it's very hard I think for people outside to believe that on the one hand he bet on these games, apparently successfully, and on the other hand he did not damage the credibility, the integrity of the game.
COMMISSIONER STERN: Well, we start with the FBI and the Department of Justice, U.S. Attorney's Office, they're part of the Department of Justice, but the U.S. Attorney's Office and the FBI investigating for the very same thing you're talking about, and then we checked it against our own observer review. Then we did an independent deep dive under Larry Pedowitz's supervision, and subject to his cross-examination.
So I don't know what to argue to you or tell you. And we don't profess to a degree of certainty; all we say is that we found no reason to conclude that the U.S. Attorney and the FBI were incorrect in their finding that there was no criminal activity about game manipulation, period. So there were multiple sets of reviews.

Q. Can we foresee a period with the refs after a game to ask questions about the rules in the case of a technical foul?
COMMISSIONER STERN: Yes, we're in the process of planning for that now, where particular referees will be made available on a more consistent basis having to do with rule interpretation postgame and the like. In addition, I think we had several hundred media, a couple hundred media, at media day - maybe a hundred, I'm exaggerating, I apologize - to make the refs available. And our refs will be meeting with various teams during the pre-season and during the course of the season. Those meetings will include meetings with media, as well.
So we're determined to demystify the process and share with the media, and therefore our fans, the rules, the ins and outs, as well as the mistakes that will inevitably be made.

Q. But you don't plan on doing it on a game-by-game basis like we meet with the coach after the game?
COMMISSIONER STERN: No, no, that's not our plan. But our plan is when there are interpretations or the like that come into question, that we need to have our referees more accessible. As you might imagine, when the coaches do that, by the time they're head coaches, they've had a fair amount of media training and media familiarity. And that's not something that all of our referees are expert at. So we want to move them slowly into the ability to be able to respond forthrightly and precisely to questions that the media may ask them about rules or the like, or calls actually. And you'll see much more of that this season.

Q. Obviously Mr. Pedowitz issued a series of recommendations here. To what extent do you see these as kind of binding? What is the League's plan? I know you're implementing some of these already on your own.
COMMISSIONER STERN: We're going to implement all of them. And that's what I will be advising the Board of Governors at our meeting on October 22nd.

Q. To be clear, I know this was delayed in being published because of the outcome of the federal situation. Did you have these recommendations prior to today?
COMMISSIONER STERN: Not all of them. But, yes, many of them actually we were pushing Mr. Pedowitz and his colleagues, and they complied. Before we started last season, given the immediacy of having to play a season right after the Donaghy plea, we said, Tell us what you're thinking about that might affect these issues. And, for example, publishing the schedules of the refereeing crew, we did that with respect to this past season, issuing new sets of rules and regulations. We began doing that. As we said, Don't hold back. As you move along, make recommendations to us. And there's nothing that was recommended that we didn't move forward on, because the recommendations have been very solid and we think effective.

Q. I hope you'll indulge me if I go off topic. I wanted to ask you about the economic slowdown we're seeing, whether or not there have been any implications to the league or teams.
COMMISSIONER STERN: You get the prize. We thought the first question would be about the Knicks, but it's about the economy.

Q. I had to come from a different angle.
COMMISSIONER STERN: I see. I'll answer, but because we're all focusing on refereeing, I'll ask everyone else to keep it to that.
To us, our network arrangements are strong. Our teams' local arrangements are strong with respect to TV. Their sponsorships seem to be pretty good. We expect to see some softness in the composition of their ticket makeup. We don't know that attendance will be down. But we feel that, based upon early results, there will be a lower component of season tickets and a higher component of partial season ticket, groups, and day-of-game.
But clearly, as business gets affected by the slowdown, then spending will get affected, both personally and by businesses. So sports, I don't believe, can exist apart from that reality. The only thing that will probably increase will be television viewing as a low-priced alternative to spending money going to the movies, going out to eat, or going to the event itself possibly.

Q. There's a mention in the Pedowitz Report where he says the potential for referee bias remains a threat to the integrity of the game. That's a broad statement. As you just mentioned a few minutes ago, one of the things you did do is start posting the referees the morning of games. It seems to be implied in that decision, and of course implied in Donaghy's whole scheme, that there's something valuable in knowing that. It seems to go to the bias issue. How confident are you in the idea that potential individual biases don't affect games? If they're not affecting games, what is the whole point of his basing his scheme on getting it from information, you now posting information in advance?
COMMISSIONER STERN: Without telling any great secrets or debunking old ones, I think there was always some sense that -- you know, Red used to tell me if you knew this particular crew came in that you'd be able to play the game more, they wouldn't be quite a certain way. And actually we've had a program in place for the better part of a decade that's designed to go the other way, that you would get the same call in a game no matter who was reffing the game, but recognizing that there might be differences that people who spend their lives combing over those differences and seeing some pattern or the other.
You know, we saw that there's a perceived value that gamblers try to get this information. So we wound up seeing circumstances where people would be watching to see what referees landed in a city, determining whether they had checked into their hotel, whether they were eating breakfast. So we decided if gamblers perceived a value in that, and knowing it gave a particular gambler a perceived edge, without us maybe being as smart as they are, why don't we just eliminate that, and we did. Then we did spend time sort of speculating about whether it affects the line or doesn't. That was a, Let's eliminate that as a competition issue, so to speak. That's what we did.
We're looking for things like that. I know that all sports wrestle with it with respect to the announcement of injuries, recognizing that -- I don't think our sport has as many problems with that, but recognizing there's a balance between what a coach wants to reveal to the other side so they can change their defense or what have you, as opposed to what gamblers are looking to know based upon that information.
This is just something that we -- I mean, we've always known, but as gambling continues to grow in this country and around the world, this is something that we're going to have to keep addressing to decide when the edge that gamblers try to get should be blunted by public release of information and other rules that we will try to implement.

Q. Do you believe that the league has an image problem because of this or is it just some fans living in Area 51 that keep beating the drum?
COMMISSIONER STERN: No, you know, I've spoken about this. On the one hand we've come off a great year and people are focusing on our players and the great competition. Rating's up across the board. Our third highest year of attendance. We also had a great Olympics, not just that Team America won, but that 26 of the 36 players on the medal stand were players with NBA experience. So that's good.
But when the season starts to come around again, and given the fact that referee working, so to speak, by officials and coaches and team and media and the like, has somehow been allowed, and I would allowed by me, to creep into our game in terms of being a part of it, I think that there are fans who sort of are happy to grasp onto it to explain away a loss or the like. And we not only have to demystify our refereeing, but we really have to hold NBA family members to account for the fact that their words and actions can have a deleterious effect because if you understand who our core referees are and what they seek to achieve and how they are monitored, metricized, rated, reviewed and developed, you get a completely different picture than the one that I think many fans have.
So it's not just a small group. I think it's a relatively small group, but it's not in any particular area. It's the kind of thing that creeps into our game. And we think that the most important thing is to make it understandable. And I think one of the services that the Pedowitz Report provides, and I was almost taken aback when I was reading it, is a very good 12 pages spent describing the referee program. It's not as juicy as some of the other parts of the report, but I recommend it to the media as a starting place. I scratched my said and said, How come we had to wait for the Pedowitz Report for this to be in writing and to be distributed and the like? Because actually I think there's an even more comprehensive description of everything that's done that we owe the public.
So I see this as a combination of needing the transparency, but in addition stopping at least the family members from their complaining. The sense being, if they don't get this call, maybe they'll get the next call. And that's not a good thing for our sport.

Q. Do you think fans feel burned permanently, or do you think it's a matter of time and you'll win them back?
COMMISSIONER STERN: Oh, we'll win them back. And I'm not sure how you would measure the burn. Would it be in decreased attendance, decreased ratings, decreased coverage? Every indication is that the viewing attendance, coverage, interest, Internet blogging and the like is up. And on a global scale, the game between U.S. and China at the Beijing Olympics was the most watched game in history. So we think that our fans are there, but they're appropriately demanding, and we have to satisfy that demand.

Q. Did any part of you feel that Donaghy was the only official found to be involved in criminal activity? Also, how much does this report chip away at any perceptions of bias from all the officials in games?
COMMISSIONER STERN: I think it does a good job. I think in certain respects, on the first day we met with the FBI, they told us that Donaghy was the only one they had illegal activity concern with, but they did say there were referees that were violating our rules, and that they had had that information, as well, from Tim Donaghy. I think the Pedowitz Report confirmed both points with an independent investigation.
I wasn't that thrilled to know about the violation of our rules by our referees, but I was even less thrilled by the fact that they weren't well-articulated by us and not particularly well-enforced either.
The bias issue, I don't consider it to be sort of venal bias. It's just that the allegation that referees, being human, may have certain issues with teams or the like. But we couldn't establish that in the investigation. But we're going to be mindful of the concern. And I think through the transparency, and of course Major General Retired Johnson, I have to learn how to describe that in the full range of things, it's going to help us a lot in dealing with our teams and ultimately dealing with our fans. We feel good about our ability to tell the story, respond to teams' concerns, and very much chip away at the issues that are raised because fans think their team got a raw deal on a particular call or in a particular game.

Q. There's obviously a concern in the report, and certainly Larry discussed it in his call, about the idea of gambling in the NBA, players taking part. There's a recommendation to strengthen the gambling rules, the education about it. I'm wondering if it was so hard to monitor the referees, as you said last year, a $5 Nassau was violating rules, how tough will it be to monitor players more?
COMMISSIONER STERN: Well, I'm not sure that we're going to be monitoring players more. I would say whatever we do with the players is going to be subject to Collective Bargaining. And I think the education with respect to gambling that I take from all of this, and that's what I refer to as strengthening the program, is the education about why they are at the center of information. It's really about who they are with and what information they give because gamblers are always looking for an edge. And that's the concern that we have begun to address in rookies and we'll do more of with respect to players.
Larry Pedowitz would be a difficult owner for me because players of all sports have been playing cards in the back of buses and planes forever. I think what I would say is when the stakes get too high, I think I would have a concern, and I think that the union would join me in that concern. But short of that, I don't think that we will be seeking to regulate which card games our players play. On the other hand, we want to make sure that if there are illegal card games going on, that no one associated with our league engage in them.
So it's going to be a continued balancing act.

Q. From what I understand, there was no concrete evidence that the lines were moving greatly based on what referee or what teams were going to referee particular games either, because one team called a lot of fouls or one ref was perceived to have an issue with a certain team or a certain coach, there was none of that found?

Q. There was none of that found, that lines were moving precipitously?
COMMISSIONER STERN: That's correct. We shared with you our understanding, which we garnered after the release of the names, that it didn't affect the line.
You know, it's interesting. I don't want to get too wound up in this, but that doesn't mean it didn't affect either bets that people made or their success rate. We do know it didn't affect the line. But I don't know, and I'm not in that business, and I don't plan to be, but it's just an interesting series of circumstances.

Q. From your point of view, you're satisfied to know it didn't greatly affect the line; if it affected how much money was put on a game...
COMMISSIONER STERN: Or a particular bet. But usually money moves the line, okay? I don't want to let you know how knowledgeable I really am, but you put down a lot of money, the line moves in many cases because they want to make sure there's an even amount on both sides.
Someone else earlier made the same point. It's clear to me - and be careful, because whenever a lawyer says it's clear to them, it's usually not - but as more and more money is bet on a global scale on sports, and it doesn't seem to be going down, it's only going one way, up, and more legalized than ever before, that the review of data of all types is going to be institutionalized, almost like computer programs, dare I say having to do with the stock market, but I'm not going to talk about derivatives or credit swaps. So edges are going to be looked for and people are going to have filters and the like. And ours is not even (indiscernible). It's far from the largest sport in which betting is done. We're almost down at the bottom.
But I just think that we all in sports have to be mindful that everything we do, and the circumstances that are within our control, are going to be the subject of extreme analysis, and particularly an analysis that can be affected, impacted or moved by statistical data. I'd say that's the wake-up call for all sports on an ongoing basis.

Q. Judging from what you said, you twice used the term "family," meaning I guess your coaches?
COMMISSIONER STERN: Coaches, owners, players.

Q. Is there going to be, I guess, less tolerance? Do you perceive there will be less tolerance for people within your family either criticizing a referee either in a postgame interview or complaining to a referee during the game, whining for a call, et cetera? Is there less tolerance moving forward?
COMMISSIONER STERN: I would say that we're not even sure we have to evince less tolerance. I think our players, our coaches and our referees understand that it's time for this family to come together and to focus on the game and to remove what may even be good faith gamesmanship and whining and demonstrating, but which could have an impact that was the unintended consequence of that.
So I expect, rather than me having less tolerance, I would rather like to think there's going to be a reawakening of our family with respect to the impact that such things have on the reputation of our game.
But I don't want to shrink from the responsibility of making sure that doesn't happen from enforcing our rules.

Q. I understand it's a bit of a hypothetical, but Pedowitz has recommended, and you said you accepted all his recommendations, including things as detailed as more statistical analysis of everything you already have in terms of trying to find patterns of calls. How confident are you that all these recommendations that you're implementing now and have implemented will be able to catch something like Donaghy? You've said many times before this is a very difficult kind of thing to even detect, but you're implementing procedures with data you already have. Can this effectively detect something?
COMMISSIONER STERN: The best we can do is do the best we can, and that's all we can do. And if I spoke of confidence, I would be exaggerating. The only thing I'm confident of is that if there's anything intelligent to be done by the sports league, that will be in the first rank of rules and procedures and analyses, we will be up there with the very best. No one will have a better system than we do, although we'll share our system with everybody so we'll all have as good a system as each other.
But all of that said, to the idea that, you know, criminal activity will exist every place else in the world except in sports is just something that we can't guarantee. But we're going to have the most effective possible system that's ever been devised.
Thank you.

End of FastScripts

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