Precedent for Hornets Situation = Paul Gaston

[LarBrd33]

I keep reading this garbage that the NBA "vetoing" a trade is "unprecedented" ... That's because the media refuses to represent this story accurately.  

Dell Demps didn't have full authority to make trades.  He merely has the ability to come up with trades and then present these proposals to his ownership group for approval.  He liked this Laker trade... his ownership group (the NBA) didn't.  

Had this trade gone down the Hornets would be on the hook for the following players:

Emeka Okafor = 12 mil + 2 years
Trevor Ariza = 6.8 mil + 2 years
Jarret Jack = 5.2 mil + 1 year
Marco Belinelli = 3.4 mil
Quincy Pondexter = 1.1 mil
Lamar Odom = 8.9 mil
Luis Scola = 8.6 mil + 3  years
Kevin Martin = 12 mil + 1 year
Goran Dragic = 2.1 mil


That's 9 players and 60 million of salary already (over the salary cap).  That's a lot of money to commit to a lottery team.  It's very important to note that the NBA is attempting to sell the Hornets.  Saddling the prospective new Hornet owners with all that additional cost isn't going to improve their ability to sell the team.  So apparently Dell Demps is horrible at his job... and the Hornets ownership (and the 29 other NBA owners who hold a share of the Hornets and have to foot the bill for this team and any potential losses) rejected the trade for what is seemingly financial reasons.  

Let me pause to reiterate that fact. The Hornets have been unprofitable for years... losing anywhere from 7-18 million dollars a year.  In what world does losing Chris Paul and adding an additional 16 million per year in salary make good business sense for the 29 other NBA owners who have to take a hit on this investment?

http://www.atthehive.com/2010/12/7/1862259/the-hornets-financial-statements-the-hornets-have-been-unprofitable

I was trying to think of a precedent for this.  Here's one.

2001-2002:  Boston Celtics make it to the Eastern Conference Finals.  Key players on that team were Pierce, Walker, Rodney Rodgers and Kenny Anderson.  You might remember that mid-season our GM (Chris Wallace) traded our #10 pick (Joe JOhnson) for Rodney Rogers.  Rogers, you might remember, was a solid player.  We sacrificed a key part of our future for him.  

In the offseason, it made perfectly logical sense that we'd re-sign Rodney Rogers.  Rogers wanted to sign here.  CHris Wallace wanted to sign him.  Remember, we gave up Joe Johnson so we could have Rodney Rogers for 27 games and a playoff push... obviously we NEEDED to sign this guy.  

Unfortunately... Paul Gaston, our owner, was in the process of trying to sell the team and was brutally adamant against exceeding the luxury tax.   The GM, Chris Wallace, wanted to sign Rodgers.  Ownership vetoed it.  Paul Gaston apparently felt that having a luxury tax team would be an unnecessary financial burden and would make the team less attractive to potential buyers.  This was despite the fact that re-signing Rodney Rogers was the obvious best move at the time.   There's your precedent.  Long story short, Wallace scrambled to find a "3rd scorer" and gave up Kenny Anderson (and Vitaly Potapenko) for an alcoholic (Vin Baker) while staying under the luxury tax... the team was sold in 2003.  

What's the difference here?  The Hornets ownership is acting like Paul Gaston here.  They see the price tag on these players and feel it's not worth the financial burden and would make the team less attractive to potential buyers.  The NBA "Vetoing" this trade is no different than Paul Gaston "vetoing" the Rodney Rogers re-signing, imo.  

The media keeps spinning it like the NBA meddled in the affairs of the Hornets and it's blatantly untrue.  Demps came up with a trade that arguably made the most "talent" sense  (same as Chris Wallace wanting to re-sign Rodgers), but sometimes that conflicts with the business motives of ownership.

BTW I'm sure there are COUNTLESS other examples of an ownership group refusing to approve a trade their GM has tentatively agreed to.  Unfortunately the media reported this Laker/hornet trade before it was even presented to the Hornets ownership... and now they are milking this story for drama, ratings and controversy

[PosImpos]

I think you've done a good job breaking down exactly why this trade didn't make sense for the Hornets.

I think it's fair to openly criticize the league, and quite harshly, for doing such a terrible job of framing their reasoning for vetoing the deal.

As you've done here, one can lay out a very compelling argument for why this deal would make the Hornets much less attractive to potential buyers, while not making them anything more than what they already were -- a borderline playoff team.

The problem is that the NBA chose to cite "basketball reasons" as their justification for vetoing the trade; to make matters worse, Dan Gilbert's e-mail to Stern urging the veto of the trade makes no mention whatsoever of the trade in terms of the Hornets' interests -- either financial or basketball-related.  This wouldn't be such a big problem if Gilbert's e-mail weren't the only significant explanation we've gotten so far of the owners' reasoning for wanting to kill the trade.

This makes it seem like the trade was vetoed mainly because the owners really didn't want to see the Lakers snatch the best point guard in the league from a struggling small market franchise after they locked out the players for 5 months, partly because of "competitive balance." 

It's no wonder that the players, and many of the fans, are up in arms in response to what they understandably perceive as the league office exercising its powers in a way that drastically alters the NBA landscape, with little or not justification aside from what amounts to "because we say so."

[LarBrd33]

I think you've done a good job breaking down exactly why this trade didn't make sense for the Hornets.

I think it's fair to openly criticize the league, and quite harshly, for doing such a terrible job of framing their reasoning for vetoing the deal.

As you've done here, one can lay out a very compelling argument for why this deal would make the Hornets much less attractive to potential buyers, while not making them anything more than what they already were -- a borderline playoff team.

The problem is that the NBA chose to cite "basketball reasons" as their justification for vetoing the trade; to make matters worse, Dan Gilbert's e-mail to Stern urging the veto of the trade makes no mention whatsoever of the trade in terms of the Hornets' interests -- either financial or basketball-related. 

This makes it seem like the trade was vetoed mainly because the owners really didn't want to see the Lakers snatch the best point guard in the league from a struggling small market franchise after they locked out the players for 5 months, partly because of "competitive balance."

This news broke late and I believe the NBA was locked in on board meetings.  I expect a statement of some sort tomorrow.  "Basketball reasons" is a poor excuse, but I'm not sure how you explain "financial reasons" without alienating the fans.   It's a tricky situation... how do you explain to Joe Average that the NBA didn't want to take back the best talent possible for the Hornets, because the Hornets have been losing money every year and this was going to drop them into the red even further?  Supposedly the other 29 owners are paying for the Hornets operation right now... so if they lose 30 million this year while being a lotto team... that's money out of the pocket for the other 29 NBA owners.  And as Dan Gilbert explained... it SAVES the Lakers money.  That's actually relevant, because it allows the Lakers to pay less luxury tax (and once again taking money away from the other 29 teams that are footing the bill for the Hornets).

     

[PosImpos]

I think you've done a good job breaking down exactly why this trade didn't make sense for the Hornets.

I think it's fair to openly criticize the league, and quite harshly, for doing such a terrible job of framing their reasoning for vetoing the deal.

As you've done here, one can lay out a very compelling argument for why this deal would make the Hornets much less attractive to potential buyers, while not making them anything more than what they already were -- a borderline playoff team.

The problem is that the NBA chose to cite "basketball reasons" as their justification for vetoing the trade; to make matters worse, Dan Gilbert's e-mail to Stern urging the veto of the trade makes no mention whatsoever of the trade in terms of the Hornets' interests -- either financial or basketball-related.  

This makes it seem like the trade was vetoed mainly because the owners really didn't want to see the Lakers snatch the best point guard in the league from a struggling small market franchise after they locked out the players for 5 months, partly because of "competitive balance."

This news broke late and I believe the NBA was locked in on board meetings.  I expect a statement of some sort tomorrow.  "Basketball reasons" is a poor excuse, but I'm not sure how you explain "financial reasons" without alienating the fans.   It's a tricky situation... how do you explain to Joe Average that the NBA didn't want to take back the best talent possible for the Hornets, because the Hornets have been losing money every year and this was going to drop them into the red even further?  Supposedly the other 29 owners are paying for the Hornets operation right now... so if they lose 30 million this year while being a lotto team... that's money out of the pocket for the other 29 NBA owners.    

Perhaps it would have been difficult to frame it that way, but it's hard to believe that the reaction would have been worse than the one they got to "basketball reasons."  I certainly can't blame members of the media for pouncing on that ridiculous statement released from the league and demanding something more.  When you do something as bold, important, and immensely controversial as the NBA did in vetoing the Chris Paul trade, you have to be prepared to very carefully justify it and manage the way it is represented, even in a short time frame.  The NBA failed miserably to do that.

You certainly won't get any argument from me, though, that it didn't make sense for the Hornets to take on so much salary, and the other league owners were well within their rights to stop such a trade if they thought it would affect them negatively financially.

An individual owner can make the choice to be competitive at the expense of the bottom line, but it would be unreasonable to expect the 29 owners of the teams that compete against that team to make a similar sacrifice.  It simply wouldn't be in their own best interests -- or in the interests of the league, since the league wants the Hornets to be sold as soon as possible.

[chambers]

excellent post, TP.

[LarBrd33]

I asked Eric Pincus of Hoopsworld about this (he's the only person who seems to be awake right now) and here was his series of twitter response:

actually there is a separation between ownership of hornets and decision-making to avoid collusion - so no that's not accurate

Jac Sperling was set up as governor to decide those items independent of NBA ownership - with authority to authorize $

otherwise nba ownership breaks cba collusion clauses if they're making basketball decisions

this move was done under commish veto power - outside and required to be separate from hornets decision-making process

where it may break down for owners - is Gilbert's letter showing that it may be collusion leading to stern veto

So that's interesting.  I still say my logic is sound, but if the NBA gave Jac Sperling power to make these decisions and then overruled it... perhaps legal action awaits.

[JSD]

I keep reading this garbage that the NBA "vetoing" a trade is "unprecedented" ... That's because the media refuses to represent this story accurately.  

Dell Demps didn't have full authority to make trades.  He merely has the ability to come up with trades and then present these proposals to his ownership group for approval.  He liked this Laker trade... his ownership group (the NBA) didn't.  

Had this trade gone down the Hornets would be on the hook for the following players:

Emeka Okafor = 12 mil + 2 years
Trevor Ariza = 6.8 mil + 2 years
Jarret Jack = 5.2 mil + 1 year
Marco Belinelli = 3.4 mil
Quincy Pondexter = 1.1 mil
Lamar Odom = 8.9 mil
Luis Scola = 8.6 mil + 3  years
Kevin Martin = 12 mil + 1 year
Goran Dragic = 2.1 mil


That's 9 players and 60 million of salary already (over the salary cap).  That's a lot of money to commit to a lottery team.  It's very important to note that the NBA is attempting to sell the Hornets.  Saddling the prospective new Hornet owners with all that additional cost isn't going to improve their ability to sell the team.  So apparently Dell Demps is horrible at his job... and the Hornets ownership (and the 29 other NBA owners who hold a share of the Hornets and have to foot the bill for this team and any potential losses) rejected the trade for what is seemingly financial reasons.  

Let me pause to reiterate that fact. The Hornets have been unprofitable for years... losing anywhere from 7-18 million dollars a year.  In what world does losing Chris Paul and adding an additional 16 million per year in salary make good business sense for the 29 other NBA owners who have to take a hit on this investment?

http://www.atthehive.com/2010/12/7/1862259/the-hornets-financial-statements-the-hornets-have-been-unprofitable

I was trying to think of a precedent for this.  Here's one.

2001-2002:  Boston Celtics make it to the Eastern Conference Finals.  Key players on that team were Pierce, Walker, Rodney Rodgers and Kenny Anderson.  You might remember that mid-season our GM (Chris Wallace) traded our #10 pick (Joe JOhnson) for Rodney Rogers.  Rogers, you might remember, was a solid player.  We sacrificed a key part of our future for him.  

In the offseason, it made perfectly logical sense that we'd re-sign Rodney Rogers.  Rogers wanted to sign here.  CHris Wallace wanted to sign him.  Remember, we gave up Joe Johnson so we could have Rodney Rogers for 27 games and a playoff push... obviously we NEEDED to sign this guy.  

Unfortunately... Paul Gaston, our owner, was in the process of trying to sell the team and was brutally adamant against exceeding the luxury tax.   The GM, Chris Wallace, wanted to sign Rodgers.  Ownership vetoed it.  Paul Gaston apparently felt that having a luxury tax team would be an unnecessary financial burden and would make the team less attractive to potential buyers.  This was despite the fact that re-signing Rodney Rogers was the obvious best move at the time.   There's your precedent.  Long story short, Wallace scrambled to find a "3rd scorer" and gave up Kenny Anderson (and Vitaly Potapenko) for an alcoholic (Vin Baker) while staying under the luxury tax... the team was sold in 2003.  

What's the difference here?  The Hornets ownership is acting like Paul Gaston here.  They see the price tag on these players and feel it's not worth the financial burden and would make the team less attractive to potential buyers.  The NBA "Vetoing" this trade is no different than Paul Gaston "vetoing" the Rodney Rogers re-signing, imo.  

The media keeps spinning it like the NBA meddled in the affairs of the Hornets and it's blatantly untrue.  Demps came up with a trade that arguably made the most "talent" sense  (same as Chris Wallace wanting to re-sign Rodgers), but sometimes that conflicts with the business motives of ownership.

BTW I'm sure there are COUNTLESS other examples of an ownership group refusing to approve a trade their GM has tentatively agreed to.  Unfortunately the media reported this Laker/hornet trade before it was even presented to the Hornets ownership... and now they are milking this story for drama, ratings and controversy

Well thought and informative. One from me too.

LarBrd33, you should be an investigative reporter. You convinced me Michael jackson was innocent and now this.  

[LarBrd33]

lol jsaad... well I'm just going on instinct on this one, but apparently the NBA actually DID have someone who was designated as the "owner" role (Jac Sperling) and supposedly he DID approve this trade... So I'm not really sure what to think at this point.  The reason for the NBA owners rejecting this trade makes sense, but I'm not sure exactly how much authority they had given Jac Sperling and whether or not they really had the power to "veto" his decision.  Guess we'll find out later today. 

[Who]

I asked Eric Pincus of Hoopsworld about this (he's the only person who seems to be awake right now) and here was his series of twitter response:

actually there is a separation between ownership of hornets and decision-making to avoid collusion - so no that's not accurate

Jac Sperling was set up as governor to decide those items independent of NBA ownership - with authority to authorize $

otherwise nba ownership breaks cba collusion clauses if they're making basketball decisions

this move was done under commish veto power - outside and required to be separate from hornets decision-making process

where it may break down for owners - is Gilbert's letter showing that it may be collusion leading to stern veto

So that's interesting.  I still say my logic is sound, but if the NBA gave Jac Sperling power to make these decisions and then overruled it... perhaps legal action awaits.

I had forgotten all about that.

Has anyone heard anything from Jac Sperling? Has he made any public comments about this whole thing?

He should be having regular conversations with Dell Demps about what type of trade package to pursue in trading Chris Paul. And if he wasn't before, he sure as heck should be doing so now.

[Q_FBE]

The real solution is to contract the six most unprofitable teams and redistribute the talent through player auctions under the rules of the CBA amnesty clause. That way you have 24 healthy franchises going forward and stiff competition for the top teams in this league.

[MBunge]

This trade was made by NOH because they're operating under the instruction that NOH be kept as good as possible RIGHT NOW.  In what other context does it make any sense to trade CP3 and get back older players and more salary?  Any other management would have seen the Celtic offer of young players, less salary and draft picks as more attractive because it gives them the chance to get better in the future.  But the NBA guys put in charge weren't told to care what the Hornets are like 4 ro 5 years from now, they were supposed to care about the value of the team in the short run so the league can sell it.

Mike

[celtsfan84]

It is also pretty unfair to judge this trade without seeing what other moves were in mind.

Los Angeles would have used the $9 million trade exception, almost certainly.  To assume that the Lakers would have avoided $20 million in taxes (like Gilbert does) is to assume that they had no other moves in mind.

New Orleans could have moved Scola and Odom at later times.  Odom in particular has a partially guaranteed year coming up which would have made him valuable to contending teams or teams cutting payroll.

Houston apparently wanted to sign Nene and put him in a frontcourt with Gasol.  Interesting.  I think still a flawed move for them (the real culprits here) but interesting.

[LarBrd33]

I asked Eric Pincus of Hoopsworld about this (he's the only person who seems to be awake right now) and here was his series of twitter response:

actually there is a separation between ownership of hornets and decision-making to avoid collusion - so no that's not accurate

Jac Sperling was set up as governor to decide those items independent of NBA ownership - with authority to authorize $

otherwise nba ownership breaks cba collusion clauses if they're making basketball decisions

this move was done under commish veto power - outside and required to be separate from hornets decision-making process

where it may break down for owners - is Gilbert's letter showing that it may be collusion leading to stern veto

So that's interesting.  I still say my logic is sound, but if the NBA gave Jac Sperling power to make these decisions and then overruled it... perhaps legal action awaits.

I had forgotten all about that.

Has anyone heard anything from Jac Sperling? Has he made any public comments about this whole thing?

He should be having regular conversations with Dell Demps about what type of trade package to pursue in trading Chris Paul. And if he wasn't before, he sure as heck should be doing so now.

I stick by my original points.  It doesn't sound like Jac Sperling has any legal authority to be the final say on anything. 

"Silver said the league has relied on team chairman Jac Sperling, Hornets president Hugh Weber and Demps to make sound judgments. But he said the buck stops with the NBA front office and the league has the "final, final say" on New Orleans' transactions."

"When the NBA acquired the Hornets last December, Stern said, "Actually, the league generally approves all trades, number one. And number two, as far as we're concerned there have been — while this process has been going on — there have been two significant transactions. And our response to both of them was, 'You guys are management, you understand your budget and your instructions, just go ahead, because we've got Jac Sperling, Hugh Weber here, and if they recommend it, then we're going to be approving it.'

But when asked about dealing with free agents and big contracts, Stern said at the time, "That's a bridge that we're not planning to cross today because right now there are no free agents that I'm aware of and there won't be free agents until July 1 or a new collective bargaining agreement. So we'll deal with the team and all the other issues in that context."""

And the statement today:

""Since the NBA purchased the New Orleans Hornets, final responsibility for significant management decisions lies with the Commissioner's Office in consultation with team chairman Jac Sperling. All decisions are made on the basis of what is in the best interests of the Hornets. In the case of the trade proposal that was made to the Hornets for Chris Paul, we decided, free from the influence of other NBA owners, that the team was better served with Chris in a Hornets uniform than by the outcome of the terms of that trade.""

So unless the league is lying, Jac Sperling is nothing more than a consultant.

[LarBrd33]

I exchanged a couple more tweets with Eric Pincus and he seems to insist this is all spin and essentially is saying that Jac Sperling had full legal authority to make decisions on behalf of the league and the 29 other owners who foot the bill for the Hornets.  If that's the case, I'd have to suspect this is locked down somewhere in writing, and David Stern could go down in flames for vetoing a trade he had no power to veto.

So who is spinning this?  The NBA or the media?  You decide.