On David Stern's Decision to Not Approve the Chris Paul Trade

As you may have heard, the Lakers made a trade offer for Chris Paul to Hornets GM Dell Demps yesterday. After including Rockets GM Daryl Morey in the transaction to include the right combination of players to satisfy the needs of all involved parties, the Lakers (presumably with the approval of team GM Mitch Kupchak and recently hospitalized owner Jerry Buss), Morey and Demps all agreed to make the deal.

At this point, the news of the blockbuster move (which reportedly would have sent — perhaps among other assets — Paul to Los Angeles, Pau Gasol to Houston, and Lamar Odom, Kevin Martin and Luis Scola to New Orleans) was leaked to the media. For hours, Twitter and ESPN and all the other sports media outlets reported a completed deal.

Then, at some point — and I’m definitely not purporting to know the time line or exact events that occurred during this process — David Stern said New Orleans would not be doing the transaction.

This is where things get murky and all the outrage is stemming from.

See, Stern is the commissioner of the league. And the league owns the Hornets.

The 29 other teams each put up an equal stake to purchase the franchise in December 2010 from a debt-laden ownership group led by George Shinn, who was unable to find a local buyer for the team he wanted to sell. So Shinn approached the league suggesting that they buy the Hornets. He wanted to be out from under the burden of ownership — and a presumably a huge chuck of money — and had exhausted the possibility of finding anyone in New Orleans willing to pay the price he was asking.

Especially following the fiasco that was the Sonics relocation to Oklahoma City, the NBA (and, at least when speaking publicly, Shinn) believed that keeping the Hornets in New Orleans was a priority. So it came down to either the NBA buying the team or Shinn opening the bidding for his franchise nationwide, which would presumably include suitors who, like Oklahoma City Thunder owner Clay Bennett, would be buying the team with the intention to relocate it to a location where it is easier to run a profitable professional basketball franchise (like perhaps San Jose, Kansas City, Anaheim, Chicago, Las Vegas or, somewhat ironically, Seattle.)

So the league told the owners about all this and got them all to agree to pony up enough money to pay 1/29th of the price Shinn demanded for the Hornets. Just like that, the NBA owned the team. And under the stewardship of the league — not to mention a lease with Louisiana and a hefty re-location fee that from the NBA on any buyer who wanted to move the team — it seemed as though the process of finding an owner in New Orleans could continue along a time line that did not include the financial pressures that massive credit financing imposed on the Shinn ownership group.

“I wanted to ensure that the team remained in New Orleans, if that was possible, and recognized that the league could provide the necessary funding while a new owner was sought in New Orleans and negotiations with the city and the state could continue,” Stern said.

But the major question presented by the Chris Paul trade fiasco is not who owns the team; it’s who runs the team. Ultimately, the league and David Stern can step in and micromanage any aspect of the team’s operations. But should they? More importantly, throughout the duration of the league ownership, the league has maintained that the day-to-day operations and decisions would be made by the Hornets’ managemenn team in place at the time of the sale (Demps and Hugh Weber) and the league-appointed top boss, Chairman Jac Sperling.

On December 6, as the league was in the process of buying the Hornets, Stern said the following during a media conference call. [Quote marks added by me.]

while this [league takeover] process has been going on, there have been two significant transactions [made by the team]. 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.

That certainly sounds like a commissioner stating that management has autonomy. As far as I know, there aren’t any GMs across the league who are allowed to make major transaction (or, for some, any transactions) without consulting their owners. I don’t believe, for Larry Bird can just say “I’m trading Danny Granger for Al Jefferson” and not at least run it by Herb Simon. He probably can, however, sign Jeff Pendergraph to a low-salaried two-year deal without anything more than a courtesy call/email/text to Simon so the owner doesn’t have to read about it on the internet.

So a large issue here, to me, is whether or not Demps should be able to make a major, franchise-altering deal with Los Angeles/Houston with only the approval of his immediate supervisors, namely Jac Sperling. If Sperling gives the OK, which he reportedly did, should the trade be done? Or do they have to consult the true owner of the team, the league and, effectively, Stern?

Stern, by words and all previous actions, to my knowledge, had been hands off with team management. I don’t believe he was engaged in the decision to, for example, trade Marcus Thornton for Carl Landry last season. To my knowledge, the league office and Stern found out about that decision the same way they found out about, say, the Jermaine O’Neal trade to Toronto: the teams agreed to a transaction and sent the particulars to the league office for processing. Stern did not get a call from Sperling telling him about the Landry acquisition and say “that sounds pretty good, but try to get them to throw in a second-round draft pick.” He was not involved in the decision in any way.

So there is, to my knowledge, no precedent for Stern serving as the de facto owner of the Hornets when it comes to player personnel decisions. I could be wrong. And I don’t know to what degree Stern has been involved with other aspects of managing the team. I would expect that Stern, via his marketing and sales teams, have had some input into things like season ticket sales strategy. Those types of matters would directly impact the finances of the team in a way that payroll does not.

But many would reasonably argue that Stern should have no role in player personnel decisions. They are arguably “below his pay grade.” Try to improve the team’s overall finances in things that occur off the court, but give the basketball operations staff the autonomy over decisions related to winning basketball games — which are what trades and free agent signings are by and large.

The flip side to all this is whether trading Chris Paul, the best and most important player in Hornets franchise history, is just a player personnel decision. It is also reasonable to suggest that the fate of Paul could significantly impact the valuation of a team that someone higher up than Sperling is responsible for overseeing.

This certainly seems to be the argument that Stern has made in his official statement on the current uproar over the proposed Chris Paul trade.

“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.”

Whether or not he is correct in his assessment of how keeping Paul, especially now after all the fallout, will effect the team’s valuation is really not all that significant. You can look at that either way. Mark Haubner, an excellent basketball writer from The Painted Ares, questions Stern’s logic.

if there’s one team that got screwed over today, of course it’s the team the NBA owns, the New Orleans Hornets, in one of the league’s smallest markets. Now they apparently can’t trade Chris Paul, and are presumably stuck with him for a lame-duck season, in which the story of the blocked trade will follow him and the franchise around all year, at the end of which, New Orleans will end up with no compensation. This helps increase the value and facilitate the sale of the Hornets how?

Compelling argument.

And that’s what everyone else is doing today: questioning Stern’s logic. But not about how the proposed Paul trade — or how the effect of the Paul trade being called off — affects the team’s valuation. No, people are questioning how Stern thinks he can the right to interfere with the personnel decisions of a management team we were all under the impression was authorized to direct basketball operations autonomously. People are questioning if the league is now effectively run by an irate, stubborn group of small market owners who demanded that the Los Angeles Lakers, of all teams, not be allowed to employ the best point guard since Magic Johnson. People are questioning if the league is rigged.

What gives Stern the right to do this? Well, the sale of the team to the league is what gives it to him.

The question is whether or not he should have exercised it.

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Tags: Chris Paul David Stern New Orleans Hornets

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