Saturday, December 31, 2011

Reading Between The Lines - Hardwood Hype's 2011-12 Eastern Conference "Preview"

Would it be a Hardwood Hype “preview” if its completion arrived before the season’s second week?

In my defense, the last eight days have consisted of four airports, three cities (one being Las Vegas) and roughly three dozen friends and relatives. Please cut me some slack. Thanks.

In keeping with the theme of last week’s Western Conference preview, in which my predictions were made relative to the gaming market’s expectations for each team’s performance in the coming season, I have, mentally at least, headed back East. Despite the belated arrival of this post, be assured that none of what you are about to read benefits from hindsight, as each over-under call was made no later than December 22 and has not been altered.

Thursday, December 22, 2011

Reading Between The Lines - Hardwood Hype's 2011-12 Western Conference Preview

In the days leading up to a typical NBA season, in addition to the standard curriculum, I turn to the dark arts, comparing my opinions on each team to the prevailing betting line for regular season wins. This allows me to organize my disparate thoughts and “assess the market’s assessment” of a given team heading into the new campaign.

We are currently on the eve of yet another new NBA season, one cobbled together after a harrowing glimpse into a narrowly averted abyss that is simultaneously etched permanently into the forefront of our collective memory and fading rapidly in the rearview. The absence of a traditional offseason- summertime free agency, summer league and month-long training camps- has stuffed five months of preparation and hot-stoving into 16 days (12 down…).

As a result, hoops junkies, no less opinionated than before, but now comically short on prep time, have sprung into action, assessing the potential impact of every signing and trade that was (or was not), forecasting the NBA-readiness of incoming rookies and projecting the development of young players already in the league. I (like you, presumably) have spent the past two weeks immersed in this crash course, reading along- I’ve particularly enjoyed the previews from Ball Don’t Lie; and for great team-specific analysis, check out any of the sites here- learning the whos, whats and wheres, allowing the hows and whys to crystallize

Longer-time readers of the site may recognize this format from last year. However, given a lack of lead time, thanks both to the NBA and my personal commitments, rather than devoting an entire post to each team, the 2011-12 installment, like the NBA regular season itself, has been condensed.

First up, the Western Conference: 

Thursday, December 15, 2011

On David Stern And Bad Influences

An obscenely intelligent and forward-thinking man, there was a time when David Stern was, above all else, the one of the greatest commissioners in professional sports. These days, however, that title seems a distant memory, with his role as CEO of a multi-billion dollar corporation trumping all that pertains to the actual game he oversees. He no longer chooses to consort with longtime, team-first owners, the Jerry Busses and Jerry Reinsdorfs of the world, preferring instead to align himself with captains of industry, hedge fund managers, venture capitalists, buyout king, and whatever Robert Sarver is- individuals well-versed not only in the science of running large enterprisesat a profit, but also the art of finding new and creative ways to squeeze cash out of them.

With the most successful of front offices traditionally keeping closer tabs on standings than income statements, NBA teams have not historically been paragons of financial efficiency. However, despite presenting challenges for those in search of consistent profitability, team ownership has long been seen as an avenue to massive long-term financial gain and apparently- as we learned in the months preceding and encompassing the lockout- a means to further other ventures and a safe haven for technically-legal financial chicanery.

As has been the case with countless inefficient markets comprised of valuable assets, the NBA is now a playground for financial engineers. What’s resulted is fascinating, if simultaneously infuriating. Always seen as the most stage-managed of the sports’ insular old boys clubs, the NBA is now a near-perfect microcosm of the world's corrupt oligopolies. There is the appearance of a general rule of law, and economic and human rights rules are followed sufficiently to justify continued relations, but, from the manner in which the Seattle Supersonics became the Oklahoma City Thunder, to disputed claims of financial distress that led to, and prolonged the lockout, to the inexplicable veto of an agreed-upon trade of Chris Paul to the Lakers, it's clear that business-as-usual is pretty shady.

David, these people are not your real friends.

Hopefully enough of these increasingly public moments of scorn and shame, and, more importantly to individuals unaccustomed to prying eyes examining the means by which they accumulate their immense wealth, the realization that nothing truly happens behind closed doors anymore will affect some change.

Most importantly, however, the NBA’s ultimate saving grace, if there is to be one, from the cold world of the mercenary financier, will be, ironically, the financial ruin of some of its teams. Barring the unforeseen, the mirage of an NBA team as a market-beating investment will soon begin to fade. It’s tough to envision an environment in which NBA franchises will justify their recent sale prices, let alone continue to appreciate at a better-than-market rate. Consider for a moment the figures associated with the July 2010 sale of the Golden State Warriors:

Bought by Chris Cohan in January 1995 for $119 million, the Warriors- and their monopoly on Bay Area NBA hoops- were sold to Joe Lacob, a managing partner at Kleiner Perkins (early investors in Google, plus 150+ companies that have gone public), and Peter Guber, chairman of Mandalay Entertainment, in July 2010 for a record sum of $450 million. Pretty good, right? Well…

Yes, Cohan did nearly quadruple his investment in just over a decade and a half, but his money compounded at just 8.67%, or roughly .75% more than the risk-free return on a 30-year U.S. Treasury bond purchased at the start of 1995. Should the value of the team (ignoring the probability that it has already dipped below purchase price) continue to compound at the same rate for the next 10 years as it did for the aforementioned 16, Lacob and Gruber would be able to unload the Warriors for $1.03 billion.

Let’s be real. I don’t care how great the fan base is, nothing less than hyperinflation makes the Warriors a billion-dollar business within a decade. Do these guys seriously believe that within a decade, the Warriors, the one playoff appearance and more wins than only the Clippers in 17 years Golden State freaking Warriors are going to be worth over a billion dollars?

As I have pointed out in the past, such returns simply will not fly in the world of illiquid investments- in which the return demanded by investors seldom dips below 20%, and commonly approaches 30%. Additionally, the strong-arm tactics likely to be employed by owners whose teeth were cut in the brutal world of private equity will alienate customers in an emotional, fan-driven business, causing returns to dwindle further.

If this scenario plays out, it’s a safe bet that the value of non-marquee teams will drop, triggering if not panic sales, at least second thoughts from these top-of-market buyers. As with any market, asking prices will need to fall to the point of equilibrium or (and?) the number (supply) of teams must fall to the point where scarcity justifies purchase price (demand), driving buyers that targeted teams strictly as investment vehicles from the market, in search of greener pastures.

And it will be for the best.

Because, in the midst of this rambling mess, I came to a sad realization- back in the day, I think this Stern would have told Red Auerbach to fuck off.

Friday, December 9, 2011

The Blockbuster That Wasn't

From time to time, events in the world of pro hoops (I’m sure it happens in all other walks too) conspire to trigger a deluge of response for which the internet was seemingly created. Yesterday epitomized this.

During my lunch hour, rumors of the Knicks Dolin’ out near-max money for Tyson Chandler in hopes of luring Chris Paul to Manhattan dominated the conversation. In the early evening, as I prepared to go out to dinner, I was struck by the euphoric jolt of “Chris Paul to the Lakers.” Dinner, at a local all-you-can-eat/drink sushi spot, was when the bubble burst, as first my brother in law, and then Twitter, informed me that a well-past-his-prime dictator, with the prodding of a whiny narcissist whose considerable fortune was paid for (at least in part) with the sweat of foreclosed one-time homeowners, had blocked the deal. Suffice it to say, my wife was NOT happy about this hijacking of our meal, as I continued to consume copious amounts of sake, though no longer in a celebratory mood.

At about 1:00 am, fueled by prepaid booze and the collective rage of the NBA masses, and moments from finding myself in central booking at “Twitter jail,” I elected to throw caution to the wind and pump out a sake-soaked tirade. Upon recognizing that I’d be unable to do so without veering wildly into the “dark place,” I shelved the idea. Fortunately, at that point fellow Laker fan and Twitterer J. Dana Teague (@teaguejd) mentioned that the events of the evening had compelled him to put some thoughts on paper. I invited him to share them here:

Last night the Lakers traded for Chris Paul. That's what should have happened. A 3-team deal was agreed upon by the Rockets, Lakers, and Hornets. The Lakers gave up Lamar Odom and Pau Gasol in return for Chris Paul and either Emeka Okafor or a TPE. The Hornets got Odom, Luis Scola, Kevin Martin and Goran Dragic from Houston, and draft picks, which isn't at all a bad haul, and can be traded to other teams for young talent/more picks. The Rockets got Gasol, dropped $3.5 million below the salary cap and were in position to make a play for Nene.

Was it the best deal the Hornets could have gotten? No. A trade with the Clippers, Warriors or Magic would have made more sense. Was it a fleece job on the scale of the Miami sign-and-trade for Chris Bosh or (at the time) the Lakers' 2008 trade for Gasol? Not in the slightest. Chris Paul wasn't necessarily the best fit in LA, and it would have gutted the Lakers roster. I'd rather they trade for Dwight Howard, or flip Gasol for a similar package to the one the Rockets were sending to New Orleans.

Plus, the Lakers gave up their only useful power forwards (both very good), and effectively stripped themselves of their greatest strength, their vaunted front court. They tied their fate to 3 players who have problematic knees, during a compressed season. Gambling on Andrew Bynum, Kobe Bryant, and Chris Paul to play effectively through a schedule as brutal as this season’s is a HUGE risk, and was no guarantee of a title. It was a ballsy move, similar to the one Otis Smith made last season by trading for Gilbert Arenas. One last swing for the fences. 

Saturday, December 3, 2011

These Are The Moments... The Toronto Raptors

On Tuesday night, podcast pioneers and renowned Toronto Raptors fans, The Basketball Jones made it to New York City for the latest stop on their now month-old No Season Required tour. In addition to attracting an excellent crowd of hoops junkies and putting on a great show, The Jones’ visit got me thinking about Raptors highlights. It's time to give this series some Nothern exposure.

Fans of the Toronto Raptors have a fascinating relationship with the spectacular. With the possible exception of their counterparts from Cleveland, no NBA fan base has been privy to more jawdropping, out-of-your-seat “holy shit!” moments from which they’d now like to distance themselves.

Long before LeBron’s public flogging of Cleveland, Vince Carter, in his own special way, was doing a number on Raptor fans. If “The Decision” was a bomb that rocked Northeast Ohio, Vince was a slow-burning chemical fire. From an untimely commitment to educational milestones in 2001, to "Wince" Carter's frustratingly long spells in street clothes, to the adoption of a step-back, fadeaway 3-pointer (lest the greatest dunker of all time be known as such), to the admitted tanking of the 2004-05 season in a (successful) attempt to orchestrate a pennies-on-the-dollar move south of the border, Vince did an incredible job of bastardizing as spectacular a body of work as has ever been seen in the NBA. By the time he’d closed the book on his days at the Air Canada Centre, it’s fairly safe to say that neither side was particularly interested in reliving the era in which he assembled his staggering dunk catalogue.

Thing is, in spite of Vince’s douchebaggery and the broken hearts left in his wake in Toronto, no comprehensive review of the greatest highlights in NBA history, let alone Raptors history, is possible without a dusting of…