Tuesday, December 13, 2011

David Stern – NBA Gatekeeper

David Stern is in the home stretch as NBA commissioner, a role he has served in since 1984. His association with the NBA dates back to 1966 as an outside counsel, officially joining the NBA in 1978 as General Counsel. He became the league's Executive Vice President in 1980.

The last few months must seem like a roller-coaster ride to Stern. A prolonged NBA lockout cost the NBA the first two months of the 2011-12 season.

The last few days have seen Stern at the center of a firestorm, a crisis many NBA media pundits believe Stern brought upon himself when he vetoed a trade of NBA All-Star Chris Paul from the New Orleans Hornets to the Lakers. The NBA owns the Hornets.

“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,” Stern said in the statement. “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.”

Stern’s decision set somewhat of a precedent. The National Hockey League has owned the Phoenix Coyotes for the last three NBA seasons. Gary Bettman’s support for the Coyotes is unwavering but he hasn’t stepped into the day–to-day affairs of the Coyotes.

Major League Baseball owned the Montreal Expos after Jeffrey Loria sold the Expos for $120 million to Major League Baseball. There are more than a few Expos fans who believe MLB commissioner Bud Selig may have run the Expos out of Montreal, but Selig didn’t interfere in the day-to-day management of the team.
Stern’s vetoing the Chris Paul trade appears to have had more to do with comments a number of NBA owners “shared” with Stern.

"The message is we went through this lockout for a reason," Dallas Mavericks owner Mark Cuban told ESPN Dallas 103.3 FM. "Again, I'm not speaking for Stern. He's not telling me his thought process. I'm just telling you my perspective, having gone through all this. There's a reason that we went through this lockout, and one of the reasons is to give small-market teams the ability to keep their stars and the ability to compete.

"I wouldn't have been happy, but I would have understood because it was a conversation a lot of owners had long before the Laker deal was consummated," Cuban said. "It was like, 'Look, sure, I'd love him. Give [Paul] to me in a heartbeat.' But the whole idea of the lockout was to prevent stuff like that.

"Players will always have the right to choose what they want to do as a free agent, but the players agreed to rules that said, 'You know what? Let's give the home team, the incumbent team, an extra advantage.' And that's how the rules were designed. I think they're going to work."

The Mavericks are the defending NBA champions. Most of the Mavericks championship team are back to defend their title, and in a truncated 66 NBA schedule the Mavericks are one of the NBA’s pre-season favorites. Cuban isn’t exactly an objective observer when it comes to the Lakers becoming a much better basketball team.

But the Coup de grâce belongs to Cleveland Cavaliers owner Dan Gilbert who is still feeling the sting a year after LeBron James “took his talents to South Beach.” Gilbert sent Stern an email that read:


It would be a travesty to allow the Lakers to acquire Chris Paul in the apparent trade being discussed.

This trade should go to a vote of the 29 owners of the Hornets.

Over the next three seasons this deal would save the Lakers approximately $20 million in salaries and approximately $21 million in luxury taxes. That $21 million goes to non-taxpaying teams and to fund revenue sharing.

I cannot remember ever seeing a trade where a team got by far the best player in the trade and saved over $40 million in the process. And it doesn't appear that they would give up any draft picks, which might allow to later make a trade for Dwight Howard. (They would also get a large trade exception that would help them improve their team and/or eventually trade for Howard.) When the Lakers got Pau Gasol (at the time considered an extremely lopsided trade) they took on tens of millions in additional salary and luxury tax and they gave up a number of prospects (one in Marc Gasol who may become a max-salary player).

I just don't see how we can allow this trade to happen.

I know the vast majority of owners feel the same way that I do.

When will we just change the name of 25 of the 30 teams to the Washington Generals.

Please advise...

Dan G.

The letter is remarkably misguided on Gilbert’s part.

It’s embarrassing the NBA still owns the Hornets; it may or may not be wrong that David Stern believed he had to intercede in the day-to-day operations of the Hornets, but it’s silly to even suggest the 29 NBA owners are going to vote on whether or not the Hornets can make a trade.

Good ownership focuses on hiring the right personnel and putting the right management in place to make the best decisions. Jerry Jones and the late Al Davis more often than not hurt the Dallas Cowboys and Oakland Raiders respectively when they served as their teams’ general managers.

In a report published by ESPN’s Larry Coon, author of the NBA Salary Cap FAQ, he offered this regarding Gilbert’s reference to the $21 million that wouldn’t be heading to the league if Paul was traded to the Lakers.

Coon pointed out “the system is supposed to decrease spending, yet owners like Gilbert rely on teams like the Lakers continuing to spend like they used to -- because the proceeds from the luxury tax go to teams like the Cavs. Gilbert is using his position as part-owner of the Hornets to implore Stern to exercise his power as the fiduciary of the Hornets to make a ruling.

The NBA hired Jac Sperling to be the Hornets team chairman to avoid a conflict of interest on the NBA’s part in the day-to-day management of the Hornets. Paul can become a free agent after the 2011-12 season. He had made it clear he has no interest in signing a contract extension with the Hornets.

The question that begs to asked “if the Hornets are going to lose Paul to free agency at the end of the 2011-12 season is it in the best interest of the Hornets to trade Paul and receive something in return?”

The answer would appear to be simple. Yes it makes sense for the Hornets to make the best possible trade they can for Chris Paul,

Did David Stern overreach his mandate as NBA commissioner in blocking the trade?
During the 1976 season, Oakland A's owner Charlie Finley tried to trade closer Rollie Fingers and outfielder Joe Rudi to the Boston Red Sox and pitcher Vida Blue to the New York Yankees only to have Commissioner Kuhn block both deals because they were "not in the best interests of baseball." Kuhn did the same thing the following year after Finley tried to deal Blue to the Cincinnati Reds.

The dawn of free agency was set to begin for Major League Baseball and Finley tried to sell the players he knew he would lose through free agency.
What the Hornets wanted to do was trade Chris Paul and attempt to make their basketball team better in the long run.

The NBA’s other 29 owners aren’t in the business of owning 1/29 of the New Orleans Hornets. If the management team the NBA put in place to manage the day-to-day affairs of the Hornets believed it was in the best interests of the Hornets to make the trade in order to improve the team, the NBA had no business interfering in the trade.

Clearly Mark Cuban had a conflict of interest. He doesn’t want to see the Lakers become a better basketball team. The Lakers would represent more of a direct threat to the Mavericks if the trade had been made.

Clearly Dan Gilbert was more concerned about the luxury tax the Lakers wouldn’t have to pay if the trade had been made, and that’s another conflict of interest.
David Stern’s vetoing of the trade isn’t his finest hour as NBA commissioner. It’s embarrassing and suggests the NBA doesn’t have a great deal of faith in the people they’ve entrusted to run manage the Hornets.

For Sports Business News this is Howard Bloom

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