Chris Paul at the Deadline?

[shrink]

It sounds like I've been hitting the egg nog a little early and that I have visions of sugar plums dancing in my head, but I think there is legitimate chance that MIN could acquire Chris Paul by the deadline. But it involves two questions:

QUESTION ONE: WOULD THE HORNETS TRADE CHRIS PAUL?

The cynic says, "Of course not. He's their star and they need him to draw in fans. Might as well fold the franchise if they have to trade Paul!"

Well, only the last part is true.

Let's take a look at their attendance:

2002-03 15,610 19th in NBA 91% of arena
2003-04 14,332 29th in NBA 83% of arena
2004-05 14,221 30th in NBA 82% of arena
2005-06 18,168 (OKC/NOH)
2006-07 17,833 (OKC/NOH)
2007-08 14,181 26th in NBA 82% of arena
2008-09 16,968 19th in NBA 99% of arena
2009-10 14,803 24th in NBA 87% of arena

In 2002-03, we were seeing the tail-end of the novelty factor. When an NBA franchise comes to town, fans buy tickets, whether they win or lose, but after enough losses, (2003-05), the team gets down to its more realistic numbers, and the Hornets were at the bottom. I dismiss the two years with OKC (novelty factor again), and look at 2007-08. The team was projected to lose $20 mil, but late season success and extra play-off games were enough for them to break even. However, now as they plunge back into mediocrity this year, we see the Hornets attendance dropping like a stone.

Unfortunately for NOH, the Hornets cannot afford this. Their revenues are declining drasticly just as their expenses continue to mount. $20 mil in losses may be a happy estimate. Shared NBA revenue is down, New Orleans is one of the smallest NBA markets, and even with a winner, they couldn't even charge the same prices for tickets that the average NBA city could -- fans just won't pay that much for tickets there.

Let's take a look at the owner, George Shinn. Can he afford a $20 mil loss? Glen Taylor, with a net worth of $2.1 billion, has the potential to weather a loss like that .. its less than 1% of his net worth. George Shinn's net worth? $100 million .. that's a one year loss of 20%, and no end in sight. Shinn has long-term contracts on several Hornet players and a payroll over the lux, in a city that can't withstand those numbers, even if people were buying tickets at 100% capacity. Worse, Charlotte has seen what Shinn does when a city loses interest in his team - its gone. Problem is, there aren't going to be any big cities or billionaire Russian investors to help Shinn pay the bills and keep the lights on.

Shinn has to get the team's payroll in line with what he and New Orleans can afford to pay. His longterm deals are nearly unmoveable, his young players, Hilton Armstrong and Julian Wright, have been awful this year and have no trade value to push a deal along. The only piece with the trade value to push out tens of millions of dollars is Chris Paul. It might lower their gate even farther, but it probably won't fall much below the 2002-2004 levels before Paul was electrifying crowds and the Hornets were last in attendance. They'll lose a little more revenue, but they'll cut a lot more expenses, both for now and the next few years.

[shrink]

QUESTION TWO: COULD THE WOLVES WIN THE AUCTION?

Most Chris Paul discussions I've seen focus on how many young assets a team would give up for Chris Paul. I think with three years of collecting, the Wolves could certainly be in any discussion on that front. However, as I've shown, what Shinn needs more than young assets is major cap relief, and Glen Taylor and David Kahn can outbid almost any team in the league there.

Imagine a three-way call negotiating the price for Chris Paul:

NOH: So what kind of offer will you give:

THIRD TEAM: OK, we can't pay you all in expirings, but how about we take Paul and Peja for , and include a prospect?

MIN: We'll do that. Our prospect is 2009 lottery pick Jonny Flynn. Lots of similar qualities to Chris Paul, high upside, likeable for your fans, and best for you .. locked into the very beginning of his rookie salary scale.

NOH: Can you guys do better?

THIRD TEAM: Well, we don't have Flynn, but we'll add in future 1st.

MIN: No problem. We'll take Posey too.

NOH: I'd really rather have Posey's $13 mil gone than some future pick.

THIRD TEAM: Wait, how about a more talented guy? Our second best player?

NOH: Hmmm .. well, he's got salary attached that makes things worse ... MIN?

MIN: How about we take back extra salary this year and give you a $4 mil TPE to get you under the lux? That'd save you an additional $12 mil.

THIRD TEAM: What? We can't do that! We don't have that kind of lux space! That only costs MIN $4 mil, it'd cost us $12 mil!

MIN: If necessary, you can have the UTA pick too, but that's probably just overkill.

[Worm Guts]

I still think they could expirings for Okafor and West, and they'd do that before trading Paul. I think that's the big question, what other ways do they have to cut salary.

[shrink]

This sets us up perfectly.

1. With Chris Paul, and Al Jefferson and Kevin Love, we become a very popular destination for a 2010 free agent.

2. If the free agent wants a max deal, he asks his team to make the best deal they can in a sign-and-trade.

3. Even without the FA's approval, MIN can use Peja's "now-expiring" deal, and pile on a number of those assets they've collected. Rubio. Sessions. Pekovic. UTA pick. CHA pick. The guy they drafted with 2010 MIN's lottery pick. It's not as much as valuable as raw cap space, but we can add in a ton of young assets that rebuilding teams like.

4. We roll out with a young team and a BOS-like rebuild:

Chris Paul
ELITE FREE AGENT/TRADE TARGET
Brewer, MLE
Love
Jefferson

We eventually go over the lux, but MIN fills the house and can charge a reasonable amount for tickets so we'd do OK.

[shrink]

I still think they could expirings for Okafor and West, and they'd do that before trading Paul. I think that's the big question, what other ways do they have to cut salary.

I agree its a last resort. But I don't believe they have another resort to try.

First, they were facing $20 mil in losses with normal attendance in previous years, before they drove that bus over the lux. They are trying to count backwards from $30 mil now.

Second, I don't think you can get expirings for Okafor, because he's declined the last 2 years. West could get them expirings. However neither obviously has the trade value to remove the piles of deadweight they've accrued. Even if they get rid of David West for expirings, they face the $30 mil hit this year. Next season, they have six players that cost them $60 mil, with a lux that will probably come in around $63. That's probably another $30 mil lost if they can maintain normal attendance.

Even if you shave $10 mil in savings somewhere at a time when NBA teams are leary to take on salary, Shinn can't afford to lose $50 mil in a 2 year period. That's the type of losses that make you start using the "contraction" word.

Granted it'd be no fun for NOH fans to have to start over, but that's better than losing the team. That is just how badly they've driven the bus, ignoring every red light, expensive contract, and financial information they've seen the last two years.

[fattymcgee]

I still think they could expirings for Okafor and West, and they'd do that before trading Paul. I think that's the big question, what other ways do they have to cut salary.

I think Worm Guts hit the nail on the head here. You need to quit dreaming about these unrealistic trades.

[shrink]

If the Hornets were even able to get expirings for Okafor, they'd have to trade both Okafor and West to stay fiscally solvent.

And without those two players, you could kiss Chris Paul good bye anyway. He's not going to stick around on a team that can't win any games at all.

[funkatron101]

If the Hornets were even able to get expirings for Okafor, they'd have to trade both Okafor and West to stay fiscally solvent.

And without those two players, you could kiss Chris Paul good bye anyway. He's not going to stick around on a team that can't win any games at all.

Shrink is right in this regard. It's only a matter of time when Paul asks for a trade, if the Hornets get rid of everyone around him.

The problem is, even with the Wolves assets, I think we are a longshot. And if we do manage to get him, will we even have any money left to get anyone else?

[cpfsf]

Wouldn't NOH want to get rid of Posey? His contract doesn't end until the summer of 2012. Seriously though, who trades for Songaila?

I see two other teams able to trade for Paul: GSW (don't laugh) and OKC. GSW could make a decent package including guys like Curry, Azubuike, Randolph, and/or Morrow. Plus they could trade Ellis or Biedrens (if NOH really wanted them, or they could trade them to a third team).

Oklahoma City could throw in guys like Westbrook, Green, Harden and plus they have two first round picks (their own and one from Phoenix). OKC has the expirings to make many trade scenarios work.

One thing I do like about trading for CP3 for Flynn (among other pieces), is that Rubio won't play until the 2012/2013 season (the year CP3 has a player option). So he's more than a decent insurance policy.

[shrink]

GSW has talent, but they only carry $11 mil in expirings. NOH can't afford to turn Chris Paul's value into talent -- they'd just have new guys they can't afford. They need to move Paul's $15 next year, and Peja's $14 mil next year and/or Posy/MoPete at $6+ each.

OKC carries about $15 mil in expirings. I can't see how they'd match enough salary to help NOH where it needs it.

MIN's carrying $23 mil in expirings, plus Gomes for another $4 in a partially guaranteed deal.

[Krapinsky]

I'm confused. If New Orleans can't afford their players why did they take on so much extra salary going into the year? How does one explain trading for Okafor and then Songalia?

[cpfsf]

I'm confused. If New Orleans can't afford their players why did they take on so much extra salary going into the year? How does one explain trading for Okafor and then Songalia?

stupidity

[shrink]

And if we do manage to get him, will we even have any money left to get anyone else?

Good point, and one I forgot to mention.

For as long as I've been here, I've been a huge proponent for the power that money holds over the NBA. I've been happy to see McHale atone for the sins of the past and create financial flexibility, and David Kahn following this same valuable theme. Right now, the NBA is becoming divided into the "haves" and the "have nots," and financial relief has never been more valuable.

I believe with this approach, cashing our expirings in trade now, rather than letting them become cap space, we gain a few benefits.

First, it would be difficult for a NOH top wait until after the trade deadline and eat the additional $12 mil in payroll and lux penalties. Once we're past the trade deadline, expiring deals can't be dealt. So there is time-value to using the expirings now.

Second, it avoids the uncertainty of being just "one of the teams" with cap space.

Third, Chris Paul is amazing. We win back fans and can sell tickets for 2010. It may hurt our 2010 pick a bit though.

Fourth, Chris Paul is a draw for another free agent in a S&T or trade target.

Fifth, and this is very important, if we take our team way under the cap to trade raw cap space, it will take a while before we can bring our total salary back up to the level of most teams around the lux. If we want to cash our cap space, our exceptions disappear, and we can only add salary in trade, and only within 125% + $100,000. Obviously, if we're playing with a payroll at $53 mil, and other teams are playing with a payroll at $63 mil, we're at a bit of a disadvantage,

If we use all our expirings now, and create a TPE for the hornets, our payroll is more like $66 mil this year, and near there next season too. Peja's expiring contract gives us a big number to cap match a well-paid talent, and we add cheap incentive to make it worthwhile. No salary drop means we're not putting ourselves at a payroll disadvantage.

[shrink]

I'm confused. If New Orleans can't afford their players why did they take on so much extra salary going into the year? How does one explain trading for Okafor and then Songalia?

Its our Ricky Davis/Mark Blount deal, but this time with an owner who can't afford losses.

NOH was able to break even if they filled their arena (well, until they went over the lux)
NOH needed to win to keep the arena filled.
NOH had made bad decisions, wasting money on players who couldn't make the team a winner.
NOH had nothing to deal to add talent, other than take on longer contracts.

Unfortunately, like MIN's attempt to keep KG happy and MIN competitive, gambling on low cost, high risk flawed players, NOH is in the same boat. They are already not winning, and attendance is already dropping. Unlike Taylor, Shinn cannot afford patience and financial losses while he corrects his mistakes.

[cpfsf]

GSW has talent, but they only carry $11 mil in expirings. NOH can't afford to turn Chris Paul's value into talent -- they'd just have new guys they can't afford. They need to move Paul's $15 next year, and Peja's $14 mil next year and/or Posy/MoPete at $6+ each.

OKC carries about $15 mil in expirings. I can't see how they'd match enough salary to help NOH where it needs it.

MIN's carrying $23 mil in expirings, plus Gomes for another $4 in a partially guaranteed deal.

Forgot OKC waived Watson, but still they can trade Harden, Westbrook, Thomas, Livingston, picks, plus TPE for Posey and CP3 versus a package centering around Flynn for Paul, Peja, and Peterson. Basically Harden & Westbrook & picks versus Flynn & removing Peja's salary. Just one scenario I came up with.

[jade_hippo]

these are the only kind of deals NO can afford now. they almost have to rebuild instead of retool now. the Wolves are one of the few teams that can offer what they desperately need in financial savings. even if we end up with Okafur and Peja, they fill some pretty big needs we have.

[rpa]

So without Paul how do you expect the Hornets to generate ANY revenue at all? You can say that it saves them salary all you want but as you pointed out (but failed to acknowledge) the Hornets problem is NOT player salaries, it's their current lack of ability to generate cash. If you take away the only player capable of generating money from that team they're going to lose bigtime both in the short term AND in the longterm.

Also, I think it's incredibly naive to just say "they can't dump Okafor for an expiring contract" in the same breath as saying "it's not impossible that they'd [basically] sell CP3 to us". With the lack of skilled bigs in this league Okafor should easily fetch an expiring contract and West fetches one and more. Take those 2 off next years cap and the Hornets suddenly don't have tax issues AND they still have their revenue generator.

[funkatron101]

So without Paul how do you expect the Hornets to generate ANY revenue at all? You can say that it saves them salary all you want but as you pointed out (but failed to acknowledge) the Hornets problem is NOT player salaries, it's their current lack of ability to generate cash. If you take away the only player capable of generating money from that team they're going to lose bigtime both in the short term AND in the longterm.

Also, I think it's incredibly naive to just say "they can't dump Okafor for an expiring contract" in the same breath as saying "it's not impossible that they'd [basically] sell CP3 to us". With the lack of skilled bigs in this league Okafor should easily fetch an expiring contract and West fetches one and more. Take those 2 off next years cap and the Hornets suddenly don't have tax issues AND they still have their revenue generator.

Until he complains about have no supporting players and asks to be traded. I'm certainly not ruling out the Hornets moving Okafor and West, but it looks like it could blowup in their face either way.

[rpa]

Until he complains about have no supporting players and asks to be traded. I'm certainly not ruling out the Hornets moving Okafor and West, but it looks like it could blowup in their face either way.

I think Paul's a pretty nice/classy guy; enough so that he wouldn't thrown a temper tantrum if they have to be bad for a year to clear dead weight. I mean, the Lakers were awful for 1 years and it didn't take them long to get back.

My point really is that there 3 solid ways to make money in the NBA:
1) Win
2) Have a superstar to attract fans
3) Be lucky enough to be in a city that will fill up the arena and buy merchandise no matter what happens

(3) is out and (1) will be out with either proposal (trading Paul or trading his supporting cast). The difference is if you keep Paul you still have (2). But you're right, IF he were to try and force his way out then they're screwed.

[funkatron101]

Until he complains about have no supporting players and asks to be traded. I'm certainly not ruling out the Hornets moving Okafor and West, but it looks like it could blowup in their face either way.

I think Paul's a pretty nice/classy guy; enough so that he wouldn't thrown a temper tantrum if they have to be bad for a year to clear dead weight. I mean, the Lakers were awful for 1 years and it didn't take them long to get back.

My point really is that there 3 solid ways to make money in the NBA:
1) Win
2) Have a superstar to attract fans
3) Be lucky enough to be in a city that will fill up the arena and buy merchandise no matter what happens

(3) is out and (1) will be out with either proposal (trading Paul or trading his supporting cast). The difference is if you keep Paul you still have (2). But you're right, IF he were to try and force his way out then they're screwed.

I'm not claiming it to be a certainty. Overall he seems like a great character guy, but he is frustrated. Look at the altercation with Rondo. He lost his coach, which he seemed to be close with. If he loses West and Okafor, who knows? It's a catch 22.

Risk Paul asking for a trade by dumping his supporting cast, hoping that he doesn't and that you can rebuild quickly; or

Trade Paul and a bad contract/s for expirings, great young talent and strong future assets, hoping that the remaining fans stick with you as you try to lure in Free agents.