A Defense Of The Lakers’ Trade From A Business Perspective

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Published: December 27, 2011

((This is a guest post from Swarm and Sting’s Jake Madison. Enjoy.))

I’ve been spending a lot of time lately ruminating on the business and financial side of the NBA–particularly about how the Hornets are affected by various aspects. I was following ESPN’s Daily Dime chat Tuesday night and host Zach Harper raised an interesting point.

When asked about whether the Magic should trade Dwight Howard to the Lakers if they got Andrew Bynum and Pau Gasol in return, Zach said, “But where does that get you? Granted, you’d still be a playoff team. Probably top 4 in the East, at worst top 5. But you’re not winning a title with that team. You’re just delaying the inevitable.” He went on to say, “You should either be building a title team or rebuilding your team. I don’t get the in between business at all.”

From a competitive standpoint, and that of a fan, I agree with him. Is there really any point being stuck in the “in between business?” (I am taking that as losing in the first or second round of the playoff year after year.) The few extra home playoff games are fun and all, but is it fulfilling as a fan? The ultimate goal of all team sports is to win the championship. It’s worth it to blow up the team and struggle for a few years if it brings a championship home eventually.

The three playoff games at the Hive last year were my first NBA playoff games ever. It was an incredible experience and it would be an incredible experience if the same thing happened this year, and the year after. But, I’d trade all that for one title every five, maybe ten, years with no playoffs in between. I know many of you would agree with me. Because of that, I think the Clippers’ trade was a much better deal for the Hornets. But, I thought about it from a business angle and saw a different side of the “in between” argument: it comes down to casual versus diehard NBA fans.

As I’m sure you know, the Hornets put forth a massive I’m In marketing campaign. What was genius about the campaign was that it was built around supporting the city of New Orleans as opposed to being about certain players (viz. Chris Paul or David West). Diehard NBA fans will always come to the Hive to watch the team no matter how good or bad they are. The purpose of the I’m In campaign was to reach out to those casual NBA fans who don’t fully follow the league but still enjoy basketball and want to support their city and team.

The goal was to reach over 10,000 season tickets for the upcoming season. The team recently reached that milestone number, but it wasn’t easy. There was a gargantuan effort put forth to reach that magic number. I’d also be willing to bet that a lot of casual NBA fans bought tickets because of how competitive the team was during the first round of the playoffs against the Lakers. While the marketing ideas are great, winning is ultimately what draws casual fans to games.

Had the Hornets moved Chris Paul to the Clippers for the same deal at the trade deadline last season, would the Hornets have been able to sell as many tickets? Zach seems to think so. In the DDL chat he said, “Fans LOVE potential.” That’s where I disagree. I think diehard fans love potential. Casual fans prefer to make the playoffs every year—even if it means never winning a title.

Talking to coworkers and clients of mine at work, the general feeling seemed to be they liked the Lakers’ trade over the Clippers’. They liked getting solid players in Kevin Martin, Luis Scola and Lamar Odom. The team would make the playoffs and potentially cause an upset in the first round, they said. The Clipper’s deal meant the team was in full on rebuilding mode which they didn’t want. They didn’t know much about Eric Gordon because he hasn’t been in the league as long as the players in the original trade. They know who Martin, Odom and Scola are because they are casual NBA fans and those players have been on successful teams. Casual fans don’t understand the value of Minnesota’s unprotected first round pick. They may not even know what an unprotected pick is.

When Dell Demps, Monty Williams and Hugh Weber decided to pull the trigger on the Lakers’ trade, they understood that. They understood that starting a rebuilding project could turn off and alienate many of those 10,000 season ticket holders. You and I know the Clippers’ trade was better for the Hornets championship aspirations in the long run. That’s because we are diehard fans. Unfortunately, we are most likely in the minority. I’ve spoken to a few ticket reps since the trade and have gotten conflicting information about the amount of current ticket holders asking for refunds. But it is happening.

There is also another business factor when it comes to the “in between business”: income. While the team’s ultimate goal is to win the NBA title, the owner’s goal might be a profit (this changes owner to owner). If a team is towing a fine line between red and the black on the balance sheets, the extra money in ticket sales can really help. There is potential that a team needs to make the playoffs just so they don’t lose money over the course of a season. If that’s the case then it is perfectly understandable to be content losing in the first round every year. Combine that lack of playoff ticket income with the loss of ticket holders from the team not being good (even though there is potential to be great in the future) and that is a scary proposition for an owner—especially in a small market. It’s unfortunate but most of the business side is.

I asked Zach more about the idea of diehard and casual fans, “Zach, you said earlier that fans love potential, but doesn’t that apply more to diehard fans than casual fans? When trying to sell thousands of season tickets don’t you have to target those casual basketball fans who would prefer two home playoff games over the potential of the team two or three years down the line?”

Zach responded, “I really think it depends on the fan base. And maybe that’s a copout answer. People love to pretend they were there from the start of something great. I think that holds true for diehards and casual fans. That’s why I believe if you sell it right and are honest about rebuilding, you can sell tickets. Also, cut prices.”

Zach is speaking generally about the league. The Knicks sold out of season tickets for years based merely on the fact that they might get Lebron James. In my opinion, I don’t think it depends of fan base but rather the size of the fan base. New York is a much bigger city than New Orleans; there are more diehard basketball fans. Of course it will be easier to sell them on potential and rebuilding because if you lose one fan then there is another fan right there to take his/her spot.

A small market like New Orleans doesn’t have the luxury of a massive fan base. In the current economic times each individual fan has a large importance placed on them because there might not be anyone to replace them. (Feel very, very special, Hornets fans!). You have to treat certain situations with kids gloves when a larger market doesn’t need to do that.

From a business perspective the Lakers’ trade makes more sense. You minimize the damage to the fan base and thus keep the team’s revenue up. The biggest sign of how this trade ultimately affects the Hornets will be seen in season ticket renewals. Will fans have bought into the potential of the team with Gordon and the Minnesota pick? Or will fans lose interest if the team struggles? We’ll find out in a couple months.

14 comments
Mikey
Mikey

One thing us New Orleanians have to be careful about is that we have a tendency to approach the NBA playoffs as if it were the NFL playoffs. A given team can be a 5th or 6th seed in the NFL playoffs, and wind up winning the whole thing. In fact, a 5 or 6 Seed in the NFL has won at 2 out of the last 5 Superbowls. A great team in the NFL that has a bad day in the playoffs is going home. A great NBA team that has a bad day still has 3 more games to lose before they go home. The NBA is just different. More than half the league makes the postseason, and consequently there are have been mediocre teams with abysmal records make the playoffs. Its true that if you make the playoffs, you give yourself a chance to win the whole thing, and there are rare cases of a #8 beating a #1 in the 1st round, but go ahead and reference the last time a #8 won the NBA championship, because I don't remember it ever happening. The Nuggets did make the WCF as a 7 seed 3 years ago, but their run ended with a defeat to the Lakers. The lowest seed I can remember winning the whole thing was the '94-'95 Rockets; they were a 6 seed in the West, and defending champs.

Tim
Tim

This years draft is too loaded to not stockpile picks for. If we walk away with 1-2 future all-stars, we're halfway to building a dynasty. Besides, will we really be THAT bad this year? As far as business goes, my whole family is a collection of casual NBA fans. They MIGHT go to 2-3 games if we're bad. If we're good, they will go whenever tickets are available. They wouldn't know of we had potential or not. They wouldn't go to the arena to watch our potential.

SJ
SJ

Back in early 2008 I became a Hornets fan because a ticket rep came knocking at my college apartment in Baton Rouge. He asked me if I was a sports fan. I told him how much I loved the NFL, College Football, and Soccer. He then asked me if I knew the Hornets were the #1 team in the Western Conference. I felt almost foolish. I honestly had no idea. He offered me a ticket package for 6-8 lower bowl games for something like $200 which included 4 games against great teams at the time (Lakers, Spurs, Cleveland, etc). I bought that package and was hooked since. This was the best year in the Hornet's franchise. EVER. And they couldn't sell-out every game without door to door tactics 70 miles away from New Orleans. I've went to more Hornets games in 2008 and 2008-2009, then I have the past 2.5 years when I've actually lived in New Orleans. The reason is simple, my resources are limited and I was only paying for a better product on the floor. I buy home playoff tickets when we make it, so does everyone else in New Orleans. But the biggest difference between me and most other people's whose behavior ticket purchasing behavior is similar to mine is that I am a diehard NBA fan. I don't get into anything half-ass, so when I got back into the NBA for the first time since Jordan retired, I got back into correctly. Even when I wasn't going to the arena, I was watching the games on TV. I was keeping up with all our rivals, and soon the entire NBA. I bought ESPN Insider not because I find their info substantial but because I couldn't read enough about basketball. So if a die-hard fan, which I now consider myself, will not go to more than a handful of home games without an elite product on the floor, why in he world would a casual fan? Blowing up a team is going to be bad for business in a small market. Having proven veterans come and give us hope for an upset in the playoffs will fill more seats over a 3 year span, then the potential that MIGHT (READ: Probably won't pan out) that is available in the draft.

Jason
Jason

I actually disagree about wanting a championship over 10 years of consistency in the playoffs. I'd rather be the Atlanta Braves (even without their World Series) than the Florida Marlins who are occasionally good with a rental team. Even without an NBA title, the Dirk years at Dallas must have been an incredible ride. I agree you want to be working towards a championship, but I think you should be happy with always contending and having the potential to win (Think the Jazz in the Jordan years). But first round exits are not worth it.

nikkoewan
nikkoewan

i'd rather have a championship every 10 years, than be a playoff contender every year and not win it. That's just me

BRballboy
BRballboy

If we get the 2 high draft picks plus more picks and huge cap space availability(2 max contract stars?) by the further dismantling of the old roster, we will not lose season ticket holders. Just the opposite! It will also be easier to find a new owner willing to keep the team here. Diehard NBA fans already know this, and casual fans will find out before next years ticket sales. We shouln't be too attached to anyone on the current roster, this is all about positioning for the future.

carpo
carpo

off topic, but fuck yeah bucks, their play is so entertaining and still have a handy lead despite bullshit officiating gettin love to the line whenever hes near the ball

Tyler
Tyler

Winning solves everything. Many of you aren't real fans if you want your team to tank so you can just get a rookie or two. Its about stability in all aspects of the business.

jmbell
jmbell

Winning does, but not mediocrity. Which was the state the Hornets were defined to be in as long as Chris Paul was here or if we had gotten the Lakers trade. Not that I want the Hornets to tank, I would love for them to make the playoffs. But the franchise is better off with Gordon and two high draft picks. Even if the picks don't pan out, you have to try. Look at the Thunder, they're set to make the playoffs and contend your the next decade or more. They did it the right way with out cutting corners.

jmbell
jmbell

*For the next decade. I probably should have gotten on my desktop.

jmbell
jmbell

*destined to be in. Stupid autocorrect.

Blattman
Blattman

I can see your points, but you are reasonning on the short term. Yes, on year 1, Lakers trade would have more benefits on the revenue plan. But will the season tickets grow up in year 2 ? I don't think so, and even if the fall is not as hard as in the clippers trade, in the long term it will create some kind of exhaustion like they have in Atlanta. But if you take the clippers offer, you take the risk of having a great team in 2 or 3 years. Great team means sellout at every game. That's why this offers still make sense on the economical perspective : it's an investments, you lost some money in first years to maximize your profits after. For the franchise, the only way to keep the season ticket afloat, would be to draft some prospect with serious hype and, in the 2012 draft, there is at least 5 of them (P.Jones/H.Barnes/J.Sullinger/A.Drummond/A.Davis). Furthermore a new marketing campaign will be necessary (something like "Greatness is coming").

bee dat
bee dat

You raise a good point to think about for all those who were / are hoping for and /or advocating for tanking this year. Is our dream of keeping an nba team in nola too fragile to withstand tanking a year or two? As a diehard bball fan, I would have enjoyed watching that group of barely heralded veterans compete each night, sometimes beating teams with established star power. Fortunately, I think we got the best of both worlds, a team that is going to compete and in quite a few games (I'm still betting playoffs) while being extremely young and having maximum flexibility to go in the full spectrum of directions after the ownership /lease questions are settled. Let's hope our fans are not so fickle to jump ship before this all becomes apparent. I am afraid of the house of 10000 cards tumbling down but have fath in hornets fans old and new. Great job hornets, hope mr chouest is ready and on board. Bee dat!

JT's Hoops Blog
JT's Hoops Blog

I'm glad that trade did not go through. It would have butchered the Lakers' front line. And Chris Paul is good, but I don't think he would have meshed well with Kobe anyways. For more than a decade the Lakers ran an offense without a traditional point guard. Kobe has been the primary ball handler and he seems like someone who likes to control the flow of the game. Even Mike Brown never coached with a traditional point guard. Lebron was the primary ball handler while Mo Williams, who was written in as PG, but is more a scoring combo guard rolled off picks to get sots. So even in his rotation, Chris Paul would have been out of place. In general it was all for the best. The ramifications of having to let go of Lamar Odom hurt the Lakers because he got offended by the Lakers using him to get Paul. you can't blame him either. No one wants to leave a two time NBA world champion for a rebuilding job on a financially struggling small market franchise--to put it mildly.

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