Pennies on the Dollar

Dell Demps goes into Mondays meeting with Chris Paul needing to sell him on his vision. He must show the frustrated face of the franchise that it is possible for this roster of mismatched parts to be transformed into a contender. Moves will have to be made that will give the Hornets a legitimate opportunity to win now, while at the same time not sacrificing the future or putting the team in a position where they are one injury away from falling back into the middle of the pack. This is why being a GM of an NBA team is one of the toughest jobs in sports, and the posititon Demps is in right now is an unenviable one.

There is no exact formula for how to build an NBA contender- if there was then every team would follow that model. The current model for success is the Lakers, who built their team partly through trade, partly through the draft, and partly through free agency. The Celtics, meanwhile, made bold trades to secure their big three, and the Oklahoma City Thunder have built their impressive roster primarily through the draft. For each team, their method of building their roster was in part dictated by external circumstances.

The Lakers play in a large market and sell courtside tickets for thousands of dollars. Blowing up a team and telling their fans to wait five years is simply not an option. The Celtics, meanwhile, had a superstar that was on the backside of his prime so it was imperative that they become aggressive to build a contender before his window closed. As for Oklahoma City, they knew that they had a cornerstone piece that was going to need time to mature on the court and rushing his development and expectations would not be good for him or the team.

Some teams simply can not follow the paths of others and therefore must adjust on the fly. After an 18-64 season, the Hornets fully expected to go through a multi season rebuilding campaign, but Chris Paul was so magnificent in his rookie season that the team far exceeded expectations. While most would have predicted before the season that the Hornets would be looking at a top five pick the next year, they instead made a strong push for the playoffs and received the 12th pick in what many said was a seven player draft. Their hopes of building the way OKC has was taken away and instead they were forced to follow a path closer to what LA and Boston has done without the resources or history of those two franchises.

Demps must look at this roster and determine the best path moving forward and a popular idea amongst most Hornet fans is to explore the trade market. The trade market has changed in the last seven years or so, as it is rare to see a dollar for dollar trade anymore. It used to be that teams would trade a puzzle piece that didn’t fit for one they believed would fit better. Now they trade a quality puzzle piece for a deteriorating puzzle piece plus cash and a puzzle piece to be named later.  The Kendell Gill for Hersey Hawkins trades of the past are gone. Now, you would trade Gill for an expiring contract, some foreigner who will never see the NBA court, and a 2099 2nd round pick.  These trades, in NBA circles, are called Pennies on the Dollar trades. But do these trades work? And for which teams?

Last year, between the end of the 2008-09 season and the trade deadline in February of 2010, there were ten Pennies on the Dollar trades made in the NBA. To qualify what counts as a POTD trade and what does not, here are some of the necessary conditions:

    1.)  One player in the trade must be a current or recent All Star, or quasi All Star.

    2.)  The team trading the player in Rule #1 must be doing so primarily for financial reasons.

    3.)  No piece can come back to the team trading the All Star player that can realistically be projected to be an All Star or quasi All Star

Rule 3 is tricky, but I do not want to confuse financial motivations with a youth movement. Minnesota received a player back in the KG trade that many believed would be a perennial All- Star some day and when New Jersey shipped J Kidd out, they received a PG who would make the Eastern All Star team the following year. These do not qualify as POTD trades in my book, just as any trade that shipped DC out of town wouldn’t be a POTD trade in my book.

But the question remains- do POTD trades typically work out? One would think that simply by their name and definition that they would have to. Anytime you can get great value, you assume that you have to make the purchase, but the data shows that this is not always true. As a detailed sample, let’s look at the 10 POTD trades from last year:

1. The Spurs acquire Richard Jefferson for scraps

2. The Hawks acquire Jamal Crawford for scraps

3. The Magic acquire Vinsanity for C. Lee and scraps

4. The Cavs acquire Shaq for expirings and non-guaranteed contracts

5. The Grizz acquire Zach Randolph for Q Rich

6. The Hornets acquire Okafor for an injured Tyson Chandler

7. The Bobcats acquire S. Jackson for scraps

8. The Mavs acquire Caron Butler and Haywood for scraps

9. The Cavs acquire A. Jamison for scraps

10. The Rockets acquire K. Martin, Jordan Hill, and 1st rounders for Landry and expirings


As you can see, one team made two POTD trades- the Cleveland Cavs, who went on to win five less games than they did the previous year and were eliminated a round earlier in the playoffs. In fact, only two teams on the list had more postseason success than the did the year prior- the Charlotte Bobcats, who made two POTD trades as well, one in which they received the dollar and one in which they received the pennies. And the Spurs- but keep in mind that while both teams made it one step further than the year before, both were swept right out of the playoffs unceremoniously.

That is not to say that all of the other trades were bad moves. Dallas is still an unknown and perhaps the fruits of their labor will be received this year when Butler and Haywood are more familiar with their teammates. The same could be said with the Hornets and Okafor, the Rockets with Martin, and the Spurs with Jefferson.  The same can not be said for the Cavs two moves or Orlando’s chemistry killing Vince Carter move. And looking back over the last seven year, I found 57 POTD trades made in the NBA with less than ten percent of them leading to either great long or short term success for a franchise.

Everybody wants to cite the Lakers trade where they stole Gasol- but that case is in the vast, vast, vast minority. More realistically, as a team taking the dollar in the trade, you are going to land a slightly better than average player who is overpaid for the amount of wins he can give your ballclub in a given year. Beyond that, the data shows that these players are more likely to shrink in the playoffs and will not post similar stats to what they posted in the regular season.

The teams giving up these players know this, and that is a large part of why they are on the market in the first place. From outside fans looking in, they see the numbers and the immediate upgrade that X player might provide, but the long-term results do not usually match fans expectations. POTD trades often times improves the way a roster may look on paper, but more times than not those results do not manifest themselves in the postseason. 

Keep this is mind when rumors of expirings for players like Iggy and Luol Deng are discussed. While it seems certain that either of these guys would be a huge upgrade over anybody we currently have at small forward, the truth is that building an NBA roster is more about assembling a delicate puzzle than it is just acquiring the best individual pieces. General Managers tend to jump at these POTD trades due to the sheer value that they present on the surface, but if Demps is really looking to build a winner here- long term and short term- than he might consider a POTD trade only as one of his last resorts. 


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