Monday, December 12th, 2011...12:13 pm

The Veto Power

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By Sam Mann

As you probably know by now, last Thursday David Stern, Commissioner of the National Basketball Association, vetoed a three team trade that would have sent star point guard Chris Paul to the Los Angeles Lakers, Pau Gasol to the Houston Rockets and several other pieces to the New Orleans Hornets. The NBA released a statement shortly after the news broke, saying it was a basketball move and that the team was better off with Paul remaining a Hornet. I’m sure at this point you are wondering how the commissioner has the ability to do such a thing; after all, each of the 30 NBA are independently operated and managed. The problem here is that the NBA bought the Hornets last year for $300 million, and has yet to find a buyer. Therefore, the Hornets are technically owned by the other 29 franchises in the league.

(Actually the part about not finding an owner is not entirely true. Reports have indicated that several potential buyers have shown interest, but most if not all would prefer to move the team out of New Orleans. Stern and the other owners are intent on keeping the Hornets in New Orleans for many reasons, some sentimental but mostly practical as the city and the state have been extremely cooperative in helping the franchise continue on in New Orleans. The financial challenges facing this franchise were behind the league’s purchase and are definitely a huge factor in this story).

In some ways then, Stern could be considered the “owner” of the franchise. The owner of an NBA team typically would have the final say over a major transaction like this. The problem for the NBA is two-fold: first, they have (had) made it perfectly clear that Hornets GM Dell Demps was 100% authorized to make any trades, including for Chris Paul. Those within the league have known for years that the Hornets would probably have to trade Paul at some point this season, as he is a free agent at the end of the year and will not resign. So the fact that trade discussions went so far shows that no one was really very concerned with the Hornets ability to make trades. The second problem for the NBA is that in the wake of this deal being announced, other NBA owners immediately complained to the league office, and those complaints have been made public. Cleveland owner Dan Gilbert, he of fame for lambasting former Cav Lebron James after James left Cleveland for Miami, sent an email to the league calling the potential trade a travesty. The email was promptly leaked. Other owners like Mark Cuban have also made it clear they opposed to deal. And of course, Stern has said that his decision was taken independently without consideration of the other owners.

There are a lot of levels and facets to this discussion. It would be nearly impossible to dissect all the moving parts, but it is necessary to highlight a few. The three teams involved reportedly filed an appeal and lobbied for the Commissioner to reconsider. This apparently was to no avail, as the Lakers soon dropped out of discussions, but not before upsetting Gasol and Lamar Odom, two of their key players. (Odom was subsequently traded to Dallas, as he requested a trade in the fallout.) Reports then surfaced this morning that the Los Angeles Clippers and the Hornets have submitted a trade for approval. Will the NBA let that deal go through? Rumors are that the Players Association was set to file a lawsuit against the league on behalf of Chris Paul if he was not traded by today. Is the threat of the suit enough to convince the NBA?

Let’s back up for a moment and ask why the NBA and its owners were so against this trade. There are two reasons:

  1. The NBA owns the Hornets and doesn’t want to own them forever. They want to complete a sale to a new ownership group and know that Chris Paul is the Hornets’ main asset. Without Paul, the league knows it would receive a lower price for the franchise. They also are worried about the effect of such a trade on attendance, sponsorship and the business end. In other words, they are trying to protect their investment.
  2. We just returned from an extended lockout, one of the “reasons” for which, according to the league, was to help small market franchises keep their star players. Owners are upset that Lebron and Carmelo Anthony and other stars are fleeing their small markets to team up with other stars in New York, Los Angeles, and the other big markets. Allowing a star player to be traded to the league’s signature franchise a week after this bitter lockout ended would cut at the owners’ credibility and suggest that the lockout didn’t solve one of the “problems” that we were all told needed to be solved.

As you can no doubt tell, there are significant flaws in both thse arguments. Looking at the Hornets rationale, this is one of the more short-sighted decisions in professional sports history. No owner is going to buy the Hornets based solely on this year, and no matter what happens with Paul and these trade scenarios, he is not playing in the New Orleans next year. So the choices are as follows: force Paul to play out the string this year and lose him next year with no compensation, or trade him now for 4 players and a first round draft pick. Tell me which is the better long-term scenario for the franchise?

As for the whole lockout and owner perspective, can we really say that is a legitimate argument? What kind of precedent does this set? Any time a trade appears to be against the interests of the league, the NBA should have the ability to veto it? What happens next? Dwight Howard is also on the trade block. Is the league going to try and stop that trade too? What this shows is a simple conflict of interest. If a team is owned by the league, the league should not be able to act as a typical owner would. It’s an interested transaction. There needs to be a veil between the two. Based on what we know now, it was clear that the owners were acting selfishly: to protect their investment in the Hornets, to make sure that big market teams like the Lakers couldn’t “steal” their players, to protect their credibility in the lockout. And David Stern chose to bow in the face of that pressure.

The other part of this discussion, not legally related, is the human side. You gotta feel bad for these players, who were traded, and then the trade was rescinded. It’s gotta be hard to walk back into the practice facility the next day, when the franchise clearly wanted to go another direction but was rebuffed. And you also feel for the front offices of these three teams for putting all this work in and having the rug pulled out from under them. I won’t get into the merits of the deal, but it looked a good trade for all three teams. It seemed like one of those rare trades that made everyone better, and the league couldn’t see that because they and their owners were short-sighted and self-absorbed.

As far as the legality of the veto, it’s not abundantly clear. The NBA will certainly argue it was acting as the Hornets owner and not as the Commissioner’s Office, which seem to legitimize the action in some way. At the same time, this clearly was not authorized under the CBA (at least as far as know) and seems like an artificial restraint. I would imagine a suit would focus on antitrust law, that this was collusion among the various franchises to prevent player movement. If that is how the issue is framed, I’m not sure how the league could effectively argue the restraint was reasonable. But, the realities of the situation will probably prevent a suit from ever reaching the courts. Paul may be traded to the Clippers by the end of the day, and the trade is dead. If not traded, Paul would be stuck in New Orleans pending a suit, which would take a long time. I expect a compromise, probably in the form of another trade, but I guess you never know.

Update: The Clippers-Hornets trade reported earlier today has fallen through, apparently because the Clippers think the NBA’s asking price is too high. So while this is not quite a “veto” it is still the league commandeering the process and removing any autonomy that GM Dell Demps could be thought to have. Maybe the lawsuit will happen after all, because it sure doesn’t look like Chris Paul is going anywhere anytime soon.

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