At least the 76ers are easy to find down there at the bottom of the NBA Eastern Conference standings (from ESPN). If you're thinking they might look less dismal in the Western Conference, it's currently anchored by the Minnesota Timberwolves, who at 4-13 are 3½ games, er, better (for want of a better word). Then again, the 76ers are riding a one-game winning streak."The players are not trying to lose; rather, the owners have assembled a team with little hope of winning, thereby giving themselves a better chance of obtaining a big-time star in next year’s draft."-- the NYT's David Gelles, in "Philadelphia 76ersTake the Low Road to the Top""I'm all for the tank program, but it's getting ugly. . . . The opponents are using us as a night off. They're cheating the fans."-- 76ers radio pregame host Phil Allen, quoted by David Gellesby KenAs David Gelles notes in his piece, the Philadelphia 76ers are doing a lot of losing this season.
The 76ers are 1-17, nearly tying the league’s record for futility to start a season. The team’s first win came Wednesday night against the lowly Minnesota Timberwolves.
And he describes this as the "spectacular" result of a strategy now being pursued by the team of Wall Street financiers that three years ago took over the team that, he points out, "has been to more N.B.A. Finals than any team besides the Lakers and Celtics." What they're doing, David says, "has become a test case for what happens when the cold, hard calculations of the business world are applied to the emotionally charged landscape of professional sports."And what they're doing, in a word, is losing.
[I]nstead of spending lavishly on star players, the owners have employed methods honed at the private equity firms where they made their fortunes. Josh Harris, the billionaire who leads the new owners group, and his front office sized up the N.B.A. marketplace and discovered something counterintuitive: the best route to the top just might be through the subbasement.The 76ers, turning the fundamental belief system of sports on its head, don’t mind losing. A lot.
There actually is a strategy here, based on the reality that NBA teams, especially unsuccessful ones, have little hope of obtaining the kind of franchise players who can turn the team into a winner is via the draft. The new owners discovered the hard way that free spending may not be the ticket when, as David points out, they shelled out big bucks on Andrew Bynum, who "did not play a single game for the 76ers and signed elsewhere after the team paid him $17 million." (The four co-owners, by the way, are all financial overachievers who graduated from the University of Pennsylvania's Wharton School of business, and in their years in Philadelphia became 76ers fans. At the head is Josh Harris, "a co-founder of Apollo Global Management who is worth $2.6 billion, according to Forbes." The group also includes David S. Blitzer, "a senior executive at Blackstone, the world’s largest private equity firm.")The new ownership began stockpiling draft picks through trades of players who might have some value. But for a crack at the very top players, your team has to play badly enough to win you a choice spot in the current season's draft order, which mostly rewards futility in the previous season. (Not entirely, though: In the mid '80s the NBA decided it had to do something to discourage teams with close-to-the-worst record from striving for the worst and instituted a lottery. The system now allocates the top three picks by lottery among the 14 teams that didn't make the playoffs, though a complicated weighting system improves the odds for the, er, most deserving teams. Again, though, the lottery applies only to those first three picks in the first round of the draft. After that the order is based on losingest records.)Last year the owners "brought in new management, including a former Madison Square Garden executive, Scott O’Neil, as chief executive and a data-driven general manager in Sam Hinkie." Their mandate is to rebuild the team through the draft.David Gelles points to precedents for rags-to-riches stories from draft magic.
The Cleveland Cavaliers had the worst record the season before they drafted LeBron James. A few years later, the Seattle SuperSonics franchise (now the Oklahoma City Thunder) was accused of tanking but drafted Kevin Durant. James and Durant are now two of the league’s biggest stars and regularly lead their teams deep into the postseason.
Of course, thanks to the lottery, having the worst record doesn't even guarantee you the top pick. And the reality is that even the top pick doesn't often turn out to be a LeBron or a Kevin Durant. "Last year," David recalls, "the 76ers had the second-worst record in the league but wound up with the third pick. They chose Joel Embiid, a center from Cameroon who has yet to play a game in the N.B.A. because of injuries.""I don’t understand this strategy at all," David was told by Russ Granik, a former NBA deputy commissioner, now a banker at Galatioto Sports Partners. "It seems ill-advised. You can’t assure yourself of anything in the lottery, and you can’t assure yourself when the next LeBron James or Tim Duncan is going to come along."Of course lots of teams have achieved some success at using the draft to lift themselves out of the NBA basement. But David says that chief executive Scott O'Neil --
acknowledged that the 76ers had taken this strategy to new extremes. His is the youngest roster in the league, full of rookies and castoffs. So far this season, the team has not paid out the minimum amount required for player salaries by the league.“We’ve gone further,” he said. “This is the youngest team in N.B.A. history. With that comes the perils of youth.”
Still, David notes, "losing is taking its toll on Philadelphia fans. "
At Monday’s game, many in the crowd cheered for the visiting San Antonio Spurs.Attendance at 76ers games is the second lowest in the league, behind small markets like Sacramento and Memphis. Many of the concession stands remain closed during games. Stalls selling team merchandise attract few buyers.Longtime fans say they understand the strategy but find it hard to watch. Phil Allen grew up selling sodas at 76ers games. Today, he is host of the 76ers pregame show on 97.5, The Fanatic, a sports radio station.“I’m all for the tank program, but it’s getting ugly,” he said.Wearing a black pinstripe suit and roaming the baseline at the Spurs game, Allen, who is also a season-ticket holder, lamented the fact that the 76ers are so bad, visiting teams don’t even bother to start their star players. On Monday, the Spurs rested Tim Duncan and Tony Parker and still won easily.“The opponents are using us as a night off,” he said. “They’re cheating the fans.”
But team chief executive Scott O'Neil told David that "to reach great heights, his team had to take outsize risks."
If you loo at the fortunes that have been made in private equity and Wall Street, very few have been made going with the wind. The great ones are the big bets, and this is a big bet.
And David points out that, while O'Neil's Whartonbred bosses may be following private-equity habits by scrutinizing their business model and trying to outstrategize the other teams, the strategy they've evolved is longer-term than one might normally expect from private-equity hot shots.
They are investing in some long-term assets, including a new practice facility. And despite an enormous potential profit, they do not plan to sell the team.
It remains to be seen, if you're a 76ers fan, whether this is good news or bad news. My own instinct is that big-time money-makers in other fields who think their supposed genius will work just as well in sports, well, it usually doesn't.#