Sixers' misery now might pay off later

Posted: March 24, 2014

The Philadelphia 76ers and Sacramento Kings were waging a who-is-worse contest on the court as Sixers CEO Scott O'Neil sat at a conference table in the bowels of the Wells Fargo Center and discussed the strategy behind the team's spectacular demise.

To fans, the hoops franchise that hadn't won a championship in 31 years was in full-fledged "tanking" mode, closing in on the NBA losing-streak record of 26 - a gnarly milestone of a mangled season. The team, it seemed, had been built to lose.

In tank-speak, the Sixers had traded their best players for barely NBA-caliber youngsters, all en route to a putrid record, a top draft pick, and payroll maneuverability down the road. With this year's draft packed with a doozy of talent, conspiracists saw tanking as tactical.

"We don't use the T word - just so you know," O'Neil said with a marketing man's smile, before offering a business analysis of the method behind the madness.

The Sixers' billionaire brain trust prefers another word: rebuilding. The turnaround term is a favorite of the four-man team of owners and managers whose elite degrees, business backgrounds, and fortunes are backing a team bought from Ed Snider for a reported $280 million in 2011.

To them, the spiral is about "building assets" - part of a long-term strategy to boost the odds of getting the championship team they want instead of the middling team they had.

"We all agreed that there is one way to do this, and one way only," O'Neil said.

These Sixers are not the first NBA team, nor the only one this year, to jockey with a bad record for a top draft pick. Fourteen of the league's 30 teams had losing records as of Saturday. The Sixers, heading into their matchup Saturday night with the Chicago Bulls, had lost 23 games in a row.

But what has turned heads is the audacity with which the franchise has traded away talent and marketed its motives. Even with a 15-55 record - second worst to Milwaukee's 13-56 - the Sixers have all but cheerleaded their demolition project.

"I've never been in a city where I've been full eyewitness to a team that's been accused of tanking," said Wharton sports business professor Kenneth Shropshire. "It's unique."

The Sixers have been bad before - the 1972-73 team managed just nine wins. But there was no sense their incompetence was anything but that.

The goal inside today's organization is to be in contention to win a title - one or more - and to do so the way that seems sensible: from scratch, with the draft. That's what the odds say works well.

And yet, the worst NBA team does not automatically win rights to the top draft pick, likely to be mega prospects Andrew Wiggins or Jabari Parker.

There's no assurance those two freshmen will even be in the draft come June. And even if the Sixers do get the guys they covet, league history is littered with examples of high picks gone wrong.

To hedge their bets, Ivy Leaguers and private equity tycoons Joshua Harris, 47, and David Blitzer, 43, are applying financial-world principles of patience and dispassionate analysis to the team they own as a passion project.

They have assembled a data-driven front office led by statistics guru and investment-world expat Sam Hinkie, 36, a Stanford MBA who became general manager 10 months ago.

Ticket sales are down, merchandise revenue down, local TV ratings down, and the number of fans in seats down. But CEO O'Neil, 44, a Harvard Business School graduate hired last summer from Madison Square Garden Sports, was encouraged.

This month, the Sixers began selling season tickets for next year. In the first 19 days, fans scooped up 65 percent of the total number sold last year.

"You sell two things in our league," O'Neil said. "You sell winning, and you sell hope."

Hope may be winning as the team is losing big and the Sixers push what will go down as either a brilliantly bold, or wildly hubristic, strategy to give Philly an NBA team that goes all the way.

"We're not saying this is going to be a little tough," O'Neil said. "We're saying, 'Together, we're going to build. Stay with us.' "

The team's marketing slogan - "Together We Build" - is as clear an admission as they come.

"This is going to be a roller coaster," he said. "There's going to be ups, downs, spin around, you're going to go backwards, you're going to go upside down.

"To some people, that roller coaster is terrifying. To others, it's exhilarating."

The lower bowl seats at Wells Fargo can be more than $100 and hard to snag. But for the Sixers' March 12 matchup against the Kings, many at the end of the red-carpet-lined tunnel leading to Section 114 were help-yourself empty.

Undrafted Georgetown center Henry Sims was among the unknown newbies sweating it out on court, a floater from one developmental league to another before landing with the Sixers in Philly through a giant February trade in February that sent veteran Spencer Hawes to Cleveland for two second-round draft picks.

Sims tangled alongside potential rookie of the year Michael Carter-Williams and lonely veteran Thaddeus Young. Turnovers, a technical foul, missed layups - the team notched its 18th straight loss.

"If we keep losing, we're going to get us a high draft pick next year," said Donald Reed, 62, a health-care worker from East Mount Airy, in a pal's $86 season-ticket seat. "Maybe I'll become a season-ticket holder if we get the right draft pick.

"They were gutting this team the way I thought they would and should," he said. "This team's been down for a long time. You just can't throw a winner on the floor just like that."

Wharton graduates Harris and Blitzer lead the investors who bought the team from Snider and Comcast-Spectacor. Neither is a stranger to big bets.

Harris cofounded New York-based Apollo Global Management L.L.C. Blitzer created the London-based European office of the Blackstone Group, one of the world's largest private-investment groups.

Neither man was made available to be interviewed for this story.

Because of caps on what NBA teams can spend, an average team with solid players can have a tough time signing a superstar.

Bad teams, though, have another option: the draft.

"You make a judgment as an owner," said former longtime NBA deputy commissioner Russ Granik. "I have to make a choice: For the best group I can assemble" - and maybe a .500 record - "or, am I willing to suffer one or more really miserable seasons?"

At first, Harris and Blitzer worked with the team and coach they inherited, Doug Collins. The Sixers made the playoffs in the strike-shortened 2011-12 season.

But after the acquisition of injured center Andrew Bynum was a colossal failure the next season, a new approach emerged.

On Nov. 2, 2012, the team announced it hired Aaron Barzilai, a Ph.D. and Stanford grad who had worked for the Memphis Grizzlies. Barzilai became the team's first full-time director of basketball analytics. The kind of guy charged with finding diamonds in the rough.

In the way moneyball had swept Major League Baseball by sizing up players and payroll through data crunches, the statistics craze had landed at Sixers headquarters.

Collins, only days earlier, had said this of analytics: "If I did that, I'd blow my brains out."

In April 2013, Collins left. In May, the Houston Rockets' Hinkie became general manager. And in June - draft day, no less - Hinkie worked a deal that blew people's minds.

He sent all-star Jrue Holiday to New Orleans in return for the Pelicans' snapping up injured center Nerlens Noel sixth in the draft and sending him to Philly. New Orleans also promised the Sixers a top-five-protected first-round pick in the 2014 draft.

In July, the Sixers named O'Neil CEO. In August, they made Brett Brown coach - a man known for developing young players.

The season began with an unexpected win against the Miami Heat, followed by a surprising 3-0 run.

But by February, with underwhelming No. 2 pick Evan Turner from the 2010 draft and injury-prone big man Spencer Hawes anchoring the struggling team through a seven-game losing streak, Hinkie traded both for five second-round draft picks.

Hinkie had accrued "assets":

A potential superstar big man in Noel, assuming he is healthy when he hits the court next season.

A first-round New Orleans pick for June - as long as New Orleans itself doesn't win one of the top five picks in the draft. In that case, the Pelicans would claw back the pick and act on it themselves.

The Sixers' own shot at a top pick in the same draft, assuming the ping-pong balls in the May lottery pop the Sixers' way. (The team with the worst record typically has a one-in-four chance of drawing rights to pick first, and increasingly lower odds for the 13 other teams who miss the playoffs.)

$9 million more to spend in 2014-15 after trading Turner.

Seven second-round picks, five of which can be used in June, where talent is expected to go deep.

In the NBA, gunning for a draft pick has its merits. With only five players on the court at any time, a single player has a huge impact.

The 1995-96 Sixers finished 18-64 after several awful seasons. They were under new ownership when they went into the 1996 draft with one-in-three odds of a No. 1 pick. They hired Brad Greenberg to lead the way as general manager.

Greenberg was that team's incarnation of Hinkie - minus the statistics and business pedigree. The '96 draft was as alluring as insiders say this year's will be: Stephon Marbury, Ray Allen, Kobe Bryant, Allen Iverson - all were on the table.

And, yes, there had been tanking talk the season before.

"I remember people saying it," said former sports-arena financier Sam Katz. "I remember people wishing they would [tank]."

Greenberg and others in new owner Snider's management team were hoping for some big breaks. They knew their plans to rebuild could go wrong in a million ways.

"We were talking about getting good players - adding talent to the team, piece by piece," Greenberg said. "I was confident that we could look at a number of players and make a smart decision, and hope like heck that we'd get lucky and it would all work out."

The Sixers got the top pick. Greenberg chose Iverson.

But while the explosive guard eventually became a fan favorite and all-star, the team went no farther than a single failed championship run in 2001. And they almost traded the Georgetown phenom a few years before that, as he and coach Larry Brown struggled to get along.

"It didn't go according to plan," said Greenberg, who stayed with the team only a year, he believes, because management had set expectations too high, too soon.

"We probably didn't handle a lack of success the way it needs to be handled," Greenberg said. "I don't think you can be panicky."

Terms of Hinkie's contract are not public. But management is talking a game of patience.

The team is being utterly transparent with fans, O'Neil said. And for good reason: They are being asked to hang in for a long, brutal ride on the road to possible success.

"What options did we have?" said O'Neil, a '92 Villanova grad. "In a city like Philadelphia, I don't know that anything other than authenticity will ever work, quite frankly."


mpanaritis@phillynews.com215-854-2431 @Panaritism

     


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