Bad GMs

Chad Ford writes about bad deals:

In many cases, the battle between agent and general manager is not a fair fight. On one side you have the agent, a professional negotiator who spends all year thinking about how to drive up the player's price. On the other side you have GMs, many of whom are former players who have seldom handled negotiations. They usually had agents for that.

Fascinatingly, Ford mentions this and then just lightly moves on. But doesn't it seem like a big deal? It's a business job. Why don't teams hire people with business experience?

Comments

Don't most teams have people under the GM to handle the particulars?

I know the Blazers hired an Asst. GM specifically because he is a slary cap guru. He was the one the engineered the Randolph trade to specifically give the Blazers a trade exemption that they used in the Sun deal that landed James Jones and the draft pick from Spain. So while the Blazer-Knick deal looks onesided for the Knicks, it allowed PDX to trade nothing but Paul Allen's cash for Jones and Fernandez.

Posted by Tiparillo | July 13, 2007 12:30 PM

I was curious to see if david vitter is being investigated yet so i googled david vitter fbi and look what the first result was:
http://www.vitter.senate.gov/forms/Letter%20to%20Frist%20and%20McConnell%205-24-06.pdf

During the Jefferson search, he came out in favor of FBi searches of congressional offices

Posted by m g | July 13, 2007 12:32 PM

Umm, they probably do. Ford might be talking out of his ass. This often happens with pundits, while people evaluating pundits may be likely to be much more comfortable with relatively circumscribed claims. This means that there is an asymmetry in experience with wild-ass claims. Perhaps we need to set a pundit to catch a pundit.

Posted by SomeCallMeTim | July 13, 2007 12:33 PM

Sports agents are often more flashy than competent negotiators.

In 2004, the Tigers drafted a promising young pitcher named Justin Verlander. His agent was unable to reach a deal with the Tigers, who broke off negotiations. Verlander's father--a union official with years of experience in difficult contract negotiations--stepped in, and reached an agreement satisfactory to both sides in short order. The rest is history . . .

Posted by rea | July 13, 2007 12:33 PM

It's a business job. Why don't teams hire people with business experience?

As other commentors who know more than I (which isn't difficult, as I know nothing) about sports have pointed out, this may not exactly be the case.

But anyway, it boils down to "Peter Principle" vs. "Dilbert Principle". Do you hire a good athlete on as a GM (Peter Principle) or do you hire a PHB-type out of B-school, who might know generic business stuff but not the actual business at hand (Dilbert Principle)?

From what I hear of business, the Dilbert Principle plays out in real life even worse than it does in the comic strip. But sitting here in academia, the last great bastion of the Peter Principle, I know that the Peter Principle has many a flaw ...

Posted by DAS | July 13, 2007 12:39 PM

Most GMs have a staff which includes people with all sorts of skills.

Still, Chad's article is pretty right on about a lot of things. That Lewis deal is beyond absurd.

Posted by matthew c | July 13, 2007 12:40 PM

(shrug) It's more of the same: folks making reasons up to side with the billionaires against the millionaires for reasons that are *completely* opaque to me. I can't imagine what the difference between them could be that would make people want to side overwhelmingly one way.

Posted by sherifffruitfly | July 13, 2007 12:43 PM

Here are some great GM's: Jerry West Larry Bird, Joe Dumars, Greg Popovich. Here are some bad GMs: Kevin McHale, Bob Ferry, Isaiah Thomas, Elgin Baylor . It may not be a fair fight, but its not always the player with the upper hand.

Posted by Peter Driscoll | July 13, 2007 12:45 PM

Larry Bird is an abysmal GM. Jerry West had been getting by on rep.

Posted by Freddie | July 13, 2007 12:48 PM

Agents often do a bad job for their client. Look at Ricky Williams and Terrell Owens, for example.

Posted by Jose Padilla | July 13, 2007 12:55 PM

Here are some great GM's: ...Larry Bird....

Uuuuummmmmm...did anyone read past that?

Posted by SomeCallMeTim | July 13, 2007 12:58 PM

It's a cap league. The actual dollars and cents are mostly fixed within a specific range of options, so it's not as if the price of the commodity is a huge component of the analysis. It's more like the federal senencing guidelines. That's why sports writers can often predict with great accuracy what someone will command in free agency months ahead of time. I think assistant GMs, at least some of whom are probably MBAs or the like, can handle this element.

Also, the final price is largely set by perceptions of the market for a player. In fact, the best GMs are good at their jobs, not because of an overwhelming demonstration of business savvy, but because they can fit players to gether like puzzle pieces that are better than the sum of their parts (see Buford and the Spurs). This means talent evaluation is a much bigger component of a successful NBA front office. Furthermore, it likely has a big effect on the actual dollars and cents business side. So in the Lewis situation, what Presti said to him in Houston probably had a bigger effect than Orlando not having an economist or day trader as GM. I have no doubt that Presti was clued in to the Magic's potential to overspend here, and made his pitch to Lewis depite having a team full of small forwards, partly to raise the costs for the competition of trying to poach his assets. The risk in offering, say $18 M to Lewis for the Sonics was that he would take it. Presti had to be able to look at Orlando's team and realize what Lewis was worth to them specifically. That isn't something one can learn in B-school, or even watching lots of Magic games, necessarily. All the ancillary factors--locker room, practice style, coach, etc.--are basketball judgments.

Also, I suspect business-trained GMs would likely increase the odds of the old-school Clippers approach across the league. Teams that could develop assets and keep operating costs low could likely attract enough fans to remain profitable without ever building a team to contend. This is probably all the more the case with the recent elevation of the draft to an all-year event and a subtext to the entire college basketball season. Even if the Sonics win 15 games next year, as long as Durant is on the floor they can sell tickets. If after three years Durant wants a monster contract, ship him for useful assets and start the process all over again. Certainly such an approach minimizes the risk that, for instance, the Sunc assume with an aging, injury-prone tiny guy (relative to the rest of the guys on the court) as the lynch pin to their team and the shoulders on which all over those hopes and big salaries rest.

Posted by MSB | July 13, 2007 1:16 PM

Also, the final price is largely set by perceptions of the market for a player.

The major point of the Ford piece was that, in this case, the contract price was not set by "perceptions of the market," but rather by one overeager GM. Nobody else would or could have paid close to what the Magic paid.

I'm not sure how much of a broader point about ex-player GMs can be made from this, but Otis Smith made a bad call here.

Posted by Brad L | July 13, 2007 1:38 PM

"On one side you have the agent, a professional negotiator who spends all year thinking about how to drive up the player's price. On the other side you have GMs, many of whom are former players who have seldom handled negotiations. They usually had agents for that."

Which is the harder job: negotiating or evaluating NBA talent?

Which is worse: paying a little bit too much for what you want, or getting something that is not what you want?

The completely bizarre deals are not a case of poor negotiating skills, they are the result of misevaluation of talent. Paying a player 20% more than he's worth is bad negotiation. Paying 10 times what a player is worth is bad evaluation. Which is why guys with playing experience are better GMs, provided they are also reasonably intelligent.

BTW, Getting the player a high salary is only the second most important part of an agent's job. The most important thing for an agent to do is get the player to higher him as an agent.

Posted by Njorl | July 13, 2007 1:42 PM

The Ricky Williams example actually cuts in the opposite direction. Ricky was represented by Master P, who was branching out from music. New Orleans trotted out a no-base, huge-incentive contract, and sold it to Ricky Williams and Master P as if it was the biggest deal for a rookie in history. Ricky, of course, did not come close to maxing out on the deal. No experienced agent would have allowed him to gamble in that way.

Posted by Ephus | July 13, 2007 2:02 PM

So I found an old SI article on "top GMs". Of the top 10, one was an owner's son (Calangelo), one was a long-time assistant coach(Buford), one was a coach's son (Nelson), six were players (Paxson, Dumars, Petrie, Riley, Thorne and Pritchard), and one seemed to be placed as GM of the Utah Jazz as part of the FBI witness protection program. Who the hell is Kevin O'Conner and why is he GM of the Jazz?

I figure he's the one guy in the top 10 with no basketball history, though Calangelo's education certainly overshadows his basketball background.

Posted by Njorl | July 13, 2007 2:09 PM

The best knowledge to negotiate on is to have the better valuation skills: and the GM will have far better valuation skills than the agent. The best GM will be assembling a unique team of players in real time that will operate in a very particular way the GM envisages. It is very difficult to evaluate most players without a deep knowledge of the things a great GM is carrying inside his head (a good but not great player may be more useful in the GM's strategy than a better player who's skills don't fit the strategy).

We assume that this knowledge is not fully available to the agent (indeed, communication of such dense and complex knowledge even to the GM's staff takes weeks). We also assume that the agent doesn't have the skills of leading the team that a great GM has (otherwise, we assume the agent would be a GM and no longer an agent). Thus, the good GM generally will have the better evaluation skills and thus outperform the agent, even though the agent might be great performing negotiating tactics in a conference room.

"Also, I suspect business-trained GMs would likely increase the odds of the old-school Clippers approach across the league. Teams that could develop assets and keep operating costs low could likely attract enough fans to remain profitable without ever building a team to contend."

No, quite the opposite. You would need to ask what the team owners want to the team to do. The vast majority of team owners are not owning teams for purely profit maximation from the team itself. A big part of their motivations are often status / hierarchy / political reasons. Generally, there is usually some nexus of "establishing oneself as the biggest macher in town", "expunging shady deals of the past", publicity and other reasons. Obviously, a mediocre athetically but profit maximizing team does not add much value to the team owners on any of those non-monetary fronts.

Essentially, that business model would be a contrarian investment strategy. A contrarian investment strategy in financial markets can work because anyone can participate in the financial markets (no barrier to entry). When there are an extremely limited number of sports teams, a contrarian strategy is less appealing for already entrenched incumbants.

Posted by burritoboy | July 13, 2007 3:34 PM

I think Chad makes a great point, actually. The guys that get taken for a ride are invariably the guys that don't have even basic negotiation skills. It takes an egotistical player like Isiah Thomas or Chris Mullin to convince himself he has enough special basketball knowledge to offer a huge deal to, say, Jamal Crawford or Mike Dunleavy Jr even though no one else in the league will. A business-first guy, even if he didn't know all the intricacies of getting his man to bite on a pump-fake, would never offer those kinds of deals without first trying to assess market value.

Most of the terrible contracts I can remember were doled out by "basketball guys" (former players, former coaches, or both). Erick Dampier's abominable deal was the work of a business guy (Cuban working through Lil' Nellie), but I can't think of any others off the top--anyone want to jump in with some examples?

Posted by Jake H. | July 13, 2007 4:16 PM

I'm not sure how we're distinguishing "business types" here, but I don't believe Scott Layden was a player, and he was awful.

Posted by SomeCallMeTim | July 13, 2007 6:08 PM

It's a business job. Why don't teams hire people with business experience?

You need a basketball man, not a bean counter.

/Joe Morgan ripping on Moneyball without having read it.

Posted by Pooh | July 13, 2007 8:23 PM

What's odd is how many former players- especially former impact players- become general managers within a few years of the end of their playing career in the NBA. In baseball or football, few seem to assume these roles. In baseball, for instance, only three of the thirty general managers have any MLB playing experience at all and only one (Mike Flanagan, a former Cy Young winner) could be described as a top-flight player. In the NFL, the only exec I can think of with significant playing experience is Ozzie Newsome of the Baltimore Ravens. Yet in basketball it seems that half of the 92 Dream Team (Mullin, Jordan, Bird, Isiah, McHale) have significant say in their teams' personnel decisions.

Why is this?

Posted by MS | July 13, 2007 11:01 PM

Because basketball owners are stupid.

By the way, how about that Bibby for Gooden rumor? Bibby might be the perfect PG for Cleveland. They'd be unstoppable.

Posted by too many steves, too many beers | July 14, 2007 2:45 AM

I'd be pretty surprised if the advantage lay with the agent, especially in cap-oriented sports like basketball, hockey and football. Baseball may be the exception.

Along that line, I heard a sports economist once - who obviously didn't have any use for agents - say that the agent's job was to ask for exactly what a team is willing to offer; said another way, it is the agent's job to convince the player to sign for what the team is willing to pay.

Posted by 3pointshooter | July 14, 2007 8:35 AM

"The major point of the Ford piece was that, in this case, the contract price was not set by "perceptions of the market," but rather by one overeager GM. Nobody else would or could have paid close to what the Magic paid."

That is indeed Ford's point, but it's not correct. He glosses over the fact that Houston was willing to pay the same max price for Lewis that Orlando paid. And that there was a third unnamed team also willing to pay that amount.

None of that means that singing Lewis at that price was smart, but it does mean that Orlando almost definitely couldn't have gotten him any cheaper.

There are a number of bad assumptions in Ford's piece. SCMT's 12:33PM comment hits the nail on the head here. He's written a lively column. It just doesn't happen to be, y'know, correct.

Posted by Petey | July 14, 2007 9:09 AM

Everyone goes ga-ga over the draft, but right now is the fun time of the off-season to Petey.

Chucky Atkins to my Powder Blues. Gotta love Chucky. Very heady player. Provides the 3pt shooter they need. Unfortunately turning 33 next month, considering that the Nuggets will need 35mpg out of him.

Steve Blake takes the comfortable route of signing with hometown Portland over the pressure of playing for a title with Miami.

Washington signs DeShawn, meaning that JCN and one of their fighting centers is likely headed out of town.

Mikki Moore gets paid. Full MLE for 3 years.

Joe Smith to Chicago, which is smart, considering that Ty and Jo aren't ready for prime-time.

And the Mike Bibby to Cleveland rumors continue, although the Mikki Moore signing seems to put the kibosh on that one.

Posted by Petey | July 14, 2007 9:18 AM

In the NFL, the only exec I can think of with significant playing experience is Ozzie Newsome of the Baltimore Ravens.

Matt Millen of the Lions was a decent linebacker (12 years, 4 superbowls), although his 24-72 record as a GM is hardly an advertisement for making ex-players GMs

Posted by rea | July 14, 2007 9:33 AM

And the biggest question is going to be where Stevie Franchise heads.

He'd obviously be a perfect fit for the Clips, but why not try to go for a title with Dallas or Miami?

-----

Also, Utah loses out in the Mo Pete sweepstakes. So after being light in the '2' position last year, they've lost Derek Fisher and gotten even lighter.

Mo Pete is a nice addition for N.O. Hard to see how they don't make the playoffs next year.

Posted by Petey | July 14, 2007 11:03 AM

"Ford might be talking out of his ass. This often happens with pundits, while people evaluating pundits may be likely to be much more comfortable with relatively circumscribed claims. This means that there is an asymmetry in experience with wild-ass claims. Perhaps we need to set a pundit to catch a pundit."

And FWIW, since I'm almost never in agreement with SCMT on hoops, I thought I'd explicitly highlight his correct comment from above. Even a stopped clock...

Ford's piece has retreated back behind the paywall, after being free yesterday, so I can't take it apart piece by piece. But it really does rely on a number of incorrect assumptions.

To repeat myself from above, the core incorrect assumption is thinking that Orlando could've gotten Lewis at a lower price. You can certainly quibble with whether or not Orlando made the right decision in paying Lewis what they did, but if they'd offered a single dollar less than what they did, they almost certainly wouldn't have gotten him.

Posted by Petey | July 14, 2007 11:14 AM

Mo Williams signs with Milwaukee. Now that's an example of savvy agenting.

Milwaukee offered $39m. No one else could top that amount. So Team Willams announced that they were interested in signing with Miami for $31m to play on a contender, prompting Milwaukee to up their offer to $52m.

And in related news, the Pat Riley search for a PG isn't going well. If Steve Francis doesn't go with them, they'd better hope J-Will is actually healthy this year.

Posted by Petey | July 14, 2007 12:20 PM

That is indeed Ford's point, but it's not correct. He glosses over the fact that Houston was willing to pay the same max price for Lewis that Orlando paid. And that there was a third unnamed team also willing to pay that amount.

Petey, I got no dog in this fight, but since this is a straight question of fact (could someone else have reasonably bid a similar amount on Lewis) I was curious who was right, here.

http://www.chron.com/disp/story.mpl/sports/4936714.html

This suggests Ford was more on the money - the rockets would have had to move some big numbers in a sign-and-trade to pull it off, probably meaning shipping off some quality, not just the Battier + pick that had been rumored.

Not impossible, by any stretch, just not super-likely.

What would have been the alternate scenario(s) to a Magic signing where Lewis gets the same money, both in dollars and in years? How likely were those to play out in reality?

Posted by Brad L | July 14, 2007 1:41 PM

"the rockets would have had to move some big numbers in a sign-and-trade to pull it off, probably meaning shipping off some quality, not just the Battier + pick that had been rumored."

If I understand the fine details of the CBA correctly, the Rockets would have only had to ship about $7.5m worth of contracts back to Seattle to make the thing work. (Rashard's contract is only valued at $9m for cap purposes, and you can match by getting to within 15%.) $7.5m is not a lot of contracts, especially given that Seattle was willing to take bad contracts in exchange for also getting a first round pick.

Given that the Rockets were still romancing Lewis the day before the deal was signed, I'd assume they thought a sign & trade was quite doable.

It's really not hard to get to $7.5m, especially with Bobby Sura's expiring contract added to the mix. I think Houston could've put together appropriate packages both with and without Battier quite easily.

"How likely were those to play out in reality?"

I was not on the line when Houston talked to Seattle, so I've got no idea what the talks were actually like, but I've got to assume there was a high probability of a deal being in place, or close to being in place.

If not, why would Houston have still been romancing Lewis? And if not, why would Orlando have sent the Sonics a second round pick for the privilege of signing Lewis to a 6th year they'd prefer not to have signed him for? Houston had no interest in trying to harm Orlando.

It seems highly likely to me that the reason for Houston's attention is that they really were willing and able to sign Lewis for 6yrs if Orlando was only willing to do 5yrs.

And again, there were reports that an unnamed 3rd team was also willing to do a sign & trade for 6yrs.

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I've mentioned this before, but the contract that seems more applicable to Ford's issue is the Vince Carter contract. NJ gave Vince $66m when Memphis, who probably didn't want Carter, could've offered him only about $40m, and no one else could've offered him more than $31m.

And since the team that had Carter still wanted him, there wasn't the possibility of other competitive bidders becoming involved through sign & trades, as there was for Orlando in the Lewis signing.

The Carter contract seems to me the example of a team paying far more than any competitor would, not the Lewis contract.

Posted by Petey | July 14, 2007 2:08 PM

not just the Battier + pick that had been rumored.

I would never have given up Battier to get Lewis. Never.

Posted by Freddie | July 14, 2007 2:35 PM