Nets lose 140M from bball operations

Last Thursday was a time of good feelings for the Bucks and Nets. Milwaukee got its man in Jabari Parker, fired from its overloaded quiver of second-round picks, and Giannis Antetokounmpo may or may not have grown another three inches. The Nets unveiled a new practice facility in their home borough, with people at all levels of the organization trumpeting the glorious future after a solid finishing kick in Jason Kidd?s first season.

And, then, bam. Kidd allegedly struck like a cobra, demanding a job title that would have put him above Billy King, the team?s general manager ? an insane power grab for a guy barely a year removed from bricking 3-pointer after 3-pointer for the Knicks. Kidd had undermined others before ? Byron Scott, Lawrence Frank (twice), his coach at Cal. He demanded trades, (allegedly) faked an illness, and more. He has a touch of the Machiavellian in him.

But Machiavelli was rational. Kidd would seem to lack any understanding of his place in the world if he truly believes himself worthy of the kind of dual role Doc Rivers, Stan Van Gundy, and (to a degree) Gregg Popovich worked their whole lives to get. This was the equivalent of Jordan Crawford saying he might be better than Michael Jordan.
Van Gundy ascending the double throne as coach and top front-office guy in Detroit was something of a surprise. Granting that role to Rivers in L.A. was a gamble, and Rivers spent much of his first year in the job signing players who played well either for or against his old Boston teams in 2009. Flip Saunders is a smart basketball guy, but it?s unclear why he?s worthy of such exalted status in Minnesota. And if the new mega-deals for Derek Fisher and Steve Kerr really rankled Kidd, as some reports suggested over the weekend, he?s not the only irritated dude in the NBA?s coaching community. It?s not clear Kidd actually cares about the Fisher and Kerr contracts, but the market for coaches has become strange and frothy; it would not be nuts for someone as headstrong as Kidd to push for a new contract.
But to demand to be Brooklyn?s new version of the old coach-GM Pat Riley? Come on. Kidd and the Nets rebounded beautifully after Brook Lopez?s injury, transitioning into a killer small-ball outfit, jacking more 3s, and forcing heaps of turnovers. They lost to Miami in five games, but the last three were ultracompetitive, and in some measures, they gave Miami a better fight than Indiana. This was a team on the rise that worried the Heat.
Three or so months of solid coaching does not make you Pop, or Riley, or Van Gundy. The Nets were fretting in December that they had hired the wrong guy ? a soda-spiller and assistant-killer who relegated Frank to memo writing and presided over a team whose only virtue was being a hair less incompetent than the crosstown Knicks. People all over the organization distanced themselves from the decision to hire Kidd when things were going badly. Now he wanted to be Riles without the hair?
But this story probably isn?t as black-and-white as Kidd, the Frank Underwood?style villain, blindsiding the Russians and King with an end-around power grab. That is what happened in the end ? last week, when Kidd and his representation asked the Nets? Russian ownership if they might allow Kidd to run the team and supplant King. King would have stayed on ? he?s owed a ton of money, just like everyone else here ? but Kidd planned to eventually fire most of the front office, if not all of it, per several league sources. That?s a power grab, sure.
But multiple sources insist the maneuvering started during the fraught months of December and January, and that Kidd did not open the game by asking for the top front-office job. Kidd during that period approached ownership with concerns about King?s job performance, sources say ? King?s commitment, leadership, and vision for the future. Kidd suggested the organization might hire an outsider for a front-office job above King, sources say. Kidd even wondered if ownership had a basketball guy in Russia who might come to Brooklyn and take on a more activist role above King.
Kidd did not pitch himself for the job ? not at first, anyway. Those initial discussions went nowhere, though not everyone involved agrees on the timing and tenor of those talks. King is well liked in Brooklyn, and he has followed ownership edicts in dealing away just about every future asset possible to win immediately. The Bucks sought permission to talk to Kidd earlier this month, presumably about their head coaching job, and when the Nets were slow to respond, Kidd and his team began agitating for Kidd himself to assume the double perch, sources say.
This is all unfolding within the broader context of the Nets? organization. Bruce Ratner, a longtime Nets higher-up, is open to selling his minority stake in the team, and the New York Post reported last week that Mikhail Prokhorov, the team?s principal owner, would like to cut costs and scale back spending to make that minority stake more appealing.
That?s a valid concern. The basketball side of the Nets? business is projected to have lost $144 million over the 2013-14 season, according to a confidential memo the league sent to all 30 teams in early June. (Grantland has reviewed and verified the memo with a half-dozen sources.) If that strikes you as out of whack, that?s because it is.
The NBA expects nine teams will end up having lost money once luxury-tax distribution and revenue-sharing payments are finalized. The Nets, with that monster $144 million figure, are the biggest losers. Next in line? The Wizards, with projected losses of about $13 million. That?s right: The Nets lost $131 million more than any other NBA team last season. This is what happens when you pay $90 million in luxury tax for an aging roster and play in a market so large you are ineligible to receive any revenue-sharing help.
It?s important to note that the figures here stem from basketball activities only, and do not appear to include benefits the Nets and Prokhorov get from their ownership stake in the Barclays Center. And Prokhorov, of course, is heli-skiing levels of rich. But taking a $144 million bath when the rest of the league is swimming in profits does not sit well.
This is a bit of an uneasy time in Brooklyn. The roster King built drove those losses, but ownership?s desire to win right away upon the team?s move to Brooklyn drove those roster-building decisions. The team is tossing away more than $1 million every year on Frank, and it?s unclear why the front office signed Frank to a six-year contract with escalating year-over-year salaries ? a longer deal than either Kidd or King have.
Nobody comes away from something like this without at least a few droplets of blood on their hands. This is ugly stuff, and the fallout might get even uglier. Larry Drew, who was fired Monday, is getting absolutely hosed here. He has at least two years of fully guaranteed money left on his contract, so he?s not going to hurt financially, but this is not the way professional organizations treat their employees. Drew isn?t a great coach, but he?s not a terrible one, and he deserves better than this. Kidd can only hope some hotshot coach in the future doesn?t pursue Kidd?s job while he?s still under contract.
It?s fair for Milwaukee to want Kidd in the big picture. He?s a starry name, just like Fisher and Kerr. He brings glamour to a sausage town. People around the league are still trying to figure out why the market for coaches is exploding like this ? why Kerr and Fisher got so much cash with zero experience, and why Kidd might be the second coach in 14 months to switch teams via a trade.
The Bucks would have been insane, by the way, to surrender a first-round pick for Kidd. He?s not Rivers, and the Bucks, to be kind, are going to be selecting in a different portion of the draft than the Clippers, who gave up their 2015 first-rounder unprotected to Boston in the Rivers deal. A rebuilding team simply cannot surrender a first-round pick, even one with extensive protections, for a sophomore coach. The Bucks have a bundle of extra second-rounders, which is why they reportedly agreed on sending two second-rounders to Brooklyn to make this happen.
The Nets were not without leverage. What would Kidd have done if this had fallen apart? The Nets are done with him, and he wanted this Bucks job. The Nets owe him for the remainder of his four-year, $10.5 million deal ($7.5 million guaranteed), and with any stalemate Kidd could have theoretically reported to work and forced the Nets to fire him, reassign him, or live in perpetual awkwardness ? a basketball version of The Break-Up. Maybe King has a brother who sings a cappella. That would have been ideal for comedy purposes, but it probably wasn?t a realistic scenario.
Kidd may well develop into a great coach. He was a genius player, and he was creative in both the regular season and the playoffs; his choice to replace Shaun Livingston in the starting lineup with Alan Anderson helped space the floor and swing Brooklyn?s exciting first-round win over the Raptors. People all over the organization spoke in glowing terms about Kidd as the season wound down. Concerns about his work ethic faded.
He impressed higher-ups when he unilaterally banished Andray Blatche from the team in December. The Nets couched Blatche?s absence as due to ?personal reasons,? but Kidd really booted him out of concerns over his conditioning and preparedness, per multiple sources familiar with the matter. The timetable on Blatche?s absence was open-ended; Kidd told Blatche to come back only when he was ready to play. It was a suspension in all but name, and the organization privately applauded Kidd for taking a strong stance.
He won over the veteran players. The Nets really felt they had uncovered a gem of a head coach. That?s part of why the Bucks want him, though Kidd?s longtime relationship with one of Milwaukee?s new owners is at play, and it certainly gives off the appearance that Milwaukee and Kidd might have negotiated secretly during the season. No one can prove that at this point.
The Bucks are also banking on Kidd as a draw for free agents. Milwaukee?s new ownership group, led by Wes Edens and Marc Lasry, two private-equity giants, wants to win big. The days of competing for profits and the no. 8 seed under Senator Herb Kohl are done, and that change had everyone in Milwaukee?s front office excited to work within new parameters. That front office ? GM John Hammond and David Morway, his top deputy ? is safe for now, per sources familiar with the situation. The Bucks swear up and down they want Kidd only as coach, and not in the dual role he pursued at the last minute in Brooklyn.
Maybe that?s true. But Hammond and Morway had no clue the Kidd talks were happening, per sources and published reports, and that?s not exactly a great indicator of the organization?s investment in them. It?s also not in the best-practices manual to leave your top two basketball decision-makers out of the loop on a massive decision like this.
The finances matter for the Bucks, too. They are not thrilled about paying two coaches at once. Milwaukee is projected to make $14.8 million in basketball-related net profit for the 2013-14 season, according to that league memo, but they?re one of several small- and mid-market teams propped up almost entirely by revenue sharing. Milwaukee will get about $18 million from revenue sharing and $3 million more from luxury tax payouts, easily eclipsing the $6.5 million the team lost on its own account.
The Hornets and Pistons would be dead without revenue sharing, and they?re expected to end up in the red even with it. Charlotte is projected to lose nearly $34 million in basketball operations, and its monster estimated $22 million revenue-sharing check can?t make up for that. Ditto for Detroit?s $26 million loss and estimated $10.6 million revenue-sharing get.
A few other tidbits from the memo while we?re here:
? The Thunder are indeed paying into the revenue-sharing system, rare for such a tiny market, but they?re slated to make nearly $29 million in profit when everything is netted out. That?s the fifth-best projection in the league, trailing only the Lakers ($100.1 million), Bulls ($61 million), Rockets ($40.7 million), and Celtics ($33.1 million). Again: This memo does not capture the complete financial picture for any organization, but between this estimated profit and the general escalating value of all NBA franchises, it?s fair to take these numbers into account when debating the Thunder?s decision to trade James Harden and duck the luxury tax.
? Holy cow, the Lakers! They end up with that huge profit despite contributing a league-high $49 million to revenue sharing. The league?s revenue sharing is complex, with payouts and contributions tied to all sorts of variables ? market size, profitability, earnings benchmarks, and other stuff. A few teams, including the Lakers and Knicks, play in markets so large they are disqualified from ever receiving revenue-sharing payouts.
? Speaking of the Knicks: They?re actually expected to take a net loss for the season ? something around $3.5 million. But don?t worry, they?re still insanely profitable. They made $58 million on their own, and will ?lose money? only because of their huge revenue-sharing contribution (nearly $27 million, no. 2 behind the Lakers) and the giant tax bill they paid for a lottery roster. And, again, the figures do not account for the value of Madison Square Garden, on which the Knicks do not pay any property taxes. Hooray, civic handouts!
? Sneaky profitable teams: the Spurs, Jazz, and Nuggets, nos. 6-8 in the estimated net-profit rankings. All three finished under the tax, and the Jazz and Nuggets receive nice payouts from the revenue-sharing system. The Spurs will pay into that system, but they made a boatload on their own.
Back to the Nets: They?ll resolve this Kidd thing soon enough and move on. Kidd will have to rehabilitate what is left of his reputation. The Bucks? new owners will take a bit of a public hit, though proving a bit disloyal to coaches and (perhaps) front-office people isn?t as damaging to a team?s free-agency appeal as proving disloyal to players beyond run-of-the-mill personnel moves.

The Nets will have to hire a new coach, and you know the big-name candidates by now: Lionel Hollins (the favorite), Mark Jackson, George Karl, Billy Donovan, Kevin Ollie, John Calipari, and more. They will have to negotiate free agency from a tricky spot. Kidd?s agent, Jeff Schwartz, the orchestrator of Kidd?s hiring as head coach in the first place, also represents Paul Pierce ? a key free agent who has value around the league. Kevin Garnett probably wants his last big NBA paycheck, but if Pierce leaves, who knows if Garnett may retire and forgo the last year of his contract. The Nets are limited in what they can offer Livingston, who may be out the door already.
There are lots of messes to clean up. No one is coming out of this looking good.

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