Why the Charlotte Hornets have nobody but themselves to blame for their recent struggles

After a strong start to the season, the Charlotte Hornets have lost 9 of their last 12 games and with a 23-25 record stand in the middle of a crowded pack of mediocre Eastern Conference playoff contenders. The team’s recent struggles stand in stark contrast to its success at the beginning of the season. Kemba Walker has actually improved upon his career year a season ago. He is scoring more and with greater efficiency through a deadly combination of attacking the basket and shooting, and the sum total of his production suggests he’s one of the better players in the NBA. Head coach Steve Clifford continues to emphasize defense and taking care of the ball. The Hornets have the ninth best defensive rating in the NBA and the lowest turnover rate. Their starting lineup has outscored opponents by 9.5 points per 100 possessions in nearly 400 minutes played, which would rank second among NBA teams. Nonetheless, their recent losing streak has unmasked flaws in this Hornets team. Although the Hornets have lost an above average amount of production due to injury, the team’s lack of depth and misfit roster has exacerbated difficulties when any of their studs miss time. This issue could have been easily avoided with smart and rational choices from Charlotte’s front office during this past offseason.

While the Hornets’ primary concern during 2016 free agency was retaining stud wing Nicolas Batum, the front office faced a difficult dilemma regarding three core members of their rotation who were also set to be free agents. Courtney Lee, Jeremy Lin, and Marvin Williams were all due for significant raises over their respective 2015-16 salaries and the salary cap pushed the Hornets into a squeeze where they would not be able to keep all of them in town. The solution was to make a draft day preemptive strike by acquiring sharpshooting wing Marco Belinelli in exchange for the 22nd overall pick. Once July 1 rolled around, the Hornets had only left themselves with enough space to maintain Bird rights on Batum and Williams and had to renounce Lee and Lin, letting go of any chance at retaining them. With their remaining cap room, they signed guard Ramon Sessions and center Roy Hibbert. Finally, Charlotte rounded out the offseason by signing and trading wing Troy Daniels to the Memphis Grizzlies for $250K in cash and signing Brian Roberts, Christian Wood, and Traveon Graham to minimum salary contracts. However, in the process of executing the offseason, there are three primary areas where the front office fell short: proper allocation of resources, recognition of league trends, and salary cap management.

Allocation of Resources

Charlotte did not allocate their cap room or draft picks optimally this offseason. Starting with cap room, when the Hornets traded for Belinelli in June they took on his $6.3 million salary while the rookie scale contract for the 22nd pick they gave up in exchange for Belinelli is just $1.2 million. Although this $5 million loss in cap room may seem harmless on the surface, it is particularly problematic because of the opportunity cost; it was the difference between keeping Lee and having to let him leave in free agency. While there is an argument that Belinelli was replacing Lee on a cheaper and less risky contract, it would be understating the massive downgrade Belinelli is from Lee. Put concretely, Belinelli isn’t actually any good. Using 2015-16 stats (information Charlotte would have had at the time of the decision), Belinelli performed at a below replacement level according to both ESPN’s RPM and Basketball-Reference’s VORP, which suggests that a D-League call-up could mimic or improve upon his production and that he might not even be worth the minimum salary, let alone $6.3 million this year and next.1  In fact, over his entire career, the Italian has not been a significant producer outside of San Antonio. Lee, on the other hand, rated as a below average starter during the 2015-16 season according to these metrics, which, despite the sound of that phrase, is a huge upgrade over below replacement level. Furthermore, Lee’s long track record of strong production confirms the conclusion that he is a significantly superior player than Belinelli.

Of course, it’s possible that Lee told the Hornets that he did not want to play in Charlotte. It’s also possible the front office felt that the cost to retain Lee was going to be more than the fairly reasonable 4-year $48 million deal he eventually signed with the Knicks. Paying Lee big money into his age 34 season is a definite risk, and Belinelli only had two years left on his contract. Nonetheless, the downgrade from Lee to Belinelli is large enough that they should have made a greater effort to keep Lee, especially if he was willing to accept the contract he actually received from New York to stay with the Hornets and the best alternative was to trade a first round pick for Belinelli.

Giving up the first round pick in the trade was an inefficient appropriation of assets and a reckless misevaluation of the value of a first round pick. Specifically, the Hornets let go of an opportunity to replenish the young talent on a team that sent its 2014 first round pick Noah Vonleh to Portland and gave up two second round picks to acquire Lee at the 2016 trade deadline. Moreover, first round picks are extremely valuable, even ones that fall in the 20s, because they offer the chance of significant production from a player on a below-market contract. I do not think Belinelli justifies this lofty price. In a nutshell, the decision was between the 22nd pick, a young player on a cheap contract for the next four years, and Courtney Lee, a productive wing on a reasonable but slightly risky deal, in exchange for Belinelli, an aging gunner who had rated below replacement in 5 of his 9 NBA seasons, and $7 million in additional cap space. Choosing the latter was a suboptimal allocation of resources and ultimately, a poor decision.

League Trend Recognition

The Hornets failed to recognize that the league is trending smaller, emphasizing shooting, playmaking, and versatility, which is leading to a scarcity of wings across the league as teams scamper to join the small-ball revolution. Charlotte allowed Lee and young sharpshooting wing Troy Daniels (who by the way had a higher VORP than Belinelli in 2015-16) leave when the opportunity cost of keeping them was negligible. Players that can defend the opposing team’s best wing scorer and legitimately shoot the three are immensely valuable. Even players who are really good at one of those skills and adequate at the other have value. The Hornets gave Daniels a qualifying offer, meaning that he was a restricted free agent and they could match any offer he was given. They eventually decided to sign-and-trade him to the Grizzlies in exchange for $250K, giving up a young and moderately productive player for a relatively small amount of money. The worst part is that Daniels’ contract with the Grizzlies is a bargain 3-year $10 million deal which is valuable if Daniels provides anything more than replacement-level production, which would be a good bet. He is a career 42% shooter from beyond the arc. That’s lights out! He’d be 11th all time in 3pt percentage if he had played enough games to qualify. While Daniels is a clear negative on defense, the gravity of his knock-down shooting greases offenses and it is the primary reason he is a strong contributor on the offensive end. Daniels is a solid player on a cheap contract and Lee is a rare breed two-way wing. From a value standpoint, the Hornets made mistakes in letting these players leave.

In addition to hoarding a valuable resource, the retaining Daniels and Lee would have built depth and helped to alleviate a problem at backup power forward. Starting with depth, you could say the Hornets are solid at backup wing with Belinelli and Jeremy Lamb and would be overcrowded with Daniels and Lee (who would command more minutes than Belinelli currently does). However, having more good wings is always useful. The Hornets have learned the importance of depth the hard way this year and there is still a question of whether or not Lamb is any goodFurthermore, if the Hornets decided to keep Daniels and Lee, they could find extra minutes by occasionally playing Michael Kidd-Gilchrist or Batum as small-ball fours where the Hornets lack a true option. They’ve been playing Kaminsky at backup power forward, and he offers good spacing from the four position offensively (more so in reputation than production, he’s a 31% career three-point shooter). However, he’s simply not quick enough to guard the power forward position. Below is Miami Heat center Hassan Whiteside completely blowing by Kaminsky in a face-up.

Whiteside is a center. Quicker power forwards have been able to blow by Kaminsky from the perimeter and power through him to finish at the rim.

Kaminsky is simply is too slow to guard the modern power forward in the NBA, but due to a lack of wing depth, he is probably Charlotte’s best option at the position. If the Hornets had kept Lee and Daniels, they would be able to give a significant portion of the backup power forward minutes to Batum or Kidd-Gilchrist, a far superior solution to playing Kaminsky out of position. Speaking of Kaminsky, it is a cheap shot to rehash the Hornets’ ill-advised rebuff of Danny Ainge’s trade offer of four first round picks (including an unprotected Brooklyn pick) in exchange for the 9th overall selection in the 2015 draft. But I’m going to do it anyway. The rationale for rejecting the trade offer was misguided and frankly, concerning. From Zach Lowe’s 2015 article, Hornets chairman Curtis Polk justified rejecting the trade by saying “After all the intelligence we’d done, we were comfortable with Frank. But now you have two minutes to decide if you make this trade, who you’re gonna take at no. 16, or maybe no. 20, and we haven’t been focusing on that range. In fantasy basketball, it sounds great: ‘Oh my god, they could have gotten all those picks.’ But in the real world, I’m not sure it makes us better.” This explanation makes me question the competence of the front office. Teams have to know which player they would pick at any spot in the draft to be prepared for this situation. Polk essentially admitted that the Hornets were not. The move looked bad when it happened and it appears even worse with hindsight. The Hornets were not ready to jump on the massive value that Celtics’ trade offer added due to a lack of preparation. There appears to be a pattern of the Charlotte front office being a step behind the league in terms of recognizing and adapting to changes and the decision to move on from Lee and Daniels when there was little opportunity cost of keeping them is emblematic of this problem.

Cap Management

Lastly, the Hornets have failed to maximize future salary flexibility when structuring contracts, displaying a lack of attention to detail, future planning, or salary cap knowledge, none of which are good signs. Once Charlotte had exhausted their cap space on Hibbert and Sessions, they had the ability to exceed the cap and re-sign Batum for anything up to the individual maximum. Since Batum agreed to sign for 5-years $120 million, about $30 million less than the maximum contract he could have received from the Hornets, Charlotte had the ability to structure Batum’s annual salaries in a way that maximized future cap space as well as Batum’s trade value at zero present cost. For example, the Hornets could have organized the payouts so that that it started at the maximum, $26.6 million, and then decreased by 5% per year for the remaining four seasons, which still adds up to $120 million total. Instead, the Hornets started Batum at $20 million and his annual salaries increases by 7.5% per year (the maximum allowed under the current CBA). They will be paying Batum $3 million more than they had to in year four, and $5.5 million more in year five, burning future cap space as well as Batum’s trade value. A 31-year old Batum with 2-years $44 million left on his contract is more valuable than if he was still owed $53 million, as he is scheduled to receive under his current deal. Convincing Batum to stay in Charlotte was a clear win. Getting him to take significantly less than the maximum was a coup. However, in the midst of this important victory for the franchise, they failed to utilize the bird rights rule to their advantage and they may as well have lit future cap space and trade value on fire.

In sum, the ideal offseason for the Hornets is to not trade for Belinelli, draft someone with the 22nd overall pick, and keep Batum, Daniels, and Lee on contracts with descending annual payouts. The necessary steps to execute this strategy are outlined below.

screen-shot-2017-01-16-at-8-48-42-pm

In this scenario, the Hornets would have had a little more than $4 million in space to spend on a backup point guard while cap holds sit on the books for Batum, Daniels, Lee, Williams and the 22nd overall pick. Getting backup point guard with this leftover space is the first step in their offseason machination. Next, they use the $2.9 million Room Mid-level Exception to sign a backup big. While the money available to spend is less than the $11 million they actually gave to Sessions and Hibbert, it is enough to reasonably fill those spots with similar talent. It’s not as if either of those players have made significant contributions to the Hornets this season. Finally, Charlotte uses bird rights to exceed the cap to re-sign Batum, Daniels, Lee, and Williams and sign their first round pick to a rookie scale contract. The resulting cap sheet would look something like this:2 

screen-shot-2017-01-16-at-8-49-38-pm

On the surface, the Hornets had a solid offseason which has led them to a decent record in 2016-17. However, regarding asset allocation and talent evaluation, league-wide trend awareness, and cap management, the front office failed to maximize the team’s future outcomes.

***
1. Replacement level is a somewhat nebulous term. For more, see http://www.sonicscentral.com/warp.html

2. The projected totals for Batum, Daniels and Lee’s contracts are approximately the same as what they actually received. In fact, for all three, the projected contracts are slightly larger than the deals they actually received. In Batum’s case, his actual contract was with the Hornets, while Daniels and Lee signed with the Grizzlies and Knicks respectively. 

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