The Hornets were looking to deal Paul to the Clippers for Chris Kaman, Eric Gordon, and Al-Farouq Aminu, an unprotected #1 draft pick from Minnesota, and Eric Bledsoe's name was also being floated about as well. As we have now learned, the Hornets wanted all four of these players plus the draft pick, and that amount seems to be too high for the Clippers to pay.
While there are reports that the deal could be tweaked, it is dead for now. Steve Perrin at Clips Nation writes:
...The Clippers have a fine team as is. They don't have to behave in a desperate manner in this process. The NBA/Hornets are the ones with their backs against the wall. I expect we have not heard the last of "Chris Paul to the Clippers" - but whether the next round starts between now and the start of the season, or closer to the trade deadline, remains to be seen.
But if Stern thinks another team is going to swoop in here and offer more, I think he's just wrong. Paul is worth more to the Clippers than to most other teams because he's at least willing to stay two seasons.
Perrin spots the problem well here - Stern & Co. believe they have a high hand in Chris Paul, and they do...to a certain point. However, Paul's value is not simply determined in a vacuum, but by how much other teams can pay for him. The league was pursuing two things in working with the Clippers: talent and salary cap space. Gordon, Bledsoe, and Aminu are all still on their rookie contracts, as would be next year's draft pick. Kaman is in the final year of a $12.2 million contract, so he offers some salary space relief as well.
The league's strategy for the Hornets' future is becoming more clear - they want as much free salary cap space as possible for a new owner to come in and lay his own blueprint. That in itself is a good strategy. But for the league to demand both the salary space AND some of the Clipper's best young talent, their asking price for Paul is too high. The Clippers have to walk away from that deal.
Interestingly, this deal does help clarify why the league rejected the Lakers deal; despite the superior talent, that deal did not give the Hornets the same clean balance sheet. Even though it came across as heavy-handed and meddlesome, the league's killing that deal does make sense from this balance sheet perspective.
For this second proposed deal however, the Hornets overreached. Now the league learned that its bargaining power does have limits, as it should. Also, as Perrin points out, the Hornets are running out of trading partners. The more the league either overplays its hand or undercuts GM Dell Demps' efforts (an atrocious position, to be sure), the more difficult it is going to be to receive true value for the franchise's best player. SI's Sam Amick writes that:
One source close to the situation saying the league has taken over almost all negotiations while Hornets general manager Dell Demps has been relegated to a minimal role. The ripple effect around the league could be great, as teams steadily grow wary of dealing with the Hornets and many executives become convinced the league won't deal fairly.
If the league continues to ask for too much, everybody is going to lose.
To protect themselves (and by proxy the rest of the franchises) it is almost as if the Clippers issued an "ultimatum" to Stern. Fancy that.