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The Oklahoma City Thunder Model: So Easy a Gnome Could Do It

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The Thunder visit the Washington Wizards tonight for the conclusion of their regular season series. If you have watched the actions of either team at all this season, you would likely be struck by the obvious discrepancy in each team's directional path. The Thunder, two years removed from the basement in the Northwest, are on a trajectory to win more than the 50 games they took last year, and are actively being touted as the team of the present and the future. The Wizards, meanwhile, are stuck in the basement and looking to the mid-west for some answers. Is there an emerging "Oklahoma City Model?"

Wizards Hope to Copy Oklahoma City Model in Washington | Washington Post

I sympathize with the Washington Wizards. I truly do. I lived in the DC metro area for the better part of the last decade, so I got to experience first hand such key moments as:

  • Michael Jordan drafting Kwame Brown;
  • Michael Jordan returning to play two buzz-worthy but ultimately forgotten years;
  • Michael Jordan getting hustled out of his ownership stake, leading Hall of Fame coach John Thompson to utter that the team treated him like a whore;
  • The late owner Abe Pollin once had a cake wheeled on the court to celebrate Gilbert Arenas and Antawn Jamison for having been selected as All-Stars;
  • Gilbert Arenas signed a $111 million contract while he was on injured reserve after blowing out his meniscus;
  • Gilbert Arenas flashed some firearms in the locker room, which was really the beginning of the end;
  • The Wiz finished with a record in 2010 bad enough to draft John Wall;
  • The Wizards are currently 1-29 in road games and will be duking it out for the #1 draft spot once more.
Granted, there were several seasons when the Wiz were honest to goodness fun to watch. The last year when Arenas, Jamison, and Larry Hughes played together, along with the next two where Hughes was replaced by Caron Butler, saw the team finish with winning records and in the playoffs. While there was no question the team wasn't championship-caliber, it was still nice to see the team winning games and see Arenas reach the peak of his popularity, and his mercurial persona helped inspire an entire blogging phenomenon called FreeDarko. If you hear someone shout the word "Hibachi!" at a basketball game, well, you might smile knowing that the kiai was originally coined by Agent Zero.

Let me state on the record that I have a fondness for the team's new owner, Ted Leonsis. I think he has learned some hard lessons about team ownership, as he as previously taken the Washington Capitals from the brink of disaster to a promising future. He is also candid, honest, and engages with the fan-base enthusiastically. He is sort of a toned down version of Mark Cuban. In short, I hope that his plan works out.

Here is the problem though; I feel like I'm witnessing the gnome underpants theory of economics all over again. Here it is in short form, constructed for an NBA team's pursuits:
  1. Lose a while, collect young talent through the draft, create salary cap space;
  2. ???
  3. Wins!
The equation makes perfect sense; if you are willing to lose for a while and rebuild through the draft, collect assets and make salary cap space, that after a portion of time wins will result. The problem though that you can see with the gnome underpants theory is that there is a missing step - that elusive ??? keeps getting in the way.

If we forget about the ??? for the moment, it appears that the Wizards are following the Thunder plan well. They are losing a lot of games, they got their #1 pick last year in John Wall (Kevin Durant was #2 in 2007), they'll likely get a top four pick again this year (Thunder got Russell Westbrook at #4 in 2008), and then if pieces fall right they might end up with a third high draft pick in 2012 (Thunder took James Harden at #3 in 2009). Everything is falling into place, right?


The Wizards play a truly mindless game. Wall runs down like a sprinter shot out of the blocks and tries to throw lob passes when he could get an easy layup. Blatche is a seven footer with athletic advantages who spends most of his time taking difficult, baseline fallaways…Young never met a shot he wouldn’t take.

JaVale McGee jumps at everything, and does get to a few balls, but all you have to do is roll to the basket and it’s layup after dunk.

The next aggressive defensive contest you see from a Washington player may be the first.

Borders Books Could Make iPads

If you follow the financial news at all, you might have noticed that in February Borders Group, which owns Borders Books, declared bankruptcy. The filing came amidst the confirmation of reports that the company had completely mis-read the book business market for the better part of the last decade. Originally patterned off of Barnes&Noble, the monolith who still sits next to Nordstroms and DSW's everywhere, Borders failed in part because:
Borders's finances crumbled amid declining interest in bricks-and-mortar booksellers, a broad cultural trend for which it offered no answers. The bookseller suffered a series of management gaffes, piled up unsustainable debts and failed to cultivate a meaningful presence on the Internet or in increasingly popular digital e-readers.

Its online struggles proved critical as consumers became accustomed to getting books mailed to their doorsteps or downloaded to handheld electronic devices. Among Borders's biggest missteps were decisions to transfer its Internet operations to Inc. about a decade ago, and a stock-buyback program coupled with overseas expansion that swelled the company's debt.

Oversimplifying the equation to the absurd, here appears to be the Borders business model:

  1. Pattern itself after Barnes, right down to the awful coffee and overpriced snacks in the cafe;
  2. ???
  3. Profits!
The reason why Barnes remains and yet Borders is failing is that elusive ???. If the solution is to simply run a business in the same way that the industry leader runs its business, then we'd be awash in book stores that operate at 100% operating margin and all the books are free. That ??? is so simple on its face that I could become the CEO of Borders tomorrow, lose a ton of money, then say, "we're applying the Steve Jobs method!" of doing business. Our brand new iPads that hit the market in 2012 would be every bit as good as the real thing, but would also contain a 3D digital camera, be as thin as a sheet of tissue paper, and decrease male sterility.

The point is this: that ??? is the most important part of the equation. How a team solves that missing component is the difference between a team like the Bulls or the Thunder vs the Wizards and the Kings.

Who is making the decisions?

Is it at this point that the definition of the missing ??? should be apparent. It is the people in the front office that make the decisions. It isn't the draft, or the salary cap, or even the players themselves. It is the architects of the franchise. Right now, Thunder GM Sam Presti is on a bit of a hot streak. Everything he has rolled so far is coming up sevens, and he has his team primed for a normal growth rate that should be competing for championships in the next two to three years. This good fortune could all change if the Kendrick Perkins trade fizzles, but as the aging giants of the West begin to recede into the past, no team is better position to take over the lead than the Thunder.

The Wizards' GM since 2003 has been Ernie Grunfeld. Early on in his tenure, he too was on a bit of a hot streak. The fact alone that he traded Kwame Brown for Caron Butler should have earned him free drinks in DC for life. But he also procured Arenas, Jamison, and some very good role players in Brendan Haywood, Antonio Daniels, and Etan Thomas. He had assembled a team that was both very young and carefree and but very good.

If you've been following the team though, you know how quickly it all fell apart, and the reversal of fortune was compounded by a number of bad decisions by Grunfeld, such as the Arenas contract extension and their investment in players like Andray Blatche. Time will tell if he can reclaim his previous decision making acumen.

So part of the old and decaying decision making nucleus remains, but new to the scene is Leonsis. So when we consider the big question marks of the team in DC, this is what we're really asking: can Leonsis and Grunfeld make decisions as good as or better than Presti? Leonsis believes this is the plan:

I know that is a lot to ask but we have to be honest with everyone. We will load up on young players. We will await the new rules (if any) in the NBA. We will add free agents. We will make trades. We will play the youngsters to gain experience and then I think we will have a very good team for a long, long time. That is the plan.

Is this plan enough? Here is what is missing, and in my opinion what separates Presti from the rest: he has brought a mindset to the team a philosophy on how to marginalize the team's exposure to risk. This risk is that of unhappy players, of bad contracts, of injuries, and of the changing rules. Presti has immunized his team balance sheet.

Will Leonsis bring the lessons he has learned from the past to do the same? That there is a good ??? indeed.