A Substitute for War

Basketball philosophy

Wrath of Kahn: How the Minnesota Timberwolves are proving asset value theories right

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The current Minnesota Timberwolves logo (2008-...

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About a year ago, I wrote an article entitled “Developing an NBA GMing strategy: Entrepreneur/Net Worth Theory”. The premise in short being that the best way to judge a team, is to look at their total trade value. Trade value encompasses who has the stars, favorable age, salaries, injury history, team leaders, etc. The value of “what you have” is best determined by how much the rest of the league demands what you have. If you have what everyone else wants instead of their own rosters – in all likelihood that means stars and impact young players – chances are you’re in a good position. The rest of that article goes into more details for the reasoning for this asset strategy.

If true, it could create a specific “plan” as a General Manager to follow. Build one’s trade value and accumulate valuable assets, and you rise against the rest of the league.

Now I know I’m not the only one to bring up an idea like this. In fact, I’m almost certain that at least a few NBA GMs take this asset-based position. Daryl Morey’s history in Houston is certainly consistent with it. But the much malgined David Kahn is perhaps an even more interesting example. Both GMs of course have histories of university graduates, rather than being former players – Morey graduating in computer science, Kahn in English before moving to sportswriting and eventually the NBA. As a result I believe both came into their jobs with plans rooting in business strategy – and specifically, the idea of “having a plan” – and riding out the short waves of volatility.

I believe David Kahn’s plan from the start has been based on asset accumulation first, roster construction later. Drafting PGs Ricky Rubio and Jonny Flynn at #5 and #6 in the same draft and signing more PGs since then in Ramon Sessions, Luke Ridnour and J.J. Barea is of course most infamous, but he’s stacked up the PF position as much with Kevin Love, Derrick Williams, Michael Beasley, Anthony Randolph as natural 4s. It’s clear that Kahn’s PG and PF loaded rosters were not meant to fit together to maximize their potential on the scoreboard now – But to act as asset stops in the road and to give Kahn the assets in the bank to acquire the roster he wants.

Kahn’s roster is full of former high draft picks in Michael Beasley, Darko Milicic, Martell Webster, Anthony Randolph – Classic examples of “buy low” assets, with the possibility of reward if one broke out and reached their potential as stars. None have wildly broken out, but with the exception of Webster, all likely have more value now than when traded for.

The Timberwolves have spent little free agent space on unrestricted free agent veterans – and from an asset perspective, this is a smart move. When a rebuilding team signs a free agent in their late 20s or early 30s, the marginal benefit is tiny. The extra wins don’t add anything to the season if the team is far away, all that’s left then is the marginal cost of winning enough to drop from a great to a good draft pick, and the opportunity cost of not having the extra capspace used on that player as a trade asset. And the Timberwolves have recognized the value of capspace as a trade asset, because it is. There’s enough teams yearly that would like to clear salary, that if you could do it for them, it’s likely you can be compensated moreso for it than if the deal was made on a neutral financial field. Cap space lets you trade 2 dollars and 1 Monopoly money dollar, for 3 dollars. The Wolves have used this strategy to acquire Beasley (Miami needed the space to sign Mike Miller) for a few 2nd round picks, to acquire Anthony Randolph (together with Eddy Curry’s contract, which New York needed to dump in the Carmelo Anthony trade) and took extra salary taking Webster for a #16 pick (Luke Babbit) from Portland. Regardless of whether these players are long term mainstays on the Wolves, they are assets and improved the Timberwolves trade value. Of course the overwhelming youth of the Wolves have led to a ton of draft picks – with Rubio (#5), Wes Johnson (#4), Williams (#2) as high picks of their own on the team. Despite missing on the Jonny Flynn (#6) pick and seemingly making a mistake taking Johnson, the quantity of swings at the bat have helped them land ahead – They only needed one star beside Kevin Love to be in great shape and it appears they have one in Rubio. Williams might be their 3rd.

As a whole, if looked as solely from an trade asset building perspective – The Kahn era has been largely succesful so far. When he joined the franchise, their trade value and overall position in the league was near the bottom. Now they have an enviable store of talent. When I rank Total Trade Values in February as I did last year, the combination of Love, Rubio, Williams, Beasley, Randolph, Johnson, will likely be enough to put them in the top 15. Thus assuming they were once sitting very low on the list, that’s a massive improvement. Can one say “Sure, but teams should expect to go up with time”. Well, not entirely. Look at where the Charlotte Bobcats, Toronto Raptors, Detroit Pistons, Milwaukee Bucks were 3 years ago compared to now. Not a lot has changed. Furthermore having a philosophy of spare trade assets helps playoff teams too. Having assets in one’s back pocket allows you to trade for impact, win now players. Without valuable players to trade, you can’t get valuable veterans.

What’s fascinating however, is the Kevin Love situation. If taking a strict asset perspective, one could think everything points to trading him now, as much as Kahn would be maligned for it. Why? Because Love is arguably at the peak of his value, putting up incredible statistics and at the end of his rookie contract when he is controllable for years. Love is at a “sell high” stage. Once upon a time Kahn had an Al Jefferson asset when at his 20/11 statistical peak, had huge value around the league – and sat on it until both his ACL and his trade value had been blown out. From an asset perspective, the tale of not cashing in the Jefferson chip when it was at its peak instead of after its fall, has to play on Kahn’s mind just as it does a stockholder who missed selling at a peak. Furthermore, one would think Derrick Williams’ value would go upwards if he became the full starting PF of a team, instead of Love’s backup – in the same way Love’s value flourished without Jefferson. Finally, Love’s max extension will take a huge bite of their capspace and trade oppurtunities with it. So from an asset perspective, one could make a serious argument that going forward with Rubio, Williams, and the king’s ransom received for Love, is actually the right move. Yet it appears the Timberwolves will give Love a maximum extension (or as it appears, a 4 year extension with a 3rd year opt out). Perhaps Kahn has trading Love one day on the mind, but understands that now, after the Timberwolves fans’ suffering out of the playoffs for 7 years, is not the time to take a step back – especially with New Orleans owning their 2012 draft pick. And perhaps Love’s value has time to go higher still, if he proves he can anchor a playoff team this season. Nevertheless, it’s something to think about, especially with a 2012 draft boasting a plethora of elite C prospects like Anthony Davis, Andre Drummond, Meyers Leonard, John Henson. Perhaps Kahn will listen to offers for Love from the teams holding those picks.

Overall in almost any field, when one goes against the tradition– In this case the common moves of general managers, many misguided – the inital reaction may be malignation and overreacting to the lack of short term results. David Kahn to his credit took an off the wall approach to rebuilding the Minnesota Timberwolves franchise, rode out the short term waves of volatility without overreacting, and at the moment it looks like he may have been right after all. The Timberwolves have a young roster with multiple stars, that are playing well and have massive potential going forward. Perhaps asset spending happy GMs like Bryan Colangelo, John Hammond, Joe Dumars, etc. should pay attention to those of us believe you go as far as the strength of your asset accumulation. In particular, I believe one could write an article as long as this one detailing Colangelo’s failures. He began with Chris Bosh, a #1 pick (Andrea Bargnani), Charlie Villaneuva (after a strong rookie seas0n), a young Jose Calderon and lots of capspace – 4 years later in the summer of 2010 was left with Bargnani, Demar Derozan, Ed Davis, Calderon’s negative value contract and that’s about it. If David Kahn accumulated an asset bank much larger than when he started, Colangelo spent until he had one much smaller – and is one of the many examples of a poor, asset ignoring GM in the league. But that’s another article.

Written by jr.

January 27, 2012 at 5:56 pm

One Response

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  1. yep


    February 28, 2012 at 9:04 pm

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