Harden Week: Second-Round Maestro; Daryl Morey, James Harden, and Moses
Michael Shagrin is a senior at Dartmouth College in Hanover, NH, a contributor to Hickory-High and ClipperBlog
of ESPN’s TrueHoop Network, and a sports columnist for The Dartmouth
. Follow him on twitter @MShaggy
to find out more about the frequent intersection of his two passions, basketball and politics.
Daryl Morey is the Moses of the NBA advanced statistics community. For those unfamiliar with Exodus, God looked down upon the plight of the enslaved Jewish people and beset their Egyptian rulers with His plagues. The Pharaoh responded by ending their servitude and the Jewish people, with a mixture of ecstasy and restlessness, hustled out of Egypt. But the Pharaoh changed his mind as the Jewish caravan approached the Red Sea, trapping the Jewish people between his army and the iconic body of water. When God parted the Red Sea allowing the Jews to escape the Pharaoh, they were ultimately denied the opportunity to celebrate their triumph, even as the Pharaoh’s army drowned in the sea behind them. Lying directly in front of Moses and his followers was desert. Forty years of desert.
A prototypical Jewish irony is that Moses never made it to the Promised Land, dying within sight of the Land of Milk and Honey. He had thrown off the yoke of the Pharaoh and parted the sea, resolved internal insurrections and fought off incursion from desert tribes, and even hiked Mount Sinai to retrieve the Ten Commandments. Yet, he passed away on the banks of the Jordan River knowing full well that God would not permit him to enter the Promised Land. Before instructing his followers to cross the river, Moses gathered the Israelite tribes to give his final address, which would become the basis for Book of Deuteronomy. While I hope that Daryl Morey, another talented and humble trailblazer, can avoid the fate that befell Moses, I worry that he’s on track to spend the next 40 years in the desert. I worry that Morey will see the Promised Land, but never enter.
During the last week and half, Jews shunned the practice of eating leavened bread in order to mimic the suffering of the enslaved Israelites during their daring escape from Egypt. Reformed Judaism’s version of Passover as a matzohfest is an almost laughable attempt at imitation, however it does carry symbolical significance by unveiling a common characteristic amongst the Jewish Diaspora; we don’t need what we want and we don’t even necessarily want we need. When you identify with a culture defined by suffering and exclusion, sometimes it’s difficult to determine when such trauma is no longer relevant to your worldview. Is it a hundred years? Five hundred years? A thousand years? It is this trap that Daryl Morey must avoid. After so many years of asset flipping in hopes of landing a superstar and escaping mediocrity, the Rockets finally acquired James Harden. But Morey’s been a slave to the cult of value for so long, isn’t there a chance he ends up aimlessly wandering the desert with a troupe of economical contracts for the next forty years?
When Houston acquired James Harden from Oklahoma City, it seemed like the conclusion to a story, not the beginning of a new one. The Rockets would finally end the phase of merely struggling to make the Playoffs, an era bookended by the Yao/McGrady years and the arrival of Harden. But the continued competitive evolution of the Rockets requires a coinciding change in front office strategy, one that accounts for the limited attention span of a lonely superstar.
The Rockets acquisition of Harden, arguably the best shooting guard in the league, was the culminating move after nearly five years of incremental, even fractional steps forward by Daryl Morey. Unlike most teams that find themselves entirely out of short-run title contention, Rockets owner Leslie Alexander had no intention of bottoming out in order to fast track the rebuilding process. Alexander wanted asses in the seats while simultaneously returning to the upper echelon of the über-competitive Western Conference, much to the chagrin of Morey.
An accepted assumption for success in today’s NBA is the necessity of having a superstar (in the age of the super team, most people say you need at least two), which can be acquired three unique ways: trade, free agency, or the draft. The draft is the simplest way of gunning for an elite franchise-altering player but it incentivizes tanking or at least consciously avoiding success. Next is free agency, through which only a select number of big-market franchises have a shot of convincing a superstar to join them. For prideful, non-destination franchises, the only option left for securing an elite player is via trade, but who the hell ever wants to trade a superstar?
If any NBA GM possessed the skill set to accomplish this exceptional task, it was Morey. When the Rockets poached Morey from the Celtics front office in 2007, the MIT Sloan MBA was in a universe all by himself—he was already formulating proprietary metrics for evaluating players, enabling him to recognize value where other GMs could not. What Morey accomplished over the next few years required a potent mixture of insight and guile. “If you’ve got a mission of turning around the franchise when you lose Yao and Tracy and getting back to being a title contender without ever getting a top-5 pick or even a top-10 pick,” Morey told Grantland’s Zach Lowe, “the way we’ve done it is the only way.”
A telling way to conceptualize Morey’s approach during this interregnum is as a Wall Street trader specializing in penny stocks. As low-risk financial products, a small absolute growth in a penny stock’s value yields a massive relative growth in value. In the same way a stock broker would dispassionately sell off an underperforming penny stock, there was little stopping Morey from cycling through his cheap contracts. This strategy of shuffling affordable contracts was particularly well suited to Houston’s pursuit of a superstar because it facilitated Morey’s ability to make a diverse range of trade offers and adapt to the asset demands of any negotiating partner.
The Rockets front office is well known as the hardest working crew in the NBA with more feelers out there than any other front office. As Harden’s departure from Oklahoma City became more and more probable, Houston inevitably inquired about Harden’s asking price, keeping an open line of communication with Oklahoma City. The work paid off, both for Morey and Thunder GM Sam Presti. The collection of assets that ultimately netted Harden was an impressive array of developed talent (Kevin Martin), developing talent (Jeremy Lamb), and potential talent (two first round picks and a second round pick).
There was a sense of poetic justice in Presti’s act of handing Daryl Morey the elite player for whom he yearned so long and worked so hard. Most teams don’t usually have superstars coming out their ears, but the Thunder landed whales on three consecutive top-five picks. Influenced by their extraordinary success in the lottery, the small-market team’s profit expectations developed while their primary contributors were on relatively cheap, rookie-scale contracts. So when it came time to hand out a third max contract in three years, Thunder ownership decided Harden wasn’t worth it. In Oklahoma City, bottoming out worked too well. And after all those years of proposing countless combinations of players and assets in hopes of landing a star, the enterprising Morey was willing and able to cure Presti’s embarrassment of riches.
When Morey finally consummated the trade for a superstar, it couldn’t have come at a better time. The Rockets ended the 2011-12 season miserably, falling from the 6th seed in the West with just a week remaining in the regular season all the way to the 9th seed, out of the Playoffs all together. Further, Morey parted ways with his most productive players from the lockout-shortened season.
Within the span of a week, Morey facilitated the departures of Goran Dragic and Kyle Lowry, his two qualified options at starting point guard. During their time in Houston, both players rapidly developed from repressed, undervalued sparkplugs to highly productive game managers. Both guards seemed destined for uninspired careers before being sought out by the Rockets, a typical background for many of Morey’s trade deadline acquisitions. Dragic was just a middling backup for Steve Nash in Phoenix when he made his way onto the Rockets’ radar in February 2011. Houston managed to unearth Lowry in 2009 when he was still in the Memphis second unit as a punch off the bench. Morey sent Aaron Brooks and a future first-round pick to Phoenix in exchange for Dragic, and, to secure Lowry, he only needed to send Memphis a first-rounder. Crucial to Morey’s grand strategy, he acquired both point guards in the middle of inexpensive rookie scale contracts.
But on July 5th of this past offseason, Dragic announced his attention to rejoin the Suns on a 4-year, $30 million contract, without a word of protest from Morey. By comparison, in slightly less than two season with the Rockets, Dragic made a total of $4 million. That same day, the Rockets agreed to swap Lowry for a first-round draft pick and some filler (Gary Forbes). Morey began July 5th with two starting caliber point guards. He ended the day with none.
But what a difference a night can make. The next morning, Jeremy Lin was verbally agreeing to sign Houston’s backloaded 4-year, $28 million offer sheet. However, the moratorium on transactions had not yet been lifted and wouldn’t be until July 11th, meaning this deal (or any of the aforementioned deals) couldn’t be executed for almost a week, even though verbal agreement was reached. When the Knicks seemed unfazed by the prospects of paying the global celebrity around $5 million in each of the first two seasons and $9 million in each of the subsequent seasons, Morey embraced the ethos he once relayed to ESPN the Magazine’s Eric Neel: “we’re limited only by our strategic insight.”
Looking at the Knicks extensive liabilities in 2014-15 season (the year that the Collective Bargaining Agreement imposes an extremely punitive luxury tax regime), Morey decided to use the moratorium period to adjust his offer to Lin. The Knicks’ books were almost empty for the 2015-16 season, meaning the last year of Lin’s contract as initially constructed wouldn’t be very difficult to swallow. So, rather than keeping half the “poison pill” in 2014-15 and half in 2015-16, Morey decreased the total value of the contract to $25 million, but shortened it to only three years. This would’ve put the Knicks on the hook for a $15 million payout in the third year were they to match, likely bringing their payroll to an eye-popping $90 million, a figure far exceeding the luxury tax in a season when such a transgression is met with steep penalties. Displeased by Morey’s exploitation of the loophole in the CBA, the Knicks front office did all they could to avoid physically receiving the three-year, poison pill offer sheet and postpone their predicament.
To most everyone’s surprise, the Madison Square Garden tenants ultimately declined to match the Rockets’ offer, meaning Morey solved his point guard problem for a price of $25 million over three years. However, the fact that this was a manufactured problem, not an inevitable one, speaks to the underlying purpose of Morey’s decision. Houston had two proven point guards to choose from, neither of who would demand much more money than Lin, but Morey ended up spending a medium-sized sum on the unproven player (who, in fairness, has proven to hold significant economic value as a cultural icon). Before landing a superstar, Morey’s team-building strategy was in fact premised on signing unproven players along side a host of medium-sized contracts—but those are always two different players, never the same guy, as was the case with Lin. So, why manufacture this problem in the first place? The same reason Daryl Morey has made every move since Yao’s feet started to crumble and McGrady’s back began degenerating. To land Houston’s next franchise player.
If Daryl Morey is the star of this story and James Harden is the second-lead, then surely the third most prominent role belongs to the Collective Bargaining Agreement. To dismantle a roster almost entirely (13 moves involving 31 players, thanks to SI’s Chris Ballard for doing the math) requires more than just a working understanding of the CBA. Morey appreciates the subtleties and wrinkles in the labor agreement like an accountant knows the tax code. If you looked at the structure of an NBA organization from afar, the role of the GM is to act as an intermediary between labor and ownership, speaking the language of both sides and trying to strike a balance between each of their interests. And Morey’s done just that, adeptly wriggling himself out of tight situations and into favorable ones, regardless of where the trouble originates.
Just as the NBA’s most productive players have a go-to move, one that always feels comfortable and smooth, regularly adaptable to the prevailing hazards, so too does Daryl Morey in his team-building efforts. This of course is the second-round draft pick. To a creative thinker with a dynamic understanding of the CBA, the second-round draft pick is an extraordinarily versatile asset because there are few restrictions on the contracts’ minimum salary and length. One of the few restrictions, termed the Gilbert Arenas rule, created the “poison pill” loophole that Morey exploited in order to sign Jeremy Lin. A few days before the Rockets publicly jumped into the Lin sweepstakes, Morey utilized the very same tactic to dissuade Chicago from matching Houston’s offer sheet for Omer Asik.
A second round pick who signed with the Bulls before the 2010-11 season, Morey told Zach Lowe that he had been “obsessed” with Asik after failing to nab him in the 2008 draft (he deferred coming to the States for two seasons). Morey bombarded the Chicago front office with proposals for Asik and, sadly for the Bulls, they rebuffed him each time. Had they accepted one of those offers, they would have at least been able to garner some value in return for the big Turk. Instead, they helplessly refrained from matching Houston’s offer sheet (identical to Morey’s offer to Lin) due to Bulls owner Jerry Reinsdorf’s antipathy to exceeding the luxury tax—a near certainty were they to retain Asik. In
both Lin and Asik’s case, Morey targeted a second-round pick and an un-drafted free agent, razing his front-office adversary by exploiting their imbalanced salary commitments. (For a detailed, technical description of the poison pill, check out Larry Coon’s CBA FAQ.)
Another second-round darling whose relationship with Houston changed abruptly in mid-July of 2011 was Luis Scola. Houston managed to pry Scola from the Spurs in 2007, five years after San Antonio obtained his draft rights with the 56th pick. On an affordable contract, less than $10 million over the first three years, Scola was a productive presence from the beginning, helping fill the hole left by an injured Yao Ming during his first season and starting all 82 games the following two seasons. As a reward, Scola earned a 5-year, $47 million contract, but Morey showed a willingness to trade the Argentinean—a kind of public posturing that couldn’t have left Scola with the impression he’d be in Houston for the long-term. And, so it goes, Morey waived him via the amnesty clause. Jeremy Lin and Omer Asik were coming to town and the ever-adaptable, nonpartisan GM wanted his books fairly clean in case he encountered an opportunity to acquire an elite player.
As demonstrated by his obsession with Omer Asik, when Daryl Morey sees an undervalued second-round draft pick, he uses his impressive work ethic to transform personnel desires into reality. However, this impartiality doesn’t stop at the water’s edge. If Morey views every transaction as a chance to exchange a player with proven value (maybe semi-proven value) for undiscovered value, the Rockets’ roster should have as much turnover as any team in the league—which it does. Nowhere is this more apparent than in Morey’s desire to target particular second round draft picks through trades on draft night. In fact, Morey was able to obtain Carl Landry (31st pick by SEA/OKC in 2007) and Chase Budinger (44th pick by DET in 2009) by offering the exact same trade—a future second round draft pick and cash.
As should be apparent at this point, Landry and Budinger’s value each increased measurably after getting unexpected minutes in the Rockets’ system. When Morey inevitably flipped these affordable yet effective producers, consciously or not, he was doing the legwork for his future acquisition of James Harden. Morey sent Landry to the Kings along with Joey Dorsey in exchange for Hilton Armstrong and what would ultimately become a centerpiece in the trade for Harden, bona fide scorer Kevin Martin. For Budinger, Minnesota sent Houston the draft rights to Lior Ellyahu and the 18th pick in the 2012 draft, which turned out to be Terrence Jones from Kentucky, a likely component in many of Morey’s pu pu platter offers to OKC.
Such an opportunistic team-building approach prohibits Morey from engaging in any sort schmaltzy nostalgia, or at least acting upon it. One scenario where sentimentality could have interfered with Houston’s big picture strategy began even before Morey’s tenure with the Rockets—signing the undrafted and undersized Chuck Hayes in 2005. One of Morey’s first acts after taking over as GM in 2007 was re-signing Hayes to a four-year deal, paying out close to $2 million per season. After five seasons in Houston, Morey developed an affinity for Hayes, as SI’s Chris Ballard explains it, because Morey as a basketball player was “the quintessential undersized four who gets by on hustle, effort and taking every advantage he can… As a result Morey has always had a soft spot for similar players, Hayes in particular. The shortest starting center in the league at 6’6″, Hayes couldn’t run or jump and lacked anything resembling a jump shot, yet he was remarkably effective in ways traditional stats couldn’t measure. Watching him sign with the Kings as a free agent a year ago broke Morey’s heart. That’s how it goes, though. “You can’t afford to be emotional,” says Morey.”
In the summer of 2010, the Kings handed Hayes a rich contract, 4 years, $22 million—the type of offer that would have been odious to the Rockets given their intent to retain cap flexibility in pursuit of a franchise player. Morey has a similarly revealing psychology regarding second-round prodigy and legitimate hunk, Chandler Parsons. Morey admits to Zach Lowe that he feels tremendously bad about the discrepancy between Parsons’ contribution to the Rockets success and his extremely lean contract (barely more than $3.5 million over four years). But as is Morey’s wont, he can always use the restrictions on the CBA as a buffer between himself and an annoyed player. Keeping Parsons satisfied with the organization is crucial to ensure his continued production over the last two seasons of his contract, so Morey can’t just flippantly ignore his player’s concerns. He needs to have a justifiable answer to retain the respect of his players, coaches, and ownership. Zach Lowe prodded Morey on these very questions when they sat down together at this year’s Sloan Conference. Here’s what he had to say:
Lowe: “Do you feel guilty that you are robbing Chandler Parson’s blind on his current 4-year, the best contract in the league.” Morey lets out a surprisingly loud combination of a sigh and a harrumph. His face turns to one of torment, looking at the ground rather than Zach as had been customary throughout the interview. “Do you want to try and help him financially in some way? I would feel bad.”
Morey: “We can’t. So let’s just start there.” Hands out by his sides, as if pleading with Zach or God or Bill Simmons or Bill James to step in and terminate this line of questioning. Then he exhales a deflated sigh.
Lowe: “I understand that you can’t. But do you give him some advice?”
Morey: “He’s a very smart guy so he came to us and said, “Is there something we can do? What about you waive me and then re-sign me?”
After some surprise from Zach, Daryl continues.
Morey: “I said, “Chandler, A) We can’t do it because of the rules. B) If we waive you, somebody else is going to pick you up…”
Lowe: “So he senses that he’s terribly underpaid.”
Morey: “He’s a great player. Honestly, we’ve taken a lot of players in the second round and given them the largest guarantees in the league and they didn’t make it. Jermaine Taylor, Joey Dorsey who ended up winning a title in Europe but didn’t make it in the NBA. The list goes on. We give a lot of money to our second-round picks to hope they pan out. Obviously, we put a lot of investment of coaching time and development, so we try to have a return at the end. Chandler himself probably feels like “man, this is sort of hard,” but he’s smart enough, I think, to look at the big picture and add up all the ones who didn’t make it to Chandler’s contract. We’ve invested a lot in these kinds of players and Chandler is the one that panned out. If you’re the one guy that pans out, it’s tough.”
But why all of this Moreyian (maybe Moravian) history? He speared his whale in the Harden trade, he stole Omer Asik and Jeremy Lin from destination franchises in Chicago and New York, and there’s still plenty of cap room to make an elite player a max offer. What’s the problem?
Or more accurately, problems.
Morey’s strategy contains a pitfall that can appear when any GM becomes exceedingly reliant on advanced statistics. That’s a tendency to elude a balance between the short term and long term interests of the club—short term goals have been consistently pushed to the side in Morey’s bargain bin pursuits. Sure, focusing on cheap contracts is the best way of guaranteeing salary cap flexibility and staying relevant in the hunt for a superstar. But there’s unavoidable collateral damage, such as the synergistic development of players who grow by taking the court together, or the personal, emotional connections that are critical to the dynamic of any successful team.
Revisiting the penny stock metaphor, there’s a fundamental difference between securities in a portfolio and players on a basketball court. There’s a ceiling on the amount of time a basketball player can spend in live games developing his skills and increasing his value in the eyes of the basketball community, unlike playing the stock market which offers virtually unlimited opportunities. Thus, by its very nature, the process of accruing undiscovered talent and displaying that talent requires the team to sacrifice the playing time (and potential salaries) of more developed players, guys who’s primary worth is immediately tied to their contributions on the court. This stands in contrast to the undervalued “steals” Morey has spent so much time targeting, most of who, as we’ve seen, end up departing Houston once the market recognizes their appreciation in value.
The cult of value is a sort of trap for a franchise transitioning from mediocrity to the upper echelons of the Western Conference. The Rockets have Harden, but nobody else on the team has showed the potential to become a perennial All-Star. Everybody knows The Beard won’t ever be able to defeat an opponent featuring a “Big Three” all by himself. So, Morey continued working throughout the 2012-13 season, doing what he could to put the Rockets in a position to acquire an elite free agent. But what if that prospect becomes distinctly unlikely or the elite, max contract players available aren’t suitable to Houston’s well-defined and well-thought out style of play? We’ve now arrived at the same fork in the road as Daryl Morey.
As Larry Coon detailed on the CBA FAQ Blog on Wednesday, even if Houston waived all of its non-guaranteed contracts, they still wouldn’t have enough cap space to offer the marquee prize of 2013, Dwight Howard, a max contract. However, as Coon points out, Howard’s maximum salary will be the highest of this year’s free agent class, meaning Houston can make a run at one of the other talented free agents this offseason. A few of these options are Andre Iguoudala, Josh Smith, and Al Jefferson—but even if these guys are likely due for a max contract, none of them are talented enough to justify Morey pushing all of his chips to the middle of the table. And, even more, none of them really fit the Rockets’ offensive system, which is heavy on three pointers and attempts at the basket.
Like Moses in the desert, Morey is approaching the Promised Land without much prospect for entrance. He has most of the pieces necessary to make the leap from playoff contender to title contender, the first essential component being James Harden. But Harden won’t stick around forever. He’s not yet invested in the city of Houston like he was in Oklahoma City and star’s have a tendency to get impatient. When Morey traded away his entire power forward rotation at the trade deadline for the 5th pick in the 2012 Draft, Thomas Robinson, most people around the NBA cheered the Rockets for their savvy exploitation of Sacramento’s financial woes. But I saw the trade differently. It was an indication that Morey has yet to adjust his player procurement strategy, even though the addition of Harden should noticeably accelerate the timeframe for Houston’s title pursuits.
Daryl Morey remains on the hunt for value when he should be on the hunt for championships. Will his sermons become the basis for the basketball bible or will he be just another charlatan prophet?