The resignation by Sam Hinkie signals the end of his long-term managerial strategy, notoriously dubbed the “Process.”
By most standard measures, Sam Hinkie’s tenure in Philadelphia was a failure. In a business where success can be objectively measured by wins and losses, the Sixers were the losingest team over the past three years, with a combined record of 47 and 199. His years at the helm represent three of the five worst seasons in team history, finishing with fewer than 20 wins in each of those seasons.
Our evaluation of the job done by Hinkie will not be result-oriented. The goals set forth, and agreed to by ownership, were always long reaching goals with no determinate timeline. Instead we must weigh the execution of the Process against its goals, and decide if the 76ers are in a better place today than when Hinkie took the job.
To borrow from the eloquently written, and now leaked, resignation letter penned by Sam Hinkie,
“To do this requires you to divorce process from outcome. You can be right for the wrong reasons. In our business, you’re often lionized for it. You can be wrong for the right reasons.”
In order to truly evaluate the performance of Hinkie, we must do exactly that – separate process from outcome. And to understand process, we must start from the beginning to grasp context.
The Beginning
Let’s rewind to the 2012 offseason.
The team was coming off another mediocre season at 34-48, just missing the playoffs. Par for the course in the post-Iverson era. In the six years following Iverson’s departure, the 76ers were a fringe playoff team, led by do-it-all forward Andre Iguodala. Despite making the playoffs four times, the 76ers were clearly outmatched in the top heavy Eastern Conference, only making it out of the first round once, in 2012, when Derrick Rose tore his ACL in Game 1 of the series.
Finally tired of the spinning wheels of mediocrity, the 76ers pulled off a drastic move in an attempt to acquire a franchise player. Part of a four team trade, the Sixers sent 2011 1st round pick Nikola Vucevic, 2012 1st round pick Maurice Harkless, a protected future 1st rounder (which turned into two 2nds) and their best player, Andre Iguodala, to acquire Andrew Bynum.
As we now know, it ended up being one of the worst trades in NBA history. Bynum, plagued by injury and a lack of mental fortitude, never played a game for the 76ers. Management had gone all-in with a pair of 8s, only to see a flush hit on the river. Their pipeline of young talent was almost entirely decimated.
The Bynum trade was a failure worthy of dismissal, which is exactly what happened when presiding General Manager Tony DiLeo was handed his walking papers on May 11, 2013.
The Sixers had tried building a competent team (barely) able to make the playoffs. They had tried going all-in on a budding, but risky, star.
It was time for a change, and change they would get.
The Ownership
If any owner in the NBA was going to agree to Hinkie’s brash and unrelenting plan toward talent acquisition, it was Joshua Harris. The self-made billionaire led an ownership group in 2011 to purchase the Sixers from Comcast-Spectacor for $280 million.
Harris, worth nearly $2.4 billion, made his fortune as a founding partner of the private equity firm Apollo Global Management. While it’s natural to be leery of the motives driving businessmen from the private sector, those who know Harris say he’s not like the others.
Scott Stewart, a fellow classmate at Harvard Business School, had this to say
“I can’t see him using this as a toy or a status symbol or some kind of crown jewel to illustrate his success to people or to himself,” Stewart said. “He’s a serious businessman, and he wants to make it a serious success. Is this a toy? No. There’s just no way. . . . The way to be successful in this case in the NBA is to win NBA championships. It’s a very definitive and tangible goal. His track record of success would lead you to believe that that’s his ambition with the team: not only to win one but win multiple.”
Joshua Harris is no stranger to going against the grain to achieve success. During the global financial crisis in 2008, when banks and other investment firms were shying away from high-risk debt, Apollo Global Management was doing the exact opposite. They were buying up large amounts of senior loans in various companies, most notably a $2 billion investment in the debt of LyondellBasell, a large chemical company with rapidly dropping prices. The investment was considered very risky as many in the industry believed the falling company would go under. But Apollo was well versed in the chemical industry and kept buying the debt on a daily basis. It paid off big time when LyondellBasell turned around, netting Apollo a profit of $9.6 billion. One of the biggest payouts on a single private equity investment ever.
This type of investment strategy is in line with Apollo’s core principles. As described in the Financial Times article about Apollo,
To this day Apollo goes its own way as a relentlessly contrarian value investor. Its frugality is legendary. “If you propose a deal that is expensive, you do not belong at Apollo,” says co-founder Mr Harris. The firm’s reluctance to pay top dollar means that often it snaps up the messiest, most-troubled companies. Its confidence in its analytical skills, its financial engineering willingness to rise to operational challenges has repeatedly resulted in outsize profits.
In fact, a good chunk of Apollo’s activities come when the market is doing poorly, and others are shying away. Leon Black, the principal founder of Apollo Global Management, details their comfortability in such market conditions:
“We traverse downturns,” says Mr Black, “Since Apollo was founded in 1990, we have been through four downturns and 40 percent of all of our money has been invested in down cycles, when everyone else shut down.”
It’s these fundamentals – a contrarian viewpoint, trust in analytics and success in downturns – that would drive the hire of the next general manager and subsequent strategy for the organization.
The Hire
On May 15, 2013, the Philadelphia 76ers announced the hiring of Sam Hinkie as General Manager. Considered to be one of the brightest stars in the enlightenment of analytics engulfing NBA, the 36-year-old Hinkie was hired from the Houston Rockets.
He got his NBA start when the Rockets hired him in 2005 as a special assistant to then general manager Carroll Dawson. Two years later, Hinkie became the youngest vice president in the history of the NBA at 29 years old. For the next five years, he served as the right hand man to Daryl Morey – widely regarded as one of the forefathers of the analytics movement.
At the time of his hiring, Morey lauded the role Hinkie played in the organization,
“His valuable insight regarding players and the NBA, whether building around Yao Ming or taking the multiple strategic steps necessary to acquire James Harden, has provided the Rockets with an unmatched advantage over the years,” Houston GM Daryl Morey said. “Philadelphia will realize over time what an important acquisition they have made.”
So where did this basketball analytics wunderkind come from? The football dominant state of Oklahoma, of course.
The small town of Marlow, Oklahoma, with a population of 4,622, was where Hinkie called home. Truth be told, he was foremost a sports fanatic. At Marlow High School, Hinkie played point guard for the basketball team and defensive back for the football team. Despite his passion, Hinkie was just an average athlete, able to use his smarts to carve out a role. His true talents lied in the classroom.
Duane Lovett, one of Hinkie’s best friends growing up, detailed his intelligence,
“Obviously, a guy like that’s going to set the curve in pretty much any class you’re in,” said Duane Lovett, “Excelled in any kind of math class. There’s lots of smart people. But he thinks outside the box. That’s kind of him in a nutshell. Doesn’t do things the way everybody else does.”
In an attempt challenge him, Kenny Ridley, his biology teacher, and a Brown University graduate, tried to throw him curveballs,
“I’d make up special tests, try to pull one over on him,” Ridley said. “He’d look up and grin. He’d still ace it. Whatever I threw at him, he was up to the task. Super bright. Had some talents that a lot of folks don’t.”
His academic success followed him to the next level. Hinkie graduated from Oklahoma University summa cum laude, and was named one of the top 60 undergraduates by USA Today in 2000.
Upon graduation from Oklahoma, Hinkie accepted a job for Bain & Company. He later parlayed that into a position with Bain Capital in Australia, where he helped to analyze and identify businesses for acquisition. After a stint in the financial sector, Hinkie returned to school to obtain his MBA from Stanford University. While there, he worked with the 49ers and Texans on draft strategies and statistical analysis, before ultimately signing on with the Houston Rockets.
The hire of Hinkie, while unusual by NBA standards, should come as no surprise given Joshua Harris’ background. The two share a lot in common. Both are cerebral, self-made individuals who come from modest beginnings. They made their way with an analytical approach and unconventional thinking. And, above all, they thrive in rough conditions.
It seems fitting that their plan for making the 76ers a championship contender would be shrewd and deliberate.
The Plan
When Sam Hinkie took office, he had one goal in mind – build a team capable of contending for an NBA championship. No matter how long it took.
The NBA is extremely star driven. This becomes even more apparent during the playoffs when the defense tightens and spotlight intensifies. In these moments, it is often generational talents who take over on the big stage. Each NBA champion has at least one Hall of Fame player on their roster. Such talent is difficult, but not impossible, to acquire.
The plan crafted by Sam Hinkie was simple – maximize the Sixers’ chances at obtaining one of these elite talents. To do so required analyzing each method of player acquisition – draft, free agency and trade – and determining the route with highest probability of success. When forecasting for the future, your foundation is always built upon past outcomes.
In the last 30 years, only one team has won an NBA championship without drafting one of their top two players – the 2004 Detroit Pistons. That means 29 of the previous 30 NBA champions drafted at least one of their top two players, with 17 champions drafting both players in that duo.
Ok so the best way to acquire elite talent is through the draft, but where in the draft can you find it?
We looked at every draft since the NBA-ABA merger in 1976 until 2012. The lottery yields the majority of top-level players in the NBA. Of all the Hall of Fame and All-NBA players drafted in that time period, 77% of them are selected in the lottery and 50% are chosen in the top 5.
If you are drafting in the lottery, you have an 18.7% chance of drafting an All-NBA or Hall of Famer. The higher up you go in the lottery, the better your chances. In the top 5 you have a 34.1% chance, top 3 a 40.5% chance and if you’re lucky enough to grab the top pick in the draft you have a 56.8% shot of getting an elite player.
The higher you pick in the draft, the higher your chance of landing a supreme talent. Yet unlike other professional sports leagues, it’s not as simple as being the team with the worst record. The NBA draft lottery, implemented in 1985, was designed to bring equilibrium to the league while deterring outright tanking. The current weighted system was developed in 1993 to give the team with the worst record the best chance at landing the top overall selection, currently 25%, while leaving just enough doubt. The rest of the odds can be seen in the below matrix.
Historically the best, and most sustainable, method for acquiring championship caliber players has been through the draft. There are two ways to maximize your chances at landing an elite player this way:
- Pursue the worst record in the league to give yourself the best chance at landing the top pick.
- Obtain as many draft picks as possible, to increase your odds of hitting on any particular pick.
Acquiring players through the draft also has an added bonus – the rookie pay scale. Any player drafted in the first round is subject to a fixed pay scale for his first four years in the league. A team could not pay more, even if it wanted to. The pay scale is composed of two years fully guaranteed, followed by team options in year 3 and year 4. The amount for each year is set, but can be negotiated between 80% and 120% of that amount. The base salary decreases with each selection in a particular draft, with the amount for each draft slot increasing in subsequent years. The rookie pay scale amounts have been set up to 2020, the final year of the CBA, and can be seen here.
Below is an example of the rookie pay scale for the top pick in the 2015 NBA draft.
After the fourth year team option, the team has the option to extend a qualifying offer. If they do, the player becomes a restricted free agent with three choices:
- Accept the qualifying offer and become an unrestricted free agent the next year.
- Negotiate an extension with the incumbent team.
- Sign an offer sheet from an opposing team, which the original team has the right to match.
The rookie pay scale is extremely valuable for a franchise. It allows the team four years to evaluate their draft pick on a fixed payment schedule. After that contract is over, if the player has proven his worth, they have the inside track to retain him – either by contract extension or matching another team’s offer sheet. The player could sign the qualifying offer, and become an unrestricted free agent the following year, but would be impeding his earning potential in the fifth year while exposing himself to injury and performance risks.
The clock on a rookie’s contract only begins once the player joins the team’s roster. There are cases, increasingly in recent years, where a team drafts a foreign player under contract with an international team. The player won’t be able to join an NBA team until his current contract is completed. To expedite this process, the player and his current team can agree to a buyout (to which an NBA team can assist financially). Conversely, an NBA team may intentionally draft a developmental foreign player with the intentions of keeping him off their books until his skill has reached a satisfactory level – aka the draft and stash. Yet another hidden advantage of drafting players.
By consistently pursuing draft picks, the Sixers could increase their odds of acquiring elite talent while incurring the lowest possible risk. If a first round pick doesn’t work out, the Sixers’ absolute worst case scenario would be to let him walk in free agency anytime after year 2. More realistically, if one of their draft picks wasn’t fitting within their team, or didn’t have a satisfactory trajectory, the Sixers could look to trade them. After all, there are few trade assets more enticing than draft picks and young talent. Green prospects present hope, they can be developed and molded into All-Stars with the right coaching. Best of all they have a low financial footprint and can be easily retained.
But drafting players isn’t the only way to success. There were still 13 teams able to win championships without drafting both of their stars. These stars can only be obtained one of two ways, trade or free agency. While less likely, this is still a possible avenue to build a championship caliber team. When such a player does become available, you must be prepared. A team should have both quality assets, in order to pull off a trade, and cap room available to sign a high caliber player.
There have been many times where supplemental role players are acquired in free agency, but rarely foundational players. Two such instances come to mind – Shaquille O’Neal and LeBron James. In both cases, the destination teams had cap space and the ability to lure their prize.
The Lakers had the promise of the lucrative Los Angeles market, and an opportunity to join a legacy of big men. Kudos to the Lakers management for simultaneously convincing Shaq to sign and drafting Kobe Bryant in the same offseason. It wouldn’t have been possible without cap room to sign Shaq, and assets (Vlade, a 1st round pick himself) to acquire Kobe. However, this scenario is less likely to occur today. The advent of the internet and increased revenue in the NBA have lessened the advantage of larger markets in today’s free agency.
In Miami, Riley pulled off probably the best free agent coup in the history of the league. Clearing out enough cap space for two maximum free agents, he was able to poach the best player in basketball during his prime. With Dwyane Wade in tow, Riley put out the pitch of a lifetime, bringing LeBron James and Chris Bosh to the Heat. Such a feat was impressive, and likely wouldn’t happen without Riley’s clout and Wade’s relationships. But they had both, and the cap room to make it possible.
Both were rare occurrences, but possible nonetheless. Other star players have moved in recent years, such as LaMarcus Aldridge and Dwight Howard. If such a situation were to arise, the Sixers would be wise to have the infrastructure and financial flexibility available to make a run at them.
The final tactic for acquiring elite talent is via trade. This is usually the least optimal as the price in assets is very high and can gut your team. Though there have been multiple times this has worked in recent years.
Celtics’ GM Danny Ainge was able to execute this spectacularly, when he traded for Kevin Garnett and Ray Allen in the same offseason. It was made possible by the bevvy of assets the Celtics held in addition to Paul Pierce. In total the Celtics sent out 7 players and 3 first round picks, including Al Jefferson (picked 15th in 2004) and the 5th pick in the 2007 NBA draft. It was a worthy gamble as The Big 3 led the Celtics to a championship in 2008.
The following offseason the Lakers got in on the trade fun, dishing out Marc Gasol and two 1st round picks for Pau Gasol. By pairing Gasol with two players the Lakers previously drafted, Kobe and Bynum, the Lakers were able to capture two championships in 2009 and 2010. This was made possible by the drafting of Marc Gasol, who ended up becoming an All-Star and Defensive Player of the Year for the Grizzlies.
These types of players rarely come available on the market, but it does happen. Teams positioned with the correct infrastructure, and assets to complete the trade, have been able to use this method successfully.
Hinkie’s plan was to leverage this information, and put himself in the best position to acquire talent necessary for championship contention. His unabated strategy can be summed up as follows.
To obtain as many draft picks as possible, while simultaneously tanking to increase odds at obtaining the highest selection in the draft. This method yields the best chance at obtaining an elite player, while creating a portfolio of assets. The low financial commitment, and high value placed on young talent, provides optimal flexibility to pursue players via trade or free agency down the road.
Harris and Hinkie are both businessmen who take calculated risks. From a purely numbers perspective this was the optimal way to pursue a championship. While the strategy required a period of downturn, the duo understood this as a means to a better end. Hinkie acknowledged this in his letter to investors
It is critical to be cycle aware in a talent-driven league. In a situation like yours at the Sixers, where a variety of circumstances left you near a trough in the cycle (and falling), amplifying this cycle became crucial.
The idea in and of itself wasn’t really all that innovative or revolutionary, it was the audacious execution that made it unique.
The Execution
We have talked about the plan and the numbers behind the Process. But how did Hinkie actually execute?
In the aftermath of the Andrew Bynum trade, Hinkie was equipped with few current or future assets. Below is the state of the roster at the end of the 2012-13 season.
The team was led by the young, promising point guard Jrue Holiday who had just completed the fourth year of his rookie deal. Their second most valuable player was Thaddeus Young, a 24-year old tweener forward with a fair contract. Evan Turner was once the 2nd overall pick, now seen as a versatile role player. Spencer Hawes, a productive center who could stretch the floor, was entering the final year of his contract.
Most executives would have come in and resigned Jrue Holiday to a long-term deal and built around him. No one would have batted an eye. After all, here was a 22-year old point guard fresh off an All-Star appearance. The problem for Holiday in the Hinkie era, is that he was too productive for his own good. Holiday was good enough to fight for the playoffs, but not quite the elite talent you build a championship team around.
2013-14
Hinkie wasted no time implementing the Process. In his first draft, Hinkie traded freshly minted All-Star Jrue Holiday to the Pelicans for the rights to the #6 pick in the 2013 NBA draft (Nerlens Noel) and a top-5 protected 2014 1st round pick. Trades like this don’t happen often as teams mostly retain their successful draft picks. However, Hinkie saw an opportunity to sell high and took it.
Nerlens Noel was widely considered the top talent in the draft, only available at #6 because he was forced to miss the entire 2013-14 season with a torn ACL. The Pelicans were no doubt improved by the addition of Holiday, but likely wouldn’t make the playoffs with such a young team in the Western Conference. Picking up the top player in the draft, and an extra lottery pick, all while reducing wins for next year? Perfect.
Hinkie capped off the rest of his first NBA draft with the Sixers by selecting Michael Carter-Williams with their own first round pick at #11 and acquiring two 2014 2nd round picks, along with the rights to Royce White and Furkan Aldemir.
The next step, hiring a head coach, was crucial in the subsequent stages of the Process. The coach would have to be understanding of the long-term strategy of the front office and well versed in player development. Enter Brett Brown.
Brown had built his coaching career from the ground up in the National Basketball League in Australia. After making a cold call to Melbourne Tigers head coach Lindsay Gaze, in 1988, Brown was offered a job as an assistant coach, which he maintained for the next five years. In 1993, he accepted a position as the head coach of the North Melbourne Tigers. The next year, Brown led the Tigers to a championship, while being named the NBL coach of the year.
In 1998, he transitioned into the NBA, taking an unpaid job with the San Antonio Spurs as a member of their basketball operations department. For the next 10 years, Brown rotated at different positions within the Spurs’ organization, first as director of player development and ultimately as an assistant coach to Gregg Popovich. Concurrently, he served as an assistant coach on the Australian national team, before becoming the head coach in 2009. His roots as an international coach gave him knowledge of foreign players and how they could transition to the NBA, which played a key role in the Spurs signing Patty Mills in 2011. Brown’s diverse experience gave him insight into the front office/player development side, while also getting rich coaching experience from the best head coach of this generation.
On August 14th, 2013 the Sixers were able to pry Brett Brown from the Spurs’ bench with a 4-year fully guaranteed contract. With the right coach in place, the Process could continue.
Right before the start of the 2013-14 season, Hinkie nabbed two productive young players by trading a heavily protected 2nd for Tony Wroten and signing Hollis Thompson as an undrafted free agent. It was the preamble to a whirlwind trade deadline.
On February 20, 2014 the Sixers took part in four separate trades. The summation of their moving parts had them dealing the expiring contracts of Spencer Hawes, Evan Turner and Lavoy Allen in return for six 2nd round picks.
2014-15
The Sixers, led by rookie of the year Michael Carter-Williams, had finished the 2013-14 season with the second worst record at 19-63, only besting the 15-67 Milwaukee Bucks. Neither team secured the top selection in the 2014 draft, as the Cavaliers, the 9th worst team that year, capitalized on their 1.7% chance of landing the top pick.
Faced with a similar dilemma as in 2013, the Sixers followed the same blueprint, using the #3 pick on the injured, but supremely talented Joel Embiid. The belief was he would have to sit out one season before returning to form. Unfortunately, that has yet to occur but recent indications are he’s progressing.
Equipped with the Pelicans’ pick at #10, Hinkie leveraged intel that the Magic were keen on Louisiana-Lafayette guard Elfrid Payton and drafted him. In exchange for Payton, the Sixers received the Magic’s #12 pick, a 2015 2nd rounder, and recoup their own lottery protected 2017 1st rounder they had sent in the Andrew Bynum trade. The trade was made possible by Hinkie’s willingness to wait a couple of seasons for Dario Saric, arguably the better prospect, to come to the NBA. The Sixers finished off the draft by selecting impact players Jerami Grant and K.J. McDaniels in the 2nd round.
Later that summer, they put the finishing blow on the pre-Hinkie roster by dealing Thaddeus Young to Minnesota for a top-10 protected 2015 1st rounder, originally from Miami. Of course, wiley Riley found a way into the 10th overall pick in 2015, delaying reparations until 2016.
At the 2015 NBA trade deadline, Philadelphia was active again. For the second time in two years, Hinkie traded a promising young point guard at the height of his value. Michael Carter-Williams was coming off a rookie of the year campaign, and putting up gaudy numbers. However, his stats were inflated due to a high usage rate on a bad team. Carter-Williams’ high usage also meant high inefficiency, as he was averaging 4.2 turnovers per game while shooting 38% from the field. No matter. Enamored with his athleticism, the Bucks pulled off a three-way deal to acquire the 6’6″ guard from Syracuse, sending Brandon Knight to the Suns. Believing Knight to be their point guard of the future, the Suns sent the Lakers’ top-5 protected 2015 1st round pick to the 76ers. That pick is now top-3 protected for the next two years, and becomes unprotected in 2018.
The Sixers also took advantage of their financial flexibility. The Nuggets, desperate to get out from under the remaining two years and $23.25 million due to Javale McGee, sent Oklahoma City’s top-18 protected 2016 1st round pick as payment for the Sixers absorbing the contract into their available cap space.
2015-16
The artificial tanking by the Sixers was again not good enough to clinch the worst record in the NBA. The Timberwolves, even more devoid of production, and the Knicks without Carmelo Anthony, both finished with worse records at 16-66 and 17-65, respectively. Philadelphia secured the #3 pick for the second straight year.
This may have been the most devastating year for 76ers to finish outside of the top 2, as it precluded them from being able to draft surefire stud Karl Anthony-Towns and hyper-confident guard D’Angelo Russell. Still with the third pick, they had their pick of a pair of talented big men in Jahlil Okafor and Kristaps Porzingis. Okafor presented the safer pick, with a fully developed arsenal of post moves. However the Sixers hadn’t been scared off by long-term risk in the past. A report came out after the draft that Porzingis’ agent, Andy Miller, had shut out the Philadelphia front office and potentially scared them off from drafting the Latvian. It’s impossible to know with certainty the reasoning behind Philadelphia’s selection, but time will tell if they made a mistake in drafting Okafor.
Later in the offseason, Philly again flexed their cap space. Sacramento, desperate for impact players, sent a king’s ransom in order to dump the contracts of Carl Landry, 2 years for $13 million, and Jason Thompson, 2 years for $13.25 million. In return for taking on those two contracts, the 76ers were rewarded with the right to swap 1st round picks in 2016 and 2017, along with a top-10 protected 1st round pick in 2018 (which becomes unprotected in 2019) and the Kings’ #8 selection in the 2014 draft, Nik Stauskas. That’s quite a haul for simply taking on the $26.2 million due over the next two years. If the Kings fail to improve in that time period, it’s possible the Sixers can end up with three top-10 picks (including Stauskas).
As we now know, it would be the last offseason with Sam Hinkie running operations for the Philadelphia 76ers.
During Hinkie’s 35 month tenure, the 76ers acquired 24 new draft picks, including 7 1st round selections, with the option to swap two with the Kings. They also netted 17 2nd round picks with the option to swap two more. A potential total of 28 draft picks acquired in just under three years. That’s in addition to having all of their own first round selections, and Dario Saric waiting in the wings.
The Sixers are also in a very good financial situation. The dead cap money from Javale McGee and Gerald Wallace comes off their books at the conclusion of this season, with Carl Landry on the books for one more year at $6.5 million. They currently have four players drafted in the top 8 still on their rookie contracts – Noel, Embiid, Stauskas and Okafor. In addition, they have Richaun Holmes, Robert Covington, Jerami Grant and T.J. McConnell under contract at about $1 million per year until the end of the 2017-18 season at the earliest. At the start of the new league year, they will have roughly $57.6 million in cap space.
The Verdict
It’s too early to tell.
It seems like a cop out, but it’s the only true answer.
The ultimate goal of the Process was to bring the 76ers to championship contention. We are far off, likely five years or more, from being able to determine the true success against those lofty goals. And by that time, the plan’s visionary will be long gone.
However, what we can do is compare the current progress against what the Process sought to accomplish. Did Sam Hinkie put the Sixers in a better position today than when he took the job three years ago?
When Hinkie first took the job, he essentially had Jrue Holiday, Thaddeus Young and a bunch of role players. Most general managers would have resigned Holiday to a long-term deal and tried to build around him and Young, continuing the rut of mediocrity, as neither look to be cornerstone players on their current teams. Instead, Hinkie deconstructed that core in favor of a more flexible future.
If you look at each trade completed by Sam Hinkie, it is clear he won the majority from a value standpoint. The final outcomes are unknown, but the preliminary results are satisfactory. He turned Jrue Holiday into Nerlens Noel, Dario Saric and a 1st round pick. Then traded Carter-Williams, coming off a rookie of the year performance, for a pick potentially higher than used to draft him. Few, if any, executives would have traded Carter-Williams when Hinkie did. The timing was impeccable. You couldn’t sniff that value for him this offseason.
Hinkie also leveraged the cap space he created to land at least two more first round picks, from the Nuggets and Kings, along with the #8 pick in the 2014 draft, in return for absorbing contracts – of which only $6.5 million remains on the books for next year.
Overall, the pipeline of assets is vastly improved from the 2013 offseason. They currently have four potential All-Stars, all 22-years old or younger. Okafor is already an elite offensive talent, but needs to improve his maturity and defense. Noel looks every bit the defense stalwart the Sixers hoped, but he must improve his offensive skillset. Saric, who has a unique blend of skill and athleticism, is nearing a buyout that allowed him to join the Sixers this offseason. And if Joel Embiid can get healthy this offseason, he has the most upside of them all. Tack on the potential role players in Covington, Stauskas, Grant, Holmes, Marshall and McConnell – all under contract until at least 2018 – for a combined total of $9.9 million per annum AND 24 additional draft picks. An impressive restocking of the cupboards in just three years.
The foundation has been laid in concrete. The rest of the structure will depend upon a combination of luck and decision making.
Answers will come as soon as May 17th when the NBA draft lottery occurs. Ironically, the Sixers hold the worst record in the NBA for the first time since Hinkie took over. If the ping pong balls land the right way, they should land the #1 pick and the rights to select Ben Simmons, who looks like the franchise player Philadelphia has coveted. In addition, they have the 24th and 26th picks in the upcoming draft and a chance to be holding a second top-5 pick this year. There is currently a 44% chance the Lakers’ pick lands outside the top-3, and in the hands of the 76ers.
Regardless of the outcome of the lottery, it is clear that Hinkie has put the 76ers in a great situation going forward. They have yet to land that franchise player, but could do so in the very near future. The odds are stacked in their favor. Even if they don’t get the exact player they want in the draft, there isn’t a team in the NBA with more assets or financial flexibility than the Sixers. They will have options to trade for, or sign, All-Stars in the future.
So why is Hinkie currently on the outside looking in?
Hinkie and Harris overlooked, or perhaps intentionally ignored, one crucial element in the Process – the human element. At the end of the day, the 76ers are in the entertainment business, and their product is basketball. Their revenue is built upon the fan interest, which in turn is based on a winning, watchable product. The 76ers’ attendance was in the bottom three in the NBA the past three seasons, reflecting their stature as a bottom three team according to win-loss record. In accepting Hinkie’s plan, owner Joshua Harris essentially agreed to stomach a shortfall in revenue in the short-term for a brighter future – let’s call it investing in infrastructure. And humorously enough, a contingent of Sixers fans understood and embraced the Process, even using their draft pick count to taunt other fanbases.
The losing may have had other, unanticipated impact. The NBA is essentially a contingent of 30 owners, a very exclusive club. Their revenue pays for the salaries of the commissioner, along with the rest of the league office, and the players and staff employed by each individual team. You may think the Sixers’ losing has adversely affected the revenue of the league, but surprisingly it hasn’t. Since the 76ers have 2.5 million+ viewers in their local TV market, they don’t qualify to receive revenue-sharing. Interestingly, they have even turned an operating income in the past two years – $13.9 in 2013-14 and $24.4 in 2014-15.
So what’s the problem here? Well the thing about being in such an exclusive club, is the other 29 members have influence. In this case, the other NBA owners became increasingly annoyed with the Sixers’ strategy. Their intentional losing was not only embarrassing for the league, but taking advantage of a loophole in the system. One the league even tried to reform, but was shot down by small market teams. When that didn’t work, the owners put pressure on commissioner Adam Silver to fix the problem. Silver succeeded by forging a relationship between Jerry Colangelo and owner Joshua Harris.
On December 7, 2015 the 76ers announced the hire of Jerry Colangelo as the chairman of basketball operations. During his press conference, Colangelo said Hinkie would still have final say on personnel, while hinting at a shift in power.
Colangelo "Sam is in the position where he will make the call on the final decision, but that's after a lot of collaboration with us."
— Derek Bodner (@DerekBodnerNBA) December 7, 2015
It took until April 6, 2016 for Sam Hinkie to take that hint. Much to his embarrassment, his resignation letter was promptly leaked to the media. In it, he pointed to the “changes to our organization” as his reason for stepping down (ie losing control of personnel decisions).
“For me, that’s today. Given all the changes to our organization, I no longer have the confidence that I can make good decisions on behalf of investors in the Sixers—you. So I should step down. And I have.”
Less than four days later, the changes to the organization became abundantly clear when Jerry Colangelo hired his son, Bryan Colangelo, as president of basketball operations for the Philadelphia 76ers. How’s that for NBA nepotism?
The move to hire both Jerry and Bryan Colangelo simultaneously brought a distinctive end to Sam Hinkie and the Process. In truth, it was a natural progression in the plan. Their strict, business analytics approach wasn’t built to last in the NBA ecosystem, where nepotism is rampant and contrarian strategies are abhorred. In fact, it’s likely that Harris and Hinkie saw this day coming. In spite of that, Hinkie executed the Process as he saw fit, without hindrance.
“It’s clear now that I won’t see the harvest of the seeds we planted. That’s OK. Life’s like that. Many of my NBA friends cautioned me against the kind of seed sowing that felt appropriate given the circumstances for exactly this reason. But this particular situation made it all the more necessary, though. Part of the reason to reject fear and plow on was exactly because fear had been the dominant motivator of the actions of too many for too long.”
Sam Hinkie was wrong, for the right reasons. His unrelenting pursuit of young talent has put the Sixers in a much better place today, yet he was chastised for it. It was the price for progress.
Bryan Colangelo will harvest the seeds planted by Sam Hinkie. The fruits of labor bore from the Process now lie in his hands. Colangelo’s use of these fruits will either set the Sixers on a path toward contention or pretension. Due to perception, he will be lionized for intermediate success. But anything less than true championship contention should be considered a failure.