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Ruffin and Finances

Plenty of folks wondered what the significance of the trade for Michael Ruffin is.  Most people, when thinking of trade deadline deals, didn't envision swapping Ike Diogu for a 32-year-old power forward who barely plays.  What gives?

This was a move of prudence, not popularity.  Because they are still carrying the contract of Steve Francis and now have Darius Miles' dollars back on the books as well the Blazers are far over the salary cap and into luxury tax territory.  Every dollar they keep in contracts costs them two:  one to the player and one to the league. The difference between Diogu's contract and Ruffin's is a couple million dollars.  Multiplied by two that's somewhere around four million saved by trading little-used, third-string power forwards.  Also if the Blazers can appeal and get Darius Miles' contract back off of their cap they are now firmly under the luxury tax threshold with a little wiggle room to spare.

In addition the Blazers gained that $3 million trade exception mentioned in the press release.  It cannot be used in combination with other players but as several people have pointed out (if you haven't noticed we have astute readers and you will get an accurate take here within minutes of anything happening) there are a few ways it could be used:

1.  We could outright trade for a guy without giving anything back, much as we did with James Jones.

2.  We could do the same with a draft pick, though the pick would have to be made first.

3.  Though we cannot package the exception in a multi-player trade there's nothing to stop us from making two concurrent trades with the same team.  For instance (and this is just a for instance) we could make a trade for Eddy Curry and then use the exception to acquire David Lee.

The trade exception is good for one calendar year, so there's no rush.

As far as what this trade signals about any future moves, my guess is not much other than reminding us the Blazers are still paying attention to financial responsibility.  I think there could be a mild indication there that Portland won't be taking on any horrible contracts to acquire players (as in the Curry example above).  But I don't think our chances of seeing a trade today have decreased or increased because of this move.  It made sense no matter what.

And really, a reminder that the Blazers are being fiscally responsible isn't a bad thing.  Championship teams do pay for what they get, but championship teams don't overpay. Teams that try to buy a title are seldom successful.  No, put your hand down please Mr. Steinbrenner.  I am not taking questions or comments right now.  And Mr. Cuban, will you please sit down and get away from my son?  He's only 14 months old.  He doesn't understand anything you're saying about his father being out of line and reporting him to the League Office.  In any case, while targeted spending is necessary, maybe even to the point of going into tax territory, just throwing a checkbook around is not the solution.  Moves like this show an understanding of that.  Frankly we're a more grown up organization than we were ten years ago.

Of course there's a flip side to that too.  Financial responsibility aside, if reports are to be believed we're in a completely unprecedented era in terms of talent available for a given price.  Some of the deals being talked about this week would have been laughed at openly a year ago.  We're in a unique time which calls for unique thinking.

The coin of the realm right now appears to be expiring contracts for financial relief and young players.  The Blazers have positioned themselves for exactly this opportunity.  They are flush with both.  In a way it's like investing in the futures market and then finding that the commodities you banked on just went through the roof.  The Blazers could have won more games earlier than this by taking on more talent, more veterans, bigger contracts.  They didn't.  Those extra losses and that extra waiting were the price we paid for this moment.  The situation could not be better.  The Blazers have to at least look at moving some of those assets while their value is sky high in order to acquire undervalued talent that will pay off as the franchise takes its next steps.

In this climate acquiring that talent means taking on contracts.  It may mean luxury tax dollars.  That doesn't look responsible in the short term, but there are several reasons why it may make sense.

You have to realize that opportunities don't come along often, especially if you're talking legitimate, name-level talent (provided that's what you want).  If you miss them they may not return.  The Blazers dare not pass this moment without deep consideration.

What's more, you have to realize that teams like the Blazers have don't come along often.  We are seeing something built that will not be repeated in a few years, in a decade, maybe not again in our lifetimes.  We cannot hold back.  We must commit ourselves to this team and throw our eggs in this basket.  That also means committing to improving this team when necessary, even at cost.  You could spend the same money in another era and not have the same chances for return on investment that this incarnation of the Blazers will give you.

The irreplaceable, incredibly rare opportunity we're talking about here is a championship.  Championships do have their own benefits to offset the cost.  First there's the obvious financial benefit of tickets and jerseys sold.  I'm not sure the financial reward recoups the cost of taking on a bad contract or two.  I'd be interested in an economist's assessment.  But it at least mitigates the investment somewhat.  The more obvious benefit, though, is the legacy.  What do the Blazers want to be known as?  What kind of owner does Paul Allen want to be known as?  Mr. Allen is doing this to make money, no doubt.  But he's also doing it in order to succeed.  No measure of success exceeds a title.  Win it and you're a championship owner for the rest of your life.  What price tag can you put on fulfilling a lifelong dream and reaching the unquestioned pinnacle of your field? Mr. Allen can afford to have 100 championship rings made.  But he can't wear any of them with meaning or pride unless this happens.

Money is to an owner what strength and endurance are to the athlete.  LeBron James has built up an incredible reservoir of physical prowess so he can play better, longer, and under more adverse conditions than his competitors.  Paul Allen has built up an incredible financial reservoir.  That gives him the ability to go hard when others can't.  This is the late third-quarter.  Everybody else is fatigued.  Many are forced to cut short and give up.  Some teams are actively trying to trade away their chances at victory because they don't have the reserves to keep going.  Should the Blazers, then, follow suit?  What is the money for?  To not use it, or to not consider using it, would be like LeBron James slowing down in the third quarter like everybody else.  That may make sense, but it doesn't make him LeBron.

Yes, you'd take a financial hit by acquiring a significant contract now.  But in two years everybody else will be scrambling trying to catch up, spending more and getting less for it, while you are cruising on to victory based on the moves you made when the market was right.  Everybody eventually has to pursue the same strategy in order to win:  acquire talented players and pay for them.  Timing, as much as strategy, makes the difference between the champions and the also-rans. 

From an overall economic perspective it makes no sense to spend money right now.  But if you're well enough off to be insulated from the global perspective--or at least more insulated from it than your neighbor/competitor--and you can afford to narrow the focus down to the game at hand then spending that money makes a ton of sense.

There's no need to overbuy here.  But at the same time there's no benefit to the Blazers in following the herd, hiding in a hole and dumping salary.  Portland will not be successful in doing so when everybody else is trying the same thing.  The money move is going against that trend...buying when everybody wants to sell and the price is cheap so you can hit the bonanza when those assets mature and you hold them all in your hand.

As I type this I hear the echoes of the Bob Whitsitt era bouncing around the room, just as those echoes still bounce through the organization.  I understand that the "Spend Paul Allen's Money" doctrine was wrong.  It eventually brought about necessary, yet painful, reprisals.  I would never argue for a return to that philosophy.  However it would be a shame if the conservatism born out of the correction to that time caused us to miss an opportunity now which could lead to greater success, celebration, and healing.  It would be a frustrating, anger-filled experience to look back in 20 years and realize that the mistakes of the 90's cost us success in not one era, but two.  Sometimes it really is prudent to be imprudent.  Purse-strings make an amazing servant but a poor master.  Even financially you cannot live by fear alone if you wish to prosper.  You have to live by faith, seeking to do what is best even when that doesn't seem smart, instinctive, or what everybody else is doing.

Be as fiscally responsible as you can in every way you can.  Do not spend a dime that doesn't need to be spent.  But if there's a move out there that's going to improve this team and you have the resources to do it, even if that move is risky or hurts financially, make that move.  Be the superior owner/organization/financial athlete.  The rewards it brings cannot be bought for any amount of money and they'll be remembered long after the money doesn't matter anymore.

--Dave (