Process to progress: Why the Philadelphia 76ers owners are feeling buoyant

As basketball’s Philadelphia 76ers emerge from a gruelling period of rebuilding, the mood at parent company Harris Blitzer Sports and Entertainment is bouncing. A group that stresses the value of bright people and good ideas now wants to take all of its teams to the next level and become a major global influence.

Process to progress: Why the Philadelphia 76ers owners are feeling buoyant

“I always think to understand where you are, it’s helpful to understand where you were,” says Scott O’Neil, chief executive of Harris Blitzer Sport and Entertainment (HBSE). “And we went through what some might argue is the most aggressive rebuilding process maybe in the history of sport. And it seems to be bearing fruit even quicker than we’d hoped.”

Formed in September, HBSE represents the sports ownership interests of private equity investors Josh Harris and David Blitzer, which include the National Hockey League’s (NHL) New Jersey Devils and their Prudential Center home, and the team whose story O’Neil is relating: the Philadelphia 76ers of the National Basketball Association (NBA).

O’Neil, a former NBA and Madison Square Garden Sports executive who was brought in to lead the 76ers in 2013, is speaking as the team prepare for an appearance in the 2018 NBA London game against the high-flying Boston Celtics. Not long ago, it would have been a technical mismatch. Back in 2013, shortly after the Harris-Blitzer takeover, there began what came to be known as ‘The Process’.

“This is our fifth season together, all of us, and when we came in they had just made what’s widely regarded as a really bad trade in basketball,” O’Neil recalls. “They kind of gutted their roster of draft picks and talent for one star [the injury-stricken Andrew Bynum] that didn’t end up playing.”

The assessment of the owners and the management, as 76ers president Chris Heck explains, was that the playing staff was in no condition to make a realistic championship challenge any time soon. A more drastic approach was needed to make any meaningful improvement.

Joel Embiid's frequent injuries since his 2014 rookie season had previously stalled the team’s advance

“The model was always, ‘make the play-offs, make the play-offs’,” adds Heck. “But the truth is, there are two or three teams that are elite and there are teams that get stuck in the middle.”

Deciding that collecting the best college and high school talent in the draft was the quickest route to an elite roster, the team began trading experienced players for first-round draft picks, scooping up overlooked development talent and generally eschewing short-term competitiveness in favour of the long-term view. And the weighting of the draft system would mean weak performances one season would provide opportunities in the next.

To say that approach has demanded patience would be an understatement. The Sixers went down from a low base, and were soon consistently among the very worst performers in the NBA. They posted a 26-game losing streak in 2013/14, and lost 28 games in a row between the end of the 2014/15 regular season and the start of 2015/16.

Inevitably, those statistics produced some turbulence. Other owners in the NBA were reportedly not enamoured with what was going on in Pennsylvania, believing it to be against the spirit of the league set-up. 76ers general manager Sam Hinkie, one of the architects of the project, stepped down in 2016 as the pressure grew.

But commitment to the concept endured, with ‘trust the process’ becoming a local maxim. Now, as O’Neil says, ‘The Process’ is showing real progress. The Sixers arrive in London with an even record and a decent chance of making the play-offs for the first time since 2012. Adding sparkle to those promising performances are two first-round draft picks: Cameroon’s Joel Embiid, whose frequent injuries since his 2014 rookie season had previously stalled the team’s advance, and Australia’s Ben Simmons, who was chosen first overall in the 2016 draft.

The same boldness has been applied to recruitment off the court. O’Neil says that Harris, Blitzer and their executives had “aspirations to build a world class organisation, and that always starts with people, people, people”. By his reckoning, there are now “a dozen people in our organisation that will go on to run clubs”, but putting that executive talent together involved “a total reset”.

“Let’s say we have 500 employees,” says Hugh Weber, the president of HBSE, as well as of the New Jersey Devils and the Prudential Center. “485 of them have been hired in the last four years. That gives you an idea.”

O’Neil says: “Josh and David, on the business side, said, ‘What resources do you need? We want to be the best-run organisation in the world. What do you need to do it?’”

Those new additions have made a considerable impact. Remarkably, even as the team tanked, business was booming: the 76ers led the league in growth across ticket, sponsorship and merchandise sales, as well as local TV ratings. Partnership revenue has risen 30 per cent a year for four years, with 90 per cent renewal rates. Season ticket membership sales have trebled in three years to a franchise record of 14,000.

All of that has taken the group to London in very fine spirits. “We’ve been planning this, or at least hoping to come here, for two years,” says Chris Heck, president of business operations at the 76ers, “and when it became a reality last summer, we started planning for the whole week. The NBA was kind enough to make our schedule spread out with no games prior or right after.

“We saw this as an opportunity not only with the basketball team playing on this stage at The O2, but to be into the community and to have the business relationships and meetings not only during the game but throughout the week. We’ve become somewhat of a global brand, and that’s certainly our aspiration, so this fits our timeline and our team – how we are growing not only in Europe but all over the world.”

Whereas the Premier League soccer clubs based in London – including Crystal Palace, who are majority-owned by Harris and Blitzer but run by a different unit in the UK – have considerable scope to build their own international profile, teams in the NBA look to the league management to make the first move. Fortunately for those teams, that leadership has been putting its overseas operation in place for some time.

The 76ers pose for a team photo on their visit to London for the annual NBA Global game in the UK capital

“Much of what the NBA has positioned itself to be today, you have to go back 20 years,” says Heck. “It was very strategic and specific: international, make basketball a global brand, and make it about the storytelling and the content. So I think going back to [former NBA commissioner] David Stern and [current NBA commissioner] Adam Silver, of course, these guys are brilliant and have been brilliant about how they position the sport beyond traditional fans.”

For O’Neil, that approach is only in keeping with what he calls “the most collaborative league, at least that I’ve been exposed to”.

“The commissioner has done an extraordinary job engaging with the constituents: the operators that run the businesses, the groups that own the sports teams, the different media companies,” he says. “He’s a very forward-thinking, collaborative executive.

“But at the end of the day, that’s what a league’s function is. The big media rights deal is them. Collective bargaining is them. In the NBA’s case, with the international business, they’re the tip of the spear. And the national and international sponsorship business is them. So from their perspective, that’s where they play. It’s very much a collaborative approach but we definitely follow his lead as to where he takes us.”

If there is radicalism baked into the work of the NBA, in everything from branding to social content to discussions about selling access specifically to the closing stages of games in the future, there is also an “intellectual curiosity” behind the HBSE operation – as well there might be in an organisation that took such a counter-intuitive approach to team-building.

“And part of intellectual curiosity is actually going through life figuring out how much you can learn,” O’Neil adds. “And part of that exercise is with the fans, part of it’s with our marketing partners, part of it’s with our co-workers and employees.”

“What we try to do in terms of how we leverage these teams across the entire platform,” adds Weber. “In one sense, from a partnership/sponsorship standpoint, you might take an approach to bundle them all together and go out and talk to them. On a needs basis, what do they need from us and what franchise might be the best, most suitable solution to that?

“And then you have all these other solutions in terms of leveraging talent, internal efficiencies, and ways to look at the world, and how we can make things better and break them apart and put them back in better and bigger ways. Those are two different ways we are continually looking at how we take our strengths and leverage them in places that we might need.”

With the play of Ben Simmons, the first overall pick in the 2016 draft, the Sixers have a decent chance of making the play-offs for the first time since 2012

The 76ers’ jersey patch sponsorship with StubHub, which was the first signed after the ongoing three-year pilot programme was announced by the league, is a case in point. “It’s so much more than a patch,” says Heck. “We have an integrated ticketing system where we’ve blended the primary and secondary ticketing market together with our box office and StubHub, which has been revolutionary in the sense that we are able to obtain the richest data in the ticketing world by combining forces with StubHub.”

If there is a richness to the StubHub partnership, the HBSE leadership puts that down to a discursive approach to putting deals together. O’Neil cites the rationale offered by one of the 76ers’ other partners, logistics firm NFI, for signing up.

“[NFI president Jeff Brown] was, like: ‘Why are we partnering with a basketball team?’” he reveals. “And what he said was: ‘They came in, they asked me 400 questions about my business, and then came back with a solution that fit.’

“I’d say the same thing with StubHub. What was important to them? To roll out and integrate the primary and secondary market. So therefore we said: ‘OK. How hard is it going to be to deliver them a solution that puts them on the map as a different business?’”

Along with that willingness to share assets and pursue mutual business goals across the HBSE collective, there is also what Weber describes as a “commonality” in the identities of the cities where Harris and Blitzer’s teams are based. “From south London to Philadelphia to New Jersey,” Weber says. “These are all gritty.”

O’Neil sees that as being, in part, the result of the owners “typically looking for opportunities where they can drive a lot of value”.

“Would you buy the Warriors now or would you buy the Warriors ten years ago?” he asks. “It’s kind of consistent with the overall approach.”

Whatever conditions have led to that prevailing characteristic, the management of each team are aware of the responsibility they have to the people in those communities.

“You have the sporting side,” says O’Neil. “You have the great arbitrage in sports which is patience, which our managing partners have, they’ve empowered us to build a world class organisation on the business side, and then from the community end you see the impact that you’d have on kids and fans. There’s such an opportunity – then go and help them. Especially in disadvantaged areas.”

HBSE is supporting community projects in the US and overseas, with its ‘Project 76’ scheme delivering an estimated 25,000 volunteer hours in Philadelphia and New Jersey and with players joining their peers at Crystal Palace for outreach sessions while in London. But there is also a wider commitment to addressing social issues, in word and deed, in the NBA – one that O’Neil credits to Silver, who has made it “the expectation” that “you are actually going to be part of and help drive the social movement”.

Scott O’Neil, chief executive of Harris Blitzer Sport and Entertainment (HBSE), the owners of the Philadelphia 76ers

That commitment to activism and social conscience predates the current political moment but its presence is particularly notable in the age of President Trump. Over in the NFL, nuance was smeared beyond recognition as player protests over police brutality and racial inequality became another running battle in the wider culture war this season. O’Neil views the NFL as a different environment with its own challenges and opportunities. “It’s still an incredible league with an incredible fanbase and following,” he says. “So we look more with a curious eye.”

In basketball, however, he sees contention as a price worth paying for an open discourse. “Whenever you take an aggressive position with the expectation that you can help be part of social change,” he says, “you’re not going to get 100 per cent universal appeal and hugs. So I’m not sure that’s the aim.

“And there is sometimes a conflict between ‘can we just stay the course and ride on our merry way and be fine’ or ‘are we going to encourage our enlightened players to take positions?’ And you side with the latter, and I think that’s very much on brand with how we see the world in our position, who we are, and it’s very much consistent with how Philadelphia has emerged as a city, you know? Go back 250 years.”

Those comments reflect a different way in which HBSE addresses the communities its teams represent. The Devils, notably, are the only one of the US major league teams who play in New Jersey to make direct reference to the fact.

In December, meanwhile, the 76ers released a new ‘statement’ Nike playing jersey. Apparently inspired by the Declaration of Independence – signed, of course, in Philadelphia – they bear the legend ‘Phila’ across the chest in cursive script.

“I think the brand is a total reset from what it was to where it is, and the team has done an incredible job of positioning ‘new Philadelphia’,” adds O’Neil, whose background includes a spell with the new NFL champions, the Philadelphia Eagles. “I mean, that’s what this brand is. New Philadelphia doesn’t ignore this incredible history of the American Revolution – in Philadelphia, that’s something which you see on the latest jersey – but it also celebrates that we aspire to be a London-ish type of town: cosmopolitan, and smart, and cultured.

“All of what makes London what I think is one of the greatest cities in the world is what Philadelphia is moving towards and aspiring to. That is the brand that we’re hoping to help to lift.”

O’Neil sees contention as a price worth paying for an open discourse with activism and social conscience

Much as the city of Philadelphia is taking what inspiration it can from the British capital, so the US-based HBSE team are absorbing the experience of their stablemates across the Atlantic.

“We look with envy at the opportunity that Palace have internationally,” admits O’Neil. “In our leagues, we’re restricted by a geographic territory. I think our leagues, more so than other US leagues, have been much more proactive in getting us opportunities internationally.

“But I think my big takeaway, any time I spend with Crystal Palace, is: ‘Boy, what an opportunity you have. You have the freedom to think, and create, and dream.’ And I think they do a terrific job. This comes back to the intellectual curiosity point – between [chairman] Steve Parish, who I think is a wonderful operator, and Phil Alexander, the CEO, they’ve been good partners and friends, and we talk and share ideas and hope to help each other.”

That openness to new ways of thinking at HBSE is also apparent in other ventures currently underway. The organisation’s startup incubator – or the Sixers Innovation Lab Crafted by Kimball, to use its official name – offers guidance to companies with the help of Seth Berger, founder of basketball footwear and apparel brand And1.

It currently has a diverse bunch on its books: Monster Roster, which uses algorithms to recommend team line-ups to fantasy sports players; Live Life Nice, a digital media company on a mission to push positive stories and video content; esports training platform U Git Gud; and Doc & Phoebe’s Cat Co, a product which promotes physical and mental health in cats by encouraging them to ‘hunt’ mice-shaped feeders around the home, rather than eating from a bowl.

Along slightly more conventional but similarly forward-thinking lines is HBSE’s investment in esports. Team Dignitas, who compete in tournaments including the North American League of Legends Championship Series, were merged with Apex Gaming and added to Harris and Blitzer’s collection in September 2016.

“I would say that we loved the audience size and the opportunity,” says O’Neil of the move into competitive video gaming. “The only parallel we could come up with was if you look at something like the UFC, which was a huge audience and not a very big business. The Fertittas [former owners Lorenzo and Frank] came in, bought the UFC, put in Dana White to operate it, and you see this business actually explode behind the audience.

“It’s one of the very few sports that I’ve seen where you have a global, growing audience with a passionate fanbase that spends a ton of time online – with no sophisticated business behind it. And so we knew we were coming in early, we knew we had a lot of time to build and grow with it, but we see a huge upside in the space.”

With the Devils currently riding high in the Metropolitan Division of the NHL’s Eastern Conference, the trends are heading in the right direction across the board for HBSE. Despite a strong first-half showing inspired by a brilliant Ben Simmons display, the 76ers will go on to lose 114-103 to the Celtics at The O2. But if the occasion serves as a reminder of how far the team yet have to travel to match their rivals’ front-running standards, it is also an indication of just why there is such optimism throughout the organisation. 

“It’s almost like mercury rising,” says O’Neil. “A team literally in the ashes to a team where there’s so much hope and excitement.

“And we’ve seen that play out in almost all the metrics at home.  We sell out every game, our ratings have more than doubled, our sponsorship’s up 40-something per cent. It’s an incredible rise but we’re still not an elite team yet. But in the NBA, when you have this kind of foundation, everyone seems to understand what’s coming.”