The Hornets were set to trade Paul to the Lakers for Pau Gasol and Lamar Odom. The Rockets, the third team in the trade, would have acquired Gasol from New Orleans, which would have received shooting guard Kevin Martin, power forward Luis Scola, point guard Goran Dragic and a first-round pick from Houston.
But minutes after a deal was agreed to in principle, a source confirmed a Yahoo! Sports report that the NBA called off the trade. Owners, who spent the last five months fighting for competitive balance during the lockout, pushed back against the league-owned Hornets for trading a star point guard on the verge of free agency to a big-market team.
Yahoo! Sports obtained a letter that Dan Gilbert sent to commissioner David Stern and deputy commissioner Adam Silver, in which the Cavaliers' owners called the proposed deal a "travesty" and felt "this should go to a vote of the 29 owners of the Hornets."
"I just don't see how we can allow this trade to happen," he wrote. "I know the vast majority of owners feel the same way that I do. When will we just change the name of 25 of the 30 teams to the Washington Generals?"
Despite Gilbert's letter, the NBA denied that the owners nixed the deal.
"The league office declined to make the trade for basketball reasons," NBA spokesman Tim Frank said.
And as expected, the denial was met with skepticism in league circles. Agents, executives, coaches and players were shocked that Stern and the NBA would be so bold to make this move, especially since the NBA's team had done quite well. Hornets general manager Dell Demps, who had been operating without restraint from the NBA for months, landed three starters and at least one first-round pick in exchange for losing Paul.
As a result, the "basketball reasons" as they pertained to the Hornets didn't make much sense. The more likely culprit, as suspected by many, was the fact that the Lakers had kept center Andrew Bynum out of the trade and were still positioned to potentially use him to land Orlando's Dwight Howard in a deal that would make them the kind of super team that could certainly fare well against LeBron James & Co. in Miami.
With the turn of events, numerous sources close to the Hornets said Paul was expected to show his displeasure by skipping the first day of training camp on Friday. Some of his teammates, the sources said, might be boycotting with him if Paul ultimately chooses not to arrive.
Even though the new collective bargaining agreement had been ratified just hours before the proposed trade went through and a day before training camps were set to open, the possibility of continued acrimony between players and owners was never gone. Throughout the lockout, many players fumed over Stern's style and were convinced the work stoppage was about power over them as much as it was about money. Their ability to have some level of freedom in the market had been threatened by some of the owners' hard-line proposals, but ultimately survived almost entirely intact based on the terms of the new deal.
Other teams in the hunt for Paul were informed of the pending trade by the Hornets on Thursday afternoon, according to a source close to the process. The Celtics and Warriors are among the clubs that have been pursuing Paul, who can opt out of his contract and become a free agent after the season.
The trade would have continued a Lakers makeover that began with the hiring of coach Mike Brown to replace Phil Jackson after the team's second-round loss to Dallas last season. The notion of having a premier point guard to pair with Kobe Bryant during his twilight years would be a new and dynamic frontier for the Lakers, who won five championships with Derek Fisher as the floor general but were well aware they needed an upgrade. Fisher wasn't on the league's short list of elite point guards even in his prime, and he's certainly not now as a 37-year-old. Paul, 26, has averaged 18.7 points, 9.9 assists and 4.6 rebounds and 2.2 steals per games in six NBA seasons, all with the Hornets.
While Paul had the Knicks atop his list all along, he had realized for weeks that a deal was nearly impossible because of New York's lack of assets. He then turned his attention to Los Angeles, where he was always excited about the idea of playing with Bryant and had even considered joining Blake Griffin for the long haul with the Clippers, according to sources.
Before the Hornets turned their attention to the three-team deal, sources said Demps was seriously considering sending Paul to Boston even though he didn't want to be there. Celtics president Danny Ainge was pushing hard and didn't care that Paul wouldn't commit long-term right away. Ainge offered point guard Rajon Rondo and two first-round draft picks and discussed a possible sign-and-trade with restricted free agent forward Jeff Green -- all of it so he could contend for a championship with his old core this season before possibly building a new one with Howard in play after the contracts for Kevin Garnett and Ray Allen expire next summer.
As for Houston's involvement in the proposed three-team trade, the Rockets have been seeking a premier big man in the wake of Yao Ming's retirement. Gasol could have fit the bill as a skilled 7-footer with the ability to provide much-needed scoring in the post and more length on the defensive end, where Houston was mediocre last season. The 31-year-old Gasol struggled in the 2011 playoffs, but he's a four-time All-Star with career averages of 18.8 points and 9.1 rebounds.
The proposed deal also would have created another $3 million in salary-cap space for the Rockets, who have been active in pursuing free-agent centers. The additional flexibility could have allowed them to make a better offer to coveted free agent Nene. General manager Daryl Morey met with Nene and Samuel Dalembert this week in addition to Tyson Chandler, who was closing in on a deal with the Knicks on Thursday.