A former owner of the Cleveland Cavaliers was so awful at running the franchise that the league created a rule against the way he did business. His mismanagement was so blatant that the next set of owners wouldn’t finalize the purchase unless the they could buy four first-round NBA draft picks.

Ted Stepien drove the Cleveland Cavaliers into the ground

Ted Stepien bought the Cleveland Cavaliers before the 1980-81 season and sold them in 1983 after heavy financial losses. In between, the team went 66-180, replaced head coaches six times and traded away so many first-round draft picks that the NBA created the “Stepien Rule.”

Stepien was a successful businessman, having founded and operated Nationwide Advertising Service. He initially bought 38% of the Cavaliers for $2 million and quickly upped his stake to 82%, giving him control of day-to-day operations.

One of Stepien’s first moves was to hire University of Minnesota coach Bill Musselman, who didn’t make it through the season before being reassigned with a 25-46 record. Stepien fired three more coaches the following season, resulting in Musselman being moved back to the bench to complete the season.

An impatient and impulsive owner trades away the future

Ted Stepien started trading away first-round picks almost immediately in his quest for immediate playoff contention that never arrived. Two trades with the expansion Dallas Mavericks cost the Cleveland Cavaliers their 1983, 1984, and 1986 picks in exchange for Mike Bratz, Richard Washington, and Jerome Whitehead; the trio appeared in a combined 170 Cavaliers games.

A later trade with Dallas for Geoff Huston worked out better but cost Cleveland its 1985 selection. The only reason Stepien didn’t trade the 1982 first-rounder was that the previous owners had beaten him to the punch and dealt it to the Los Angeles Lakers – who used it to select James Worthy No. 1 overall.

League officials regarded Stepien as so irresponsible that they temporarily barred him from trading any more picks without league approval while they determined what to do next. Their solution was the “Stepien Rule,” which states that a team cannot trade its first-round pick in consecutive years except under specific circumstances.

The rule was terrible news for the Mavericks, who lost their favorite trading partner. Dallas used its haul of extra first-round selections to draft Derek Harper (1983), Sam Perkins (1984), Detlef Schrempf (1985) and Roy Tarpley (1986). Harper, Perkins, and Schrempf all played at least 1,136 NBA games and they combined for 47,091 points.

The new owners insisted on help from the NBA

When Gordon and George Gund bought the Cleveland Cavaliers from Ted Stepien in 1983, they negotiated a deal with the NBA that allowed them to pay $500,000 for a series of four first-round draft picks beginning in 1983. It was a reasonable stipulation on their part even if the Gunds didn’t fare much better with draft picks than Stepien did without them.

The 1983 pick was Stewart Granger of Villanova, who averaged 4.5 points in 56 games and was traded in the offseason. The Cavs picked Tim McCormick of Michigan in 1984 and packaged him to acquire Mel Turpin of the Washington Bullets. Turpin lasted three seasons with the Cavs and averaged 10.4 points. In 1985, the Cavaliers drafted Charles Oakley but traded him to get forward Keith Lee from the Chicago Bulls.  

The 1986 draft worked out better. The Cavs had the No. 1 overall pick from a 1979 trade with the Philadelphia 76ers for Joe Bryant plus the purchased pick. They selected Brad Daugherty and Ron Harper, both of whom went on to solid NBA careers.

Harper was traded after three seasons in a deal that brought Danny Ferry to Cleveland.