During the offseason, MVP Bill Walton demanded to be traded, citing unethical and incompetent treatment of his and other players' injuries by the Blazers' front office. He did not get his wish and sat out the 1978–79 season in protest, signing with the San Diego Clippers when he became a free agent in 1979.
Before the draft, Larry Bird had just finished his junior year at Indiana State. However, he was eligible to be drafted without applying for "hardship" because his original college class at the Indiana University had graduated. He initially enrolled at Indiana in 1974 but dropped out before the season began. After sitting out a year, he enrolled at Indiana State. Despite being eligible for the draft, he stated that he would return to college for his senior season. His hometown team, the Indiana Pacers, initially held the first overall pick. However, when they failed to persuade him to leave college early, they traded the first pick to the Blazers, who also failed to convince him into signing; ultimately the Blazers used the first pick on Minnesota standout center Mychal Thompson.
As a result, the Blazers fell 13 games from their franchise-best record of the previous year, barely squeezing into the playoffs with a 45–37 record that earned them the sixth and final seed, only two games better than the Clippers.