Whither the Hornets?

On my birthday I woke up to news that the NBA and players had reached a tentative agreement to play the 2011-12 season. 20% of the regular season will be lost as teams will be forced to play a truncated, 66-game, 120 day season ending in late April. I thought this was a good opportunity to radically change the NBA schedule, which runs from Halloween to Easter with playoffs through the first week of June, to a pushed back schedule of Christmas to Memorial Day and playoffs until late July or even early August, commonly known as the dog days of summer. Oh well, they didn’t make such a change so we’re “blessed” with a rapid fire schedule with numerous back-to-back-to-back game sets. It will surely be brutal to the finish.

It’s also brutal seeing what’s happening to the New Orleans Hornets. GM Dell Demps had a deal to send superstar point guard Chris Paul to the Lakers, who would send Lamar Odom back to the Hornets and Pau Gasol to the Rockets, who would then send a bevy of players including Luis Scola and Kevin Martin to New Orleans. It seemed a fair trade last week and was assumed to be a done deal until Commissioner David Stern stepped in and killed it, citing the now infamous “basketball reasons”. An attempt to revive the deal with additional parts was also rejected, as were two attempts by the other LA team, the Clippers. The Hornets, which are owned by the league and the other 29 team owners, are completely handcuffed when it comes to making player moves and will surely field an awful team this year, whether they trade Paul by Christmas or not. The reasons for doing this are rather divergent. Cavs owner Dan Gilbert complained about not getting a piece of the Lakers’ luxury tax payment. Mavs owner Mark Cuban thought it was unfair to “take advantage” of a small market team. There were plenty of whispers that Stern wanted to stick it to superagency CAA and make Paul an example that the players can’t just dictate where they wanted to go, though that’s not what Paul was doing in this case. Supposedly Paul is being kept on the roster simply to raise the team’s attractiveness for potential buyers, even though it’s unlikely that Paul will stick around when he becomes a free agent in the summer.

A year has passed since the NBA bought the Hornets from two-time owner failure George Shinn, and there is no sign of a local buyer that could come in to rescue the team, despite the fact that the team reached its season ticket and attendance goals last year. There are a few prominent locals who could be positioned to be minority owners, but that’s not going to be enough. The NBA seems to have raised its bar to prevent undercapitalized groups from buying, such as Atlanta Hawks’ failed buyer Alex Meruelo. For the NBA to sign off on a new owner for the Hornets, the buyer will have to A) be willing to overpay for a franchise in the Big Easy, perhaps as much as $400 million, and B) be willing to absorb losses or deal with razor-thin margins in the market. It’s no wonder, then, that the Hornets are a prime relocation or contraction target.

Continuing to own the Hornets is a terrible conflict of interest for the NBA, which can’t operate the team normally while it tries to maximize value for a sale. On one hand, it wats to retain Paul as a key asset even though it’s clear he’s skipping town. On the other hand, it doesn’t want to saddle the team with a bunch of long-term contracts (read: talent) that would make the team less attractive for buyers. It’s a bad spot to be in, and it makes me scared that the league will simply throw its hands in the air and give up. I hope that’s not what happens, since there are options they can pursue:

  • Sell the team to Larry Ellison if he’s still interested. Ellison would obviously move the team to San Jose. I wrote in January that moving a team to San Jose, as much as Warriors owners Joe Lacob and Peter Guber would rail against it, could advance talks in San Francisco for an arena there, since it’s likely that an arena deal in SF couldn’t be completed for either the W’s or relocated Hornets until after the 2016-17 season. Neither San Jose nor Oakland would like it much, but the NBA would at least know there’s some cushion there. Ellison is wrapped up in the America’s Cup project, so it’s unclear if he still has interest in the Hornets. If he paid $450 million, as Lacob-Guber did for the Warriors, the NBA probably wouldn’t blink twice and would back up the moving vans for him. The problem is that last year Ellison offered $350 million for the Hornets, so why would he pay $100 million more a year later for an arguably devalued franchise? If he paid that $350 million for the franchise, and the remaining $100 million went to Lacob/Guber so that they could terminate the lease at Oracle Arena and jumpstart the process in SF, that might just work.
  • Find a Seattle-based buyer and move the team to the Emerald City. Stern played hardball with Seattle as the Sonics were on their way out of town, so it isn’t likely that he or the owners would approve such a move until an arena deal were in place. Any publicly financed arena deal up there is every bit as dead a possibility as one in the Bay Area. It’s also unclear who would surface as a potential owner.
  • Move the team to a place with a new arena, such as Kansas City or Louisville. Neither market is particularly rich so it’s at best a lateral move. Both markets have new arenas, with Louisville an arguably better hoops market. Like Seattle, it’s unclear who would surface as buyer. The Kansas City option revives the possibility of the shouldn’t-be-revisited Kansas City-Omaha dual-city franchise since Omaha also has a relatively new arena. Forget I mentioned it.

This is not how David Stern wanted to wind down his career. A labor stoppage is forgivable among hardcore basketball fans, of which there are many and I am one. There are enough stars to propel the league forward. The Hornets debacle is a different story. It’s a complete clusterfuck, and it will be expensive for the league to extricate itself from the mess. The only question is who is going to pay. Does the NBA give up on the NOLA market, a terrible PR move, then stick the buyer with the tab? Does it fold the team and give the money back to the other owners? That itself is an even worse admission of failure, given that none of the four leagues have contracted teams in the last three decades. Figuring all of this out is well above my paygrade and is why Stern has been at the helm for three decades. It’s a no-win situation for him, and for that, I don’t envy him one bit.

36 Responses to Whither the Hornets?

  1. Rayburn's Son says:

    Come on Larry, what are you waiting for? Move this dog to San Jose. He would get his $100 million back pretty quickly after a few years of operation at the Tank. San Jose Hornets?

  2. Tony D. says:

    RM,
    Can you clarify? Are you suggesting the Warriors AND the Hornets relocate to a new SF arena? And if so, why? I know its a long shot, but having the Hornets in a revamped Shark Tank seems to make much more sense than having two teams in a hypothetical SF arena. Just my opinion.

  3. Marine Layer says:

    @Tony D. – No, I’m suggesting that Ellison pay the extra $100 million to allow the W’s to have SF all to themselves.

  4. GoA's says:

    @ML- wasn’t the TR payment in LA $30M for the Kings? Hate to see anyone help out SF with an arena but understand your suggestion–

  5. EddieVegas_NRAF says:

    I think you mean Big Easy, not Big East, although since Boise State is now in the Big East I could see the confusion.

    Someone in Las Vegas could make a move on this, if (amongst other issues) the NBA could look past the sports-wagering conflict. Caesars Entertainment (formerly Harrahs) has been making noise about building an arena as part of a $3 billion (!!!!) CityWalk-style area east of the Flamingo, Imperial Palace, Harrahs, Ballys and Paris. They could snap up the franchise and store it at the Thomas & Mack until the arena is ready.

    This is all conjecture, by the way. Just saying there may be more options than stated above.

  6. Marine Layer says:

    @Eddie – Typo fixed. You and I both know that Vegas is nothing but a big tease until someone steps from there with money to buy a franchise and head an arena effort. So far everyone coming out of there is little more than a facilitator, not a doer.

    @GoA’s – That’s the standard fee. Don’t forget that any franchise price to enter the lucrative Bay Area market has to be along the lines of what Lacob/Guber paid for the W’s (and Ellison declined to pay initially).

    FWIW, the cost to buy out the remaining lease years after this season is $7.4 million x 5 = $37 million, unless there’s some early termination penalty. The W’s would pay the lease as long as they were in Oakland anyway, so they could apply that money plus ~$33 million towards the SF arena or needed improvements in Oakland, whichever they felt was the best investment.

  7. Rayburn's Son says:

    @Eddie – “Gambling is illegal at Bushwood Sir, and I never slice.”

  8. GoA's says:

    @ML- great point- got it- speaking of ransom payments I heard that the SF Museum of Modern Art is going to do a $550M expansion to house the Fisher art collection- why not use this as a bit of leverage over the city of SF- otherwise locate it in SJ- just a thought…

  9. Tony D. says:

    @RM,
    Thanks.

  10. Dan says:

    Hey anyone know the status of the Warriors cock blocking plan to move their D-League affiliate to San Jose? (They must’ve been taking lessons from the Giants).

  11. EddieVegas_NRAF says:

    “Yeah, I figured as much. Hey, Moose! Rocco! Help Rayburn’s Son find his checkbook, will ya?”

  12. Jeffrey says:

    “You should get a free bowl of soup with this hat… Looks good on you though.”

  13. Dan says:

    http://www.mercurynews.com/california-high-speed-rail/ci_19542816

    Well that’s it. Unless the NFL renegs on the the G-3 loan, the Niners new stadium is done. Welcome to Santa Clara!

  14. Rayburn's Son says:

    @ Eddie @ Jeffrey

    It’s easy to grin When your ship comes in And you’ve got the stock market beat.
    But the man worthwhile, Is the man who can smile, When his shorts are too tight in the seat.

  15. hecanfoos says:

    I’ve sentenced boys younger than you to the gas chamber. Didn’t want to do it. I felt I owed it to them.

  16. Jeffrey says:

    You must have been something before electricity… Want to earn 5 bucks? The hard way?

  17. letsgoas says:

    if ellison buys the hornets and moves them to sj, wonder if he’d change the name of the franchise or color scheme. color sheme would fit in with the sharks since it’s main color is teal but i could do with a name change. if ellison really wanted to pump out his chest, he’d rename them the oracles just like his company.

    oracles plural of or·a·cle (Noun)
    Noun:
    A priest or priestess acting as a medium through whom advice or prophecy was sought from the gods in classical antiquity.

    san jose oracles. ha!

  18. tlas says:

    Here’s the thing I’m trying to understand: With the hockey team already in place, a football moving in next door, a baseball team possibly moving down there and a basketball team in another city, added to the various colleges offering sports, where the heck is there space for another pro basketball team? (I’m not talking about arenas here but people willing to show up to watch them)

  19. hecanfoos says:

    I smell varmint poontang. And the only good varmint poontang is dead varmint poontang, I think.

  20. doctorK says:

    You’ll get nothing – and like it.

  21. Dan says:

    tlas, you bring up a good point. There really isn’t market space for many more teams (if any). LA ran into the same issue as it went with moving the Kings down there. The league was only going to allow it reluctantly because they felt the LA market was already over saturated.

  22. Jeffrey says:

    RATFARTS!

  23. Sid says:

    Ellison was going to pay 350M for the team and then 100M in a relocation fee to move the team to San Jose.

    George Shinn did not have the heart to sell it to Ellison because he knew what would happen. So he sold it to the NBA for 50M less because of his own consciousness.

    This is the same George Shinn who moved his “hometown” Hornets from Charlotte to New Orleans in the first place….makes total sense?!

    San Jose getting a team is dependent on the Kings leaving Sacramento. If the NBA was reluctant to make So Cal a 3-team market they would never let smaller Nor Cal have 3 teams.

    Therefore if the Kings move to Anaheim, which looks likely considering they are trying to conjure up $$ from parking like it is monopoly money right now……only then would San Jose come into the picture.

    Hence why Lacob and Gruber were going to vote against the Kings move. They know full well it opens San Jose to a team and a shared TV deal across all of the Nor Cal.

    The Hornets will move eventually. The league knows Ellison can offer a “100% cash offer” and bail them out at anytime but moving the team to San Jose is the issue with the Kings in limbo out in Sacramento.

    We will know soon what will happen….my hope is the Kings move to Anaheim and San Jose gets the Hornets.

    Now you just took 2 small market teams and converted them into big market teams. The NBA needs to see moving these 2 teams helps the league as a whole.

  24. EddieVegas_NRAF says:

    I’ve sentenced boys younger than you to the gas chamber. Didn’t want to do it. I felt I owed it to them.

  25. Dan says:

    Frankly I hope the opposite happens. The NBA does not need to be consolidating more teams in large markets. 3 LA and 2 Bay Area teams just seems bad for business. Hopefully Johnson can complete their arena funding package and Sac keeps their only Big 4 team for years to come. If Anaheim gets anyone it should be the NBA forcing the Clippers to stop sucking at the teat of the Lakers and actually become their own damn team again. As for the Hornets, there is one place they should obviously be going in my mind, and that’s back to Seattle. Play in Key Arena for a few years and get a new one built. If they don’t get it built then explore moving them elsewhere.

  26. EddieVegas_NRAF says:

    Gah! Foos hit that one already. Apologies..

    A flute with no holes, is not a flute. A donut with no hole, is a Danish.

  27. Jeffrey says:

    Hey Wang! It’s a parking lot!

  28. jeff-athletic says:

    I see Seattle as the most logical, practical, and likely destination for the Hornets, assuming there is someone up there with the dough to buy them and pay the reloc fee.

    Hornets to SJ seems pretty far fetched – Warriors already in Bay Area, Kings in Sac. If KJ doesn’t put the financing package together in Sac, then the Kings will go to Anaheim, and then the Hornets to SJ could be a possibility.

    But 3 teams in LA? That would be so ridiculously stupid. Nobody down there cares about the Clips as it is, and they would care even less about the Kings. Som OC locals might jump on with the Kings, but the entire LA area is Lakers country, through and through.

  29. baycommuter says:

    OT: ML, did you see the 2nd item in M&R today about a Giants source acknowledging they’re behind the lawsuits?

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/14/BAJ31MC1KQ.DTL

  30. pjk says:

    Frisco Giants want us to believe that a $500 million private investment in downtown San Jose is a very bad thing for San Jose residents. How stupid do they think we are? This is all about pure naked greed on the Giants part and the Giants being adamantly opposed to San Jose’s right of self determination. Hopefully, this will all backfire and the t-rights get removed by a 29-1 vote and the Giants ordered to cease and desist all efforts to stop the San Jose ballpark project. Why not go a step further and have MLB seize control of the Giants franchise until ground is broken in San Jose?

  31. Dan says:

    bc, great of them to openly admit it now. It’ll be easier for MLB to shut them down.

  32. hecanfoos says:

    Hey Wang! It’s a parking lot!

    Thats my all-time favorite! You gotta love Rodney!

    BACK ON TOPIC: The world needs ditch diiggers too.

  33. Dan says:

    Off topic again. The San Jose Earthquakes stadium was just granted it’s development permit. Unless I’m mistaken that was the last chance the public had to block that particular stadium. Now they just need to submit their architectural drawings for the building permit and shovels can start turning dirt.

  34. Al says:

    As an A’s fan, out of selfishness I hope no NBA franchise moves to SJ. That way, there will be more disposable income and obsessive fandom around to be spent on the A’s. Sorry guys.

  35. Sid says:

    Seattle with a new arena would be perfect to move a team to. Steve Ballmer is rumored to willing to bring a team back there but without an arena in place not likely to happen. You cannot move a team back somewhere without an arena deal in place beforehand. Otherwise you will be back in the same place the NBA was before the Sonics moved if all fails.

    @Dan- In reality, the NBA has issues because there are not enough teams in big markets like the Bay Area, LA and Chicago.

    These small market teams do not the demographics to support their teams. While these big market teams are making $$ hand over fist with big TV deals and underutilized markets. It is criminal that the Warriors and Clippers make tons of money but yet lose year in and year out.

    While teams like New Orleans, who have had success cannot make a dime.

    Why is there a team in Sacramento and not San Jose? Why is there a team in New Orleans and not rich Orange County? Why is there a team in Charlotte (where they failed once) and not a 2nd team in Chicago? Or a plan to return to Seattle/Vancouver?

    David Stern has always favored the big markets over the small ones. Which is a big reason why he is a bad commissioner. Even Selig found way for everyone to be profitable regardless of market.

    In the end the Hornets will move, but it will take a “cash offer” to move the team. Only Ellison can provide that right now. The NBA cannot risk another George Shinn situation on their hands in NO or anywhere else.

    The Kings situation will clear this up real fast in the coming months. They are done in Sac….without a flat out public handout there is no way it gets done.

  36. notsellingjeans says:

    I think the NBA’s problems are solvable even without contraction, and I think Ellison could play an important role. I think these five steps would improve the overall health of the league:

    a.) Let the Kings move to Anaheim. That turns a small-market franchise that can’t recruit FA’s into a least a middle-market franchise that can. People howl about the “3-teams in the same market” thing, but the NHL has 3 in NJ/NY. Plus, NBA players want to live in Southern California. Even being the “third fiddle” in LA is better for attracting FA’s than it is to be in a bad weather, small-market city somewhere else.
    b.) Ellison buys the Hornets and is given reign to move them to SJ. In conjunction, the Warriors build the new facility in SF. This is an acknowledgement that the N.O. market isn’t strong enough for hoops. Buying the Hornets becomes more attractive to Ellison with the knowledge of a better CBA and the allowance that he can move to SJ.
    c.) Move Memphis to either Seattle or Vancouver. Vancouver failed before, but that was partially because Seattle cannibalizes the market and the Canadian dollar was much less competitive then. I think the NBA could succeed in Vancouver now…IF there was no Seattle. It has to be one or the other.
    d.) Re-align the league as the NHL just did to lower travel costs, with four geographic divisions. The NBA’s Pacific would be: Seattle/Van, San Jose, San Francisco, LA x 2, Anaheim, Portland. The other 8 Western Conference teams are all in the Mountain or Central Time Zones, and they’d be in a division together, too. You play 6 in-division games and a home-and-home with every other team in the league.
    e.) Divvy up the 15 Eastern Conference teams into two divisions. It doesn’t work as neatly as the Western Conference, unfortunately.

    You get rid of the two worst U.S. TV markets in the league (#49 Memphis and #52 New Orleans), and arguably the most dilapidated facility in the league (Arco). You also reduce travel costs significantly and maybe even raise TV revenue by getting more games against teams in your time zone.

    I think those are better steps than contraction.

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