Tag:New Orleans Hornets
Posted on: December 8, 2010 10:23 pm
Edited on: December 8, 2010 10:46 pm
 

The NBA's NOLA dilemma: PR versus profit

As the NBA zeroes in on its acquisition of the Hornets, a moral versus business conundrum awaits the league and its owners over the future of basketball in New Orleans. 
Posted by Matt Moore



Let's start here: No one wants to move the New Orleans Hornets. You can't have watched footage of people dying in the Superdome and not have a soft spot in your heart for the Crescent City. The issue for the NBA as it takes ownership of the team is not one of what would make them and the rest of the world feel good. They know what that is. Find a local owner, keep the team in New Orleans, and everyone lives happily ever after. 

The question is whether that's a viable option and if they really feel that they're not just throwing money down a hole. The financial documents that came out Tuesday from Deadspin outlining the massive financial woes in New Orleans present a significant dilemma for the NBA and its owners as they try and determine the future of this franchise. There were questions about the viability of New Orleans as a market well before a hurricane overwhelmed the levies, and the questions extend not just to attendance and fan interest, but to market economics, sponsorship revenue, and the complete financial situation in New Orleans. This is all before we start to look at the relationship with the city's mayor and Louisiana's governor, both of whom have been very clear about one thing. They hope the NBA commits to keeping the Hornets in the city, but they will not be providing financial handouts in the form of tax breaks or anything else in order to make that happen. Not in this economy, not during the city's continued recovery, and not for a franchise that is a distant third in sports within the wards. (The other two being football and drinking.)

That's where things get tricky. If the NBA is pursuing its due diligence and trying to find the situation that yields the most promise financially within a decent time frame, it's difficult to see New Orleans as the answer to the riddle. Kansas City offers the building ready for attendance now, but has its own set of market questions. Anaheim offers the market and the building. Seattle offers the market and ownership. If David Stern is correct and this issue won't be resolved until after the CBA is resolved, that gives Seattle time to finance a new building as well as for Las Vegas to get approval for a new arena. Other cities waiting for the right situation might be in a better position by then to create an actual bidding war, which would only make it more difficult for the owners to select a bid from New Orleans. 

And yet, at the end of it, there are many positive signs towards New Orleans. Several owners are starting to make noise about being interested in offers. The goodwill of keeping the Hornets in New Orleans is something the league could use after ripping the Sonics away from Seattle under similar (though less emotional circumstances). Keeping the team local is the easy solution. But it also may be viewed as the impossible dream by owners. When the vote to move Seattle to OKC was made, only two owners voted against the measure, Paul Allen in the same area, and Mark Cuban, who questioned moving a big market team to a small market. Similar thoughts could be in play as the owners who voted for the most financially viable option follow suit and owners who question failing markets like New Orleans may not be moved enough to keep the team there. 

At the end of the day, the NBA seems very much in place to make a real "good faith" effort to keep the team in New Orleans. But the realities of the situation may force their hand in a direction no one wants to see. 
In unrelated news, the Hornets drew just a little over 10,000 for their game against the Pistons Wednesday night. 
Posted on: December 8, 2010 4:53 pm
Edited on: August 14, 2011 9:20 pm
 

Speculation mounts around Hornets future

All sorts of theories are flying about the future of the New Orleans Hornets. Posted by Ben Golliver chris-paul-monty-williams

Given the mess that is the New Orleans Hornets, you have to feel bad for three people: new GM Dell Demps, new coach Monty Williams and all star point guard Chris Paul. The three met over the summer and apparently hashed out a workable relationship, one which kept Paul happy in the short term and led to a strong start to the season, delivering a whole bunch of promise to start the season. Now, with the team's financial records being leaked and a sale to the NBA underway, their hard work and attempts to keep things in house and under wraps are getting blown up in a big time way. It's only been 48 hours since the NBA announced it would take over control of the team, and the speculation and rumors about possible relocation have kicked into full gear.   Here's a rundown, in no particular order. The Times-Picayune reports that Morris Bart, a New Orleans attorney is ready to become a minority partner and hoping for a 10% stake.
"I grew up in New Orleans and I went through the bitterness of the Jazz pulling out and leaving New Orleans,'' Bart said. "I would like to do my part to save the new generation of kids from having to go through that same experience. I'm living here and I think the team has to have local ownership. You've got to have a big fish that can come in and buy 50 percent and then the minority investors can follow along. I feel the NBA strongly wants to keep the team in New Orleans.''
Fletcher Mackel, a sports anchor for WDSU in New Orleans, tweets that he is "hearing rumors about David Filo buying Hornets. He's Co founder of Yahoo!, worth 2.9 billion." Filo has ties in the region, having been raised in Lake Charles, Louisiana and attending Tulane University. KMBZ radio in Missouri is reporting that Kansas City Mayor Mark Funkhouser "says he's been involved in talks to bring the Hornets to Kansas City." Kansas City, of course, has an NBA-ready arena and has been short-listed by multiple media outlets as a possible relocation home for the Hornets. Finally, HoopsWorld.com writes that contracting the Hornets is an option that hasn't been discussed enough.
Commissioner David Stern has refused to rule out contraction as a possible option when the owners meet with the NBA Players' Association to hammer out a new Collective Bargaining Agreement (CBA) this summer.
The first and perhaps hardest part of the process is finding an owner willing to sell their team to the NBA for eventual dissolution. With the acquisition of the Hornets, the league has already completed that step.
What to make of all of this? That there is local interest cropping up immediately in Louisiana is a good sign. Silence in the short term would have been deafening, and a death blow to hope for basketball fans in the Bayou. That people are interested in saving the team is a crucial first step. As for contraction, it seems like a very unlikely possibility in this situation, given the strong interest from other markets and reported interest from overseas owners regarding buying into the league. By purchasing the team from previous owner George Shinn, the NBA committed significant resources (reportedly $300 million) and will be looking for a return on that investment. It's difficult to see commissioner David Stern wanting to swallow that loss whole, especially if there is foreign demand for the right to enter the NBA.   Finally, we come full circle and return to our sympathies to those currently working for and playing for the Hornets. Single-minded focus is one of the highest virtues in professional basketball. Being able to tune everything out and carry out the task at hand is what separates winners from losers, above-average teams from average teams, and champions from the rest of the pack. What's being asked of the Hornets and their staff between now and whenever the team is sold -- remember, there is no set goal for that to happen, as Stern is preaching patience -- is a nearly impossible task. Focusing amidst such a storm is simply not a workable, functional reality.
Posted on: December 8, 2010 12:43 pm
Edited on: December 8, 2010 1:03 pm
 

3-Up, 3-Down: Falling all over

Three rising and three falling teams this week as the Rockets are getting it together and the Hornets are falling apart.  Posted by Matt Moore




3-Up, 3-Down for this week in our Power Rankings :

3-Up

Boston Celtics (3): The Celtics are doing all of this without Rajon Rondo at 100% . That's insane. They're simply crushing opponents. Their ability to coast through games and still win while getting up for big games is considerable.  Against the Bulls, the Celtics just went out and obliterated a tough team inside by going over them. Particularly, Kevin Garnett is assassinating people all over the floor. Last season he was limited largely to the pick and pop 18 footer. This season he's got the drop step-hook, the face-up baseline jumper, and a few driving dunks in his bag. That makes such a huge difference for this team.

Miami Heat (4): Six spot jump for the Heat who may  have hit the low point and started to climb back up. It's not just that they've been beating inferior competition, it's that they've been pounding them. Furthermore, Wade and James seem to be getting on the same page, while Mike Miller inches closer and closer to returning. Some big games come up for this team in the next week with Utah and New Orleans on the docket for a chance at redemption for the Heat. They need these wins not only to keep their momentum going, but to prove that they're able to beat, you know, good teams. 

Houston Rockets (17): Slowly but surely the Rockets continue to climb their way out of the bizarre hole they built for themselves. They've gone from the worst defense in the league to the 8th worst defense in the league. Progress! The most bizarre thing is that their performance is largely independent of opponent. They lost to good teams and bad, and they've beaten good teams (LA) and bad (Memphis) in the past week. Still in a hole, but starting to climb out. 

3-Down

Los Angeles Lakers (9): A four-spot drop for the Lakeshow this week after a four-game losing streak stretched from last week to this one. But a win over the dreadful Kings and a post-rankings win over the Wizards are just what the Yellow and Purple needed to get things going again. This team is tired, largely because of a lack of depth. Andrew Bynum may be back in a week, which would also help. Of course, me getting a pot of gold from a rainbow would help too, and both have about the same chance of happening, given Bynum's injury recovery history.

New Orleans Hornets (10):
If everything went right for the Hornets in the first eight games, everything has gone wrong in the last 8. David West isn't dominating but getting the ball a ton, Chris Paul is too passive, the defense has fallen off, and Jarrett Jack was not a magical improvement, but instead has been a curse so far. With all the off-court turmoil, this team needs a reassuring run to staunch the bleeding.

Oklahoma City Thunder (12):
Yeah, we don't get it either. The team has simply been inconsistent. Time to bring it up. Coach of the Year curse?

Check out the rest of the Power Rankings here .
Posted on: December 8, 2010 9:51 am
 

Shootaround: 12.8.10: The NBA's most underpaid

Posted by Royce Young
  • Forbes released its list of the NBA's most underpaid players. And LeBron is on top: "Yes, at $15.8 million, LeBron was the NBA's most underpaid player in 2009-'10. At almost 30 points and nine assists per game, 50.5% shooting and 39 minutes a night on the floor, James produced more wins for his club (27.2) than any player in the league. All while earning less than Zach Randolph and Pau Gasol, and about the same as slightly lesser stars Dwight Howard and James' new Miami runningmate, Dwayne Wade."
  • Ian Thompson of SI with great stuff on the Hornets situation: "Unless fans swarm to the New Orleans Arena in order to keep their franchise at home for the shortterm, the new owner of the Hornets will place New Orleans in a pool among larger available markets, including Chicago, Anaheim, San Jose and Kansas City. There hasn't been a lot of talk elsewhere about Chicago, but it is the third biggest market in North America and it has only one NBA team. New York will have two franchises when the Nets move to Brooklyn in two years, and Los Angeles has two. In suburban Chicago near O'Hare Airport, the Allstate Arena could serve as a temporary NBA home until a new arena could be built, depending on the resources of the new owner."
  • Everyone's favrorite crazy owner, Michael Heisley, doesn't get what's wrong with his Grizzlies: "I don't know what's happening. We're having a difficult time and I don't know what the reason for it is. I started the season with high hopes for the team. It's not living up to what I'd hope. I don't know what else to say. I've racked my brain trying to figure it out."
  • Jimmy Smith of The Times-Picayune: "When the NBA stepped in to purchase the New Orleans Hornets on Monday, the league was faced with the situation of an owner who was heavily in debt and borrowing to pay the team’s on-going operations, according to an audit of the franchise’s finances posted on the website Deadspin.com Tuesday evening. While the team actually made an operating profit in 2009, the problem for owner George Shinn was the team’s long-term debt. At the end of 2009 - the second of the two years which the audit covers - the Hornets’ long-term debt was $111 million. And they had to pay $8.9 million in interest on it. That wiped out an operating profit of $5.8 million."
  • Steve Kelley of the Seattle Times: "We won't forgive Stern for what he did. But there is no satisfaction in continuing to hate him. It's time to forget. Who knows if Steve Ballmer wants to own an NBA team? Or if he can put together the same well-intentioned would-be-saviors who introduced a viable 11th-hour plan to keep the Sonics before they left for Oklahoma City? Ballmer could be a hero for Seattle. He could add a touch of class for a league that could use a little. The New Orleans Hornets are for sale. Is Ballmer in a buying mood?"
Posted on: December 7, 2010 5:25 pm
Edited on: August 14, 2011 9:19 pm
 

New Orleans Hornets were bleeding money

The New Orleans Hornets' audited financial records have leaked online, and they paint a horrific financial picture of the franchise's ownership group. Posted by Ben Golliver Audited financial documents concerning the New Orleans Hornets have been published by Deadspin.com, and the numbers are not pretty. Earlier this week, commissioner David Stern and the NBA stepped in to purchase the Hornets after a long-anticipated sale to Gary Chouest fell through. As Ken Berger of CBSSports.com noted yesterday, the move may wind up being a death blow to basketball in New Orleans, because the Hornets were such a money pit and because deep-pocketed owners would be more likely to find a sustainable business model in a different market, as happened when the Seattle SuperSonics moved to Oklahoma City. The documents published by Deadspin, an audit conducted by KPMG, only reinforce these grim predictions. They show that, despite turning a profit from June 2008 to June 2009, the ownership group led by George Shinn was up to its eyeballs in deficits. This sheet, for example, shows the ownership's total deficit on June 30, 2009, topping out at more than $83 million. Deadspin also notes...
The team's net cash in operating activities, which represents the "measurement of money [owner George Shinn] is being asked to take out of his pocket to keep operations going," according to sports economist Andrew Zimbalist. In 2008, that amount was $7.4 million; in 2009, $1.4 million (slide 12). Zimbalist points out that "things got much more problematic for the franchise" the following year.

The two obvious questions that arise after reading this document are... 

1) Did George Shinn just fleece the NBA by selling this franchise for, reportedly, up to $300 million? 

2) Can any prospective buyers in Louisiana reasonably be expected to do so much better than Shinn that these huge deficits could be avoided?

To the first question, the league has a vested interest in propping up its franchise sale prices, keeping the buy-in price high to ensure maximum milking from the overseas billionaires who represent the league's future owners. The Hornets might not be worth $300 million, especially after reading these documents and after all star point guard Chris Paul inevitably skips down, but the right to own one of only 30 NBA teams surely hovers around that price. Contingent, of course, on being able to relocate.

To the second question, these numbers paint a pretty grim reality, one that was always assumed, and probably known by those who needed to know or who were interested in purchasing the team. For the general public, however, it casts a cold cloud over the city's chances to enjoy NBA basketball indefinitely into the future.

The only hope for basketball in New Orleans now is for an ownership group to arise that is not only happy to keep basketball in New Orleans out of the goodness of its heart, but is willing to do so while sustaining heavy losses while playing in front of hit-or-miss fan support. Good luck with that. 

This team is as good as gone.

Posted on: December 7, 2010 12:09 pm
 

Report: League looking at Kansas City for Hornets

Posted by Royce Young

If, and that's a big if, the Hornets don't stay in New Orleans, a number of cities will be lining up to grab them. And a report from FanHouse says the league is strongly looking at moving the team to Kansas City and the newly built Sprint Center.

Matt Moore laid out a number of possibilities that included Seattle, Anaheim, Chicago and Kansas City. What's the drawback to KC? Here's what Matt said:
That said, the jewel in their crown is pretty simple. It's the building. Sprint Center, built in 2005 and opened in 2007, has a capacity of 18,555 with a considerably higher number of available luxury suites and club seating due to how the building was constructed. Specifically, the arena was built to capitalize on how current arena economics work. Tickets are valuable, to be sure, but the money is made with sponsorships, and luxury seating. 

What's missing? A buyer. AEG who owns the Sprint Center, made noise early on about pursuing either a hockey or basketball team to fill the arena. But with the Pittsburgh Penguins using them as a straw man to get a new arena in Pittsburgh, there has been no team to arrive. Furthermore, it turns out the arena is making more money as a concert venue than it may with a regular tenant. With the recession having hit Kansas City well before the rest of the country and a lack of progressive technology firms in the area, finding a prospective owner outside of AEG is going to be a hard sell. Kansas City remains a viable candidate but it remains to be seen if either AEG or the city will commit to making a serious inquiry toward the Hornets. 
Other than the sentimental reasons to bring a team back to Seattle, Kansas City has to be the leader in the clubhouse. New building, big corporate city with a number of sponsorship opportunities and the potential for a great, dedicated fanbase. Like Matt pointed out, it all comes down to a buyer that wants to bring a team there.

The concern over it being a college town is a good one, but the same was said for Oklahoma City and I think we've all seen how that went over. Competing with the Jayhawks and the Missouri Tigers wouldn't be easy for a professional franchise, but in a market like Kansas City, there's always room for more basketball.

But it's not about those reasons. It's about the building. Kansas City has what the league likes and what a prospective owner loves: a brand new arena that can make money. If Seattle had something new, no doubt in my mind it would be the frontrunner. But the NBA is about money and by all appearances, Kansas City would have the best shot at making the most right now.
Posted on: December 7, 2010 10:50 am
 

Louisiana governor on helping the Hornets

Posted by Royce Young

The situation doesn't look great for the future of professional basketball in New Orleans. With the league taking over ownership, most see it as clock has been placed on the Hornets' time remaining there.

The main issue with the franchise has become the financial situation and structure in a city that may not be able to fully support an NBA team. The Hornets play in a state-owned arena and David Stern has already said that the league will be working closely with the governor's office on the team's future.

And while Gov. Bobby Jindal sounded willing to do his part to keep the team there, it's pretty clear the Hornets shouldn't be expecting any money help. From WWL Radio in Louisiana:

“We’ve been working not only with the current management but now the league on creative ways for the state to support keeping the Hornets here,” said Jindal. But Jindal said those efforts have to have limits.

“We’ve made it clear that they understand the state is facing significant financial pressures,” the governor said. “We’re not going to do anything that jeopardizes funding for higher education or health care.”

Basketball... or health care? Hmm, I wonder what wins out. Jindal is obviously saying the right things here, but the message is clear: You're not getting free money from the state just to keep a financially unstable team here. If the Hornets were making lots and lots of cash, maybe so. But as of now, the team is becoming somewhat of a burden on the state. And with economic uncertainty weighing over New Orleans more than most cities, Jindal likely isn't psyched to have to deal with this.

But more than likely, if the team is to remain in New Orleans, it'll need some help from the state. And with the way the league has tried to keep the team there after Hurricane Katrina, there will likely be some pressure on Jindal to do his part.
Category: NBA
Posted on: December 7, 2010 9:56 am
Edited on: December 7, 2010 10:07 am
 

Shootaround 12.7.10: Where Stern went wrong

Posted by Royce Young
  • Darren Rovell of CNBC on why the NBA messed up purchasing the Hornets: "The last point is the public relations disaster that this could create. If George Shinn and Gary Chouest couldn’t make it in New Orleans, fine. They’d say that and leave. Now it’s the NBA’s business to put this team in the best position it can and if they leave New Orleans it will be the league’s fault, not Shinn or Chouest’s fault, that they left."
  • An editorial from The Times-Picayune: "Mr. Stern and the league played an important role in the Hornets' return to New Orleans post-Katrina. The league also brought the NBA All-Star game to New Orleans in 2008, and metro residents are thankful for that support. The league is appointing Jac Sperling, a native New Orleanian and vice-chairman of the NHL's Minnesota Wild, to run the Hornets. But the new ownership raises questions as to the team's future, especially as the current lease expires in 2014.
  • Magic Johnson should buy the Hornets?
  • At The Hive on why the Hornets aren't the Expos: "The Hornets, however, are a viable, competitive, and valuable franchise. Their only problem is that George Shinn wanted out of the organization quickly, and that wasn't able to be done quickly enough for his desire and still keep the franchise in New Orleans. It's not a team, like the Expos, that were deemed to be of negative value to the league."
  • Noam Schiller of Both Teams Played Hard on MIP candidates: "Russell Westbrook: And who stands above Horford for 2nd in the league in PER? I’ll give you a hint: he plays for the Thunder and he isn’t Kevin Durant. Westbrook has taken his scoring to the next level by using his speed and athleticism to constantly get to the rim, where he either converts his shots at a career high 55.2%, or draw fouls. Russ is getting to the line 9.6 times a night (good for 4th in the league) and making his freebies at a career high 87% clip, combining with last year’s prominent leap-maker Kevin Durant to create the league’s most deadly foul drawing team. If he doesn’t make the all-star team this year, something is wrong with the universe."
 
 
 
 
The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com