NBA retraction of teams - Who stays? Who goes? and the players?

Can we vote?......I vote Jazz.

 

They need to move a team back to seattle before they contract.

Clippers
Hornets
Grizzlies

Any of these team should go

 

It's always bugged me about the Clipps being in LA now NJ is going to be another NY team... No city needs 2 teams when there are so many other places that could use one

 

From last week:
http://bbs.clutchfans.net/showthread.php?t=199824

[/quote]
1)So what about this reduction in NBA teams? What do you think?[/quote]
Sly bargaining ploy in advance of the new CBA
"We're so broke by these greedy player salaries that we might have to shut down teams! Oh our financial woes!"
NBA/Stern would never really do it.

If it were to happen, you'd start with the financial desperate teams that have been treading in red water for a long while:
Bobcats
Hornets
Bucks
Pacers
Wolves
Kings
Grizzlies
Sixers
Raptors
(Orlando is secretly on this list)
*Not listing the Nets since Brooklyn is their golden parachute and the new owner stabilizes them in a big way

Despite the perception by fans, the Clippers have actually been a profit turning franchise for a long while. Sterling is a despicable owner, but he keeps them in the black.

As I mentioned before, it would be a cold day in hell before Stern contracted. Look at how bad the NHL got, and they still didn't do the smart thing and contract. MLB is also fighting it off despite the Florida failures and Royals hopelessness. They won't do it. The NBA is quietly feeding a third of its teams major loans to keep them afloat.

I'd agree that the Bucks, Pacers, and Sixers (and Nets) would dodge this hypothetical axe....but the Sonics/Thunder move should serve as a warning to those franchises that Stern absolutely is bottom line driven.

The Canadian teams were doomed from the start. It was as bad a move as the NHL stuffing teams all over the south. And those Grizzlies teams were so hopelessly mismanaged and talent starved, they were never going to make the playoffs.

A contraction draft would be the most interesting wrinkle to things. Obviously there's a huge disparity when you have 2-3 All Stars available immediately followed by lower tier role players and bench guys. Perhaps one semi-fair way of doing it would be:
Order pecking order as you would the draft
Run a lottery (equal probability for ALL) for the 1st, 2nd, and 3rd selections
Go in order, with each team given the opportunity to pick or pass
If you select a player, you forfeit your first round draft pick
Those that select a player and lose their first rounder are given (in same order) a "third" round draft pick

Not really sure how to handle one aspect:
How does the NBA handle players on the contracted teams that no one wants? You can't force a team to absorb a heinous bad contract. Could be that the NBA (the 30 remaining owners) would have to buy out those players, dividing the owed money equally. I'm sure you'd also have some similar issues with lease agreements.

I've said it before, and it's just about as unlikely, but I'd prefer to see the NBDL enhanced to be a true minor league and relegation of 2-4 teams down into it. It's not a unique idea, but the EPL system of sending down the worst two teams (and taking back the top two minors) each year is great - if only because every squad would have unbelievable motivation to fight it out all season. Tanking would be wiped out immediately. Clearing out your roster to chase LeBron would be suicide.

 

Disagree - it's a business and supply/demand economics are critical.

There's a huge disparity in the ticket/merchandise demand and local corporate sponsor money between New York and Memphis. If anything, there should be at least 3 NYC teams if you'd want more of an even playing field. The Bucks can't generate enough revenue even when they field competitive squads. The league can't work when you have so many teams (listed above) that annually operate on a deficit budget.

It's a harsh reality, but
There are 3 cities that can support every pro league, plus some with 2 same-sport teams
There are about 7 other cities/regions that can support every pro league (1 team each)
There are about a dozen that can handle 2 pro teams (different sports)
There are a couple dozen that can support 1 pro and a few minor league teams
Then you've got the places that are strictly minor league/college only.

The other harsh reality is that a lot of metroplexes that USED to be able to support pro leagues have fallen so much in the last couple of decades that they can't, but are still "grandfathered" in to a team they can longer afford (Rust Belt cities, New Orleans, etc).

 

I concur. If they can establish a playing field that keeps all teams in the black, the league will benefit from having as many teams as it does. Why would you wilfully retract the ability to sells hundred of thousands of tickets every year? Keep the revenue and control the costs. I don't know why so many fans have such a hard-on for retraction either.

 

We need revenue sharing, and I like emjohn's idea of having terrible teams being sent down to the NBDL, although I would prefer we just go like baseball and have 30 NBDL teams.

 

I like the 24 team, 6 seed Playoff system. And the remaining teams get an extra roster spot or two that can be used for D-League assignments.

Eliminate 1 team from each division:
Raptors
Bobcats
Cavaliers
Hornets
Timberwolves
Kings

 

Well I guess then we'll have to keep yao, cus injured or not, he makes the Rockets a very popular team worldwide

 

Since the NBA paid approximately 300 million to buy the Hornets from George Shinn, a precedent has been set.


<hr>
SBJ: Shinn lending $70M to NBA in Hornets sale

<i>
Tired of shouldering extensive losses, Shinn will forgo the money as part of the NBA’s acquisition, with the league paying it to him in two years at an interest rate of roughly 3 percent. Shinn this week will receive about $90 million in cash from the league, the sources said. The remainder of the purchase price, said by the league to be in excess of $300 million, is debt the league is assuming.

Seller financing is quite rare in pro sports and usually occurs when there is a pressing need to sell a club. News Corp., eager to unload the Los Angeles Dodgers, helped finance the club’s sale to Frank McCourt in 2004. Palace Sports & Entertainment lent to the buyers of its Tampa Bay Lightning in 2008 after a critical lender to the purchaser backed out of the deal.

“It doesn’t happen that often in sports because usually there are enough bidders out there,” said Rob Tilliss, founder of sports advisory firm Inner Circle Sports. “But in a lot of other industries it happens in distressed situations.”

The Hornets are not distressed, though Shinn had apparently tired of subsidizing the team’s losses. According to documents posted last week on the website Deadspin.com, the Hornets’ auditor, KPMG, raised concerns about the team’s ability to continue as a going concern because of negative cash flows, recurring operating losses and partner deficits, which hit $83 million as of June 30, 2009.

The team in 2009 actually earned $1.8 million, according to the documents, even after interest expenses. The result, however, was boosted by the NBA deferring a $4 million relocation payment the team owed. The year before, the team posted a $16.6 million loss.

Regular-season ticket revenue rose $13 million in fiscal 2009 from 2008.
<b>
The NBA’s pending purchase appears to have come together quickly, shocking many in the finance and basketball worlds. In fact, while the $90 million the NBA is paying in cash comes from reserves, banking sources said the league is likely to borrow in the future to replenish the money.
</b>
Shinn had tried fruitlessly for more than a year to sell the team to his limited partner, Gary Chouest, but no deal was completed.

The NBA last week said it is in no hurry to sell the franchise, and while Commissioner David Stern said the league would like to keep the team in New Orleans, any franchise sale prompts questions about possible relocation.

The Hornets came to New Orleans from Charlotte in 2002 and split time between Louisiana and Oklahoma City for the 2005-06 and 2006-07 seasons in the wake of Hurricane Katrina.

The team’s lease with the state to play in New Orleans Arena expires in 2014. The team also can opt out of its lease for $10 million if attendance drops below an average of 14,735 fans per game. The Hornets were averaging 13,584 fans a game this season as of last week, down 7 percent from the same time last year.</i>

<hr>


Breaking various local contracts such as venue leases, broadcasting agreements etc would be an additional cost for demobilizing franchises.

<i>Pencil in</i> perhaps 50 million to buyout local contracts for each shuttered team and it would cost the NBA 350 million for each franchise that it would terminate.

That would be an assessment to each of the remaining teams of over 10 million dollars or more (depending on the number of franchises still in business) for each terminated franchise.

For the larger market teams, the assessment won't be a hardship, but for the smaller market teams on the borderline between profit and <font color="red">loss</font>, paying that assessment will be painful.

 

Maybe I'm reading this wrong, but every franchise that is potentially bought by the NBA isn't going to cost 350 million, It's determined based on value of the franchise.

 

How is the <i>value</i> for each franchise determined? Since the turnover in ownership probably works out to maybe an average of two teams each year, there are limited <i>comparables</i>* to work with when assigning <i>values</i> to franchises.

There was a recent writeup in the <i>Houston Chronicle</i> (print edition) about the sports franchises in Texas.

The story cited projections (guesses?) from <i>Forbes</i> that had the Rockets, Mavericks and Spurs all worth more than 400 million each.

Since the Hornets are in a smaller and more difficult market than the Texas teams, I used them as a <i>comparable</i> for other small market teams with financial problems that would be candidates for shuttering.

If it was decided that the Kings, Raptors, Bucks and Hornets would be shuttered, do you expect the NBA to tell the current owners of the Kings, Bucks and Raptors that you were only going to get 200 million each for their franchises even though the NBA recently paid 300 million to George Shinn for the Hornets?

<hr>

* Comparables
<i>What Does It Mean? What Does Comparables Mean?

A valuation technique in which a recently sold asset is used to determine the value of a similar asset. This technique is often used in real estate to determine the initial sale price of a property.


Investopedia explains Comparables
This technique is helpful for accurately appraising the value of any asset. For example, a real estate agent may appraise the value of a home based on the most recent selling price of a house in the same neighborhood with similar attributes, such as square footage and the number of bedrooms and bathrooms. </i>

 

THIS is the elephant in the room that people seem to either ignore or are ignorant of. Paying back owners and splitting up players will be a walk in the park compared to the money that will have to be repaid to local governments for these sparkling buildings for breaking the leases that these teams signed. If the leases for these teams are anything like the Bobcats' lease, the savings that the league would be minimized for a while.

The Bobcats' lease includes a clause that requires the team to repay the ENTIRE cost of the building ($265 million) if the lease is broken before the 30-year term is up.

Throw in the teams people mention to contract--Wolves (not so new building), Bucks (privately owned older building), Pacers (new building), Kings (old building), Hornets (relatively new building)--and this could become a very expensive proposition for the league.

It may just be better to do as others suggest and improve the revenue sharing.

 

The Hornets would be likely except for the recent transaction with the league. I can't see the league taking a loss like that after taking over the team. The Hornets arena was there before the team even dreamed of moving there so I would expect them to have some clause to pay off the building should they be voted to contract. They would probably just have to pay off the lease and that would be it.

It was still dumb to move there to begin with, New Orleans has probably one of the lowest number of corporate money to support a team and its even worse post katrina. David Stern is getting what he deserves for letting them move.