Blog Entry

Hornets officially on life support in New Orleans

Posted on: December 6, 2010 7:42 pm
If any entrepreneurs out there are in the market for a failing business that is going to shut down operations in a few months for a work stoppage, David Stern would like you to come forward with your best offer.

And if you'd like to keep the business in New Orleans, where things were so bad the previous owners ran out of money and credit operating it, all the better.

Oh, did we mention? Bidding starts at $300 million.

The future of the NBA in New Orleans, one of America's finest and star-crossed sports destinations, took a definite turn toward life support Monday when Stern announced that the league is stepping in to save the Hornets from themselves. The question now is: Who, if anyone, will come forward with the deep pockets and patience to keep the team in Louisiana?

The best way to answer that question is to ask yourself: If you had $300 million, is that how you would spend it?

Despite Stern's insistence Monday that the league stepping in to buy 100 percent of the Hornets from owners George Shinn and Gary Chouest was "the best opportunity for the franchise to remain in New Orleans for the long term," it's hard to see how the NBA gets from here to there.

"This was the most stabilizing force for the team in New Orleans that we could come up with," Stern said Monday.

In other words, this was the best of all available options -- especially if you consider that this was the only option.

Despite a compelling team with marketable superstar in Chris Paul who has orchestrated the best start in franchise history, the Hornets remain among the worst teams in the NBA in attendance. In fact, they are seriously in danger of triggering a clause that would allow the team to break its lease with the state if they fail to average 14,214 fans per game until Jan. 31. Even if that happens, a prospective buyer who wants to move the team presumably would still be faced with a relocation fee. That means the owner of the team -- the 29 other NBA teams -- would theoretically get less money in a sale to someone who wants to move it to Kansas City than from someone who wants to keep it in New Orleans.

But that's short-term math. And the long-term interests of the NBA are now more involved in the sale of the Hornets than ever before. Regardless of what changes are made to the league's revenue-sharing scheme in conjunction with a new collective bargaining agreement, it clearly is in nobody's interests to operate a team in a market where it is doomed to lose money forever.

That means there are three choices: 1) find someone (or a group of investors) in New Orleans who have so much money that they don't care about losing millions annually on a basketball team; 2) find international investors who, a la Mikhail Prokhorov, are willing to pay a premium for a piece of the American basketball business; or 3) find someone capable of moving the team somewhere else.

Option 2 would be fine, except remember: Prokhorov's purchase of the Nets was contingent on the move to Brooklyn being finalized. The Russian billionaire wanted no part of owning a team in East Rutherford or Newark. Though Stern said the protracted talks between Shinn and Chouest meant the Hornets were never thoroughly shopped to other potential owners in New Orleans, it tests the limits of credulity that another suitable New Orleans buyer is out there somewhere.

This point is proved by Stern's own statement Monday that it was "possible, if not likely" that the Hornets would've been sold to an owner who would've relocated them if not for the NBA stepping in. The test of the league's staying power in New Orleans begins in about a week, when the Board of Governors is expected to approve the NBA's bailout by an overwhelming margin.

"We're not in any hurry," Stern said.

Despite reports to the contrary, Stern said Chouest never raised the specter of a lockout among the reasons he decided not to go forward with purchasing Shinn's remaining 65 percent of the team. At this point, it hardly matters. The Hornets are the NBA's problem now, and Stern said it's likely that a sale won't be completed until a new CBA and revenue-sharing model are implemented.

In the meantime, everyone involved has good intentions and it's commendable to give this franchise the liquidity it needs to operate in New Orleans at least for the rest of this season. If a long-term solution can be achieved that keeps the team in Louisiana, that would be ideal. Then again, it would've been ideal to keep the SuperSonics in Seattle, too.

For a lesson in how money trumps idealism, look no farther than the Sonics' move from Seattle to Oklahoma City. According to NBA turnstile data, the Sonics brought in $457,863 in gate receipts per game in their last season in Seattle. In 2008-09, the Thunder's first year in Oklahoma City, that figure ballooned to $1,122,109. Since then, with support from the Oklahoma City business community and the inventive front-office maneuverings of GM Sam Presti, the Thunder have established themselves as a model organization -- thriving both on and off the court in a small market.

Here's hoping that two years from now, the same can be said for the Hornets. But it's difficult to see how the NBA gets from here to there in New Orleans.

Since: Mar 19, 2008
Posted on: December 7, 2010 12:27 pm

Hornets officially on life support in New Orleans

That is a misstatement fall2geatad...The Hornets did make in Charlotte, quite well actually. They only left because the money grubbing George Shinn constantly complained about money and wanted the taxpayers (like myself) to pay for it. I am glad he is gone but I am still pissed off that the NBA allowed him to keep the Hornets name, they should have made him leave that for the next team like the NFL did for the Browns.

The NBA worked just fine in Charlotte until George Shinn killed it and then we were "blessed" the great Bob Johnson who decides to name the team after himself. Only Jordan's presence is helping heal the old wounds brought on by those two knuckleheads...

Since: Nov 11, 2007
Posted on: December 7, 2010 12:24 pm

Hornets officially on life support in New Orleans

"New Orleans is lucky that this country rebuilt their ill-located town.  They should be contented with that.  Let's not pretend they are die-hard fans of any sport.  Move the team to a city where the fans actually care." 

Could you have a more ignorant statement.  I am sure there are thousands of misplaced residents from the surrounding parrishes who would disagree with you on the extent their city has been rebuilt, let alone being content with it.

The Saints won a Super Bowl and have been a boon for the city.  Face it, most of the Hornets problems lie at the feet of George Shin.  He couldn't make the team work in Charlotte and had the same problem in NO.  

Since: Sep 26, 2010
Posted on: December 7, 2010 11:16 am

Hornets officially on life support in New Orleans

"The future of the NBA in New Orleans, one of America's finest and star-crossed sports destinations, took a definite turn toward life support Monday....."

Really?  New Orleans?  Is that a sarcastic comment?  New Orleans is not a fine sport destination at all.  If it were, they'd support their goo basketball team.  The don't have hockey, baseball, soccer, etc......  They have football, and they have a good football team, but that's it. 

New Orleans is lucky that this country rebuilt their ill-located town.  They should be contented with that.  Let's not pretend they are die-hard fans of any sport.  Move the team to a city where the fans actually care. 

Since: May 17, 2007
Posted on: December 7, 2010 10:54 am

Hornets officially on life support in New Orleans

It seems the Louisiana coast has its priorities in a different place and an NBA team isn't part of that.
There isn't a corporate face to be put on this operation.
Nothing they do will change this. Move the team, call it a day.

Since: Jan 4, 2007
Posted on: December 7, 2010 10:50 am

Hornets officially on life support in New Orleans

TallWhiteNinja - Agree with you 100%. As a former Sonics fan, and a general fan of the Carolina's, I would love to see these two moves happen. Doubtful though :(

Since: Sep 25, 2006
Posted on: December 7, 2010 10:47 am

Hornets officially on life support in New Orleans

It's bad news again for New Orleans and basketball.  They ended up getting a franchise that couldn't make it in Charlotte (a known basketball town) and New Orleans got the leftovers.  It has one of the best players in the league in Chris Paul but the rest are a group of support staff (don't tell me West would be a star elsewhere because he isn't).  They already lost one NBA team (Utah Jazz) and will certainly lose this one.  $300mm for what?  There will have to be some pretty big concessions for this to happen.

Since: Apr 8, 2010
Posted on: December 7, 2010 8:51 am

Hornets officially on life support in New Orleans

I don't know why this is in a Hornets thread, but you have the right to sue international businesses, just not international governments.

RE: The Oil Spill was in international waters and BP is a British company, hence the name British Petroleum.  An American administation has no legal foundation or right to step in and do anything, whoever is in office in a situation like that.

Since: Mar 17, 2007
Posted on: December 7, 2010 8:33 am

Hornets officially on life support in New Orleans

The economic problems in New Orleans predate Bush--they can be traced all the way back to the Reagan administration, quite frankly. The US oil industry collapsed in the early 80's and took Louisiana with it, and it's never recovered. There have been other hits along the way--the S&L crisis hurt, as did the drug wars, and of course the more recent problems--but the real problem is that Louisiana just never recovered from the collapse of the US oil industry and never diversified its economy.
I love New Orleans. I grew up on the North Shore, and I saw the Jazz play in the Superdome when i was a kid. Someone in this thread mentioned not caring about the NBA after the Hornets moved and took the nickname, and I can feel that, because there's no way I could ever root for the Utah Jazz. But I don't think the economy can support an NBA team at this point, and the fact that the Saints are thriving is just luck, because that could easily gone wrong after Katrina. Even though I love the Saints, there was a time five years ago when I said that if the Bensons were going to stick up the city and the state for more money, they should leave because the there are more important things to spend money on than a football team, and I stand by that opinion even though it's worked out for the city. The same has to be said for the Hornets, and there's less expectation that it will work out for them.

Since: Dec 7, 2007
Posted on: December 7, 2010 8:02 am

Hornets officially on life support in New Orleans

Kansas City has the arena and fans waiting for a well run NBA team.  If we could find a decent owner (unlike our last team the Kings who were underfinanced and a not so good front office).  If they were run like the Thunder, the Hornets would be a welcome addition to town.  KC has a stable economy so that's not a problem.  I believe the suites are pre sold out for either a NBA or NHL team, so that is a good start.  Key to doing well attendance-wise here, stable ownership that acts like they want to win and a team that hustles and gets active in the community.  If the Royals can still draw well with their on the field ineptness, the Hornets should thrive here.

Since: Mar 17, 2008
Posted on: December 7, 2010 3:59 am

Hornets officially on life support in New Orleans

A different situation? Oklahoma City? Yes..success but Las Vegas is a basketball city.  Coach Kruger has got UNLV back on the map and I've lived here since 1994!!! Is the NBA going to GAMBLE on another city to only fail?  Gambling town?  You must be one of the visitors that pay our taxes...thank you for your visit and deposit!!!  You don't know much about economics and numbers...and forget about your marketing strategy and Celine Deion...I can promise you this...NBA Vegas...sell outs!!!

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