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Report: Memphis plans to sue NBA for lockout?

Posted on: October 18, 2011 8:03 pm
Edited on: October 18, 2011 8:18 pm
 
Posted by Ben Gollivernba-lockout

There are billions of dollars at stake in the ongoing NBA labor crisis, and the politicians and lawyers are circling in the water like sharks.

MyFoxMemphis.com reports that the city of Memphis, home to the NBA's Grizzlies, is investigating its options with regard to the ongoing lockout, including litigation against the league to recoup up to $18 million that would have been used to pay off arena bonds for the publicly-owned FedEx Forum. 
At the suggestion of Chairman Myron Lowry, the council is considering a resolution that would ask City Council Attorney Allan Wade to explore all options, including a lawsuit against the NBA.

Wade says this is the first city he's heard of considering this type of action. "If it gets to be half a season that's a big problem. If that thing sits idle for a whole season that's a big problem," he said. "I think that goes against the spirit of our agreement because our arena is built with revenue, not guaranteed money." 
The site reports that the resolution passed by a vote of 8-3.

To boil this down: a portion of the money generated during home Grizzlies games at FedEx Forum goes back to the city to help pay off the original financing of the arena. If there are no home games there is no revenue with which to pay back the city. The city wants its money and could decide to sue the league to get the money at some point in the future. Good times. 

Ken Berger of CBSSports.com reports that NBA spokesman Mike Bass says the league has "no comment" on the matter.

It's worth noting that this type of legal action could theoretically happen in any other city that has a publicly funded NBA arena.

Here's MyFoxMemphis.com's video report.

Hat Tip: SBNation.com NBA

Comments

Since: Oct 19, 2011
Posted on: October 19, 2011 6:34 pm
 

Report: Memphis plans to sue NBA for lockout?

i love it when i hear haters bash memphis.they do it every chance they get.i wonder if this steve guy is just mad cause the grizzlies beat phoenix
last season 2 games to 1 .i understand why this steve guy got so much hate for memphis.actually enough revenue bonds has been saved up to pay for the forum thru 2028.for those who question the quote on quote "backwater hillbilly's" in memphis let us look at their intelligence.the city of memphis has never been bankrupt and has always had a surplus in it's city budget.the people of memphis didn't fall for the mortgage scam and real estate there is at a sturdy pace of growth (can phoenix say the same?).this move by the city council was a effort to put the nba on notice a bold move in which it took a bold city to do it.if more cities did this there would be a lot less greedy manuevering done at the expense of nba fans.not bad for backwater hillbillys.



Since: Dec 23, 2007
Posted on: October 19, 2011 5:50 pm
 

Report: Memphis plans to sue NBA for lockout?

Loos like memphis is first up to be contracted....not too smart that city....



Since: Jun 25, 2009
Posted on: October 19, 2011 4:25 pm
 

Report: Memphis plans to sue NBA for lockout?

I like it. I'd love to see more cities do likewise. It's about time these fat cats are being held responsible for the consequenses of their actions. The little guys are the ones that are being hurt most by this lockout. The vendors, employees that do maintainence & upkeep in the arenas, the ticket sellers, etc. They have no say in it and are being hurt the most. Make 'em pay...one way or another. Good call Memphis!

Fine.  Let the cities across the NBA sue all they'd like.  So if it gets out of hand, the NBA can legally go bankrupt and byebye league, good luck to the cities involved in these lawsuits.  If the NBA goes bankrupt the cities get nothing, and it's not just a lockout for a little while or a season it becomes permanent and they lose a lot more then a few payments.  Not to mention NBA owners are protected, nobody can touch their personal assets if the NBA goes bankrupt on a corporate level. 

And then we'll see what the players do if that ever happens.  For most, it's back to the ghetto eventually.  For others, it's keep on spending until the money runs out and then back to the ghetto for them as well.   



Since: Oct 8, 2006
Posted on: October 19, 2011 3:46 pm
 

Report: Memphis plans to sue NBA for lockout?

I don't believe this arena financing agreement is on a sliding percentage scale, it's just like a mortgage. The city took out bonds to have the money to give to the ownership to build the arena. That mortgage (bond) payment is due every month and changes little whether the Grizzlies put azzes in the seats or not. If the team does well and makes more money than their payment due they keep the difference, if they don't make enough money in revenue, they still owe that money, the mortgage has to be paid or the city can (foreclose) sue their azzez. The city gets a set return on the bonds, it doesn't change depending on how much money the team makes.



Since: Feb 26, 2008
Posted on: October 19, 2011 2:24 pm
 

Report: Memphis plans to sue NBA for lockout?

I hear you....but what if the team has a horrible year and ticket sales are drastically low that not enough money is being generated to make the payments?  Does the city still have the right to sue the Grizzles or the NBA?  Don't get me wrong, I'm not on the NBA's side in this either, I think it would be funny as all get up if this spreads across every city that has an NBA team.
I understand what you mean by horrible year and that's why I used percentage, not an actual amount of dollars.  I'm assuming that the $18 million in the article is the average the city has been getting through the agreement, but it also said "up to." So I'm infering that the agreed upon percentage that the city takes from ticket sales would fall in-between range of figures.  The low part of that range is what Memphis is at least guaranteed in case of a horrible season, which the club might have to make up just in case ticket sale don't meet.  The high part of that range is the maximum if the club has a huge year, like this previous season, so they can keep most of the extra income to continue the success in the future.

I'm guessing on the floor and ceiling part, but obviously the agreement states the City gets a percentage of ticket sales and the club forgot to put in a contingency clause in case of a work stoppage.



Since: Sep 29, 2011
Posted on: October 19, 2011 2:04 pm
 

Report: Memphis plans to sue NBA for lockout?

Perhaps some of you aren't reading the actual article.  The City of Memphis came to an agreement with the Grizzlies that a percentage of ticket sales every year goes to pay for the arena that was built at public expense for the team.  In other words, the Grizzlies are paying off a loan
I hear you....but what if the team has a horrible year and ticket sales are drastically low that not enough money is being generated to make the payments?  Does the city still have the right to sue the Grizzles or the NBA?  Don't get me wrong, I'm not on the NBA's side in this either, I think it would be funny as all get up if this spreads across every city that has an NBA team.  



Since: Sep 29, 2011
Posted on: October 19, 2011 1:55 pm
 

Report: Memphis plans to sue NBA for lockout?

Sounds pretty easy to me...does the NBA ever gaurentee to any city, enough revenue in a stadium?  What if ticket sales were low because the team was bad (not saying the Grizzlies are, hypothetically), could the city sue the NBA because the team is bad and ticket sales are low?  Is this facility sole use for the Grizzlies?  No, the Memphis Tigers play there too and I bet they use it for concerts and other events.  CUSA has used it for their conf championship.  Cities are so willing to promise brand new state of the art facilities to bring in a pro team...it's a risk they were willing to take.  How many people own a car or home and suddenly become unemplyed?  Who do they sue?  If this follows through, every BNA city will join in and the NBA will be no more...heck, the cities that normally host NFL teams during their summer camps might as well jump on board since they missed out on revenue this year too.  



Since: Feb 26, 2008
Posted on: October 19, 2011 1:38 pm
 

Report: Memphis plans to sue NBA for lockout?

Perhaps some of you aren't reading the actual article.  The City of Memphis came to an agreement with the Grizzlies that a percentage of ticket sales every year goes to pay for the arena that was built at public expense for the team.  In other words, the Grizzlies are paying off a loan.  By voting for a lockout and thus eliminating the funds used to pay off said loan the Grizzlies are breaching that agreement with the aid of NBA and other club owners who voted for the lockout.

Thus the City of Memphis has every right to sue if they so choose.  If the Grizzlies don't pay because of the lockout then they are liable as well as the NBA who aided them in not paying the loan.  If any lawyer should be fired for not including contingencies like say in the event of a work stoppage, its should be the Grizzlies' lawyer.  The City wants it money, the Grizzlies have to pay and if they don't the NBA will have too.



Since: Mar 30, 2010
Posted on: October 19, 2011 1:29 pm
 

Pay Attention Sacramento

If you live anywhere near Sacramento and know somebody who's in favor of building the new arena, tell them about Memphis' plight. Losses like THIS are what get city officials bounced out of office in the next election, for good reason. 



Since: Apr 6, 2007
Posted on: October 19, 2011 1:15 pm
 

Report: Memphis plans to sue NBA for lockout?

Maybe Memphis should sue their attorney who reviewed and drafted/reviewed their contract for malpractice for not specifying a contingency.


The views expressed in this blog are solely those of the author and do not reflect the views of CBS Sports or CBSSports.com