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NBA AM: Selling The Hornets Again?
Posted By Steve Kyler On October 17, 2011 @ 8:22 am In All,Main Page,NBA | No Comments
Selling The Hornets, Again?: In December of 2010 the NBA took over operating control of the New Orleans Hornets, buying out former owner George Shinn with the expressed goal of righting the ship financially and finding a long-term solution to keeping the team in New Orleans.
Jac Sperling, who was appointed by the NBA as the Hornets’ team governor sat down with Jimmy Smith of The Times-Picayune to talk about where things stood with the franchise including the possible sale of the team to a private owner.
“We’ve started having conversations with potential owners already,” revealed Sperling. “The number of potential owners has grown. I think the commissioner mentioned there were four or five, and I think the number has increased a little bit.”
Sperling wouldn’t name any of the interested parties, but did say conversations were taking place with as many as eight different groups, all of which understand that buying the team will require a commitment to keep the team in New Orleans.
“There are some potential owners who live in New Orleans and some who live outside of New Orleans. But all of them understand that they would be buying a team that would have a long-term lease here. And that’s the goal — to extend the lease to a long-term arrangement with the state as part of finding a new owner.”
“[The sale conversations are] moving along now. Conversations, as I mentioned, have started. We’re trying to move the process along so that once the labor situation is clarified; we’ll be able to act quickly.”
Sperling was clear that reaching a labor deal was not tied to a sale, although there did not seem to be a lot of urgency to close a transaction immediately.
“[A labor deal is] not a prerequisite. I think we want to have the conversations now. It’s a dynamic situation, to see how things play themselves out. But in general, they’re moving in parallel.”
The NBA has spent a lot of time and energy convincing the people of New Orleans that the team is not going anywhere, despite reports. Sperling said all of the potential owners are US based, and that all of them understand the team will need to sign a long-term lease in New Orleans as part of an agreement to sell.
“All of the majority investors who are interested in owning 100 percent of the team live in the United States. Some of them live in the New Orleans metro area, some of them live outside. But they all know if they buy the team, the team is going to be here for a long time.”
Sperling wouldn’t put a time line on a deal, but did suggest that once things get resolved on the labor front and NBA basketball resumes, things could come together quickly.
“I would say it’s difficult to predict a specific date. We have the issues of a new owner and getting to a deal with a new owner. Second is getting to an agreement with the state on a long-term lease extension. And third is the collective bargaining situation. All these have relationship with each other, so it’s a little hard to predict exactly when that all will come together. But we’re moving ahead as though we can respond as quickly as possible.”
The Hornets have been negotiating with the city New Orleans and the state of Louisiana on terms for a new lease; they are also negotiating a new TV deal as their previous deal expired.
The NBA’s new revenue sharing plan, combined with a sweeter deal on their arena combined with a more competitive TV deal could swing the Hornets from a money loser under the old economic system into one of the better situated teams in the league going forward.
The Hornets have just $44.4 million in 2011-2012 salary commitments, making them primed for a sale, as the new owner wouldn’t have to carry a ton of bad contracts.
The Hornets still have Chris Paul under contract giving them a very attractive cornerstone.
Sources close to Paul’s camp say having a bona fide owner will go a long way in shaping his decisions about his free agency future.
The NBA paid some $320 million for the Hornets in December, it will be interesting to see what the team fetches when and if it is actually re-sold.
Why Is It So Hard?: One of the most common questions I have been asked over the last two months is “Why Is It So Hard To Make A Deal?”…
As the NBA and its players prepare to meet with federal mediator George Cohen separately today, that question will likely be asked of both sides of the now 108 day-old NBA Lockout.
There are some concepts that fans hate to hear about, which are cornerstones to the problem.
First, neither side is really hurting yet.
Unfortunately, because of what’s at stake – some $2 to $3 billion in concessions over the course of a ten year agreement. Neither side has been overly compelled to give in yet. Both sides have planned for this process for the last two years. Each is sitting on a war chest of money and time aids the process. The longer one-side sweats or in some cases bleeds the better the deal gets for one side or the other and that the unfortunate part of Collective Bargaining.
Second, locking themselves in a room only increases the animosity.
If you and I don’t agree on principals of a deal, arguing with each other for hours on end only breeds contempt. If you have listened to the rhetoric coming from both sides lately, you can tell that this process doesn’t need any more rhetoric or animosity, so time apart is actually a good thing.
Don’t mistake lack of formalized meetings for lack of conversation. Both sides do speak regularly by phone or e-mail, and there has been constant communication. Just not formal give-and-take bargaining.
Third, fans have asked over and over – ‘why not split it 50-50 and play basketball?’
The problem is that this labor fight isn’t just about sharing revenues. It is also about the desire to fix long-standing problems with the NBA labor system which governs how contracts are written, how trades are constructed and even how team’s mange money between themselves and each part effects the other.
So where do we stand today?
The Players feel like they have given enough back to the owners in their revenue share concessions. At some point the NBA is going to need to realize that the rank and file are not going accept a labor deal that has them receiving less than 53% of Basketball Related Revenue. The only way the Players come off that number is if they can keep most of the salary mechanisms of the old labor deal.
The Owners are some point are going to have to realize that the Players also are not going to accept a harden salary cap, unless the ceiling for that cap is substantially higher than the current $70 million.
On the Players’ side they are going to have to understand that the NBA wants change, and the only time they can change the game in a meaningful way is in this process. The NBA does not want winning championships to be about the depth of an owner’s pocket.
They want every fan base to believe that their team has a fighting chance to compete for a championship and that they can land and retain free agents.
In the middle of these concepts is a labor deal.
The NBA has agreed to meeting with the Players on Tuesday. NBA Commissioner David Stern has said failing to reach a deal on Tuesday would have lasting and damaging effects beyond what’s already been incurred on both sides.
To date the Players have lost some $168 million in salaries and benefits, due to the cancellation of the first two weeks of the season.
There is a belief that the NBA has an 82-game contingency plan in place or at least ready to be in place should a deal be reached.
That would be welcome news to the Players as their losses in this process would be recovered. But sources close to the process say that offer will go away if a deal is not reached Tuesday.
Both sides have hammered on these issues for two years, so while there is work still to be done on crafting a deal, things could come together quickly if both sides want it to.
The federal mediator cannot force either side into concessions or a deal, but he can help them see where they are close, but more importantly help close the gaps on the divide, which isn’t nearly as wide as both sides have suggested.
David Stern has said he’ll bring his absolutely best offer to the table on Tuesday… let’s hope the NBA Players Association does the same and we can put this messy business behind us.
The 2012 NBA Draft: The second most common question I get asked is “What Happens To The 2012 Draft, If A Full Season Is Lost?”
With the reality that the NBA season hangs in the balance of Tuesday’s labor meeting and with college basketball is starting to rev up its pre-season tournaments, more and more focus is being placed on the 2012 NBA Draft class. A draft class which could feature UCONN monster Andre Drummond, UNC’s Harrison Barnes and the new slimmer Jared Sullinger from Ohio State.
All three could be franchise changers at the next level; however determining who would get a chance to draft them is still very much a mystery.
Before we get too far along on this, understand that the NBA has no plan in place for this issue and given that it’s never occurred there is no blueprint for how this would play out.
Factor in that the NBA’s Collective Bargaining Agreement covers how the NBA draft is run and organized, including how draft picks are awarded, so figuring out how the 2012 draft plays out, means reaching a labor deal sometime before the draft.
If a full season is lost to labor strife there is a greater than average chance the 2012 NBA draft could be lost too, mainly because the urgency to reach a labor deal won’t kick back in until July.
If The NBA is able to force a deal after the cancellation of the season, they might have the ability to dictate terms on this subject too, but even if the owners can force an answer to this problem there are problems with almost every scenario.
Re-running the 2011 draft order won’t fly with very many teams, although some have made the case the easiest way to insure the perennial lottery teams like Sacramento, Toronto and the Clippers get out of the draft lottery in the coming years would be another pass with the 2012 draft class.
Informed sources say the idea that would be the easiest to sell to everyone is a 30 team NBA Draft Lottery where all 30 picks are determined by the ping-pong ball, giving teams like Boston, Miami and the Lakers are equal shot at a top pick.
There is no one-size fits all solution to this issue.
The one thing that has become clear in asking around about this issue is that the NBA hasn’t covered this ground yet and if it comes down to a lost season, the uncertainty of the 2012 Draft itself is almost as murky as how the picks would be determined.
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