Magic Johnson Should Consider Buying the Hornets

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Published: December 6, 2010

The NBA is looking for a new Hornets owner, and Magic Johnson’s interest in purchasing an NBA team is well documented. His recent sale of Starbucks franchises and shares in the Lakers netted him around 100 million dollars in cash, so it’s inevitable that someone is going to ask the question of why not buy the Hornets. That person is me. Why not the Hornets, Magic? It just happened. Boom.

The fact is, Magic can actually afford to purchase the Hornets as the majority shareholder. He can’t afford the Pistons. He can’t afford the Lakers. He can’t afford to bring the NFL to LA. If he wants to be the majority owner and operate a major professional sports franchise, this may be the best chance he gets for the foreseeable future.

It’s too bad that Gary Chouest won’t still control 35% of the team. That would have made it easier for Magic to purchase the team without necessarily needing any other outside investors. When I started writing this yesterday, I optimistically hoped that he was happy to stay on as a minority owner if the team remained in New Orleans. I can see why it makes sense from the NBA’s standpoint to insist on taking full control, but it’s disappointing nonetheless.

Magic’s net worth is valued at around 500 million. Certainly a bunch of that is tied up in his other investments, but 100 million dollars cash (less 15% capital gains and the like) from the sale of his Starbucks coffee shops and minority share in the Lakers us certainly a nice start toward the 300 million total needed to buy 100% of the Hornets . Total assumption on my part here, but Magic might have an easier time getting investors than Gary Chouest. He is, after all, Magic Johnson.

So why would Magic want to own the Hornets, a team whose attendance issues are publicly known, and whose fan base seems rather apathetic at times? For one thing, in 2008-2009 attendance was at 98.7 percent of capacity. OK? Does that settle it? No? Fair enough…

Today the Hornets are about three moves away from being economically viable in the city of New Orleans. Well, two moves, and one non-move. Let’s start off with the non-move.

1. Don’t have summers of turmoil resulting in an unhappy star, a possible sale, and long stretches without a clear leader.  Before Dell came into power, the front office was an absolute mess over the summer. If a player making 14 million a year is unhappy and questioning the team’s desire to win, then how can anyone possibly blame fans for not showing up to the first 10 games of the following year?  The summer and preseason didn’t do the team any favors in terms of ticket sales.

During our Season Preview, I gave my thoughts on this issue-

This offseason was one of rebuilding for the New Orleans Hornets. With lots of new faces on the roster, a new front office, and a new coach, it was an opportunity for the franchise to completely reinvigorate a fan-base which had been rather lackadaisical for the previous few months. The icing on the cake was the seemingly inevitable sale of the team to billionaire Gary Chouest, a move fans were salivating at the thought of.

Over half a year later Hornets fans are still asking the same questions they were months ago. The buzz has died down, and people are growing concerned. They want to feel like they are part of the Hornets family, and the perpetual silence does nothing but dehumanize Shinn and Chouest. The buzz will get loud again, but it won’t be at full volume until fan concerns over ownership are addressed.

Sounds like that guy really knew what he was talking about, eh? Just kidding. I have a gold medal in the special Olympics. True story.

2. Attendance was that high in 08-09 despite a broadcasting problem the size of an oil plume. The TV issues needs to dealt with immediately if the team is going to stay. That’s just a fact at this point. I tweeted earlier that it’s not surprising that George Shinn didn’t get a deal done by himself to sell the team, and what I meant is that he’s the same guy who never pushed through a deal between CST and Charter, limiting the Hornets potential fan base by a quarter of a million people. He’s the same guy who has let the Hornets go untelevised on DirecTV, even after so many people switched to satellite out of necessity (if TV can be a necessity) following Katrina because COX couldn’t provide service to parts of the New Orleans area.

I get that it’s not that easy to do this stuff, but this guy ran an NBA team. Some might say that having your team’s games shown at bars is kind of important in building a local fan base. Others are just mouth breathers.

George Shinn was a great owner in a few ways, a decent owner in a bunch, and an absolutely atrocious one in regard to broadcasting issues. I guess this has turned into my goodbye, so thanks, George, for all the good times. Your beer garden was awesome until you limited how much I could drink and made me wear a wristband, and still pretty awesome afterward because let’s be real, the Beer Garden bartenders are happy to ignore the ticket system if you give them an extra dollar (I’ve unleashed a monster). I’ve said a lot of nice stuff about you over the years, so I don’t feel compelled to write anything else right now.

But I digress.

3. A hands on owner needs to come in and show some damn loyalty to the city. The people will come. Magic Johnson seems like a trustworthy dude. He’s well known enough to get the fan base to take notice, and a good enough speaker to convince locals that the future is bright. Trust me, we forgive and forget quickly around here. Nobody will hold a grudge against the team if the eventual owner is committed to keeping them in Nola. In fact, the fans would probably treat new ownership like royalty.

Oh, and basketball operations side of things looks pretty damn good, too. Dell Demps is looking like executive of the year, and anyone who says Monty Williams isn’t going to be a successful NBA coach for the coming decades must have their head in the sand. Add a superstar point guard and the best supporting cast in years, and the team actually looks like it’s going places. They even have a 10 million dollar trade exception in which to acquire their missing piece- a reliable third big man- and enough depth at the guard spots where they could sweeten any deal.

So, if Magic is looking for a team own and operate, and a city to love him for it, then New Orleans is the spot and the Hornets are the team.

The Tax Man Commeth

Pending a change of heart from our representatives in Washington, the tax rate for those like George Shinn is set to go up at the end of the year. I’m no accountant, but from what I gather the capital gains rate for Shinn is set to shoot up to 20% from it’s current rate of 15%. Assuming that the Hornets are a capital asset, Shinn is looking at fairly substantial additional hit.

My accountant friend, who shall remain nameless, wants me to understand that making business decisions based solely off of tax consequences is not usually an appropriate way to do business, as business decisions should be the basis. Understood. I think that Georgie Boy made this decisions a long time ago and is reaching a natural deadline. Would this be as urgent if taxes weren’t set to rise in the near future? That’s unclear, but it’s interesting to note the upcoming rise anyway.


P.S. Sorry I was all over the place on this one. My mind is racing and not in any particular direction.

Plus, check out Nikkoewan’s rant.

26 comments
MaxJD_Nola2NYC
MaxJD_Nola2NYC

I can't believe we are getting whooooooooped by the sixers! Wtf

bgalella
bgalella

Magic Johnson would be a terrific owner for this team. He is exactly the type of personality that can quickly connect with the community and establish some creditability to the franchise. If Johnson was with the team, he and Chris Paul would become the most popular duo in New Orleans.

James Online
James Online

Hoopsworld has the Hornets on the way to Kansas City.

Bug Marley
Bug Marley

So how much have you guys pooled in already? I'll put in $18.34 because that's all I've got right now on PayPal account, my used airsoft gun, a netbook, a desktop PC, a pair of Chuck Taylors (one size too small for me), a SLAM shirt I won last year, an iPod Nano, a liter of cooking oil, two pots, one large frying pan, my Facebook account with about a thousand friends, and one of my kidneys.

Ludiculous
Ludiculous

Something that worries me, and I mean this is a last resort for the NBA if the whole lockout thing contains to grow to ridiculous proportions, is if the league contracts and they need to get rid of teams, the Hornets would be the first ones to go if they were still owned by the NBA. Now I'm not saying its a huge possibility but it would be a sad day to see the Hornets disbanded even if they were the Seattle Sonics.

Mike Jones
Mike Jones

It is actually coming in the Seattle media that Ballmer is going to build his own arena, completely private. Chris Paul and the new Sonics will play at KeyArena while it's being built.

ppellico
ppellico

SHAME on you, Hornet fans! Why IS there an attendance problem? This is horrible. IF I wasn't up here in the Ozark mountains STARVING for NBA live basketball and was instead lucky enough to have a real NBA team in my city, I would be an attending fan. Regardless of our financial situations, we all can find a way to enjoy the live games. When younger and one of the legendary sicko Cubs fans, I was never able to afford season tickets. What did we do? We formed groups and bought the season block ickets. We used to look foward to the winter "dividing" meetings and the arguments as we divided up and distributed umongst ourselves the tickes. We each got 2 ea. of so many games, depending on how many there of us each year, and then the play-offs to be drawn for later...IF we made it. WHY don't the NOH fans down there do this?? What I would do if I were there. Looking at those empty seats drives me nuts!

edbballin504
edbballin504

After reading the official press release from the NBA (http://www.nba.com/hornets/news/nba__purchase_new_orleans_ho_2010_12_06.html) I am encouraged. I was like most of you, very deflated and lost for words after hearing about Chouest backing out, but I think this transaction improves the state of the team from the way it was with Shinn. And steps toward improvement should be welcomed. I feel there is risk here for us Hornets fans wanting the team to stay here in NOLA, but the reward might be worth it. Let me further explain... 1. The team is now at a state of stability. Yes the team is looking for a buyer, but things are not desperate as before, and Stern is willing to let things take time for the best deal to manifest. There's a solid plan in place to keep the team here, unlike Shinn, things can take its course with time. 2. Shinn kept his hands tied and closed, having no part in going into luxury tax land, having no part in revamping most areas of the team's upper management. Yes we got Demps and Williams, but going beyond that was not happening, as Shinn's main focus was selling the team, not moving forward and making things better for the product. With the sale complete, I think you will see alot of changes that need to take place to better the overall package. For example, the CST deal should be settled, the marketing campaign should be revamped, and the overall quality of the organization should improve. 3. We now have the world's best assets in our corner to make this all work for us. The NBA will not let us fail, they have already shown their commitment by bringing in the guy from MIN that is good at what he does, if not great. The NBA and those it brings in will turn this mediocre franchise into a top notch NBA franchise and a model of greatness in the areas outside of the basketball court. I also think they will allow Demps to do what it takes to build the winner we need. The NBA wants a profit out this deal when they resale so they will do what it takes. They have the resources and assets to get it done, so now that all is a part of us. I think the NBA turns this team into a well run NBA team in all areas, it will then be up to us the fans to support the team, and some local investors to buy the team and keep it here long term. But short term, I think the NBA did us all a favor and just upgraded the organization to a level that Shinn could have only dreamed of doing himself. So fans, lets do our part...pack the hive and show the NBA that this investment will be a good one. They do their part and build a world class winner, and we will do our part to get excited and support the team. GO HORNETS!

Hornet Seantonio
Hornet Seantonio

as bad as losing seasons, being in floor seats at the hive when the nugs raped us by 50billion in the playoffs, watching cp go down last year, etc, this is the most uncomfortable ive been as a Hornets fan

AgentZiko
AgentZiko

Yea, from what we're hearing out here in LA, Magic is SET as an investor to bring the NFL back to LA. I think he'd be a great majority owner, but I'm afraid he won't be the one to purchase the Hornets. I'm encouraged to hear that David Stern WANTS to keep basketball in Katrina. I think the thought of taking away all those jobs would really bother him. But guys, we gotta see how long this goes on for. I know the NBA doesn't want to sit on the Hornets for all of this season, or into next. If someone doesn't come through soon to buy the Hornets and keep them in NO, then I'm afraid we'll see outside buyers who want to move the team kick it into gear. Anaheim, Seattle, and Kansas City are the 3 places pushing HARD for the team.

BeesGivingEffort
BeesGivingEffort

2 Reasons It Won't Happen 1) Love Fest with LA in General 2) State of the NBA - Lockout Looming? Losing Money as a Whole? 2 Reasons It Could Happen 1) Chris Paul 2) Michael Jordan Did It

Michael McNamara
Michael McNamara

Magic would give this team a shot in the arm and would give the community something to become excited about in the short term. The honeymoon phase would eventually wear off but hopefully by then certain fixtures would be in place. I know Magic is more concerned with bringing an NFL team to LA, but if that falls through, I would love to see him in the mix, and hopefully he partners up with someone with super deep pockets committed to making this work in New Orleans. These next few months are going to be hard to endure, and hopefully the Hornets play on the court can pick back up to provide a distraction from all this drama.

pschafer
pschafer

Great idea; nice commentary. And thanks for the tip about the beer garden...

42
42

I think the best thing we can hope for realistically is that the NBA cleans up the mess that the franchise is (due to Shinn, not to New Orleans) while the CBA and economy clears up, then Chouest and a partner come in with an offer for well over $300m. He'd be getting a more solid organization, and perhaps better revenue sharing, and won't have to fight the TV battle (for example) while keeping his business afloat. We just have to hope the fan base sticks with the team. I'm ignoring the `we don't support the team' flap; the benchmarks will not be an issue I think, and I'll concede that point come sometime in January if I have to.

RobertM320
RobertM320

Hey, Mike -- Pretty presumptuous on your part to assume this is already a done deal. You're talking as if they're already stitching gold and green unis for CP3 and the others. I would guess there are a few people in Anaheim, Chicago, Kansas City, and Vegas, not to mention here in NOLA that might take issue with that.

42
42

Legal, yes. Fair, no. It doesn't matter because we'll meet the goal. It's possible people will sour on the team due to ownership, but I'm doubting it unless the feeling spreads that the team will move. I don't think attendance will play a big role at this point either way. The big words were for hewho, and I wad bored.

42
42

I don't think there is an attendance problem, frankly. the bad reporting makes it seem so. It's a little unfair to impose on a population that the minimum over some stretch must exceed the average over some other period when no steps have been taken so increase the value, which is what was done here. The 14735 is compared to 2 year windows that roll, not disjoint 2 year periods. 14735 was the average attendance over the 3 years before the storm. This is essentially 3 data points. Now this is compared to a series of 2-year averages of post-Katrina population. These 2-year averages are inherently more variable than 3-year averages (see: basic distribution theory) and all of the averages are required to exceed that data point. On average, half of these will be below, half will be above if the situation is unchanged. It was changed, however, by Katrina. Yet, we met the goals every year. Therefore, support is likely up. Digging through the data establishes this further. We met the unfair (it just takes a mathematician to see it as it is, and it's unfair) condition and will continue to do so. Look through the journals for mine on attendance and support if you wish to see some of the data for yourself. I do hope hewhorocks appreciates me picking at the incongruity of the samples being compared and the heteroskedasticity that results, plus my inferences about distribution shift derived from this data, one that is contrary to the standard hypothesis.

42
42

I think you are laying out realistic potential positives. The fear is that the NBA has another agenda that it will push at some point, or maybe it already has. I, of course, will remain skeptical about all outcomes. Getting George out, who has a nearer horizon, so to speak, is probably a net-good. The situation, however, is still bad. A local owner may want to move the team, just as an owner from another city, one that is a potential NBA or not (see the Jazz).

Michael McNamara
Michael McNamara

Not really worried about Seattle (Arena) or KC (don't really support the Royals), but Anaheim is a little worrisome, as is Vegas and Chicago- two cities I think we will hear more about soon. Scary thing is that the more cities in pursuit, the higher the price gets driven up and we have already seen local owners reluctance to pay a high price. This is so unsettling.

42
42

If he wants to get involved, he better get his shovel out NOW and start clearing and leveling a spot for that new arena. Remember, you are competing against EVERYONE, not us. So go cling to that, if you want, but what you should be keenly aware of is the talk that the ultrarich engage in to get the folk energized when the actual reason to be so is murky at best.

Starks
Starks

If Steve Ballmer gets involved, it's over. He has more money than anyone else interested in buying a team. The league is struggling - like Stern is going to turn down the highest bidder. It all hinges on whether or not Ballmer gets involved (for us Sonic fans anyway). Ignore the flowery talk about wanting to keep the team in New Orleans, we've heard it ALL up here.

Joe Gerrity
Joe Gerrity

Mike, you make me want to throw up in my mouth a little bit. I'm feeling some deja vu.

ppellico
ppellico

Plus...you are using to many large words for me!!! As a post note, I remember going to see the Bulls before MJ. I picked any seat in the house. It was an empty stadium. If I couldn't get good seats because I was broke, there were so many empty seats I would move down right away. THIS in a city the size of Chicago!!! So I can see how New Orleans struggles.

ppellico
ppellico

hey, 42... I am really glad to hear this. But the numbers they give are supposedly legal numbers, I would think. I came from a city where the starved sports fans filled Wrigley Field when the teams were horrible, winning wise. Same with the Bulls...after MJ...so maybe I am spoiled and am holding the NOH fans to standards few could attain. Years ago, when my brothers and I were just starting our company in Los Angeles, I was spoiled by the Lakers. I was just venting on the fans. I think they should be going out to see LIVE NBA! It's such a gas to watch. I am a short Italian, so seeing these freaks of nature playing is awesome.

JCS
JCS

Chicago would be interesting, b/c the Hornets would operate within the shadow of the most storied team in NBA history. There's certainly enough space in the metropolis, but would they share the United Center with the Bulls or build their own stadium? Furthermore, would they be considered a Northside team, and cater to the chardonnay sipping sexual deviant Cub lovers or would they play for the well-mannered scholars of the Southside? I for one would be torn, because I love the Hornets, but at the same time I have a natural affinity for my home town Bulls. If they do come to Chicago I'll root for both, but I think it would be best if they stay in NOLA.

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  1. [...] • Remember how Magic Johnson got himself a nice pile of cash by selling his stake in the Lakers and a bunch of Starbucks franchises? One really smart Hornets writer says Magic should think about using that money to buy the team. [...]