Magic Johnson Should Consider Buying the Hornets

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.


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