42 Seconds: The New Orleans Hornets are a Model Franchise

By:
Published: September 14, 2011

As one might expect, I spend a good deal of time thinking about the New Orleans Hornets. Among the slings and arrows of outrageous fortune the franchise and the ‘fanchise’ have endured, the de facto foreclosure by the NBA is not only unprecedented in NBA history, but also potentially a structurally important nail in the coffin of pro basketball’s future here.

On the other hand, it is also potentially the best thing that could have happened to New Orleans pro basketball.

On some fictional third hand, or maybe a Count-Tyrone-Rugen-esqe sixth finger, it could be the best thing to happen with regard to the future of the NBA.

For the time being, let’s not consider the quality ownership before and after NBA stewardship. We don’t know what the next owner will be like, so we can’t compare. I can picture better (rich, nice, vicisous competitor, lover of mathematics) and worse (a guy or gal that wants the team outside of New Orleans).

Going back, the NBA purchased the team from its ownership group early last season. The team was not regularly profitable, but was not bleeding cash from operations. Corporate sponsorship and ticket sales were declining, but were not in the NBA cellar either. Tremendous attention to the documented attendance benchmarks caused negative attention that teams in the lower third of the NBA don’t normally receive. Let’s face it, every team has benchmarks that are not in a contract. Ask Sacramento if you don’t believe me. If you did decide to ask me instead, those benchmarks are a reflection of the owner’s self-evaluation of their own business acumen than of the In-itude of the fans.

Who wants my soap box?

The point is the Hornets are a team with potential to be a success as a competitive team and a business. Despite this potential, the previous ownership’s debt prevented them from continuing on, especially in the face of a looming lockout, in an NBA where owners, on average, lose money, and under pressures external to the NBA.

I am of the opinion that the NBA bought the team to avoid embarassment following a team becoming insolvent.

I am of the strong opinion that the NBA will turn a profit on this deal, if in no other way that they got their line-of-credit money back that they were in danger of never seeing again.

I am of the very strong opinion that the Commissioner Stern would think it ideal if the team remains in New Orleans. I think he genuinely, personally, wants the team here after his failure to help find local ownership before the Jazz moved, largely due to lack of support from the business community. From a buisness standpoint, there may be bigger markets that one could imagine would be so great for the NBA to tap, but ask the NFL if money from big markets like . . . Los Angeles . . . just jumps in the boat like carp. In terms of image, it’d be best for the NBA to not interfere so directly and actively as a relocation agent. They should just be bridging the gap between one local owner selling and another buying, taking good care of the product in the meantime.

I am absolutely certain that the NBA will relocate this team if no local owner comes forth with a serious, competitive offer complete with state support and at least a positive outlook for a good local tv deal, as the current deal is in it’s last season now . . . if this can be called a season . . . time will tell . . .

Considering the good and the bad that has befallen the franchise since the NBA’s takeover compared to that in the 9 months before, NBA ownership has not shown itself to be what our darkest fears rightly indicated: a group that gets us to finance the team so they can relocate it . . . completing the circle of expaning the NBA into OKC and ridding itself of the prior ownership . . . with the then-made-temporary pain of NBA fans in Seattle as a garnish.

Yet.

I really do think that the NBA not only wants the team to be in New Orleans . . . at least the commissioner . . . but I think they have are going down an even more lucrative path than flipping this team for a $150m profit.

By taking a franchise like this . . . smallest NBA DMA, no deep roots laid down, financial troubles . . . and helping to get games broadcast on the north shore, getting the season tickets up to the 9,000 level, and adding at least $4m annually in sponsorship . . . the latter two partially during the lockout in which they can’t use player images, etc. . . . has to be making some owners look twice.

How can such a franchise be made to run this way?

Was the potential always there?

Yes, my friends, it was.

I think the NBA turning the financial state of this franchise around in a year sends a powerful message to the NBA owners. It quietly puts a spotlight on each and every unprofitable owner. “We did this in a year, and you haven’t done it in 20,” or whatever. I’m sure it’s different for every owner.

Beyond that, though, it shows them how to do it. We would be acting as a model home in small subdivison early in development. Picture this . . . It can be yours . . .

Teams can’t just share their tactics outright . . . they can’t just pass a contract that worked really well in state X with sponsor A over to state Y for a team to use with sponsor B, or even sponsor A . . . but they can look at the methods.

The Hornets get some backlash for leveraging relocation to get a deal, but this is way business is done. Most teams pull this out of their attache cases during most negotiations. I say do what you need to do to keep me in my seat watching my team.

If the NBA can use us a model to save the rest of the NBA teams . . . NBA FANS! . . . then use us, I say.

Once.

9 comments
Seattle Needle
Seattle Needle

I'd be interested to see what the Hawks can do with competent ownership in place. Only time will tell if Muruelo is the right guy. Regardless, they play in a big market and they just lost their NHL franchise. Seeing another team leave wouldn't be good not to mention the arena is great and was meant for both the NHL and NBA. Seeing both leagues go would be a black eye for the city regardless of the Hawk's reputation. Ditto for the Bobcats. MJ created a buzz so I'm going to give him a chance to see what he can do as an owner in the long term. Keep in mind that they had bad ownership in Shinn and even worse with Bob Johnson. The league did a terrible job with the expansion. The Bird and Belkin group should've got that team and coupled with a legitimate name the team movement as opposed to Johnson naming the team after himself, we could've seen a smooth transition from the Hornets to the new team. Therefore, I give them an early pass for paltry support and seeing that things have picked up recently in sponsorships and ticket sales, I don't want to pull the plug yet.

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The Hawks do have a nice place. It's got a good location and tons of parking. I saw it with the hockey and basketball stuff up before the Thrashers took off, and it was a sight. Interesting place, too. I've seen the Bobcats place from the outside only. It's got a nice downtown location, but I don't know about parking, etc.

Seattle Needle
Seattle Needle

I've been to every arena in the league and rank Atlanta in the top 5. I think I have Charlotte around 11 or 12. Parking is easy at Charlotte. There are some open lots adjacent to the arena plus a 6 story lot as well. Light rail takes you right to the arena and the downtown bus depot is literally across the street. I love how Phillips has all the suites on side of the arena. That way, if you're in the upper bowl, you're still close to the floor and maintain a good view of the action. BTW, make sure to see my newest journal entry. It's in the spirit of compromise and I think it could work.

Seattle Needle
Seattle Needle

As always, great article. A couple things though. As evidenced by my previous posts, I don't necessarily have the middle of the road take on the league buying the team. Clearly, it was in New Orleans' best interest that the league do it. Yes, the team may not find a local buyer but had the league not stepped in, there would've been a bidding war between Larry Ellison and Francesco Aquillini for the Hornets and they would've moved to San Jose or Vancouver anyways. At least now, the city has a shot at keeping the team. Also, anytime a league takes over a team, it's seen as a black eye for the league itself so I give Stern props for taking another blow to the image of the league and himself in order to keep New Orleans in the game. I can't stand him and hope he's gone asap but he's clearly in New Orleans' corner. I just worry about what might happen if he steps aside. Adam Silver is on Seattle's side and that's good for me but could wind up being NOLA's death knell. For NOLA's sake, I hope that Stern can hold on for a couple more years and not step aside as soon as the new cba is done.

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These are tricky waters. Stern stepping away before an owner buys the team may be an impediment to keeping the team here, but each dollar of financial improvement may be the dollar that makes it smarter to keep the team here than move it. I have a question . . . what team moving to Seattle do you think would cause the least pain? I'm going to take the Thunder out of this discussion. I have my thought, but I don't want to share it and pollute your answer.

Seattle Needle
Seattle Needle

I'd probably say the Clippers. They not only play in a market that already has a team but they wouldn't be wasting an expensive building either. Getting out of their lease could basically be done for free. The problem is that Sterling doesn't want to sell or relocate so they aren't a legitimate candidate. As NYKF and many others have pointed out, Memphis and Charlotte have lease issues due to expensive arenas. They would probably cause the least amount of pain due to their lack of years in the city but they aren't really candidates either. So you're stuck with the common denominator teams. Teams with easy to break leases in city's that wouldn't be totally depressed if they lost the NBA. That would be Sacramento, Indiana and Milwaukee. I'd hate to lose Sac since that's all they have and Mayor KJ has done a great job of trying to get the arena done. It would be great for the city as well as the Kings to have a downtown railyards arena so I'm going to eliminate them. From there, it comes down to Milwaukee and Indiana. The Bucks have better attendance but an old arena. I guess the tiebreaker would come down to whether or not they get a new arena. Get an arena and they stay. Don't and Indy gets to keep their team.

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The Clippers were my thought. Any relocation is going to cause more pain that I want to think about. In ascending order from there, based purely on my perhaps uninformed estimation of pain, I'd likely say the Bobcats, followed by the Hawks.

JT's Hoops Blog
JT's Hoops Blog

Very good argument. The Hornets may be saved yet. Although I doubt they would be any better than they were last season.

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Thanks. On the court, we're a crap shoot. Seriously. Each month of last year proves that. I'll be sticking to that until proven wrong, to the good or bad. Off the court, we'll be better. Whether that helps us on the court in 5 years and following, time will tell.

Trackbacks

  1. [...] As I noted earlier, Stern may be using the Hornets to set an example for other owners. In particular, if this team can drum up $20,000,000 per year in extra money in the NBA’s smallest market in a year not including revenue sharing, etc., then every owner that is losing money should we wilting before the example . . . and taking notes. [...]

  2. [...] a pet theory of mine (one that some well-placed people seem to find interesting to say the least) is part of the NBA’s [...]

  3. [...] related the premise of this article from September and asked him if the thought the overall story here in New Orleans sent a message to owners who [...]