New Orleans Hornets Sale Process Enters New Phase

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Published: January 20, 2012

Broad interest in franchise; Multiple bids with commitment to stay local.

Edit- As we strongly hinted in the article and confirmed in the comments and elsehwhere, the former GM and Coach is Mike Dunleavy sr.

New Orleans Arena sure would look a lot prettier if the Hornets had an owner

The first deadline has come and gone for potential Hornets owners to get involved in the purchasing process.   Interest in the franchise is very strong, which is not surprising given the team’s successful off-season on the business side.  Also, because the Hornets are now owned by the NBA, we can expect a much smoother sale process than the last time around under George Shinn.  Back then, issues around Shinn’s personal debts, cash flow, and estate planning added enormous complications.  In addition, the lack of a Collective Bargaining Agreement at the league level added uncertainty.

This week’s deadline was an early step, whereby bidders were asked to submit their formal indications of interest.  While not yet an end-game negotiation, it is still great news for Hornets fans to know that the process by which the Hornets will choose an owner has officially begun.

Equally encouraging is the breadth of interest.  Bidders from 2010 have re-emerged (most notably, Benson and Chouest) plus there is significant national money that has come forward, committed to keeping the team in New Orleans.  While Jamal Mashburn’s name has been previously mentioned, Hornets247 has also learned of another familiar NBA name that is assembling a group.  A former NBA player, this individual also has a couple decades of coaching and GM experience, providing an interesting twist to his group.

Breaking Down the Potential Categories of Ownership Groups

1.  Gary Chouest and company

Keeping the Momentum:  In terms of turnover and changes to day-to-day operations, there would  be fairly limited disruption within the organization, at least relative to a Benson purchase.  Given all of the recent momentum, this is a good thing.

Known Commodity:  We already saw the benefits of what Chouest brings as a minority owner in terms of his rolodex full of connections in Baton Rouge and in local industry.  Chouest had an enormous impact on sponsorship, luxury suite, and club seating sales throughout his previous tenure with the Hornets.

Local Owner:  Gary Chouest is a Louisiana guy and a basketball nut, which would mean there would be a very low chance the team would be moved at any point under his leadership.

Second Fiddle:  Chouest has made it quite clear that Edison Chouest Offshore is his most pressing priority in the business world.

Tight Purse-strings:  He is also not going to be a guy who is willing to lose lots of money for the chance at a title, which may be important since the new CBA did little to curb spending (and it’s only for six years…)

Requires a Partner:  In the past it has appeared that Chouest is unwilling to be the sole owner, or the public face of the franchise, so buying the Hornets will require coordination with at least one minority owner.  More people = more complications.
No National Connections on the Basketball Side:  Aside from his brief stint as minority owner, he has very little NBA experience or connections.

2. Tom Benson

Access to Financing:  Benson owns the Saints outright with virtually zero debt.  Considering the NFL just inked a new 10 year labor agreement and their television deal is astronomical, he pretty much owns a printing press. If the NBA required him to raise $300 million cash within the week, he would have bankers lining up to loan him the money.  This access to capital means that Benson would not need to take on minority ownership, which tends to complicate matters.

Building an Empire:   Benson is steadily building a real estate and media empire in New Orleans, having purchased fox 8 and being rumored to be interested in WWL radio. In order to expand his network even further in order to build his empire a lot faster, tactics such as business cards can be used.

Orderly Succession:  Benson’s succession plan appears to be in place, with a Board of Directors taking the reins of the Saints after he dies.  Owning the Hornets could presumably fit neatly under this structure and ensure continuity for the next few decades.

Customer Service and the Fan Experience:  While it may be tempting, at first blush, to consolidate a lot of the back office sales and support jobs of the Hornets and Saints in order to lower costs, this would be devastating to the Hornets ability to build on the success they’ve had forming relationships with fans and sponsors. The Saints have a 70,000 person waiting list not because they do a great job marketing or in their customer support offices, or because they put on a great game day presentation, it’s because they’re the freaking Saints, this is Louisiana, and everyone in ‘Merica loves football.  One great things the Hornets have going for them is a very dedicated and hardworking business office that understands the specific challenges facing the team and the experience of overcoming them. The Saints on the other hand have a long history of piss-poor customer support and general neglect of corporate sponsors. I’m convinced we will see a less fan-friendly Hornets franchise if Benson were to take over. People like to look past the Saints of the 1990’s- 2005, but they were a poorly run franchise with a depressed fan base.

Second Fiddle:  It’s hard to imagine Benson’s executives ever caring as much about the Hornets as they do the Saints. In my opinion it would in all likelihood permanently reduce them to second class status, since that’s what they would be in the minds of Benson executives.

3.  A National Group with Basketball Connections

At least one person in the mix is very familiar among NBA circles, and his name isn’t spelled “Mashburn.”  This person, confirmed to be leading a well capitalized group, has NBA experience and connections like nobody else whose name has even come up as a potential owner.

Edit- His name, as confirmed in the comments and elsewhere, is Mike Dunleavy sr.

NBA Connections:  The main organizer of this group was a player, head coach, GM, and has served in several other NBA roles throughout his 30 plus year basketball career. While not the primary “money man,” he brings a wealth of knowledge to any ownership group that nobody else in the current mix can even touch.

Commitment to New Orleans:  Encouragingly, this group, like all of the others, will keep the team in New Orleans.  The main investor has previous family ties to the region and intends to move here permanently.  He is also open to adding local investors to his group to round out the picture.

Continuity on the Basketball Side:  Despite his track-record as an executive, this potential part-owner would not plan to occupy either the role of coach or GM, leaving the power duo of Monty Williams and Dell Demps in place for the foreseeable future.
Not Local, At Least Yet.  There’s nobody in this group who is currently living here, at least so far.

4.  All of the Other Groups that We Don’t Know About

The NBA runs a good process and has cast a broad net.  At this point, we’ll take anybody, just to get this whole thing over with. That said, I believe there are four groups who fall into this category currently. Figure them out and you win a prize! One could be Mashburn, but I really can’t say either way. Jamal, if you’re out there, let me know.

No matter who is ultimately chosen as the new owner, today is a great day for New Orleanians. We can now say with certainty that we are officially on the path to having a new owner, to signing a new lease, and to ensuring the sustainability of professional basketball in New Orleans for years to come.

The group that is chosen to buy the team in the end will be leaps and bounds ahead of the former owner, George Shinn, and will enable the Hornets to take the next step forward in their quest for the elusive Larry O’Brien Trophy.

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