Dunk That Sh!t: It’s all about Value

Published: January 27, 2012

Michael, Jason, and Mason answer three questions directly from you, for you.

Jason Smith Dunking That Sh!t

Dunk That Sh!t comes to you every Friday with the Hornets247 writers turning their attention from the team to you, the Hornets247 community, answering questions directly and in dunktastic fashion. If you want the guys (and bloke, but I think he dunks up) dunk your question, just submit it to the editor at mcnamarahornets247@yahoo.com with the subject line “Dunk That Sh!t” or via twitter @hornets247 with hashtag #DunkThatSh!t.

1. Kempleton Pack / Email : “Now that the T-Wolves are surprising us with more wins than expected, do you think we should stop talking about WIPTT and tank this season to get a better chance for a higher pick in the 2012 draft?”

Michael McNamara: Not only did Kempleton have a question, he had a pretty detailed analysis that I hope he shares with all of you. Hey Kempleton, go ahead and write it as a blog post over on HornetsReport.com, it really is quite good.  Anyway, back to the question. First thing first, should we stop talking about WIPTT’s? NEVER! The Hornets have lost 16 of its last 17, while the WIPTT’s have won more games than they have lost this season. While the Hornets continue to break our hearts with these narrow losses, the WIPTT’s come through more times than not.

The other point I would like to address is this idea that the T-Wolves are winning more than expected. According to whose expectations? Both Ryan and I predicted more wins for the Wolves than the Hornets before this season started and most of the readers laughed (or got quite angry). I even suggested that we move the T-Wolves pick before the season in a post on HornetsReport, and literally, the first guy ask if I was crazy. Another fan who calls himself HORNETSFAN over there stated that he wouldn’t trade the pick for Rubio and Derrick Williams. The post is now quite hilarious in retrospect.

Now, onto the tanking the season part. Man, I hate this phrase. Tanking implies that the team will lose on purpose. That will NEVER happen in pro sports. Never. You think those guys care about Anthony Davis, Andre Drummond, etc? You think grown men looking around the locker room saying, “Man, I wish we had a 19 year old kid in here to help us go against Duncan or Dwight this week”? Not one player in that locker room gives any thought to the 2012 draft. Now, do Demps and Monty know that a higher draft pick gives them a better chance at a stud player? Sure, but what would be the point of bringing that player into a toxic locker room that accepted a culture of losing a season before?

These guys will continue to play hard, and they will continue to lose in spite of their passion, simply because they lack the talent. When Gordon returns, they will have a chance to compete at a higher level, but by then guys like Ariza, Mek, Kaman, and/or Jack could be gone, as the Hornets clear the way to give young guys minutes. This is not tanking, it is preparing for the inevitable future. So, that is what we will call it- preparing. Will the Hornets be “preparing” for the rest of the season, and will that “preparing” ensure more losses? Yes and Yes

2. Mike Geiger / Email : “Forbes listed Hornets as 24th most valuable franchise. Realistically, what could a new owner do to push the Hornets up that list?”

Jason Calmes: Good question. The short answer is continue to develop sponsorships and other business relations.

That value is driven largely by the team’s assets and its revenue. It doesn’t have a tremendous base of assets, leasing the state-owned New Orleans Arena, its office space on Poydras, and the portion of the Alario Center for practices. Its revenue can be classified as fan support, local tv, government support, sponsorship, and NBA revenue.

First, the value of the team is going to change regardless of the owner in some ways. Overall fan support (tickets; crisp, clean, and refreshing 7 Up, parking) is set to drop after this season, as on-court performance in season n is a good predictor of fan support for season n+1 for franchises like the New Orleans Hornets (contrast this with the Lakers). The TV deal is going to be renegotiated and will increase by millions, if not at least ten million dollars. The benchmark free lease will likely be immutable by the time the owner waddles up to the podium to get his 12 jersey, but I’m guessing more money will find its way to the team on average. Some of these will help, some will hurt, but they will change.

Second, NBA revenues and Hornets assets aren’t going to change much, or at least change how they change, and there’s not much to be done about that.

Third, this basically leaves sponsorship. Any owner’s top priority will be to bring in sponsorship dollars. Sponsors give money to the team as part of a marketing effort, and there are many ways the team markets their partners, like crisp, clean, and refreshing 7 Up. This team has had abysmal sponsorship performance in the past, which is one reason this past year of NBA stewardship was so successful on that front: low-hanging fruit. There’s more where that came from.

Getting business involved more will lead to more fan support, since those companies will buy tickets, send employees, etc. Entergy, for example, has Hornets days at work, offers discount tickets to employees, etc. Thus, there will be second order effects from this sort of increase.

I suppose the owner could luck into something. Maybe the ownership situation energizes the fan base. The data actually shows the opposite is true in general, but we’ve been under special circumstances for a while, so maybe we defy the odds. The owner may hand Cuban his high-definition rump in some ESPN broadcast and win some sort of `bump’ in support, but these aren’t things the new fat cats can do. They happen or not.

Lastly, let me point out that the value of this team being high is not necessarily important once the owner has the team. To me, it’s what he owner spends that’s important. Paul Allen is as rich as someone who was given $1,000,000 every day I’ve been alive and never spent a dime, and he was labeled a “hard-line” owner in the recent CBA negotiations. The Lakers are the most valuable franchise and they just dumped Lamar Kardashian for financial reasons. Conversely, Shinn brought the Hornets into tax turf when he thought it would count, and he was right to allow such a move, particulars aside.

The Forbes estimated value of the franchise really doesn’t mean much since the actual sale price is what leaves the owners’ wallet and figures into the financing of the purchase and future transactions, with the banks and accountants looking at that estimated value (or some estimate) along with many other things. These guys generally have many other business interests, since that’s how they got their money, or the business portfolio was handed to them when the money was handed to them.

In summary, complicated as all this is, it’s simple in the end. Ignore the value of the franchise after the sale, and focus on sponsorships, such as crisp, clean, and refreshing 7 Up, and business relations. The value will take care of itself, and the owner will take of the team and us fans with better business support.

Lagniappe: Better yet if the team engages local companies as much as possible, driving the local economy and taking I’m In deeper into the franchise’s DNA. You guys reading me? It takes two to tango, sure, but someone’s gotta ask and someone’s gotta lead. That someone is the $300+m company. Make it so.

3. @drestevenz / Twitter : “Really, what was the point of the Hornets releasing a statement saying they were “close” to re-signing EG10?”

Mason Ginsberg: A valid question, especially after seeing a couple of the more well-known NBA writers make fun of the team via Twitter for releasing a statement saying as much.

The most obvious reason in my mind is to show people that Eric Gordon is legitimately interested in being in New Orleans long-term. Does hearing that it almost got done make it sting a little more since the deal never got finalized? Maybe so, but this is all about sending the right message to the fan base.

Look at it this way: if Dell had instead come out and said that they were never very close to reaching an agreement, would your mind really be any more at ease? How would that make Hornets fans feel about Gordon’s perceived willingness to be in New Orleans for the long haul? After reading the quotes in that statement from both Demps and Gordon regarding how hard both sides worked to get a deal done before the deadline, there is plenty of reason for optimism.

The fact that they were “close” to agreeing on an extension seems to signify that Gordon would be more than happy here if and when we match any contract that another team may offer him when he becomes a restricted free agent. Hornets fans can rest easy knowing that the inability to lock him up before the Wednesday deadline was for purely financial reasons (i.e. thinking he will be offered more money as a RFA) and had nothing to do with some made-up desire to leave New Orleans. As Gordon himself simply put it – “sometimes, business is business.”

Dunk That Sh!t is a weekly piece that you can find every Friday only on Hornets247.com. Click here to browse through the series.


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