Are the Hornets Going to Stay in New Orleans and the Kings in Sacramento?

[LanceyHoward]

I know New Orleans is on the clock. I thought a season ticket campaign that was was going well until Chris Paul got traded. But is New Orleans drawing well enough to keep the team?

And what of Sacramento? I know they need a new areana. Can't believe the taxpayers will pop for one given California's budget problems and the Maloof's are broke.

Financially, it makes a lot of sense for the NBA to contract the two teams. I wonder if that is where this is heading.

 

[Starman]

No purportedly "major league" will ever contract franchises.

The second they do, the franchise-appreciation bubble goes pop, and every team in the league loses half its value (or more).

The one overriding assumption any prospective franchise buyer operates upon is that the franchise is going to continue to exist.

 

[LongTimeListener]

They'll sell and move the teams, they have plenty of buyers in different markets.

I want to know if the Maloofs themselves are in financial trouble or if it's just a bunch of bad business loans that they can walk away from. If those douches are actually down on their luck enough that they'll have to get real jobs, that would go a long way toward proving the existence of God.

 

[Football_Bat]

Louisville and (if they get the arena situation settled) Seattle.

 

[HanSenSE]

They'll sell and move the teams, they have plenty of buyers in different markets.

I want to know if the Maloofs themselves are in financial trouble or if it's just a bunch of bad business loans that they can walk away from. If those douches are actually down on their luck enough that they'll have to get real jobs, that would go a long way toward proving the existence of God.

IIRC from the Kings to the OC talk last year, the Maloofs are taking a bath on the Palms and other properties in Vegas. Biggest thing Kings fans in Sacramento have going for them is Kevin Johnson as mayor.

New Orleans? So much of its post-Katrina emotional currency is invested in the Saints, I don't think there's any left for the Hornets.

Is Kansas City on the waiting list too, or are they pining away for the Islanders?

 

[LanceyHoward]

The Maloof's only retained a small percentage of the Palms after foreclosure. They owe a bundle on the line of credit that

No purportedly "major league" will ever contract franchises.

The second they do, the franchise-appreciation bubble goes pop, and every team in the league loses half its value (or more).

The one overriding assumption any prospective franchise buyer operates upon is that the franchise is going to continue to exist.

I don't think a league can confiscate a team. But the league paid 280M for the Hornets and presumably would pay fair market for the Kings.

The leverage the NBA has on the Maloof's is that they owe the league a lot of money on the collective credit line. While the NBA can not prohibit the move to Anaheim they can charge a relocation fee to the Maloof's. It is rumored that the Maloof's owe at least 125M to the league. If the league charged an additional 75M for the move along with the Maloof's needing to pay another 25M or so to get out of their financial commitments to the City of Sacramento it may be in the interest of the Maloof's to take the cash, especially in light of the brothers losing title to their casino.

And I don't remember the elimination of the Cleveland Barons causing the value of NHL franchises to plummet.

 

[slappy4428]

The Maloof's only retained a small percentage of the Palms after foreclosure. They owe a bundle on the line of credit that

No purportedly "major league" will ever contract franchises.

The second they do, the franchise-appreciation bubble goes pop, and every team in the league loses half its value (or more).

The one overriding assumption any prospective franchise buyer operates upon is that the franchise is going to continue to exist.

I don't think a league can confiscate a team. But the league paid 280M for the Hornets and presumably would pay fair market for the Kings.

The leverage the NBA has on the Maloof's is that they owe the league a lot of money on the collective credit line. While the NBA can not prohibit the move to Anaheim they can charge a relocation fee to the Maloof's. It is rumored that the Maloof's owe at least 125M to the league. If the league charged an additional 75M for the move along with the Maloof's needing to pay another 25M or so to get out of their financial commitments to the City of Sacramento it may be in the interest of the Maloof's to take the cash, especially in light of the brothers losing title to their casino.

And I don't remember the elimination of the Cleveland Barons causing NHL franchises to plummet.

No, but that was also before the advent of cable, internet, satellite TV, NHLN, luxury boxes and the other perqs... different time, different place, different recession...

 

[MileHigh]

Kansas City has a new arena and could take on a team tonight if it wanted to.

No doubt Sacramento needs a new arena. I was there in March and that place is a joke.

From a basketball-watching standpoint, the association shedding four to six teams would be good, but that's not going to happen.

 

[BrianGriffin]

I still don't get that New Orleans got a second NBA franchise. The Jazz couldn't make a dent, even with Pistol Pete playing for them. I don't see any sport other then football getting traction in Louisiana. Not unless the Saints ever left and the basketball team is there to become a rallying point for the community. Don't see that happening.

 

[Starman]

The Maloof's only retained a small percentage of the Palms after foreclosure. They owe a bundle on the line of credit that

No purportedly "major league" will ever contract franchises.

The second they do, the franchise-appreciation bubble goes pop, and every team in the league loses half its value (or more).

The one overriding assumption any prospective franchise buyer operates upon is that the franchise is going to continue to exist.

I don't think a league can confiscate a team. But the league paid 280M for the Hornets and presumably would pay fair market for the Kings.

And I don't remember the elimination of the Cleveland Barons causing NHL franchises to plummet.

The league would pay liquidation-level price for a contracting franchise, which would be far far below the price for any operating franchise.

The contraction/merger of the Barons did cause NHL franchise prices to drop. Mike Ilitch, who had been trying to buy the Red Wings for several seasons in the late 70s/early 80s, finally closed the deal in 1982 when prices dipped into his range. Several other franchises sold in the several seasons after the Barons contraction and the collapse/contraction of the WHA within a season went for depressed prices as the overall financial climate for pro hockey did not look real good. I believe the NHL lost its last national TV contract with CBS about 1980 as well.

Although games were picked up on ESPN, at the time ESPN paid chicken feed.

In any case any established league contracting franchises would experience catastrophic results in franchise valuation.

For marginal leagues on the verge of extinction anyway, i.e. the WNBA, they have nothing to lose, so if a franchise is bleeding money, might as well snuff it.

 

[Double J]

If you want to get technical, though, the Cleveland Barons were never really "eliminated."

The merger with Minnesota left the franchise dormant for a number of years, but eventually the merger was undone and the San Jose Sharks are basically a continuation/resumption of the Barons. Coincidentally, they're not far from where the franchise began life in 1961 as the San Francisco Seals of the Western Hockey League.

 

[Johnny Chase]

Is Kansas City on the waiting list too, or are they pining away for the Islanders?

There isn't an owner who's been interested in bringing an NHL team to KC. If that was the case, the Thrashers would have went there before Winnipeg.

 

[LanceyHoward]

The Maloof's only retained a small percentage of the Palms after foreclosure. They owe a bundle on the line of credit that

No purportedly "major league" will ever contract franchises.

The second they do, the franchise-appreciation bubble goes pop, and every team in the league loses half its value (or more).

The one overriding assumption any prospective franchise buyer operates upon is that the franchise is going to continue to exist.

I don't think a league can confiscate a team. But the league paid 280M for the Hornets and presumably would pay fair market for the Kings.

And I don't remember the elimination of the Cleveland Barons causing NHL franchises to plummet.

The league would pay liquidation-level price for a contracting franchise, which would be far far below the price for any operating franchise.

The contraction/merger of the Barons did cause NHL franchise prices to drop. Mike Ilitch, who had been trying to buy the Red Wings for several seasons in the late 70s/early 80s, finally closed the deal in 1982 when prices dipped into his range. Several other franchises sold in the several seasons after the Barons contraction and the collapse/contraction of the WHA within a season went for depressed prices as the overall financial climate for pro hockey did not look real good. I believe the NHL lost its last national TV contract with CBS about 1980 as well.

Although games were picked up on ESPN, at the time ESPN paid chicken feed.

In any case any established league contracting franchises would experience catastrophic results in franchise valuation.

For marginal leagues on the verge of extinction anyway, i.e. the WNBA, they have nothing to lose, so if a franchise is bleeding money, might as well snuff it.

The NBA paid 308M for the Hornets, which I don't think was a liquidation level price.

I listened to a Bill Simmons podcast where Stern said there were owners in the league that wanted to contract. By contracting the owners would have to share the large, and expected to grow even bigger, broadcasting revenues into fewer pieces.

If it was in the financial best interest of the NBA to put another team into a small market like Kansas City I think the league would have already given them an expansion franchise. So why would the financial interest of the league be different in moving the Hornets to KC or wherever?

 

[LanceyHoward]

And I just read that the City of Sacramento plans to sell the municipal parking lots to pay for the new arena and hence subsidize the Maloof's. I can think of no greater incentive to start using mass transportation in Sacramento.

 

[Mizzougrad96]

I hope the Kings stay in Sac.

I think the Hornets will eventually move.

 

[Stitch]

I hope the Kings stay in Sac.

I think the Hornets will eventually move.

Glendale has a nice arena waiting for an anchor tenant.

 

[TigerVols]

FWIW, I hear from a high-placed source in Vegas that the Maloofs are getting shellacked on The Palms...their biggest problem? They don't have overseas resorts like Wynn, Shel Adelson and MGM do.

 

[Mizzougrad96]

Considering the amount of money the Lakers stand to lose if the Kings move to Orange County, I would think the league will do everything in its power to prevent that move from happening.

A third team in So Cal makes no sense...

 

[Jake_Taylor]

Considering the amount of money the Lakers stand to lose if the Kings move to Orange County, I would think the league will do everything in its power to prevent that move from happening.

A third team in So Cal makes no sense...

What about a third team in NY/NJ? I honestly have no idea if it would work, but I remember reading in one of the financial magazines a while back that the market was actually the most ripe for adding pro teams. I'm guessing the Knicks and Nets wouldn't allow it, but the nice, new arena in Newark is going to be without an NBA team soon.

The problem with moving the Hornets or Kings there is it would have to be a winner to get any interest in New Jersey.

 

[Baron Scicluna]

Considering the amount of money the Lakers stand to lose if the Kings move to Orange County, I would think the league will do everything in its power to prevent that move from happening.

A third team in So Cal makes no sense...

What about a third team in NY/NJ? I honestly have no idea if it would work, but I remember reading in one of the financial magazines a while back that the market was actually the most ripe for adding pro teams. I'm guessing the Knicks and Nets wouldn't allow it, but the nice, new arena in Newark is going to be without an NBA team soon.

The problem with moving the Hornets or Kings there is it would have to be a winner to get any interest in New Jersey.

The Nets were never that huge in Jersey even when they were winning in the Jason Kidd era.

They were 26th out of 29 in '01-02 and 23rd out of 29 in 02-03 when they made it to the finals:

http://espn.go.com/nba/attendance/_/year/2002

http://espn.go.com/nba/attendance/_/year/2003

They made it up to 19th in '05-06 and '06-07, which was their peak:

http://espn.go.com/nba/attendance/_/year/2006

http://espn.go.com/nba/attendance/_/year/2007

So even when they were winning, they weren't drawing that great. I'd imagine it'd be even harder for a new team to compete against both the Knicks and the Nets (in their own new arena), even if New Jersey Kings/New Jersey Hornets are in a building that's several years old now.