Great article about possible NBA contraction

[Kwhit10]

Imagine they went to 24 teams.  You'd have some very nice competition like in the CB draft. 

But in all seriousness, the Hornets and Kings should be contracted.

[Eja117]

For those who are just commenting on the subject and did not read the article here is the most important part about where and why contraction should start:
 

Since the CBA debate is first and foremost about the money, the financial reasons for eliminating the worst-performing teams couldn't be more compelling. The leader in the clubhouse is New Orleans, and there simply is no close second. The team was taken over by the other 29 owners last December with $90 million from league reserves, a $70 million loan from outgoing owner George Shinn and undisclosed additional debt, according to the Sports Business Journal. (At 3 percent interest and a two-year repayment schedule, that means the league still owes Shinn about $50 million.)

Even before the league takeover, the Hornets were a bottomless pit of misallocated resources. According to the '09 statements, the Hornets' ownership group was carrying $111 million in long-term debt, including $73.8 million borrowed from the league credit facility. Of the latter amount, $22.7 million is due in June 2013 -- although previous maturity dates were renegotiated and extended because, obviously, Shinn and his partners were tapped out.

As of June 2009, the Hornets still owed $12.6 million of the $30 million relocation fee associated with the move from Charlotte; the initial annual payments were delayed three years. In 2007, the state of Louisiana -- the poorest in the nation, according to Money Magazine -- agreed to pay 20 percent of the remaining balance from the relocation fee. As of June 2009, the state had paid $2.5 million.

An inquiry to New Orleans Mayor Mitch Landrieu's office regarding any debt obligations held by the city associated with New Orleans Arena and the Hornets was referred to Deputy Mayor Andy Kopplin, who did not respond.

In 2009, the Hornets received $3.4 million in revenue assistance from the NBA, had a $3.9 million relocation payment deferred, collected $28.3 million in national broadcast rights fees and $9 million in local broadcast fees -- and had a $5.8 million operating profit nearly wiped out by the crushing debt and interest payments the team had incurred. This is no way to run a business, with no reason to think it would get better if the NBA were somehow able to sell the team for more than it paid Shinn and borrowed from him -- not to mention additional debt taken on by the league to close the sale.

Simply put, the Hornets are a financial mess owing tens of  millions for loans taken out against the league credit facility and millions more to the league for re-location fees that were never paid off. The league in turn owes former owner George Shinn millions in order to buy him out of the league. Then the team is still tens of millions in debt to other creditors and has to pay employees and other overhead expenses just to stay afloat at a loss of profit.

This team is a financial disaster. It needs to be contracted.

Who the other team to be contracted should be is beyond me. I think obvious choices are Minnesota, Memphis, Charlotte, or Sacramento.

Minnesota and Sacramento have horrid arena deals and have had terrible management over the last decade. Memphis and Charlotte are located in the heart of NCAA basketball country where basketball allegiance is to Louisville, Kentucky, Memphis, and UNC, NC State, Duke, respectively. The attendance and average ticket pricing as well as general NBA success as franchises reflect this.

My guess is Charlotte is safe due to who owns the team and the respect that man carries within the league(Michael Jordan). The other three teams have shown that when successful they can probably be mildly profitable but horribly unprofitable when not successful.

I would therefore relocate Sacramento to Seattle or Vegas, leave Memphis where it is and see who the future success plays on establishing that team in that city and contract Minnesota since their arena deal is such a horror and that team will NEVER attract quality free agents due to it being SUCH a cold weather environment.

as much as I disagree I admit that made a ton of sense

[Moranis]

I think cutting two teams wouldn't be bad.  New Orleans seems like a no brainer since it is owned by the league.  I'd personally cut Charlotte as the other, but I think it would probably be Sacramento getting the axe.

The Kings have prospects of moving to Anaheim.  I would rather see them move rather than disappear.  (At the very least, it should annoy the Lakers, right?)  The Pacers make a lot more sense, if you absolutely had to cut a team.

I still think franchise relocation should be tried before contraction.

One way to run a contraction draft would be to allow teams to either draft a rookie or assume an existing contract from the contracted teams.  Perhaps you add a one-time third round.  You must have cap space to assume the veteran player's contract.

St. Louis, Cincinnati, Buffalo, Seattle, Vancouver, Kansas City, Syracuse, and Baltimore have all already had NBA franchises and couldn't keep their teams.  I really think there are very few cities left and adding a third team to L.A. just seems like a mistake to me.

All of that besides Seattle and Vancouver was in the era before ESPN and major cable tv and before the sport was global.   

And yet when Seattle left it went to Oklahoma City and not a much larger market like St. Louis, Cincinnati, Baltimore, etc.  There is a reason for that.

[LooseCannon]

I think the league should first offer to sell the Hornets to someone willing to move the team out of NO with a waiver of at least some of the relocation fees.  Reportedly, Larry Ellison reportedly offered $350 million for a franchise that George Shinn paid $300 million for, but the league didn't want to let him move the team to San Jose.  Some speculate that another motivation was that letting Ellison buy the team would have been contrary to the image of poverty that the owners are trying to put up.

Sacramento absolutely should not be on the list of teams that could be contracted.  They have legitimate options of a new arena or a relocation to Anaheim or Seattle, plus the owners don't want to give up the team.  If we didn't have a crap economy, perhaps the Kings would have already gotten the sort of arena deal they want.

The more numbers I read, the Pacers are a team that should be cut, if you had to contract.  I don't understand why I am the only person in this thread mentioning them.  A playoff team that was last in attendance in the league, supposedly losing money in 25 of the last 27 years.  Franchises that consistently put a bad product on the floor ought to lose money, but a team that can't make money despite being respectable is a cause for concern.

I also suspect that contraction won't do anywhere near as much as some people think in changing the gap between the best and worst teams in the league. 

[bdm860]

I think cutting two teams wouldn't be bad.  New Orleans seems like a no brainer since it is owned by the league.  I'd personally cut Charlotte as the other, but I think it would probably be Sacramento getting the axe.

The Kings have prospects of moving to Anaheim.  I would rather see them move rather than disappear.  (At the very least, it should annoy the Lakers, right?)  The Pacers make a lot more sense, if you absolutely had to cut a team.

I still think franchise relocation should be tried before contraction.

One way to run a contraction draft would be to allow teams to either draft a rookie or assume an existing contract from the contracted teams.  Perhaps you add a one-time third round.  You must have cap space to assume the veteran player's contract.

St. Louis, Cincinnati, Buffalo, Seattle, Vancouver, Kansas City, Syracuse, and Baltimore have all already had NBA franchises and couldn't keep their teams.  I really think there are very few cities left and adding a third team to L.A. just seems like a mistake to me.

All of that besides Seattle and Vancouver was in the era before ESPN and major cable tv and before the sport was global.   

And yet when Seattle left it went to Oklahoma City and not a much larger market like St. Louis, Cincinnati, Baltimore, etc.  There is a reason for that.

You mean there's a reason besides the fact the owners were from Oklahoma City and had every intention of moving the team to their home town before they even bought the team?  They didn't even look at other cities or have other cities bid for their services did they?  So what does that have to do with eja's point?


The Golden State Warriors used to call Philly home but left.

The San Antonio Spurs used to call Dallas home but left.

The Washington Wizards used to call Chicago home but left.

Also Chicago, Detroit, Denver, Miami, Houston and Utah were all home to now defunct NBA/ABA teams.  Do we really think those teams shouldn’t have NBA teams now? 

Good thing people didn’t say “it’s already been proven that those cities can’t support NBA teams.”

I wouldn’t necessarily judge a city’s ability to support a team based on what happened 30, 40, or 50 years ago. 

[Moranis]

I think cutting two teams wouldn't be bad.  New Orleans seems like a no brainer since it is owned by the league.  I'd personally cut Charlotte as the other, but I think it would probably be Sacramento getting the axe.

The Kings have prospects of moving to Anaheim.  I would rather see them move rather than disappear.  (At the very least, it should annoy the Lakers, right?)  The Pacers make a lot more sense, if you absolutely had to cut a team.

I still think franchise relocation should be tried before contraction.

One way to run a contraction draft would be to allow teams to either draft a rookie or assume an existing contract from the contracted teams.  Perhaps you add a one-time third round.  You must have cap space to assume the veteran player's contract.

St. Louis, Cincinnati, Buffalo, Seattle, Vancouver, Kansas City, Syracuse, and Baltimore have all already had NBA franchises and couldn't keep their teams.  I really think there are very few cities left and adding a third team to L.A. just seems like a mistake to me.

All of that besides Seattle and Vancouver was in the era before ESPN and major cable tv and before the sport was global.   

And yet when Seattle left it went to Oklahoma City and not a much larger market like St. Louis, Cincinnati, Baltimore, etc.  There is a reason for that.

You mean there's a reason besides the fact the owners were from Oklahoma City and had every intention of moving the team to their home town before they even bought the team?  They didn't even look at other cities or have other cities bid for their services did they?  So what does that have to do with eja's point?


The Golden State Warriors used to call Philly home but left.

The San Antonio Spurs used to call Dallas home but left.

The Washington Wizards used to call Chicago home but left.

Also Chicago, Detroit, Denver, Miami, Houston and Utah were all home to now defunct NBA/ABA teams.  Do we really think those teams shouldn’t have NBA teams now? 

Good thing people didn’t say “it’s already been proven that those cities can’t support NBA teams.”

I wouldn’t necessarily judge a city’s ability to support a team based on what happened 30, 40, or 50 years ago. 

New Orleans has now failed twice.  Bringing Charlotte back was a mistake. 

The Pistons have been in Detroit since 1958.  The Bulls have been in Chicago since 1967. 

We've had all this expansion and Cincinnati, St. Louis, etc. haven't been seriously considered for a reason.  They can't support NBA teams and the league knows it. 

[Eja117]

I think cutting two teams wouldn't be bad.  New Orleans seems like a no brainer since it is owned by the league.  I'd personally cut Charlotte as the other, but I think it would probably be Sacramento getting the axe.

The Kings have prospects of moving to Anaheim.  I would rather see them move rather than disappear.  (At the very least, it should annoy the Lakers, right?)  The Pacers make a lot more sense, if you absolutely had to cut a team.

I still think franchise relocation should be tried before contraction.

One way to run a contraction draft would be to allow teams to either draft a rookie or assume an existing contract from the contracted teams.  Perhaps you add a one-time third round.  You must have cap space to assume the veteran player's contract.

St. Louis, Cincinnati, Buffalo, Seattle, Vancouver, Kansas City, Syracuse, and Baltimore have all already had NBA franchises and couldn't keep their teams.  I really think there are very few cities left and adding a third team to L.A. just seems like a mistake to me.

All of that besides Seattle and Vancouver was in the era before ESPN and major cable tv and before the sport was global.   

And yet when Seattle left it went to Oklahoma City and not a much larger market like St. Louis, Cincinnati, Baltimore, etc.  There is a reason for that.

You mean there's a reason besides the fact the owners were from Oklahoma City and had every intention of moving the team to their home town before they even bought the team?  They didn't even look at other cities or have other cities bid for their services did they?  So what does that have to do with eja's point?


The Golden State Warriors used to call Philly home but left.

The San Antonio Spurs used to call Dallas home but left.

The Washington Wizards used to call Chicago home but left.

Also Chicago, Detroit, Denver, Miami, Houston and Utah were all home to now defunct NBA/ABA teams.  Do we really think those teams shouldn’t have NBA teams now? 

Good thing people didn’t say “it’s already been proven that those cities can’t support NBA teams.”

I wouldn’t necessarily judge a city’s ability to support a team based on what happened 30, 40, or 50 years ago. 

New Orleans has now failed twice.  Bringing Charlotte back was a mistake. 

The Pistons have been in Detroit since 1958.  The Bulls have been in Chicago since 1967. 

We've had all this expansion and Cincinnati, St. Louis, etc. haven't been seriously considered for a reason.  They can't support NBA teams and the league knows it. 

St Louis has baseball, football, and hockey.   Why can't it have basketball?

This may be more of a revenue sharing issue than a true profitability issue

[Moranis]

St Louis has baseball, football, and hockey.   Why can't it have basketball?

This may be more of a revenue sharing issue than a true profitability issue

market saturation and interest.  Why can't a massive city like Atlanta not sell-out every night when they have a top tier playoff contender?  Some cities just can't support a pro basketball team.  Perhaps it is a college town (cincinnati, louisville).  Perhaps it is a football town.  Perhaps it is a hockey town.  Teams like the San An and Portland work well enough because it is the only game in town, though as has been shown they are losing money.  

A basketball team in St. Louis won't work or it would already have a team (instead of smaller markets).  Same with Cincinnati, Baltimore, etc.  

[saltlover]

They won't contract.  Maybe a couple of unnamed owners are willing to throw it out there to scare the players that they could lose 30 jobs with two contracted teams, but it won't happen.  Maybe it's also to scare the owners of a few of the major market owners for more revenue sharing.  But it's not a real idea.

Contraction means that the next TV deal the NBA gets will be worse, because it means ESPN, Turner, or some other network will question the NBA's viability if they are the first major US sport to eliminate a team in the national TV era.  That means less money for all the owners.

Contraction means that the remaining owners will have to pay the owners of the contracted teams hundreds of millions in buyouts.  The Golden State Warriors sold for $450 million last year.  I'm certain there's someone out there willing to buy New Orleans and Charlotte for $150 million (a third of $450 million) as a very conservative estimate, which means that the other owners desiring to contract those teams would have to pay more than another buyer on the open market would.  No way they're doing that.

Contraction means that the value of all the other teams falls, for reasons beyond the money lost due to my first two reasons above.  If the league looks like it might be losing its viability, or that further teams might be contracted, owning a team is now a riskier investment for future potential buyers of NBA teams, and therefore they will want to pay less for that investment.  The value of the Warriors tripled in 15 years.  Contraction kills that growth.  Again, no way is there going to be contraction.

[Eja117]

St Louis has baseball, football, and hockey.   Why can't it have basketball?

This may be more of a revenue sharing issue than a true profitability issue

market saturation and interest.  Why can't a massive city like Atlanta not sell-out every night when they have a top tier playoff contender?  Some cities just can't support a pro basketball team.  Perhaps it is a college town (cincinnati, louisville).  Perhaps it is a football town.  Perhaps it is a hockey town.  Teams like the San An and Portland work well enough because it is the only game in town, though as has been shown they are losing money.  

A basketball team in St. Louis won't work or it would already have a team (instead of smaller markets).  Same with Cincinnati, Baltimore, etc.  

I get what you are saying, and you're all making tons of sense and I am definitely trying to keep an open mind (for once....I'm already over my quota for the year), but let's just say we accept the owner's statement that like 22 teams are losing money in the nba.     What are they saying? There's only 12 cities in America that can support an NBA team?   

It doesn't make sense.  Last year Stern was talking about maybe having teams in London and whatnot.  But for some reason he can't keep a team profitable in San Diego?  Give me a break.

Then you say "Oh. Market saturation.  Too many good teams in a place. Can't make money." Oh ok. Then in that case move to a large, but traditionally smaller city, where they can be the only game in town like Memphis or San Antonio or Sacramento or or something like that.  "Oh no. Can't make money there either. Too small. Can only make money in a small place if the team is good".   Ok. So which is it?  Can you make money or not?  "Well we can make money, but only if the players take way less money."

Suuuuurrrrreee.     And I was born yesterday. Stern is such a master at trying to have it both ways and acting like nobody will notice.

[JSD]

Too many union jobs would be lost. Contraction is:

[Moranis]

Too many union jobs would be lost. Contraction is:

If they just added one active roster spot and kept the inactive at 3, then you would add 28 jobs or roughly the equivalent that would be lost in contraction.  Problem solved.

[Eja117]

Too many union jobs would be lost. Contraction is:

If they just added one active roster spot and kept the inactive at 3, then you would add 28 jobs or roughly the equivalent that would be lost in contraction.  Problem solved.

Under that plan each team has to take maybe a half million dollar hit every single year. I'm not sure that solves it

[Moranis]

If they just added one active roster spot and kept the inactive at 3, then you would add 28 jobs or roughly the equivalent that would be lost in contraction.  Problem solved.

Under that plan each team has to take maybe a half million dollar hit every single year. I'm not sure that solves it

How much is the tv share per team?  I mean if you take two shares away and give them to every other team, I would imagine that is more then 500k per team.

[Eja117]

If they just added one active roster spot and kept the inactive at 3, then you would add 28 jobs or roughly the equivalent that would be lost in contraction.  Problem solved.

Under that plan each team has to take maybe a half million dollar hit every single year. I'm not sure that solves it

How much is the tv share per team?  I mean if you take two shares away and give them to every other team, I would imagine that is more then 500k per team.

Very good point. Although I imagine that tv execs would also say "Hey wait a minute. We already lost the Seattle/Washington market in exchange for the highly lucrative Oklahoma market. Now you have two more major cities that hate you.  Your product just isn't what it was worth. 

Then the nba will respond with "Yeah, but the product is better so more people in all the other cities will watch"

and they'll negotiate.

idk. Maybe you're right.

The NFL survives/thrives without the LA market so anything is possible