Yeah, very nonsensical proposal. I don't think there are huge problems with the CBA or that a legal revolution is needed. Players will needed to concede some stuff and allow the owners to have more flexibility - probably by accepting smaller limits contracts in terms of years and a smaller share of the revenue. I feel that vets and the middle-class are benefited with the current CBA relatively to rookies and the superstars who sell tickets, but that's to be expected, they dominate the syndicate.
Anyway, I was just reading about the Pacers situation:
Herb Simon stressed Tuesday that he wants to keep his team in Indianapolis but was equally adamant that he can no longer afford the operating expenses at Conseco Fieldhouse or the team's year-after-year financial losses.
Simon said the Pacers have lost money nine of the past 10 years, including the year the Pacers played in the NBA Finals. (Forbes.com offers a different financial picture; see the graphic at left.) Jim Morris, president of Pacers Sports & Entertainment, said the team has lost $200 million total since Simon bought it in 1983.
"There comes a point where you have to say, 'Maybe I can't do this anymore,' " Simon, 74, said in an hourlong meeting with executives and reporters at The Indianapolis Star. "Certainly my family, if I'm not here, is not going to be able to do it.
"So, let's straighten this thing out. Maybe we can't. But let us try. Sure, I would have picked a better time than the world's greatest economic crisis. The timing sucks, but that's what it is."
The timing is triggered by a clause in the Pacers' lease -- signed when the team moved into the fieldhouse in 1999 -- that allows the team to renegotiate with the city's Capital Improvement Board after 10 years.
Under the agreement, the Pacers agreed to operate the fieldhouse, which is costing the team about $15 million a year. Simon said he did not want to negotiate in public, but it's clear, based on what CIB officials have said, that neither side thinks the team can continue to pay that much.
The CIB is facing its own $20 million shortfall. If it were to absorb the cost of operating the fieldhouse, it almost certainly would need help from taxpayers.
Simon avoided making threats to leave town and said he has not spoken to other cities that might be interested in the team. But, he stressed, "it's very important we resolve this in the near future. Very important."
And it's not just the Pacers that Simon is concerned about. The fate of the Fever seems tenuous at best.
Simon said he is committed to the WNBA team for just one more year. The team has lost "several million dollars," he said, and must double corporate sponsorships and attend ance if it is to survive.
But while Simon bemoaned his financial situation, others looked skeptically at the latest example of a wealthy professional sports team owner wanting public money.
Cathy Burton, president of the Marion County Alliance of Neighborhood Associations, said she doesn't fault Simon for trying to get a deal as good as the one the Colts received at Lucas Oil Stadium.
"The fault," she said, "lies in giving it to them. The citizens can't afford to bail them out."
She said the team brought many of its problems on itself, with player misbehavior that has hurt attendance. She called on the Pacers to open their financial books to the public.
David Carter, a sports business expert from the University of Southern California, said he can't evaluate the team's claims of losing money in nine of the past 10 years, including 2000, when they went to the NBA Finals.
But, Carter said, "even if they are (losing money), you still need to take a look at how valuable the team would be if it were put up for sale -- and not necessarily in the home market."
The Simons bought the Pacers for $11 million. Forbes magazine said the team is now worth a little more than $300 million, a figure the team disputes.
"The accumulated losses are close to the value of the franchise," said Morris, the Pacers Sports & Entertainment executive. "There is not some golden egg out there somewhere."
Potential suitors for the Pacers include Kansas City, which just built a new arena.
But, Carter said, "just because a city is interested doesn't mean they can pull the trigger. States, cities and school districts are laying people off, and there's going to be a headline about giving money to a new basketball team?"
Simon said he has been a community-minded steward of the team, which almost certainly would have left Indianapolis if he had not stepped in.
Now, it appears taxpayers may be expected to step in again. A number of options have been floated to cover the CIB's operating debt, which, depending on the outcome of negotiations with the Pacers, may very well include some if not all of the $15 million to operate the fieldhouse.
Paul Okeson, Indianapolis Mayor Greg Ballard's chief of staff, said the mayor wants to focus first on increasing admission taxes to help the CIB, spreading the burden to those who use the facility. But a 1 percentage point increase in that tax would raise only an estimated $1.5 million, not nearly enough revenue to cover the problem. In addition, the Pacers are concerned they would have to absorb that cost because they're not certain they could raise ticket prices without losing fans.
Another possibility is raising the existing tax on restaurants, but Okeson said the city needs to be cautious, especially because it would make that tax among the highest in the country.
Still, the city senses it must do something.
"I think everyone involved would agree that a picture of Indianapolis without the Pacers would not be healthy," Okeson said.
Simon said he didn't have any recommendations for how the CIB comes up with the money.
"That's not our job," Simon said. "We want to cooperate, but I think some creative people can come up with creative ways of doing it."
http://www.indystar.com/article/20090311/SPORTS04/903110367
I think the big problem is that the NBA business model needs to change beyond the CBA. The Pacers were losing millions when they were one of the best teams in the NBA. And it's not an exception, I read the Magic have been losing $20 million per year, even with Howard in the team and playoffs runs.
The problem is that most NBA franchises haven't been profitable, rather expensive toys in the hands of millionaires (very much like it happens in Europe with basketball clubs, although on a much smaller scale). The problem is that now the millionaires can't afford those toys any more so the business model needs to be drastically changed.
It's curious how Sterling was so frequently blamed by NBA fans for being a terrible owner when it looks like he was the only guy acting responsible.
Anyway, I've been thinking for a while that the NBA over-expanded - I'm not worried about the "diluted talent", there's enough talent for 30 teams, but the pie is being shared by too many mouths. A competition with less teams would be more interesting and easier to market, I think. More importantly, I think that the revenue sharing system has to change in order to allow small-market teams to compete. I'm not sure about a hard-cap; an aggravation of the luxury tax would do it, I think.
I not feeling to badly for Herb Simon, he's just another example of an extremely wealthy man asking for a handout.
Simon bought the team for $11 million and Forbes.com currently puts the value of the Pacers at $303 million. If Simon could sell the team tomorrow for $311 million he would have made $100 million in a 26 year time span in ownership of the Pacers, if the $200 million in losses claim is even valid, which I question though only slightly
Topic: How to fix the NBA economic crisis: one man's (flawed?) proposal (Read 6319 times)