Tuesday, October 31, 2006

Time for the NBA to Hoop it Up

The National Basketball Association season tips off tonight with defending champions the Miami Heat at home to the Chicago Bulls, followed by two-time MVP Steve Nash and the Phoenix Suns visiting Kobe Bryant and the Los Angeles Lakers. The doubleheader will be televised on TNT. Wednesday night 13 more games will be held, highlighted by an ESPN doubleheader. The times they are very good for the NBA and its commissioner David Stern.

“We had a terrific preseason, which took place, as you know, in the United States and all over the world, and are coming off of what we think is a very important breakthrough with respect to the World Championship and the team that competed for the U.S. in Japan. That was an extraordinary building experience for our players and, to some degree, for our league as well,” David Stern offered at the NBA’s season opening press conference.

“Another subject that is pretty near and dear to our hearts, which is NBA Cares and the commitments that we announced prior to the last season when we said we would raise over five years 100 million dollars for charities; we’ve raised $32 million. We said we’d commit 1 million hours of volunteer service. At last count we were at 205,000. We said we would build 100 reading learning and play centers over five years and last year we did 108. So we are having a pretty good year,” Stern continued

“Our business is looking very good. The basketball business -- we are going to have a dozen teams, or close to a dozen teams that have 10,000 season tickets, full season tickets, and that was up from three years ago. And our teams are doing a great job in their markets and we’re coming off a year of increased viewership on our television; we hope and plan to have it go up again this year. And the game, where we always begin and end, seems to be in excellent shape in terms of openness, openness and flow and --- and that’s where we are,” Stern concluded.

And if business is good as David Stern suggests, there is no time like the present for Stern to speak with his cable network partners regarding extensions to their current agreements. Mediaweek reported that the NBA are set to begin the fifth season of its six-year, $4.6 billion rights deals with ESPN parent The Walt Disney Co. ($2.4 billion, including ABC broadcast coverage) and TNT parent Time Warner Inc. ($2.2 billion) have begun talks with both broadcast entities about contract extensions.

“Ratings were up last year and we’re expecting them to be up again this year,” Stern told Mediaweek. “We have great schedules for our partners and most importantly, we have great recognition of our young, talented players.”

The good news for the NBA, cable televisions two biggest networks (TNT and ESPN) appear to be as interested as the NBA is, in continuing their associations with the NBA.

TNT president David Levy told Mediaweek indeed talks with the league have begun and expressed confidence that Turner would continue its 22-year relationship with the NBA.

“It’s early and we have some time, but we absolutely believe in the product,” Levy said.

“[Turner Sports Media] is a valuable property for us and if we’re going to extend that brand further, you want the NBA to be there,” Levy added in the Mediaweek report.

ESPN’s plans include 71 regular season games, hoping to improve on last year’s 1.1 ratings average.

ESPN senior vice president of programming and acquisitions Len DeLuca told Mediaweek the network is “very open and willing” to discuss extending this relationship, before declining to address any possible terms. “Our relationship is good for ESPN and ABC, it’s good for the NBA and it’s good for the basketball fans.”

“We really want to tie together what’s great about the NBA, from its emerging stars like Dwayne and LeBron to veterans like Shaq and Kobe,” DeLuca said in the Mediaweek report. “We want to take the new stars and combine them with the history of the league.”

What’s never good news – at least seven of the NBA’s 29 franchises open the 2006-07 season with serious business issues -- Portland, Seattle, Sacramento, Oklahoma City/New Orleans, Memphis, Atlanta and New Jersey.

In Portland Paul Allen put the Trailblazers up for sale, and then thought better of it.

The Seattle Sonics play in a facility so terrible it forced Seattle native and Starbucks founder Howard Schultz to sell the franchise to Oklahoma City interests. Last week the NBA approved the transfer of the teams’ ownership to Clay Bennett. Bennett is saying all the right things about the team staying in Seattle, but let’s make it clear – Bennett is from Oklahoma City, and if Bennett and the NBA can’t convince Washington taxpayers to support the building of a new arena for the Sonics, Bennett will move his team to the city he lives in.

“Well, actually I have sort of a sense of optimism because although Clay and his ownership group are based in Oklahoma City, almost from the first day that Clay started looking at Seattle as an investment and then as a purchase, he stressed to me the vibrancy of the Seattle market, the revenue streams that could be available there, and its jumping off status to Asia and its business relationships to Asia, which is a subject on which the Board spent some time today, not in terms of Seattle, but in terms of the NBA’s opportunities. So, I went from kind of skeptical in a way, to kind of getting on line with “Ok, I get what you see here.” But, of course, the large investment that they’re making and that they’re continuing and willing to stand behind is dependent upon a new building. And, they actually have committed to resources for experts and consultants and the like, to follow a critical path that seems designed to exhaust every opportunity, including the political route, the governmental route that is necessary to have a new building. I’m delighted to see the effort so focused, and hopefully their intentions here will be reciprocated by the decision makers who have the opportunity to impact it in a positive way, “Stern offered after the BOG’s approved Bennett’s ownership of the franchise.

“David has said it very well. We, first and foremost in our evaluation, made a decision to invest in the NBA and to be a shareholder in what we view as a very important and growing, global business. We also view the Seattle marketplace as a remarkable opportunity – very dynamic, expanding economy, beautiful place to be. The connection to the Pacific Rim, the existing trade that is there, the future trade that will happen, and the league’s potential internationally and really a lot of work that is already being done in that pursuit. So, our interest is in that marketplace and in that economic model. I am encouraged by what has happened so far in terms of the development of a building. I think we’re being well received, and I think we’re making constructive progress toward that end. So, we’ve been working -- although we didn’t receive board (NBA Board of Governors) approval until today – we’ve been working, really since the day we announced (the purchase), on this project. So, we’re excited to really hit the ground and begin some serious work,” Bennett saying what any new owner would say on the eve of his first year as owner of an NBA franchise based in Seattle.

Bennett has made it clear he’ll give it a year (the Hornets “plan” on moving back to New Orleans in one year) and then he’ll look at his options – moving the Sonics from Seattle to Oklahoma City, in time for the 2007-08 season. Whatever Bennett and Stern suggest, Bennett bought an NBA franchise to ensure the city he does business in and lives in (Oklahoma City) has an NBA team. Once Bennett moves the Sonics to Oklahoma City the NBA may expand to Seattle (the Charlotte Bobcats) or move a team to Seattle (the New Orleans Hornets) but take it to the bank Bennett -- will move the Sonics to Oklahoma City, if George Shinn moves the Hornets back to New Orleans.

Another NBA franchise move you can make book (pardon the betting pun) on, Joe and Gavin Maloof moving the Sacramento Kings to Las Vegas. In what may be the worst proposal for a new sports facility ever put in front of voters for consideration, Sacramento voters will be asked to consider a ballot measure on November 7 that would earmark $470 million of the budgeted $542 million costs for a new arena to be covered by taxpayers’ dollars. There is no chance whatsoever; this will pass the mustard with Northern California voters, in a State where taxpayers are NEVER interested in building sports facilities – welfare for billionaires.

The Maloof’s own the $285 million Palms Hotel in Las Vegas. It makes perfect sense for the Maloofs to move their NBA franchise to the city they call home (see Clay Bennett and the Seattle Sonics). David Stern addressed the issue, offering a politically correct opinion.

“Answering backwards, we have made it clear in Las Vegas that our current policy is that as so long as our game is on the betting line we will not be relocating to Las Vegas or expanding to Las Vegas. That’s something that has been said many times. With respect to relocation of franchises, I think that the issue considered by owners is not necessarily history, but prospective success and I think it is fair to say that the current arena, which has been very successfully operated by the Maloofs and supported by the fans, is not the arena of the future. That’s been acknowledged by the city, by the developers and the fans. So I’m … we remain quasi-optimistic that we are going to see some movement upon the arena-front, whether that is before or after the election, I can’t say, but what I will say is that the arena development deal between the arena and the developer and the city doesn’t seem to be any place yet and in the absence of that deal having yet to be made. I think it puts the Maloofs in an untenable position because they are not in a position to be asking the developer to do certain things if he doesn’t even have an agreement with city to do all that the city had told them that they would do,” Stern offered

“I was under the mistaken impression that the deal between the developer and the city had been achieved and was done. We’ve learned in the course of the on-again, off-again public and private negotiations that no such thing is true. And so, in the absence of the deal between the city and the developer, I mean, I don’t know what, what any fair minded citizen of Sacramento is being asked vote on. I would love to see them support an arena development, but I would tell that that they’ve got to make sure that the city gets with it to see whether the deal can in fact be done. Right now, there’s no deal in place. So, and we would love to see both a deal and a successful ballot initiative, “Stern concluded.

The question – will Las Vegas sports books end betting on NBA in order to secure an NBA arena for Las Vegas? At least on the surface Las Vegas casino owners are usually big picture thinkers. Vegas sports books would never consider giving up betting on NFL games (the biggest weekend of the year in Las Vegas is Super Bowl weekend) and the NCAA Men’s Basketball Tournament (second biggest weekend in Las Vegas is the first weekend of the NCAA basketball tournament) but it makes sense for Vegas sports books to seriously consider ending legalized betting on NBA games in the belief an NBA franchise would be better for the business of Las Vegas.

Watch for the Maloof’s announce their ‘interest’ in the Las Vegas market during February’s NBA All-Star weekend in Las Vegas. Sunday evening USA Basketball (who operates at no more than an arms length from the NBA) announced the 2007 FIBA Americas Championship will be held in Las Vegas at the end of August. The event features ten national basketball teams (including the United States) competing for two spots at the 2008 Beijing Olympics. There is no way the NBA wouldn’t have given their complete approval for Las Vegas to host an event that will feature NBA players if the NBA didn’t believe Las Vegas was (and is) a city capable of being home to an NBA franchise. Yes there are a number of serious logistical issues the Maloof’s and the NBA will have to deal with, but those issues can be overcome – the Kings destiny as long as they are owned by Joe and Gavin Maloof has always been in Las Vegas.

David Stern has to be concerned about the state of the Atlanta Hawks ownership group. The never-ending legal battles among the principals of the Atlanta Spirit, the group that owns both the Hawks and the NHL Atlanta Thrashers remains tied up in litigation where it has been for more than 12 months.

“If I had the ability to do it, I would do it. I’m bumped up against the limits of Commissionership. I think that we have asked the courts to resolve it as fast as possible, and we’re on record as doing that. We’re working with the team. We’re in communications with all of the partners, and the best thing that we could do, and I think that it’s happening, is to get them to work together so that the team itself does not suffer at all while they work out their partnership issues. And that seems to be, hopefully, we can achieve that result,” Stern alluded to regarding the tangled mess in Atlanta.

In tomorrow’s Insider – as a full slate of NBA games mark day two of the 2006-07 schedule, a look at the serious challenges the NBA faces with the New Orleans market, the sale of the Memphis Grizzlies, the ongoing challenges Bruce Ratner continues to face with getting an arena built for the Nets and the NBA continued move forward in embracing technology.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: Mediaweek.

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