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April 11, 2011
Kings-to-Anaheim D-Day creeps closer
The NBA owners meetings are just one week away, and it looks like a decision on whether the Sacramento Kings are moving to Anaheim will go down to the wire. Among the most recent developments:
- The Los Angeles Lakers are ramping up their opposition to the Kings' move, with coach Phil Jackson telling Sports Illustrated: "I don't see any community, I don't care if it's Bombay with 25 million [people], being able to support three teams [in the same market]. I know Istanbul does it with three soccer teams, and England does it in London with three soccer teams in the surrounding area, but it makes it very difficult in our community and our television area to do that kind of a thing. It will hurt all the franchises." As SI notes, the operative word is "television," given that the Kings arrival would reportedly cost the Lakers $300 million off their new $5 billion cable deal.
- April 18, the Monday after the owners meetings, is actually just the deadline for the Kings owners to apply for a relocation, not for its approval. So while it's still likely everything will be hashed out next weekend among the various owners involved, it's not unthinkable that they'd kick the can down the road a bit farther — if an agreement on territorial rights fees can't be worked out before then, for example.
- Orange County Register columnist Randy Youngman writes that "another publication hinted that Stern might ask the Maloofs to delay their plans to move until after the lockout, but that sounds like pure speculation." Youngman didn't provide a link, in any case, and Google has been no help, so it's tough to say where this is coming from.
- The Committee to Save the Kings is moving ahead with its signature drive to force a referendum on Anaheim arena bonds, which would delay the bond issuance until June 2012 unless Anaheim chose to fund a special election before then. The drawback, committee attorney Jeffrey Dorso tells the Sacramento Press: "The big pitfall is that it could happen regardless. They could come up with other ways to fund the $75 million." It'd definitely make the financing more complicated, though, and stadium and arena deals have been stymied over less.
- A Kings move could potentially throw a wrench into NBA revenue-sharing talks (or vice versa). As L.A. Times columnist Mark Heisler writes: "Does someone think [Lakers owner Jerry] Buss will watch $250 million fly away because someone set up a lemonade stand in Orange County, then say, 'I'd be glad to kick in an extra $5 million to $10 million annually?'"
- Speaking of revenue-sharing, the Sacramento Bee's Marcos Breton thinks this is all a sign that the NBA's revenue-sharing system is completely broken, even asserting that the division-leading San Antonio Spurs and Oklahoma City Thunder "could go the way of the Kings" eventually if things aren't changed.
- On the other hand, maybe this franchise is just cursed.
I know that Phil has coached some players who liked to say they were soccer fans but his comments are both wrong and would work against him if he understood the economics of soccer.
London has 13 fully professional teams with 5 (not 3) in the highest level (Premiership). Technically, there are at least 5 more teams that are part-time professional (players try to find some other income for the small part of the year when they are not playing) with about 2 dozen more "semi" pro teams in the English FA system.
The most amazing city for supporting soccer is probably Buenos Aires. There are 20 teams in the Argenitinian top pro level and 7 of them are within the city limits of Buenos Aires, 6 are in the suburbs and another 3 in the nearby city of La Plata. The "region" supports 16 top level soccer teams.
This is all irrelevant to the Kings but Phil brought it up. An interesting question though is the role of actual geography in the economics of sports.
Posted by Floormaster Squeeze on April 11, 2011 10:36 AM
The NBA made up its mind when the Convergence plan failed. Instead of actively looking for a solution in Sacramento, it has been actively looking for a solution outside of Sacramento. This happened when our locals decided that giving a sports team hundreds of millions of dollars was a bad idea.
As soon as any City says, "Wow, that bill is too high!", the NBA now moves on to the next victim.
This will make the Royals/Kings the most-moved major league team in the NBA/NFL/MLB/NHL. Does this happen in other countries (outside the US and Canada, that is), or is our model that different?
Posted by MikeM on April 11, 2011 01:32 PM
No it's really just the NBA's model. There have been moves of course in the other major leagues, but no where near as many in the last 65 years than the NBA. I mapped it out once and I believe the NBA after this move will have had 22 individual team moves since 1945 which is double the next closest league.
Posted by Dan on April 11, 2011 02:13 PM
The Lakers can cry about losing 10% on their TV deal but that will fall upon deaf ears amongst the other owners.
So many teams are suffering in small markets and will anyone really care about Jerry Buss losing a few hundred million on a 5 billion dollar TV deal?....Probably not.
Donald Sterling has kept his mouth shut on this because the Maloofs are doing what he did back in the 1980s to the Lakers. It would be hypocritical of Sterling to object when he is the one who paved the way with his Anti-Trust lawsuit against the league back at that time.
The Lakers/Clippers will not be indeminifed at all. The Lakers weren't when the Clippers moved to LA in the 1980s and neither team will be now.
All the owners will get a piece of the relocation fees and that is the way it should be.
The NBA needs to move teams in the worst way to markets where there is a corporate presence.
The Kings in Anaheim will only get about 2k more in fans per game. Still in the bottom 1/3 of the league in average attendance.
The key here is that the Honda Center has 84 luxury suites and that corporate money is the reason why the Kings will make money in OC.
Even if the Kings were winning with sellouts their current arena is too small and only has 30 suites in a market that does not have powerhouse corporate presence.
Better to get less fans and have your premium seats sold out as that is where the money is today for the NBA.
That model is taking over as the standard and cities that have corporate bases like Anaheim, San Jose, Vancouver/Seattle, New Jersey and Chicago will be seeing new teams and/or additional teams in the near future.
It is just the way things are in the NBA in this day and age.
Posted by Sid on April 11, 2011 02:43 PM
Stop bashing the NBA, people. Euro/South American countries have government regulation of sports leagues, which prevents relocation but introduces relegation. Which is worse? The north American leagues are more competitive, but there are some unfair barriers to entry (just ask Jim Balsillie).
If this were England the Kings would stay in Sacramento, but they'd have been dumped into the D-League long ago. Some owner with deep pockets probably would've long since started up a 3rd LA-based team or a 2nd Chicago based team and gotten in to the top league. Each method has its own superiorities and drawbacks.
Dan, you're being silly if you think this is just the NBA's model. The only reason more teams in other sports don't move is because Neil didn't have this site up long enough ago to catch as many NFL, NHL and MLB small/medium markets in its web. (I jest, Neil. I love this site almost as much as I'd love a taxpayer financed arena for the Bucks). At least one NFL team is moving the L.A. in short order and most likely two NHL teams are moving (possibly as soon as this offseason). I will give MLB credit for minimizing moves over the last few decades, but they have a revenue sharing systems that allows junk franchises to make eight figure profits off the backs of the big spenders.
I hope Sid is working on a stand-up routine.
1) The crappy, nearly 20 year-old Honda Center has nothing to do with the Kings move. Many of its luxury boxes are in bad locations (corners and baselines), its lower bowl probably seats under 8,000, the sightlines will be the 3rd or 4th worst in the NBA, they're stuck with only one weekend date (Ducks have claimed Fridays and Sundays) and it lacks a surrounding entertainment district. In other words, if the Kings had the Honda Center in Sacramento, they'd still be moving. This is about TV money and, to a far lesser extent, the number of available patrons to buy NBA-priced tickets.
2) Wanna bet me the Lakers and Clippers will not be "indeminified"?
Posted by Ben Miller on April 11, 2011 05:59 PM
At this point, I'm trying to imagine a universe in which the NBA tells the Kings they cannot move. Forcing the Kings to stay would be a disaster. Just too much damage has been done.
This may cure me entirely of pro sports, less than a season after a team I've always followed won a World Series. They try to convince you it's not just about money, but I think that's just not true.
Sacramento was right to not fork over everything they have. But this is going to get ugly, because the loan the City has with the Kings isn't a loan at all. John Dangberg's letter gives the full background on the purchase-leaseback deal the two parties have.
www.cityofsacramento.org/kings/documents/NBA_Letter.pdf
Several years later, the then-treasurer of Sacramento approved a move into second, in order for the NBA to loan money to the Kings. He did this without approval of the bond-holders, which seems illegal to me. But it opens up the possibility that the City will be stuck with "collateral," not cash. I'd bet the bond-holders sue the City if that happens.
Even after the Kings leave, this story will not end.
Posted by MikeM on April 11, 2011 06:13 PM
I live in the Anaheim area and while the Honda Center was a great arena many years ago, even that place needs to be updated. I am not happy about this move. My favorite team was from Seattle and to see them lose the Sonics really hurt so Sac Town, not all of us locals are happy about this move. Sorry you have to go through it. It really sucks to see a team you love leave.
Posted by Scott Cook on April 11, 2011 06:35 PM
Scott, even though I think the Kings will do fine in Anaheim, I still wonder why they'd want 3 teams in that area. It may not be the Kings that suffer, but one of the three will.
If you're going to move the Kings, in theory, the Seattle area might make more sense.
Now look at what Steinberg (he was on the City Council that approved the purchase-leaseback) is doing:
www.sacbee.com/2011/04/11/3545272/proposed-legislation-would-require.html
If Steinberg succeeds in getting this passed, you wonder what the courts will say. There is a signed contract, with clauses in it. If the Maloofs had to keep the Kings in Sac, they'd transform them into the Zombie Kings. They'd be so unattractive and gross, people would run away from the arena, as opposed to running into it.
Posted by MikeM on April 11, 2011 07:55 PM
If the LA area can support three teams, then how much longer before New York gets a third team in the northern New Jersey suburbs and Chicago get s second team?
Posted by bevo on April 12, 2011 05:32 AM
Well, bevo, I'm trying to figure out why not. Take any of the 10 largest metro areas in the US, and probably all of them could take on 2-3 teams, and still have a larger customer base than they do in Sac.
en.wikipedia.org/wiki/Table_of_United_States_Metropolitan_Statistical_Areas
If it turns out that relocating teams to large cities that already have a team helps the league, they'll do it.
Posted by MikeM on April 12, 2011 12:40 PM
My guess would be that it's (potentially) good for the teams, but lousy for the league. You could probably fit five NBA teams in the NY/NJ/LI market, but they'd all just end up cannibalizing each other's fan base. And meanwhile, fans in the cities you'd abandoned would stop going to NBA games altogether.
Even if the Kings manage to overcome the Lakers' opposition and get approval to go to Anaheim, that doesn't mean the floodgates will open. If any owner tries to horn in on a major market before exhausting all attempts at a new arena in their old market, I expect you'll see David Stern beat on his head with a stick.
Posted by Neil deMause on April 12, 2011 12:47 PM
I have to agree with Neil on this one. I think it's far more likely you'd see teams go into other larger markets that don't have teams (places like Seattle, Vancouver, San Jose) long before you'd see 2 or 3 teams in the even larger markets).
Posted by Dan on April 12, 2011 01:38 PM
@Ben Miller- I would be willing to bet you the Lakers/Clippers will not be paid a dime outside of traditional relocation fees that are spread across all the owners.
You forget part of the 75M being used is to improve the Honda Center for basketball.
I have been to Arco Arena and the Honda Center and the Honda Center is a far superior arena in every sense.
Their concourses are beautiful and the sight lines are good for both hockey and b-ball. Why do you think the NCAA keeps going there?
Arco is small and to tight to even be renovated and it resembles a barn.
You are wrong on the # of patrons needed. It does not matter how many fans you get it is all about corporate dollars and OC has that.
They can average 14k in fans or about 2k more than now but if they fill up all 84 luxury suites they will make bank....bottom line.
The NBA model has changed to luxury suites and corporations over the "common fan". Even TV is secondary to this.
The "common fan" does not matter anymore the NBA. Hence why Chicago, San Jose, Anaheim, New Jersey (Who has stated they are OK with a team moving there when they leave to New York), Seattle/Vancouver will all get teams soon.
Cities like Memphis, Charlotte, New Orleans, Indiana, Minnesota, Sacramento do not have corporate bases to sell high end tickets/suites.
Therefore they lose money even if they "sell out".
You are way off my friend and you need to understand the 21st century of NBA economics.
The other NBA owners seem to agree with me...
Anaheim Royals coming soon!
Posted by Sid on April 14, 2011 02:40 PM