Hurricanes, relocation and arenas ... oh my

Mark D. Smith-US PRESSWIRE

How a catastrophic hurricane in 2005 affected the NBA in ways that are still being felt to this very day. The NBA's current economic structure is inflating team value, and destroying beloved franchises at the same time.

When I was looking for a starting point to the article you are currently reading, I kept coming back to August 29, 2005. The day the tragedy of Hurricane Katrina struck the New Orleans area. One of the most catastrophic natural disasters in U.S history. It almost completely leveled and flooded the Gulf Coast. One hopes that, as a country, we never face a disaster of this scale for the rest of our existence.

The after affects are many fold. The town, the people and lives lost, and the economic structure of Louisiana -- let alone the city of New Orleans was forever altered. They are just now getting back on their feet, albeit very slowly. Additionally, the Hurricane's affects on the NBA cannot be understated. That one event has set in motion a series of economic decisions and political maneuvering that has resulted in NBA turmoil in three separate cities.

Hurricane Aftermanth: New Orleans, Oklahoma City and getting rid of a bad owner

It could be accurately stated that former New Orleans Hornets owner George Shinn was not the greatest of human beings. After founding the Charlotte Hornets franchise in 1988, the erstwhile owner went through his ups and downs. After being put on trial for sexual assault -- in 1997 -- his image in Charlotte was forever tarnished, and after that he successfully persuaded (ie: extorted) the city to build him a new arena (Time Warner Cable Arena) but after some political snafu's the city said they would fund his new arena provided he sell the team. Needless to say the NBA wasn't a big fan of a municipality dictating a sale of one of its teams and quickly approved Shinn's application for relocation in 2002 despite New Orleans being a smaller media market than Charlotte. The NBA granted Charlotte another expansion franchise in 2004, the Bobcats -- in my opinion, mostly because the NBA sympathized with the people of Charlotte for putting up with Shinn all those years.

In October of 2002 the Hornets began playing in New Orleans, and led a rather uneventful NBA existence until Hurricane Katrina came ashore on August 29, 2005 and changed everything. Relocating to Oklahoma City for the 2005-06 and most of the 2006-07 seasons the Hornets (much like their NFL counterparts the Saints) were nomads. Changing their name briefly to the New Orleans/Oklahoma City Hornets, there was a feeling of inevitability that the Hornets would make OKC their permanent home. New Orleans was a decent market that couldn't (at the time) compete with the sheer enthusiasm of the OKC fans. Particularly since one Clayton Bennett had made such a welcoming home for the nomadic Hornets.

Make no mistake, Oklahoma City would have been the perfect relocation spot for the Hornets.

However, guilt over potentially taking an established team away from a ravaged city, combined with sheer incompetence by George Shinn led the Hornets back to New Orleans for a wonderful feel good story about restoration and renewal. Meanwhile, Shinn was rapidly going broke and was having severe health issues (cancer). The NBA stepped in and bought the franchise from Shinn in 2010 for a reported $300 million. Small price to pay to rid themselves of an owner they no longer cared for.

(Was Shinn any worse than Joe and Gavin Maloof? (the obvious answer is yes because of the whole...you know...sexual assault trial.)

Howard Schultz, Clay Bennett and how the NBA rewards loyalty

It must be said that Howard Schultz, CEO of Starbucks, should have never been in the business of owning an NBA team. Moreover, he should have realized that standing aside and letting NBA savvy people run his franchise (the Seattle Supersonics, purchased in 2001) would have, in the end, saved him from himself. He took things too personally. Sat courtside and made faces and reacted overly emotional when his team won or lost. It was just unseemly. In his brief five year ownership of the Sonics, the team fielded nondescript team after nondescript team. Even wasting the prime of Ray Allen.

Schultz began grumbling about Seattle's Key Arena roughly around 2004-05. The heavily renovated arena (in 1995) at one time served as a model for a community rewarding a club that was playing some of the best basketball of the decade. By the late 1990's and early 2000's that all changed. With brand new arenas stuffed with shiny luxury boxes (including Denver's own Pepsi Center) had made Key Arena obsolete. At least, according to Schultz and the NBA. So Schultz began the process of lobbying the Seattle City Council for a new arena. However, city leaders, fed up with publicly funding new football and baseball stadiums (CenturyLink Field and SafeCo Field respectively) said no. Thus, Schultz put the Sonics on the market in 2006 and the franchise was quickly sold to an ownership group featuring Clay Bennett, he of Oklahoma City fame.

Schultz should have known that Bennett (along with the real money behind him, supposed billionaire Aubrey McCledndon) wanted to move the Sonics to OKC. If he didn't he is a bigger fool than everyone once thought. At the time of the sale, there was a feeling of inevitability that the team would move to OKC, and after Bennett proposed a patently ridiculous arena plan/public funding proposal ... the writing was on the wall. Seattle was going to lose it's team.

However, this begs the question -- if Oklahoma City is and was such a prime spot for an NBA franchise, why on earth wasn't expansion into OKC even given a cursory thought? Quite frankly, I can think of no other market that deserved an expansion franchise MORE than Oklahoma City. They demonstrated their loyalty to the NBA by supporting a team that wasn't even their own, sold out the building on most nights, and by all intents and purposes demonstrated that they were viable in almost every way. The NBA missed two prime opportunities to move a franchise into OKC from 2005 to 2007. The events since are a shameful and unseemly chapter of NBA business lore.

The circumstances of what happened when Bennett bought the Sonics and moved them to Oklahoma City are well covered in the excellent documentary Sonicsgate, if you haven't seen the film I highly suggest you watch. While the Bennett/McClendon group's actions were highly dubious and shady (and downright disingenuous), it is patently clear with the benefit of hindsight that the message was made loud and clear to the new owners of the Supersonics franchise -- You want a team? You go buy one that already exists.

"The Squeeze", Market leverage, and the incompetence of the Maloof Bros.

There's is a term in the corporate world called "The Squeeze". It essentially involves putting part of a desired product up for sale against two competing interests to drive up revenue/value/income. It's used all throughout the corporate world and is generally accepted as common practice with commodities. Supply and demand at it's core. You let the competing interests of the desired product duke it out until you've reached max threshold for the winning bid's valuation. The desired product goes to the winning bidder and in the meantime the remaining unsold product's perceived "value" rises naturally after the squeeze is employed.

That is a very fancy way of telling you the Joe and Gavin Maloof are shameless hucksters who dragged an entire team down with their financial incompetence. Additionally the league in which they reside has fostered an atmosphere that has led to what we have seen since January of 2013. Two cities competing for one team. A zero-sum game where the heart and soul of a city is up for sale. The city of Sacremento has supported a franchise that, outside of 1998-2003 hasn't been the greatest. They made ARCO/Sleep Train Arena one of the loudest places in the NBA. A fan base that has been exceedingly loyal.

The Maloof family made their initial fortune in Coors Beer distribution in the Southwestern United States starting in the 30's. They then transferred that wealth into (what became) the Palms Casino in Las Vegas in the 90's. In 1998, the Maloof family (led by Joe and Gavin) purchased controlling interest in the Sacramento Kings and what was then known as ARCO Arena (now Sleep Train Arena). While having initial success with the Kings from 1998-2003 under coach Rick Adelman and an exciting team led by Chris Webber and Mike Bibby, things began crumbling by mid-way through the decade for the Maloof brothers. By 2011 the family had to sell all but 2% of their ownership of the Palms Casino and were clinging desperately on to the Kings.

Unfortunately, their desperation has led to several bad decisions, horrible public relations --

- One attempt to move the Kings to Anaheim in 2011.

- A supposed agreement with the city of Sacramento and their Mayor Kevin Johnson on a new arena. This resulted in an awkwardly triumphant photo op with arms raised at a Kings game.

- The new arena deal being welched on/falling through. Putting the Kings up for sale again in 2012

- The Maloofs exploring a move to Virginia Beach, or ploy, that predictably fell apart

- Finally, agreeing to sell the Kings to a group from Seattle featuring Chris Hansen and erstwhile potential Sonics owner from 2008 ... Steve Ballmer of Microsoft fame. In this deal, Hansen and Ballmer agreed to a non-refundable "deposit" of $30 million to prime the pump.

- In the meantime the City of Sacramento has been busy drumming up a competing bid, which now features Ron Burkle and Mark Mastrov of 24 Hour Fitness fame. They recently announced a new arena deal.

Please go to Sactown Royalty and Sonics Rising for more extensive coverage.

The Maloofs may make out like bandits because one city that never should have lost it's team is competing with another city that shouldn't lose theirs. All in the name of baldface profits league-wide valuation. If I didn't love the NBA so much it would make my skin crawl. The city of Sacramento has been put through a two-year wringer. They deserve better and ironically no one understands this better than the fans of the Seattle Supersonics.

The Moral

While each and every one of us can take pointless sides in the Seattle vs. Sacramento debate, one thing is absolutely clear -- despite multiple opportunities to grant Oklahoma City an expansion franchise, the NBA chose not to. The league's fateful decisions from the aftermath of Hurricane Katrina has set in motion events that robbed a city of it's franchise, and is potentially robbing another city of theirs.

For some reason, incompetent and sneaky ownership is rewarded again and again in the NBA. While the Howard Schultz' and Maloof brothers of the world are rewarded with insane value when selling their teams (Schultz bought the Sonics for $200 million in 2001, they sold in 2006 for $350 million after just five years!!)

There are those, and I have been among these people, who believe the NBA over-expanded in the 90's and has been paying the price since. However, with franchise values currently through the room (the reported Hansen/Ballmer bid for the Kings has been listed at a whopping $525 million! For the Kings!?) an expansion franchise in a market that the league wanted to reward for it's great fan support and ownership loyalty would have made a tremendous amount of sense -- be it with relocating a nomadic New Orleans franchise in 2007 or rewarding them an expansion team in 2008.

What happened in Seattle from 2006-2008 is a giant stain on David Stern's legacy. Allowing Seattle to be robbed of a team may result in the most brutal and cold of irony's. As Sonics fan Sherman Alexie said at the end of the Sonicsgate movie "... Seattle getting a team can only be a result of another city being robbed of theirs." That isn't right, nor is it fair to either city. However, it IS the way the NBA has chosen to do business.

Maybe a miracle happens and the NBA awards Seattle an expansion franchise while keeping the Kings in Sacramento. Yet, the cold, cold reality of the situation is if OKC wasn't granted a expansion franchise, what are the chances one will be granted now? Kings fans and Seattle fans, don't be mad at each other. You have been thrown together because that's what the NBA wanted. In the end, regardless of outcome, save your ire for the entity that deserves it.

The NBA.

***

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