Wednesday, February 23, 2011

Carmelo Anthony in New York is unlikely to make NBA owners melo

When George Young was running the New York Giants in the General Manager's chair back in the late 1970s into the 1990s, he used to say that "a general manager has to general manage, an owner has to own, a player has to play and a coach has to coach" in order to be successful George Young's formula worked for his team as he put together two Super Bowl championship squads in 1986 and in 1990.
George Young probably would not enjoy being a general manager in the National Basketball Association these days. Owners general manage, players general manage and the industry is on the verge of a labor shutdown on July 1, 2011. The Carmelo Anthony trade from the Denver Nuggets to the New York Knicks probably put the NBA a step closer to a lockout and probably will push another owner, Denver's Stan Kroenke (whose wife Ann is the daughter of Wal-Mart co-founder Bud Walton — Wal-Mart is notorious for hiring cheap labor and preventing unionization among the company's employees) probably can now be counted among the NBA owners hard line faction that wants to reduce players salaries.
Kroenke is also the owner of the St. Louis Rams franchise in the National Football League. You might have heard that the football owners are thinking about locking out their employees — the players — on March 4. National Football League owners also want to reduce employee's salaries.
Carmelo Anthony seemingly called all the shots in the trade that ultimately brought him to the building that sits between 31st and 33rd Street between 7th and 8th Avenue in Manhattan (a building that is not on the New York City property tax roll since 1982 which means that New York City is losing about $14 million annually in taxes). Anthony has joined LeBron James and Chris Bosh as big name talent who have switched teams. The difference between Anthony and the other two is simple. James and Bosh fulfilled their contractual obligations, James in Cleveland and Bosh in Toronto and the two could legally shop around their talents.
Anthony still had a few months left on his Denver Nuggets deal before he could legally shop around his talent. Carmelo Anthony usurped his Denver general manager Masai Ujiri's power last summer by accident at his wedding when New Orleans Hornets star Chris Paul toasted Anthony and his new wife Lala Vasquez, "We will form our own Big 3" referring to the Miami Heat's signing of James, Bosh and reupping Dwayne Wade and the Knicks signing of Amar'e Stoudemire. Stoudemire, Anthony and Paul would team up with the Knicks by 2012.
New York now has two-thirds of Paul's "own Big 3."
The NBA's collective bargaining agreement with the players ends on June 30 and NBA Commissioner David Stern wants to cut salaries and the players want to keep status quo. There was pressure on Anthony to get his situation squared away before June 30. No one knows what the outcome of the agreement will be, but if Stern and the 30 NBA owners want to cut expenses, it is a good bet that Anthony was putting millions at risk if he played out his Denver contract.
Last summer, Stern said something about the league needing to cut player costs somewhere around $700 to $800 million and that the league's 30 teams combined would lose $340-350 million in 2010-11 and something has to be done and that would start by players giving back items earned in collective bargaining.
The NBA no longer wants to give the players 57 percent of the revenues.
Of course not every team is going to lose an average of ten million dollars a season. The New York Knickerbockers franchise, despite putting a poor product on the court (until this season, the team is now a notch above mediocre), sells out every game and the Dolan family owns the franchise, the building and, of course, the Dolans have the Madison Square Garden TV network and Cablevision. There is no way without creative accounting the Knicks franchise is losing money given the team's revenue stream availability.

Also on the table is a threat by Stern aimed right across the bow of the National Basketball Players Association Executive Director Billy Hunter's ship. The elimination of financially wobbly franchises. The best guess is that those markets could be New Orleans or Sacramento or maybe Charlotte or Memphis. The contraction of the league would mean fewer jobs for players. Left unsaid in the possibility of lopping off teams is what happens with the leases between the franchises that didn't make it into the future and the municipalities which built the arenas and gave away the house to the owner of the local franchise that was set adrift along with compensating the owner whose team has been put out to pasture.
Chris Paul is under contract to the New Orleans Hornets through June 30, 2012. Stern is Paul's boss these days. The NBA took over the ownership of the Hornets franchise. Stern has on one hand said the franchise could be disbanded but the NBA wants to make the team attractive for local Louisiana investors to keep the team in the Crescent City. But Stern has contradicted himself saying potential investors are interesting in buying the team and moving the franchise to another city. Based on the last NBA franchise sale, the Golden State Warriors franchise of Oakland, California (the nation's fifth biggest market), the Hornets franchise should fetch at least $300 million (depending on the market) which means each NBA owner would get $10 million or more dollars in a sale. The NBA is not going to get rid of the New Orleans franchise but that doesn't mean that Louisiana will keep the team. The franchise could end up elsewhere.
The NBA has some financial problems. According to one of Herb Simon's friends, the mall developer and owner of the Indiana Pacers, Simon is losing money on the basketball team even though the team is getting big money from Indianapolis to help pay the maintenance at the Pacers home arena. Simon is committed to keep his team in Indianapolis until 2013 as part of a deal. The Indianapolis' Capital Improvement Board gave the Simon $30 million for the 2010-11, 2011-12 and 2012-13 seasons in $10 million annual payments. The board will pay for a minimum of $3.5 million in arena improvements. If Simon moves the team in 2013, he has to repay the $30 million. If he stays in Indianapolis until the lease ends in 2019, he can leave without paying back any money.
Simon gets revenues from every event held in the building.
Next Tuesday is the NBA's deadline for an owner to move his franchise. The Sacramento Kings ownership group, the Maloof brothers, have been unable to secure public funding for a new arena and according to Stern, the Maloofs have checked out Henry Samueli's arena in Anaheim as a possible relocation site. Samueli owns the National Hockey League's Anaheim Ducks and it is hard to imagine Samueli would cut a deal with the Maloofs which would give them a significant revenue stream in the building. There would also be the question of whether the Maloofs would have to pay off Jerry Buss (Los Angeles Lakers) and Donald Sterling (Los Angeles Clippers) for invading the LA market.
Sacramento mayor and former NBA player Kevin Johnson is continuing his efforts to get a Sacramento arena built.
Milwaukee owner (United States Senator) Herb Kohl is seeking a new arena. Senator Kohl (D- WI) is limited in his ability to threat a franchise move as they would signal that in his opinion Milwaukee and Wisconsin are not good places to do business.
Washington Wizards owner Ted Leonsis is a fan of the National Hockey League's hard salary cap. Leonsis is also the owner of the NHL's Washington Capitals and was in the NHL in 2004-05 when the owners locked out the players in a labor dispute.
Small market NBA owners have been after Stern for years to find a way to increase revenue sharing between the big money teams (the Knicks and Lakers) and the small market franchises (Memphis, Charlotte, Indiana, Milwaukee, Portland and Sacramento).
Paul's toast at Carmelo Anthony's wedding, the LeBron James "Decision" last July and the rumors that another small market star Dwight Howard might not stick around Orlando when his contract ends has to be catching the attention of the owners. The big name stars are dictating moves but that isn't all that unusual for NBA. Kareem Abdul Jabber forced his way out of Milwaukee and ended up in LA with the Lakers, Julius Erving didn't; get a bonus after Roy Boe and his New York Nets joined the NBA in 1976. Erving went to Philadelphia. Shaquille O'Neal left Orlando for the Lakers.
The NBA owners will lockout the players on July 1 unless something unanticipated suddenly appears. The star players have too much power and the owners will correct the imbalance. Chris Paul's toast and LeBron James' decision will come back to haunt the players.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition is available at, Barnes and Noble or amazonkindle. He can be reached at

No comments: