NFL preparing for ‘Replacements II’ sequel with possibility of 2011 lockout
TUESDAY, 11 MAY 2010 13:04
http://www.newjerseynewsroom.com/professional/nfl-preparing-for-replacements-ii-sequel-with-possibility-of-2011-lockout
BY EVAN WEINER
NEWJERSEYNEWSROOM.COM
There are stories that are beginning to surface that National Football League owners will sign United Football League, Canadian Football League, indoor football league and any other players that might be available in the event the owners and players cannot reach a new collective bargaining agreement sometime in the next year. The present deal between the owners and players ends after the 2011 Super Bowl.
The stories include details such as the National Football League buying a 25 percent share of the one-year-old United Football League, a five team entity with teams in Hartford, Las Vegas, Omaha, Orlando and Sacramento, and using some of those players.
If these stories are true, the NFL in 2011 will be revisiting an old plan that was used in 1987.
Replacement players.
How the paying customers who own Personal Seat Licenses and paying big money for games will react is unknown at this point but in 1987 neither New York Giants coach Bill Parcells nor Philadelphia Eagles coach Buddy Ryan was too thrilled with the idea. But the Giants and Eagles NFC East rivals, the Dallas Cowboys and the Washington Redskins embraced the idea. A little history is needed to understand why NFL owners endorsed the idea which was the brainchild of then Dallas Cowboys President Texas E. (Tex) Schramm and may revisit the idea in 2011.
The NFL owners and players had a contentious relationship for decades. The NFLPA formed in 1956 with help from Creighton Miller, the first General Manager of the Cleveland Browns. Unhappy players in Cleveland and Green Bay assembled a network of "player reps" on each team. The players included Don Shula (Colts), Frank Gifford (Giants), and Norm Van Brocklin (Rams) to represent their teams. The Chicago Bears did not have a players representative. The players first meeting was held in New York in the fall of 1956, after the owners ignored the players' attempts to discuss their requests. The players asked for minimum salaries of $5,000 per season, injury pay, uniform per diems, and for teams to supply their own equipment.
Nothing happened but the players got a big break in 1957 when, the first lawsuit involving professional football and antitrust was filed, Radovich v. NFL, which significantly altered player rights within the league. The case involved a player/coach, George Radovich, who sued the league because the NFL effectively prevented him from attaining employment in the NFL or affiliated leagues, such as the Pacific Coast League, which was in existence at the time. The case was dismissed on the grounds that the NFL was exempted from the antitrust laws, and was appealed to the Supreme Court, which reversed the decision of the trial court, holding professional football subject to the antitrust laws.
The Supreme Court decision changed life for NFL owners. The players could now sue the league on antitrust grounds which they threatened to do. The owners and players settled with the players receiving minimum salaries of $5,000, $50 payment for preseason games, medical coverage for injuries, and a pension.
But the players didn't get what they agreed to and spend the 1958 season chasing the owners to live up to the agreement. The deal was finally signed in 1959.
The players did catch another break when Lamar Hunt started the American Football league and for some college players, they were able to play the NFL off against the AFL in getting some leverage for their initial contract. The AFL-NFL war over established players began in earnest when Pete Gogolak, a kicker on the Buffalo Bills signed a deal with the New York Giants in 1966. What was good for Gogolak and two NFL quarterbacks John Brodie and Roman Gabriel along with Mike Ditka who were been pursued by AFL Commissioner Al Davis to sign with his league was not good for the owners of either league. Brodie, Gabriel and Ditka got raises from their NFL teams. The AFL and NFL announced their intent to merge on June 8, 1966.
The National Football League Players Association wanted to fight the merger but didn't have the funding to do so.
The NFLPA has always been weak and the owners knew that. The two leagues may have merged, but the player associations did not, as the players on the 16 NFL teams were NFLPA members and the players on the 10 AFL teams were American Football League Players Association members. This caused a major problem in subsequent negotiations as the NFLPA would come to a tentative agreement with the owners on certain collective bargaining issues (such as minimum salaries, retirement age) then the owners would bargain with the AFLPA, who accepted lower terms, which wasn't good for NFLPA members.
There was a brief lockout and a 20-day strike in 1970 that ended just before the 1970 All Star game and which did not result in the cancellation of regular or post-season games, the NFL and NFLPA signed a four-year contract, the first collective bargaining agreement in the history of the NFL, which raised player salary minimums to $12,500 for rookies and $13,000 for veterans, added dental insurance, improved the pension, gave players the right to have agents, gave players representation on the Retirement Board, and provided for impartial arbitration of injury grievances.
(Retired players from that era are still battling the NFL over injury grievances and those grievances have caught the attention of Congress)
In 1974, the previous CBA was coming to an end. Players were demanding the elimination of the Rozelle Rule and the option clause which kept a player tied to his team in perpetuity unless another team was willing to give up number one draft picks or players to sign a free agent among other things. On July 1, the players went on strike, and were prepared to sit out until a new bargaining agreement was hammered out. The sit-out led to the cancellation of the New York Jets game at New Haven, the first game ever cancelled due to a labor impasse. However, by the early part of August, about a quarter of the NFLPA crossed the picket lines, breaking down union solidarity. On August 11, Garvey sent his players back to work after a federal mediator suggested a 14-day cooling off period, instead pursuing the issue through the Mackey case. The 42-day strike ended that day with nothing gained.
On September 21, 1982, NFL players went on strike. It was the longest strike in professional sports in the U.S. at the time and lasted until November 17. The owners responded by locking the players out at the commencement of the strike. During the strike, only 126 of the 224 scheduled regular-season games were played, forcing the league to change the format of post-season play to include 16 teams instead of the usual 10 teams. The players held two "All-Star" games to raise some funding for players without a paycheck. The players got more money but two goals were not met, a form of free agency and more pension money.
The owners were not going to let that happen in 1987.
The players decided to strike after the second week of the season and the NFL reverted to its 1974 tactic of bringing in rookies and free agents and play replacement games. The league cancelled the third week's schedule and resumed with the week four matchups.
In 2000, Hollywood made a movie about the 1987 strike called "Replacements" which was based on the Washington Redskins.
Some teams scouted the best available talent and tried to put together a strong replacement team. Other teams took chunks of local semipro teams, like the New York Giants, and hoped for the best. Others like Philadelphia Eagles Coach Buddy Ryan didn't take the replacement games too seriously and wanted for the players to return.
Like in 1974, veterans crossed the picket lines and by October 25, the NFL was able to claim victory. The players reverted to their old standby; plan B that was court action and that set off years of litigation.
"It was a great time and a lot of fun," said Charley Casserly who was part of the Redskins front office at that time. "Really, the interesting thing was we put together a time, the whole organization and Joe Gibbs did a great job coaching them. Nobody crossed the picket line and we beat two teams, St. Louis and Dallas on that climatic Monday Night that had about 10-12 players cross the picket line. The Dallas team had (Tony) Dorsett, Randy White, Danny White, Too Tall Jones. It was quite a time."
The NFL teams who did compete for players for Schramm's replacement league look anyway for players. Casserley found four players in a Richmond, Virginia halfway house who were playing for a minor league team including Tony Robinson who was the quarterback of the replacement team that beat Dallas.
"We did have a little philosophy on it," Casserly continued. "We wanted players that knew the system. We had to put together a team in 10 days to go play a game. Football unlike all other sports is really a team sport. So we wanted guys who knew the Joe Gibbs system. So we started with players who had been in our camp that year and been in our camp the year before and had been in camps with the Gibbs/(Don) Coryell system. We got players from everywhere.
"Obviously NFL cuts, but we got players from Canada, players who were cut in Canada. We wanted players in camp who were healthy and ready to go."
The players crumbled quickly in 1987 but years later Dave Jennings, who was a New York Jets punter at the time, thinks the showdown with the owners was worth it.
"The players were not that interested in a long term strike, they were looking at the next paycheck," said Jennings. "It's tough to get players to strike and stay together. In 1987, it was a shorter strike and we had the court cases working and eventually it worked out for us.
"We got nothing from the 1987 strike, we didn't get anything directly, but indirectly we got free agency and you see what happened. Free agency works."
It took six years until the players and owners came up with a new Collective Bargaining Agreement and that under pressure from a federal court judge in Minneapolis. The players and owners have spent 17 years under that system. The owners want to chance the revenue stream that is going into players' wallets and maybe break the association in the process. It has worked before with the players caving but in the end, the owners have lost antitrust cases.
It is not surprising stories are surfacing that the NFL owners are planning a sequel to the 2000 movie, "Replacements"
Evan Weiner is an author, radio-TV commentator and lecturer on the Politics of Sports Business and can be reached for speaking engagements at evanjweiner@yahoo.com
Showing posts with label sacramento. Show all posts
Showing posts with label sacramento. Show all posts
Tuesday, May 11, 2010
Tuesday, April 13, 2010
UFL Downsizes to Smaller Markets
UFL Downsizes to Smaller Markets
By Evan Weiner
April 13, 2010
http://www.examiner.com/examiner/x-3926-Business-of-Sports-Examiner~y2010m4d13-UFL-downsizing-to-small-markets
(New York, N. Y.) --- The United Football League might have once had lofty goals to provide a rival to the National Football League but reality has set in. The UFL is at best an independent minor league that grooms a few players for spots on NFL rosters. The league will add a fifth team with Omaha joining Hartford, Sacramento, Las Vegas and Orlando. None of those cities are major markets and if the league is to survive, it is probably better for the organizers and owners to be in those cities rather than New York and San Francisco, two metropolitan areas that apparently had very little interest in the UFL in 2009.
Hartford, Las Vegas, Omaha, Orlando and Sacramento are not going to get the league a major TV contract. In 2009, Versus and Mark Cuban's HDNet were the league's TV partners. A league needs a TV partner in the United States to succeed
In the late 1950s, television became an integral part of sports.
The National Football League became engrained in the American culture on December 28, 1958 when Johnny Unitas lead the Baltimore Colts downfield in overtime to beat the New York Giants. That game changed pro football and led to the formation of the American Football League. National Basketball Association owners also took notice of that game and the power of TV according to Bailey Howell who was a rookie with the Detroit Pistons in 1959.
“It was a period of transition because shortly after that they started adding teams,” said Howell of the NBA in 1959. “They added Chicago and teams were moving out of the small markets to the big market areas, Minneapolis moved to LA, Philadelphia moved to San Francisco and Syracuse moved down to Philadelphia so they were targeting the bigger markets and hopefully the TV revenue that would result from it.”
Major League Baseball was entrenched in the American psyche although most of Major League Baseball was played east of the Mississippi River until the late 1950s with Kansas City the most western outpost until 1957. The NBA and National Hockey went all of the map in search of markets to fill in the national footprint gap that TV demanded.
The American Basketball Association and the World Hockey Association never did get network TV deals. The World Football League had Eddie Einhorn's ad hoc network in 1974 but was a miserable failure because WFL owners did not have money. The United States Football League overspent for players in 1983 and did have significant TV deals with ABC and ESPN. The league made two gigantic mistakes after the first season. USFL owners accepted Donald Trump's money and reputation as a media darling after he purchased the New Jersey generals from Walter Duncan and the league expanded by six teams to cover the financial losses generated by the 12 owners in 1983.
Trump spent and somehow persuaded league owners to switch to a fall schedule which was strategy the killed the league. The USFL did win an antitrust suit against the NFL but the jury awarded Trump and his associates a dollar which was triple in an antirust case.
Other leagues have come and gone since the Trump-led debacle.
The United Football League originally was supposed to launch in 2008 but economic concerns long before the economic crash of September 2008 scrubbed the 2008 plan.
The UFL, at this time last year, was looking at Monterey, Mexico and Los Angeles as expansion sites for 2010. The league also was looking at six to eight to 10 teams and figured on losing $24 million in the first year of operation playing a six week schedule and a championship game. That was before the first kickoff last October.
That business model has changed. Hartford has a stadium and a business community that claimed it was eager for a "big league" team. But a one game trial run in the city last year was met with indifference. Sacramento had a Canadian Football League between 1993 and 1994 but there wasn't much fan support and the team moved to San Antonio.
Las Vegas is still in the league but there was a general indifference to the league champions in the Nevada city in 2009. Orlando, a team owned by the Tampa Bay Rays, is also back but the franchise received a blow when city officials scaled down Citrus Bowl renovations because there is not enough funding to go around for the new Orlando Magic arena and other projects that were part of the new arena plan.
Omaha is an interesting choice. It may be far enough off the beaten path from University of Nebraska football that it might not be totally swallowed up by the Cornhuskers. Omaha has a minor league baseball team, but there is no other professional sports team in the city with the departure of an American Hockey League team in 2007. Omaha did serve as a home for the NBA's Kansas City Kings between 1972 and 1975.
The UFL has a tight salary structure and will not compete with the NFL for players. The league served a useful purpose in 2009 as players got some game experience under the tutorage of veteran NFL coaches like Dennis Green, Jim Fassel, Ted Cottrell and Jim Haslett. Cottrell is gone, replaced by another long time NFL coach Chris Palmer in Hartford.
The UFL will probably add another team soon, but it will not be in a major market. The league has made a decision to go where they might have a chance to succeed. There is no point in competing in New York, Los Angeles (even without an NFL franchise), Chicago and other top ten markets.
At one time, the UFL might have had teams in New York, Los Angeles and Chicago, the top three markets along with Detroit so that they could capture automakers marketing dollars. Those days are gone. The UFL is now in secondary markets and that might not even be enough to keep the enterprise going in the long term even with strict budgets.
Evan Weiner is a radio-TV commentator, author, lecturer on the "Politics of Sports Business and can be reached at evanjweiner@yahoo.com
By Evan Weiner
April 13, 2010
http://www.examiner.com/examiner/x-3926-Business-of-Sports-Examiner~y2010m4d13-UFL-downsizing-to-small-markets
(New York, N. Y.) --- The United Football League might have once had lofty goals to provide a rival to the National Football League but reality has set in. The UFL is at best an independent minor league that grooms a few players for spots on NFL rosters. The league will add a fifth team with Omaha joining Hartford, Sacramento, Las Vegas and Orlando. None of those cities are major markets and if the league is to survive, it is probably better for the organizers and owners to be in those cities rather than New York and San Francisco, two metropolitan areas that apparently had very little interest in the UFL in 2009.
Hartford, Las Vegas, Omaha, Orlando and Sacramento are not going to get the league a major TV contract. In 2009, Versus and Mark Cuban's HDNet were the league's TV partners. A league needs a TV partner in the United States to succeed
In the late 1950s, television became an integral part of sports.
The National Football League became engrained in the American culture on December 28, 1958 when Johnny Unitas lead the Baltimore Colts downfield in overtime to beat the New York Giants. That game changed pro football and led to the formation of the American Football League. National Basketball Association owners also took notice of that game and the power of TV according to Bailey Howell who was a rookie with the Detroit Pistons in 1959.
“It was a period of transition because shortly after that they started adding teams,” said Howell of the NBA in 1959. “They added Chicago and teams were moving out of the small markets to the big market areas, Minneapolis moved to LA, Philadelphia moved to San Francisco and Syracuse moved down to Philadelphia so they were targeting the bigger markets and hopefully the TV revenue that would result from it.”
Major League Baseball was entrenched in the American psyche although most of Major League Baseball was played east of the Mississippi River until the late 1950s with Kansas City the most western outpost until 1957. The NBA and National Hockey went all of the map in search of markets to fill in the national footprint gap that TV demanded.
The American Basketball Association and the World Hockey Association never did get network TV deals. The World Football League had Eddie Einhorn's ad hoc network in 1974 but was a miserable failure because WFL owners did not have money. The United States Football League overspent for players in 1983 and did have significant TV deals with ABC and ESPN. The league made two gigantic mistakes after the first season. USFL owners accepted Donald Trump's money and reputation as a media darling after he purchased the New Jersey generals from Walter Duncan and the league expanded by six teams to cover the financial losses generated by the 12 owners in 1983.
Trump spent and somehow persuaded league owners to switch to a fall schedule which was strategy the killed the league. The USFL did win an antitrust suit against the NFL but the jury awarded Trump and his associates a dollar which was triple in an antirust case.
Other leagues have come and gone since the Trump-led debacle.
The United Football League originally was supposed to launch in 2008 but economic concerns long before the economic crash of September 2008 scrubbed the 2008 plan.
The UFL, at this time last year, was looking at Monterey, Mexico and Los Angeles as expansion sites for 2010. The league also was looking at six to eight to 10 teams and figured on losing $24 million in the first year of operation playing a six week schedule and a championship game. That was before the first kickoff last October.
That business model has changed. Hartford has a stadium and a business community that claimed it was eager for a "big league" team. But a one game trial run in the city last year was met with indifference. Sacramento had a Canadian Football League between 1993 and 1994 but there wasn't much fan support and the team moved to San Antonio.
Las Vegas is still in the league but there was a general indifference to the league champions in the Nevada city in 2009. Orlando, a team owned by the Tampa Bay Rays, is also back but the franchise received a blow when city officials scaled down Citrus Bowl renovations because there is not enough funding to go around for the new Orlando Magic arena and other projects that were part of the new arena plan.
Omaha is an interesting choice. It may be far enough off the beaten path from University of Nebraska football that it might not be totally swallowed up by the Cornhuskers. Omaha has a minor league baseball team, but there is no other professional sports team in the city with the departure of an American Hockey League team in 2007. Omaha did serve as a home for the NBA's Kansas City Kings between 1972 and 1975.
The UFL has a tight salary structure and will not compete with the NFL for players. The league served a useful purpose in 2009 as players got some game experience under the tutorage of veteran NFL coaches like Dennis Green, Jim Fassel, Ted Cottrell and Jim Haslett. Cottrell is gone, replaced by another long time NFL coach Chris Palmer in Hartford.
The UFL will probably add another team soon, but it will not be in a major market. The league has made a decision to go where they might have a chance to succeed. There is no point in competing in New York, Los Angeles (even without an NFL franchise), Chicago and other top ten markets.
At one time, the UFL might have had teams in New York, Los Angeles and Chicago, the top three markets along with Detroit so that they could capture automakers marketing dollars. Those days are gone. The UFL is now in secondary markets and that might not even be enough to keep the enterprise going in the long term even with strict budgets.
Evan Weiner is a radio-TV commentator, author, lecturer on the "Politics of Sports Business and can be reached at evanjweiner@yahoo.com
Friday, March 20, 2009
"Hooverville" meets 21st century sports economics in Sacramento
http://www.examiner.com/x-3926-Business-of-Sports-Examiner~y2009m3d20-Hooverville-meets-21st-century-sports-economics-in-Sacramento
Evan WeinerBusiness of Sports Examiner
"Hooverville" meets 21st century sports economics in Sacramento
March 20, 11:18 AM ·
There is probably nobody who is connected to the National Basketball Association that has a harder job that John Moag. For lack of a better description, Moag is the NBA’s point guard in the league’s attempt to get public dollars from Sacramento elected officials to help build a new area for the owners of the local NBA franchise, the Maloof brothers.
It is in Sacramento that 2009 economic reality is intersecting with the needs of a major league sports business. A “Hooverville” tent city housing the homeless has sprung up not far from the Cal Expo grounds, the place where the NBA and Sacramento officials want to build a new arena to house the Sacramento Kings.
"Hooverville” was the given to shantytowns built by the homeless on open spaces during the Depression. It was named after President Herbert Hoover who led the nation during between 1929 and 1933. Nobody has recorded any songs like “Brother Can You Spare a Dime?’ as the jobless rate hasn’t reached 25 percent but clearly wealth has been lost in the economic downturn.
Both the residents of the Sacramento “Hooverville” and the Maloof brothers’ basketball team have one thing in common, financial problems. A little background is needed to fully explain the connection between the 300 or so residents who are living near the American River and the Maloofs’ basketball team. Both need public handouts to survive. The economy is taking a toll on people who have lost jobs and have had their homes foreclosed and some of those people have ended up in tent towns.
The Maloofs are not hurting for money, their portfolios could be down because of being shareholders in the Wells Fargo bank, but they still have the Palms hotel and casino in Las Vegas along with a beer distributorship. But their basketball team suffers in comparison to other NBA franchises because the team plays in an outdated arena that lacks the big revenue producing luxury boxes and club seats that are so important to team owners. The franchise needs more money to run as a viable business.
Sacramento is small market and a government town that lacks both a rich, local cable TV contract and a multitude of big money, big spending businesses that buy the luxury boxes, the club seats and advertising inside the arena but small markets can survive in new arena with all the money making gadgets. But there is just enough money to support one big time pro sports team and in this case, it is an NBA team. Sacramento is also important because it is the capital of the country’s biggest state, California, and the NBA does a lot of business in California with two franchises in Los Angeles and one in Oakland. It always helps to have a team in the state capital for lobbying purposes in the event the NBA needs government help to solve a problem that could crop up.
Sacramento has been a problem franchise for the NBA for years. The "Hooverville" tent city has been a Sacramento problem since the economic downturn. Both are related.
Sacramento Mayor and former NBA player Kevin Johnson wants to see a new arena built and there are plans to construct an arena as the centerpiece of an arena-village at the Cal Expo although no one is sure how it would be funded. Johnson governs an area that has been hard hit by the recession hurt by job losses and home foreclosures. It is those people who have lost their jobs and homes who could be Kings ticket buyers.
Mayor Johnson wants to close the Sacramento “Hooverille” as quickly as possible and move the residents to homeless shelters and other more secure shelters including some places at Cal Expo.
That is why John Moag’s job has become even more difficult than it was after NBA Commissioner David Stern appointed him to help get the new Sacramento arena built following two crushing referendum defeats in November 2006. How do you get public money to build an arena for expensive entertainment in an area that clearly has many other public needs? An NBA team is not a quality of life issue. “Hooverville” clearly is a quality of life issue.
The question is pretty simple. How do you justify building an arena with some public funding when Sacramento’s jobless rate is more than 10 percent? One answer is that building an arena will create construction jobs. But those construction jobs will not materialize for another two years or so because no developer has stepped forward to help pay off some of the costs of building an arena and surrounding village. The money is not available for the project at the moment. Credit markets remain frozen.
The Kings franchise was born in Rochester, New York in 1945 as the Royals and played in the National Basketball League. The franchise moved to the Basketball Association of America in 1948. The BAA became the National Basketball Association in 1949. Rochester had become too a small and financially challenged NBA city in the 1950s and the franchise moved to Cincinnati in 1957. Cincinnati could not financially support an NBA team either and the franchise shifted to Kansas City where it was renamed the Kings in 1972. Kansas City was also a money loser.
The Kings franchise ended up in Sacramento in 1985 not long after the owners of the Kansas City Kings threw in the town and sold the franchise to a Sacramento group who wanted a team in California’s capital. In 1996, the Kings owner at the time, Jim Thomas, proposed building both a Major League Baseball stadium and an NBA arena in the city, but by January 1997, the idea fell apart and Thomas began threatening to sell the team because the franchise was losing money. Sacramento city leaders, fearing that Thomas might move the team to Anaheim or some other city, loaned him $82 million to help ease his financial burden. Thomas then sold the franchise to the Maloof brothers in 1998.
In 2001, Sacramento's mayor, Heather Fargo, put together a task force to study whether Sacramento should green light an arena and entertainment center in the city's downtown area and, by November 2002, there was some sort of commitment to the plan. But the Maloof brothers pulled out of the proposed venture within a year, partly because they didn't want to get stuck with a debt service bill. When the issue was revisited in 2004, the Maloofs were unhappy that a city councilman offered a resolution that would cap spending at $175 million for the city and $175 million for the Maloofs.
Apparently a salary cap on NBA players' payroll was fine for the brothers, but a municipal spending cap for an arena was unacceptable.
In 2006, the Maloofs and the city seemed to have struck a deal for a new arena that would have secured the franchise for decades if voters said yes in a November 2006 referendum The city, through the general tax, would have put up at least $470 million for the arena and parking. The city would own the building, but all of the revenue generated for all events held inside the building would go to the Maloof brothers. Not only that: The siblings would keep all the money earned from selling the naming rights to the city owned arena.
The Maloofs would pay off Thomas' old loan, which they inherited after they purchased the team. Additionally, they would pay $4 million in annual rent, an amount that could easily come from naming rights. They will also have to kick in $20 million for arena repairs. The Maloofs walked away from the deal however.
The Maloofs and the city fought over development surrounding the arena, the city wanted commercial and residential building to ring the new facility to spur downtown development but the Maloofs, who would get just about every nickel of revenue inside the building, wanted the land for an 8,000 space parking lot. The Maloofs wanted the big parking lot because they would keep all of the money generated from the lot. The Maloofs wanted the same parking deal they had and still have at the old arena.
That might not seem like a deal breaker until you do the math. Assuming the Maloofs fill the lot and charge $10 a car, that would mean $80,000 a night multiplied by 41 and you get more than $3 million annually from parking alone just from Kings events. The Maloofs would also get parking money from non-Kings events at the building, so the parking lot issue was a deal breaker.
“Hooverville” has met the Maloofs in Sacramento. The 1930s and 21st century sports business reality will meet at the Cal Expo when some “Hooverville” residents are placed in shelters on the Cal Expo grounds, land that someday might house the Maloof brothers’ Sacramento Kings.
evanjweiner@yahoo.com
Evan WeinerBusiness of Sports Examiner
"Hooverville" meets 21st century sports economics in Sacramento
March 20, 11:18 AM ·
There is probably nobody who is connected to the National Basketball Association that has a harder job that John Moag. For lack of a better description, Moag is the NBA’s point guard in the league’s attempt to get public dollars from Sacramento elected officials to help build a new area for the owners of the local NBA franchise, the Maloof brothers.
It is in Sacramento that 2009 economic reality is intersecting with the needs of a major league sports business. A “Hooverville” tent city housing the homeless has sprung up not far from the Cal Expo grounds, the place where the NBA and Sacramento officials want to build a new arena to house the Sacramento Kings.
"Hooverville” was the given to shantytowns built by the homeless on open spaces during the Depression. It was named after President Herbert Hoover who led the nation during between 1929 and 1933. Nobody has recorded any songs like “Brother Can You Spare a Dime?’ as the jobless rate hasn’t reached 25 percent but clearly wealth has been lost in the economic downturn.
Both the residents of the Sacramento “Hooverville” and the Maloof brothers’ basketball team have one thing in common, financial problems. A little background is needed to fully explain the connection between the 300 or so residents who are living near the American River and the Maloofs’ basketball team. Both need public handouts to survive. The economy is taking a toll on people who have lost jobs and have had their homes foreclosed and some of those people have ended up in tent towns.
The Maloofs are not hurting for money, their portfolios could be down because of being shareholders in the Wells Fargo bank, but they still have the Palms hotel and casino in Las Vegas along with a beer distributorship. But their basketball team suffers in comparison to other NBA franchises because the team plays in an outdated arena that lacks the big revenue producing luxury boxes and club seats that are so important to team owners. The franchise needs more money to run as a viable business.
Sacramento is small market and a government town that lacks both a rich, local cable TV contract and a multitude of big money, big spending businesses that buy the luxury boxes, the club seats and advertising inside the arena but small markets can survive in new arena with all the money making gadgets. But there is just enough money to support one big time pro sports team and in this case, it is an NBA team. Sacramento is also important because it is the capital of the country’s biggest state, California, and the NBA does a lot of business in California with two franchises in Los Angeles and one in Oakland. It always helps to have a team in the state capital for lobbying purposes in the event the NBA needs government help to solve a problem that could crop up.
Sacramento has been a problem franchise for the NBA for years. The "Hooverville" tent city has been a Sacramento problem since the economic downturn. Both are related.
Sacramento Mayor and former NBA player Kevin Johnson wants to see a new arena built and there are plans to construct an arena as the centerpiece of an arena-village at the Cal Expo although no one is sure how it would be funded. Johnson governs an area that has been hard hit by the recession hurt by job losses and home foreclosures. It is those people who have lost their jobs and homes who could be Kings ticket buyers.
Mayor Johnson wants to close the Sacramento “Hooverille” as quickly as possible and move the residents to homeless shelters and other more secure shelters including some places at Cal Expo.
That is why John Moag’s job has become even more difficult than it was after NBA Commissioner David Stern appointed him to help get the new Sacramento arena built following two crushing referendum defeats in November 2006. How do you get public money to build an arena for expensive entertainment in an area that clearly has many other public needs? An NBA team is not a quality of life issue. “Hooverville” clearly is a quality of life issue.
The question is pretty simple. How do you justify building an arena with some public funding when Sacramento’s jobless rate is more than 10 percent? One answer is that building an arena will create construction jobs. But those construction jobs will not materialize for another two years or so because no developer has stepped forward to help pay off some of the costs of building an arena and surrounding village. The money is not available for the project at the moment. Credit markets remain frozen.
The Kings franchise was born in Rochester, New York in 1945 as the Royals and played in the National Basketball League. The franchise moved to the Basketball Association of America in 1948. The BAA became the National Basketball Association in 1949. Rochester had become too a small and financially challenged NBA city in the 1950s and the franchise moved to Cincinnati in 1957. Cincinnati could not financially support an NBA team either and the franchise shifted to Kansas City where it was renamed the Kings in 1972. Kansas City was also a money loser.
The Kings franchise ended up in Sacramento in 1985 not long after the owners of the Kansas City Kings threw in the town and sold the franchise to a Sacramento group who wanted a team in California’s capital. In 1996, the Kings owner at the time, Jim Thomas, proposed building both a Major League Baseball stadium and an NBA arena in the city, but by January 1997, the idea fell apart and Thomas began threatening to sell the team because the franchise was losing money. Sacramento city leaders, fearing that Thomas might move the team to Anaheim or some other city, loaned him $82 million to help ease his financial burden. Thomas then sold the franchise to the Maloof brothers in 1998.
In 2001, Sacramento's mayor, Heather Fargo, put together a task force to study whether Sacramento should green light an arena and entertainment center in the city's downtown area and, by November 2002, there was some sort of commitment to the plan. But the Maloof brothers pulled out of the proposed venture within a year, partly because they didn't want to get stuck with a debt service bill. When the issue was revisited in 2004, the Maloofs were unhappy that a city councilman offered a resolution that would cap spending at $175 million for the city and $175 million for the Maloofs.
Apparently a salary cap on NBA players' payroll was fine for the brothers, but a municipal spending cap for an arena was unacceptable.
In 2006, the Maloofs and the city seemed to have struck a deal for a new arena that would have secured the franchise for decades if voters said yes in a November 2006 referendum The city, through the general tax, would have put up at least $470 million for the arena and parking. The city would own the building, but all of the revenue generated for all events held inside the building would go to the Maloof brothers. Not only that: The siblings would keep all the money earned from selling the naming rights to the city owned arena.
The Maloofs would pay off Thomas' old loan, which they inherited after they purchased the team. Additionally, they would pay $4 million in annual rent, an amount that could easily come from naming rights. They will also have to kick in $20 million for arena repairs. The Maloofs walked away from the deal however.
The Maloofs and the city fought over development surrounding the arena, the city wanted commercial and residential building to ring the new facility to spur downtown development but the Maloofs, who would get just about every nickel of revenue inside the building, wanted the land for an 8,000 space parking lot. The Maloofs wanted the big parking lot because they would keep all of the money generated from the lot. The Maloofs wanted the same parking deal they had and still have at the old arena.
That might not seem like a deal breaker until you do the math. Assuming the Maloofs fill the lot and charge $10 a car, that would mean $80,000 a night multiplied by 41 and you get more than $3 million annually from parking alone just from Kings events. The Maloofs would also get parking money from non-Kings events at the building, so the parking lot issue was a deal breaker.
“Hooverville” has met the Maloofs in Sacramento. The 1930s and 21st century sports business reality will meet at the Cal Expo when some “Hooverville” residents are placed in shelters on the Cal Expo grounds, land that someday might house the Maloof brothers’ Sacramento Kings.
evanjweiner@yahoo.com
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