The National Basketball Association: Business, Organization and Strategy

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THE NATIONAL

BASKETBALL ASS CIATION Business, Organization and Strategy

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b1001 The National Basketball Association

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THE NATIONAL

BASKETBALL ASS CIATION Business, Organization and Strategy

Frank P. Jozsa, Jr. Pfeiffer University, USA

World Scientific NEW JERSEY

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LONDON

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Published by World Scientific Publishing Co. Pte. Ltd. 5 Toh Tuck Link, Singapore 596224 USA office: 27 Warren Street, Suite 401-402, Hackensack, NJ 07601 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.

THE NATIONAL BASKETBALL ASSOCIATION: BUSINESS, ORGANIZATION AND STRATEGY Copyright © 2011 by World Scientific Publishing Co. Pte. Ltd. All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the Publisher.

For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy is not required from the publisher.

ISBN-13 978-981-4313-90-2 ISBN-10 981-4313-90-4 Typeset by Stallion Press Email: [email protected]

Printed in Singapore.

Yvonne - The National Basketball.pmd

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To John A. Roshel, Jr., Steve J. Newton and Don “Bacan” Smith

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Foreword

Based on the publication of his sports articles and books, and his extensive experience in teaching principles and theories of business administration, economics, and finance at American universities, Frank Jozsa is well-qualified to author a book on the National Basketball Association. His book, The National Basketball Association: Business, Organization and Strategy, explores the ins and outs of the NBA as a business, from its storied franchises to those that barely keep their heads above water. It provides readers with an inside look at the league’s innovations, methods, and policies in accounting, human resources, management and marketing, and how all of these influence decisions of owners and affect revenues, profits, and valuations of NBA teams. Dr. Jozsa explores important topics such as league expansions and mergers, team territories and relocations, franchise organizations and operations, basketball arenas and markets, and domestic and foreign affairs — all key factors that have contributed to the NBA becoming one of, if not the, premiere professional sports leagues in the world. Have you ever wondered about those early expansion years, in particular why some made it and others did not? What were the average home attendances and winning percentages of each team? Why did a franchise fail to draw enough fans to survive in one city, but succeed in making a substantial profit when moving to another? You will find those answers and many vii

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The National Basketball Association

more in this book.You will also learn all about the types of franchise officials and distributions of fan cost indexes between NBA clubs, the year, capacity, and cost of the league’s arenas and their different naming rights. An insider look at the league’s developmental and summer league is also provided. The Appendix contains tables of additional information about professional basketball leagues in America and the performance of teams and their coaches and players during various regular seasons and postseasons. A Selected Bibliography lists some of the most interesting, recent, and relevant articles, books, doctoral dissertations, media guides, and internet sources on subjects related to the NBA and the game of professional basketball. The Index makes it easy to locate information on various basketball arenas, events, officials, personalities, players, publications, and teams associated primarily with the NBA. Professor Jozsa has authored a book that should appeal to a diverse audience, from die-hard professional basketball fans to students of sports administration, management, and marketing and the faculty that teach these types of classes, as well as to economists, historians, and sports research scholars, and NBA executives and franchise owners. If you are interested in the how’s and why’s of the league’s financial success — its commercialization, globalization, and reforms during periods in the 20th and early 21st centuries — then The National Basketball Association is the book to read. Connie Kirchberg Author of Hoop Lore: A History of the National Basketball Association

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Preface

The subject of this book is the National Basketball Association (NBA), which, for various reasons, has evolved into one of the most competitive, prominent, and successful organizations in the history of American team sports. Since the league formed during the late 1940s and then developed, matured and prospered, its officials and groups of franchises and their owners, coaches, and players have each shared, in part, the revenues and profits generated from spectators who attended games of these teams; from corporate advertisers, partners, and sponsors who provided fees, royalties, and other types of payments to the league and franchises; and from companies who broadcasted the NBA’s events, programs, and shows on radio, television, and the Internet to fans and into households across the world. As an academic interested in the emergence, growth, and significance of the professional sports industry, I have researched and studied the business, economics, and finance of the NBA and its operation, performance, and structure for more than four decades. Based on my education, experience, and knowledge about the game, the most intriguing topics in basketball are those regarding such matters as when the league’s membership and size changed during its 61 years in existence; why there are any differences or similarities in the winning records of clubs while located at home in very small, small, mid-sized, large, and very large metropolitan areas; and where teams exist at sites in sports markets. In other words, I focus on the commercial, ix

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demographic, and financial aspects of these issues and their short and long run consequences, effects, and implications on the NBA relative to other professional sports leagues like Major League Baseball, Major League Soccer, the National Football League, and National Hockey League. To learn about the game and history of basketball, and the administration and operation of the NBA and its franchises, I read articles in journals, magazines, and newspapers and on the Internet. Furthermore, I reviewed several sports books published since the 1950s, wrote a doctoral dissertation on league expansions and team relocations in the mid-to-late 1970s, and authored several books on different aspects of professional sports. This research occurred when I was a student in various colleges, and during my career while teaching undergraduate and graduate courses in business administration, economics, and finance. In other words, I have devoted more than 40 years of my adult life to comprehending and understanding this subject. For decades, many experts and practitioners of the sport, and academics, historians, and other scholars have reported results from their research in numerous articles and plenty of books with respect to the cultures, organizations, and strategies of professional sports leagues including the NBA. As indicated in the Selected Bibliography of this book, a range of themes, titles, and subjects appear in the literature. For example, various articles on professional basketball franchises, players, and seasons are in print, while some encyclopedias contain information about the sport, the NBA, and any teams that have performed in the league. Indeed, the authors of these materials are former or current commentators, consultants, editors, fans, journalists, and retired NBA athletes, coaches, or officials. The chapters in this book feature topics that I model and discuss in a somewhat different but complementary, straightforward, and unique way in contrast to other sources in prior publications. Besides the Introduction in Chapter 1, there are an array of facts, perspectives, and tables on league expansions and mergers in Chapter 2, team territories and relocations in Chapter 3, franchise organizations and operations in Chapter 4, basketball arenas and markets in Chapter 5, and NBA domestic and foreign affairs in Chapter 6. In short, this book highlights and examines these matters in a few chapters, and particularly, it denotes how they have influenced the business, progress, and prosperity of the league. Anyone who reads The National Basketball Association will appreciate and realize the history and uniqueness of the NBA, and therefore, can identify which factors have contributed to its development as a different, elite, and special sports organization and business entity. As such, this book is useful as

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a reference for educators and their college and university students who major in sports administration, marketing and management, for scholars and others who research the league and industry, and for fans who prefer basketball and seek some basic but more detailed information about the performances and struggles of NBA teams and their owners, coaches, and players. Several people conscientiously helped me in various ways during my effort to create an official, professional, and well-documented manuscript of The National Basketball Association. From Pfeiffer University in North Carolina, these talented and smart individuals included Frank Chance, the Director of Information and Support Services at the school’s Charlotte Campus and his part-time evening librarian,Theresa Frady. In addition to them, Lara Little, Pfeiffer’s Library Director at the Misenheimer Campus and an Assistant Professor of Library Sciences, scanned databases and without delays mailed me the titles of numerous articles and books that related to issues, problems, and topics about the NBA and its teams. While employed at the York County Main Library in York, South Carolina, adult reference librarian Page Hendricks requested and obtained several sports books on interlibrary loan and forwarded these to the Fort Mill Library, whose personnel then contacted me. Consequently, I thank each of these librarians. I am especially grateful to two academics for their assistance. Penn State University Professor Murray R. Nelson, who authored The National Basketball League: A History, 1935–1949, answered some difficult questions that I had about the league. Furthermore, University of Michigan Professor Rodney D. Fort who co-authored Pay Dirt: The Business of Professional Team Sports responded to my queries, and his online database contained accurate statistics about NBA teams and their attendances, fan cost indexes, and ticket prices.As such, Professors Nelson and Fort provided inputs that I learned and used within the contents of this book. Connie Kirchberg, the author of Hoop Lore: A History of the National Basketball Association, is an expert on lessons, teachings, and traditions of the league. She graciously agreed to spend time and write a Foreword for my volume. As such, I thank Connie and recommend her book to fans, historians, and others interested in the NBA. Besides the contributions of Nelson, Fort and Kirchberg, a Senior Vice President of the league’s Orlando Magic, Pat Williams, encouraged me to research the business, economics, and finance of the NBA and to produce a manuscript for a book on it. Interestingly, Pat is an entrepreneur and national motivational speaker whom I greatly respect after hearing him deliver a

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presentation to a group in Charlotte, North Carolina, where he spoke about amateur and professional sports and the meaning, significance, and value of athletics. For approximately 60 years, I and Dr. John Roshel, Jr., Steve Newton, and Don “Bacan” Smith have been good friends.While at Gerstmeyer High School in Terre Haute, Indiana, we played basketball together as teammates on teams coached by Bill Welch and Howard Sharpe.Then at Indiana State University, we were fraternity brothers at Lambda Chi Alpha besides participating in various sports. After his junior year at Indiana State University, John completed dental school and later became a successful orthodontist in Terre Haute. Meanwhile, Steve and Don coached basketball in various college or university programs for many years while I spent my career as a professor in higher education.To honor, recognize, and remember our experiences as former teammates in basketball and a longstanding friendship, I dedicate this book to John, Steve, and Don. Frank P. Jozsa, Jr.

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Contents

Foreword

vii

Preface

ix

Chapter 1

Introduction

1

Chapter 2

League Expansions and Mergers

19

Chapter 3

Team Territories and Relocations

59

Chapter 4

Franchise Organizations and Operations

107

Chapter 5

Basketball Arenas and Markets

149

Chapter 6

NBA Domestic and Foreign Affairs

187

Appendix: Tables

225

Selected Bibliography

239

Index

259

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Chapter

1 Introduction

HISTORY During the 20th and early 21st centuries, some American and foreign scholars and other researchers investigated and studied the game of basketball and its origin and history. They authored articles, books, and reports about the sport, and how it was organized, controlled, and managed by administrators, investors and sponsors, and about the role of different teams and their owners, coaches and players. To be sure, these authors discuss topics that include the emergence, development, and failure or success of professional basketball associations and leagues, performances of teams who compete for and win championships, and the athleticism and skill of players to score points while on offense, to rebound the ball after a missed shot, to assist teammates, and to defend against opponents in games. In retrospect, it was a Canadian clergyman, educator, and physician named James Naismith who visualized, invented, and introduced the game of basketball in the early 1890s while he served as an instructor at a Young Men’s Christian Association (YMCA) training school — renamed Springfield College — in Springfield, Massachusetts. Naismith’s superior, Dr. Luther H. Gulick, had requested that he organize a vigorous indoor, winter recreation activity for the benefit of boys to engage in while they lived at the YMCA.

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This request, in turn, inspired Naismith and led to a game that originally involved elements of American football and also ice hockey and soccer, the use of a soccer ball, teams with nine players each, and goals constructed of wooden peach baskets attached to walls in a gymnasium. Played between two teams at the YMCA on January 20, 1892, the first basketball game ended 1–0 when an athlete placed a 25-foot shot into a basket on a court one-half the size of a modern basketball floor.1 When James Naismith’s granddaughter discovered his handwritten diaries in 2006, these documents indicated how nervous he was about the game he had invented, which Naismith called then, “Basket Ball.” Despite such doubt and uncertainty during the early-to-mid-1890s, Naismith’s sport gradually led to the creation of loosely organized amateur, semiprofessional, and professional basketball organizations throughout the northeastern United States (US) and eventually to official leagues that devised and implemented formal rules, standards, and schedules for regular seasons and postseasons. Similarly, many colleges and universities in America enthusiastically adopted the sport and then played each other in games, series, and tournaments each year. Consequently, between the late 1890s and 1940s, basketball incrementally became more common, established and complex, and somewhat entertaining and popular among America’s sports fans. In fact, a few prominent, professional basketball leagues emerged during that era and approved the distribution of their teams within small, mid-sized, large, and very large US metropolitan areas. Chronologically by seasons, these early groups were in part the National Basket Ball League (NBBL) in 1898–1904, the American Basketball League (ABL) in 1933–1953, the National Basketball League (NBL) in 1937–1949, and the Basketball Association of America (BAA) in 1946–1949. Indeed, each of these four leagues contributed in some way to the acceptance, growth, and popularity of the sport and its significance and success particularly during the first 50 years or thereabouts of the

1 For basketball’s origins and Naismith’s invention of the game, see “History of Basketball” at http://library.thinkquest.org [cited 24 August 2009]; “History of Basketball” at http://www.kansasheritage.org [cited 11 July 2007];“History: The First Rules, Court, and Game” at http://en.wikipedia.org [cited 20 August 2009]; Bernice Larson Webb, The Basketball Man: James Naismith (Lawrence, KS: University of Kansas Press, 1973); James Naismith, Basketball: Its Origins and Development, 10th ed. (New York, NY: Bison Books, 1996).


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Introduction 3

20th century.Their histories were not extensive or long-lasting and, respectively, I highlight them as follows.2 First, some sports editors employed by major newspapers within the State of New Jersey (NJ) decided to form the NBBL in 1898.This league consisted of clubs that played games at home in such cities as Camden and Trenton, NJ and in Bristol, Connecticut, and within urban areas of Delaware, New York, and Pennsylvania. Nevertheless, throughout its six years in existence at the turn of the 20th century, a number of NBBL teams experienced financial problems because of low attendance of spectators at their games. Thus, most of them ceased to operate as franchises after one or a few seasons. Subsequently, the NBBL folded in January 1904 due to weak leadership of its officials, lack of fan support, and teams’ inadequate cash flows, high financial risks, and their inferior business environments. Second, after organized into a basketball league with its headquarters located in New York, the ABL put teams in relatively big American cities like Brooklyn, New York and Philadelphia, Pennsylvania but also within mid-sized markets such as Newark, NJ and Wilmington, Delaware. These places, scattered among US states in the east and within New England, contained midsized-to-large ethnic populations and many immigrants who had fled from nations in Europe to escape repression from national governments there and any radical political, religious, and social groups. Unfortunately, selfish sports promoters and entrepreneurs primarily owned and managed this league’s teams for immediate profit rather than them being controlled and operated by dedicated, experienced, and ethical basketball coaches, investors, and other officials. Even so, the ABL existed during most of the Great Depression years and throughout World War I. Nevertheless, it failed in the early 1950s because many of the ABL teams’ best players resigned and joined clubs in other basketball leagues or they simply obtained jobs in private businesses and in local governments of an expanding American economy.

2

These and other professional basketball leagues discussed in this section of Chapter 1 are, in part, reported in “List of Basketball Leagues” at http://en.wikipedia.org [cited 24 August 2009]; “Professional Basketball Leagues” at http://www.apbr.org [cited 22 August 2009]; “Basketball History” at http://www.history-of-basketball.com [cited 20 September 2005]; Zander Hollander, ed., The Modern Encyclopedia of Basketball (Old Tappan, NJ: Four Winds Press, 1973); Murray R. Nelson, The National Basketball League: A History, 1935–1949 (Jefferson, NC: McFarland & Company, 2009); Glenn Dickey, The History of Professional Basketball Since 1896 (New York, NY: Stein and Day, 1982).


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Third, while teams within the ABL had performed in games during seasons, such US industrial companies as Firestone, General Electric, and Goodyear sponsored basketball clubs who then played against each other in a new professional league that originated in the late 1930s. As denoted in Table 1.1, the NBL’s membership consisted of several franchises from small, mid-sized, and large areas within states that extended from New York on the east coast into Illinois of the west, and Minnesota and Wisconsin in the north to Virginia of the south. While amateur and professional clubs within leagues of baseball, and some in groups of football, dominated many local sports markets across the eastern portion of the US through the 1940s, many NBL teams folded after one or only a few seasons. In fact, some business firms withdrew their sponsorship of NBL teams after the economic recession of 1937 while others ended their support when basketball players entered the US military to serve with the Allies in Western Europe during the early-to-mid-1940s. After four of the league’s most stable clubs joined a rival basketball organization in 1948 and then another league one year later, the NBL experienced serious financial difficulties and management issues that, in turn, caused it to merge and terminate operations in 1949. With respect to Table 1.1, the Non-Skids, Zollner Pistons, and All-Stars each won two league championships while the Wingfoots, Packers, American Gears, Lakers, Royals, and Redskins each finished in first place at least once. Moreover, the Bruins, Chase Brassmen, All-Americans, Nationals, and Bears were each new teams when they joined the league. Some other NBL clubs, however, experienced problems and relocated to different cities where they changed their nicknames. Nonetheless, they discontinued operations that year because companies would no longer sponsor them. In short, while 42 clubs in total played in the NBL during its 12 regular seasons, four of them left to be members of a rival professional basketball league in 1948, and one year later, the NBL dissolved when six of its franchises transferred to another basketball organization. Fourth, exactly two years after the Allies had invaded the beaches of Normandy, France in June of 1944, a group of New York City business executives — who enjoyed the game of basketball and its current opportunities and prospects as a professional sport in the future — founded the BAA at the city’s Commodore Hotel, which was located next to Grand Central Station. While there, they unanimously chose American Hockey League President Maurice Podoloff to be the BAA’s president.Although Podoloff knew very little about the game and business of basketball, his knowledge of law and real


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Introduction 5 Table 1.1 National Basketball League, by Teams, Selected Seasons Teams Akron Firestone Non-Skids Akron Goodyear Wingfoots Anderson Duffey Packers Buffalo Bisons Buffalo Bisons Chicago American Gears Chicago Bruins Chicago Studebakers Cincinnati Camellos Cleveland Allmen Transfers Cleveland Chase Brass Cleveland White Horses Columbus Athletic Supply Dayton Metropolitans Dayton Rens Denver Nuggets Detroit Eagles Detroit Gems Detroit Vagabond Kings Flint Dow A.C.’s Fort Wayne General Electrics Fort Wayne Zollner Pistons Hammond Calumet Buccaneers Hammond Ciesar All-Americans Indianapolis Kautskys Kankakee Gallagher Trojans Flint-Midland Dow A.C.’s Minneapolis Lakers Oshkosh All-Stars Pittsburgh Pirates Pittsburgh Raiders Richmond King Clothiers Rochester Royals Sheboygan Redskins Syracuse Nationals Toledo Jeeps Toledo Jim White Chevrolets

Seasons

History

1937–1940 1937–1941 1946–1948 1937 1946 1944–1946 1939–1941 1942 1937 1944–1945 1943 1938 1937 1937 1948 1948 1939–1940 1946 1948 1947 1937 1941–1947 1948 1938–1940 1937–1947 1937 1947 1947 1937–1948 1937–1938 1944 1937 1945–1947 1938–1948 1946–1948 1946–1947 1941–1942

four seasons in NBL five seasons in NBL joined NBA in 1949 one season in NBL moved to Tri-Cities in 1947 joined PBLA in 1947 three seasons in NBL one season in NBL one season in NBL two seasons in NBL one season in NBL moved to Detroit in 1939 one season in NBL dropped from NBL in 1938 replaced Vagabond Kings joined NBA in 1949 two seasons in NBL moved to Minneapolis in 1947 disbanded in 1948 dropped from NBL in 1948 one season in NBL joined BAA in 1948 one season in NBL three seasons in NBL joined BAA in 1948 one season in NBL one season in NBL joined BAA in 1948 12 seasons in NBL two seasons in NBL one season in NBL moved to Cincinnati in 1937 joined BAA in 1948 joined NBA in 1949 joined NBA in 1949 dropped from NBL in 1948 folded in 1942 (Continued)


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6

The National Basketball Association Table 1.1 (Continued)

Teams Tri-Cities Blackhawks Warren Penns Waterloo Hawks Whiting Ciesar All-Americans Youngstown Bears

Seasons 1946–1948 1937–1938 1948 1937 1945–1946

History joined NBA in 1949 moved to Cleveland in 1939 joined NBA in 1949 moved to Hammond in 1938 two seasons in NBL

Note: Rather than denote an NBL regular season such as 1937–1938 in column two, I listed it as one regular season or simply 1937.Thus, the Dayton Metropolitans played only one season or 1937 in the league. BAA is the Basketball Association of America. NBA is the National Basketball Association. PBLA is the Professional Basketball League of America. The Indianapolis Kautskys missed NBL seasons in 1940 and 1942–1944. The Warren Penns team, alternatively, was the Warren Penn Oilers, Chicago Studebakers the Chicago Studebaker Champions, and Dayton Rens the New York Rens. Source: “National Basketball League (NBL) Teams” at http://www.rauzulusstreet.com [cited 31 July 2009]; Murray R. Nelson, The National Basketball League: A History, 1935–1949 (Jefferson, NC: McFarland & Company, 2009); “Professional Basketball Leagues” at http://www.apbr.org [cited 22 August 2009].

estate was enough to meet their requirements and successfully head the league.To promote the BAA, the group selected sports media specialist and innovator Walter Kennedy. Therefore, in 1946, the BAA granted charters to 11 franchises who each played a schedule of 60, 48-minute games in the league’s regular season. As indicated in Table 1.2, these clubs played their games at home before audiences from households that resided within relatively midsized-to-large populated areas. Nonetheless, some BAA clubs failed to establish an identity with local fans. Furthermore, college basketball doubleheaders were very popular events, the best basketball athletes in America played on teams in the 10year-old NBL, and some big arenas in cities were unavailable to host and provide space for BAA games. Because of these and other issues, four of the original BAA teams folded due to internal conflicts during 1947, while the ABL’s Baltimore Bullets was encouraged and recruited to join the BAA that year. Indeed, with its players using physically tough and rugged tactics and a slowdown but competitive style of offense while in games on the court, the Bullets became a league champion despite the reduction in games from 60 in 1946 to 48 in 1947. Then in 1948, Podoloff convinced the Pistons, Jets, Lakers, and Royals teams to switch from the NBL to the BAA. With 12 basketball teams and


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Introduction 7 Table 1.2 Basketball Association of America, by Teams, Selected Seasons Teams Baltimore Bullets Boston Celtics Chicago Stags Cleveland Rebels Detroit Falcons Fort Wayne Pistons Indianapolis Jets Minneapolis Lakers New York Knickerbockers Philadelphia Warriors Pittsburgh Ironmen Providence Steamrollers Rochester Royals St. Louis Bombers Toronto Huskies Washington Capitols

Seasons

Post-BAA

1947–1948 1946–1948 1946–1948 1946 1946 1948 1948 1948 1946–1948 1946–1948 1946 1946–1948 1948 1946–1948 1946 1946–1948

joined NBA in 1949 joined NBA in 1949 joined NBA in 1949 disbanded in 1947 disbanded in 1947 joined NBA in 1949 disbanded in 1949 joined NBA in 1949 joined NBA in 1949 joined NBA in 1949 disbanded in 1947 disbanded in 1949 joined NBA in 1949 joined NBA in 1949 disbanded in 1947 joined NBA in 1949

Note: Since the BAA’s regular seasons extended from late in a year to early the next year, in column two I report the 1946–1947 season as 1946, the 1947–1948 season as 1947, and the 1948–1949 season as 1948. For example, the Cleveland Rebels played one season, Baltimore Bullets two seasons, and Boston Celtics three seasons in the BAA. After the BAA merged with the National Basketball League in 1949, it became the National Basketball Association (NBA). Source:“Basketball Association of America” at http://hoopedia.nba.com [cited 31 July 2009].

experienced pros as athletes, the BAA re-expanded its season from 48 to 60 games. Although economically weak but temporarily viable, the BAA finished its schedule of games and concluded the 1948 season. Even so, it was obvious to Podoloff and Kennedy that sports fans responded more enthusiastically to basketball players who had performed on teams in the NBL.Yet BAA clubs had the best arenas and furthermore, they existed within markets with relatively large home populations. In other words, it became apparent to basketball experts, officials, and financiers that these leagues needed to combine their operations and not compete against each other for fans and market share. These conditions, in part, motivated them and thus caused the BAA and NBL to merge in 1949 and then rename its organization the National Basketball Association (NBA). Consisting of six clubs from the BAA and 11 from the NBL, this newly formed 17-member league divided itself into


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three divisions, adopted an unequal schedule of games among its teams, extended geographically from New York City in the east to Denver, Colorado in the west, and nearly bankrupted before finishing its first year. Although few of these original franchises survived in the long run, they were, nevertheless, adversaries in America’s most competitive, elite, and popular basketball organization. This part completes an overview of four early basketball leagues that had each organized to play games sometime between the late 1890s and 1940s, struggled to remain marketable, stable and solvent, but retained some power within selected US sports markets for between five years and a few decades. Besides those organizations and the BAA and NBL merger in 1949, which established the NBA, several other domestic professional groups emerged in the sport and contained teams that performed in games after 1950.A few of them appear in various chapters of this book.These organizations include the American Basketball Association in 1967–1976, the World Basketball League in 1988–1992, and the Women’s National Basketball Association in 1997 to the present. A final group of US basketball leagues existed for one or more seasons after the late 1940s, but for various reasons, they had less of an impact than others did on the development, growth, and popularity of the sport in America. For teams with only male players, a sample of these organizations included the National Professional Basketball League in 1950–1951, another version of the American Basketball League in 1961–1963, the All-American Basketball Alliance in 1977–1978, the Western Basketball Association in 1978–1979, the Atlantic Basketball Association in 1993–1998, and the National Rookie League in 2000. For women who played basketball and excelled in the game, they may have performed in the Women’s Professional Basketball League in 1978–1981, the Ladies Professional Basketball Association in 1980–1981, and the Women’s Basketball Association in 1993–1995. The next two major sections of Chapter 1 are a Literature Review and the Book Organization.The former section highlights important types of readings that apply and refer to topics in Chapters 2–6, while the Book Organization provides an overview of the contents within these five chapters.

LITERATURE REVIEW Listed as entries in the Selected Bibliography of this book, the literature on professional basketball and specifically the NBA emphasizes and relates to


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Introduction 9

many subjects. In fact, some authors in their articles discuss empirical and theoretical issues such as the effects of professional basketball player strikes and lockouts by franchise owners and the guaranteed bonuses, salaries, and benefits of athletes who perform on teams in the NBA; legal matters like antitrust legislation, drug enforcement policies and collective bargaining agreements; and the short and long run competitive balance among teams in professional basketball leagues.Although these are intellectually challenging, interesting and provocative topics, the appropriate and most relevant articles used in this volume concern general business principles and the finance, human resources, management, and marketing decisions of officials in the history of the NBA, and the conduct, operations, performances, and revenues of the league’s franchises. Besides journal, magazine and newspaper articles, the book’s Bibliography also contains as readings a few dissertations and media guides, and many Internet sources. Respectively, these dissertations involve such business relations of sports leagues or enterprises as marketing techniques and the home game attendances of their teams, franchise relocations and league expansions, corporate partnerships, sales, and sponsorships in the NBA, and network television and broadcasting commitments in conjunction with the league. The media guides, meanwhile, report data, statistics, and other information about various NBA officials, coaches and players, games in preseasons, regular seasons and postseasons, and the failure or success of numerous teams.Among the Internet sources, there are readings about the history and vital operations of the NBA and most of its franchises, and the performances of coaches, owners, and players.These interrelate with and reveal a number of business, economic, and financial matters like fan cost indexes, naming rights, ticket prices, and market valuations. To some extent, these types of topics and dollar amounts applied to chapters that involved team expansions and NBA mergers, franchise territories and relocations, team and league organizations and operations, basketball arenas and markets, and domestic and foreign affairs. Furthermore, there are databases listed in websites within this book’s Bibliography that provide basic and historical statistics about NBA arenas, events, seasons, players, or teams. In turn, this data was useful in the development of tables displayed in each of the chapters. For examples of this information, see such online websites as basketball-reference.com, databasebasketball.com, hickoksports.com, hoopedia.nba.com, insidehoops. com, nba.com, rodneyfort.com, sportsbusinessnews.com, teammarketing. com, and wikipedia.org. Thus, the articles, dissertations, media guides, and


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Internet sources within the Selected Bibliography contain the essential readings to research, analyze, and critique the NBA, and since the mid-to-late 1940s, how it developed, reformed, and gradually prospered as a professional sports organization based in America.

Books Because of their accuracy, coverage and historical significance, certain books contributed to the data, content, and publication of this title. In other words, to research, obtain, and double-check facts and specific details about the history of professional basketball and any events, seasons, teams and their coaches and players in these leagues, there were a number of sports books that served as excellent resources. In part, they consist — in chronological order — of Peter C. Bjarkman’s The Encyclopedia of Pro Basketball Team Histories (1994), Ron Smith, Ira Winderman, and Mary Schmitt Boyer’s The Complete Encyclopedia of Basketball (2001), Leonard Koppett’s Total Basketball: The Ultimate Basketball Encyclopedia (2004), and Kyle Wright’s The NBA From Top to Bottom: A History of the NBA, From the No. 1 Team Through No. 1,153 (2007). For sure, readers will learn a great deal about the culture, development, and nature of the game and/or the origin, history, and success of the NBA from reading these four books.3 To analyze commercial and financial aspects of professional sports leagues, I studied Editor Roger G. Noll’s Government and the Sports Business: Studies in the Regulation of Economic Activity (1974) and educators’ James Quirk and Rodney D. Fort’s Pay Dirt: The Business of Professional Team Sports (1992).The former book discusses such matters in professional sports as the economics of expansion and relocation relative to the attendances of teams in arenas at their home and away games, the implications and values of players’ contracts and teams’ payrolls, and the effects of taxing the operations of sports enterprises. Noll and other researchers in chapters applied economic theories and statistical models to analyze history 3

See Peter C. Bjarkman, The Encyclopedia of Pro Basketball Team Histories (New York, NY: Carroll & Graf, 1994); Ron Smith, Ira Winderman, and Mary Schmitt Boyer, The Complete Encyclopedia of Basketball (London, England: Carlton, 2001); Leonard Koppett, Total Basketball: The Ultimate Basketball Encyclopedia (Wilmington, DE: Sport Classic Books, 2004); Kyle Wright, The NBA From Top to Bottom: A History of the NBA, From the No. 1 Team Through No. 1,153 (Bloomington, IN: iUniverse, Inc., 2007).


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Introduction 11

and then predict any league expansions and team movements to occur during the 1970s to 1990s, and to prove and explain the business effects, economics, and finances of professional sports franchises.4 According to results of their studies, these authors recommended that pro sport leagues should adopt and implement fair, innovative and transparent policies rather than discriminatory, secret and restrictive rules, which they had followed and enforced, or alternatively, to concur with and follow any laws imposed on them by governments before, during, and after the early-to-mid-1970s. In short, the readings in Noll’s book endorsed a larger supply and more efficient allocation of sports teams, and justified the elimination of anticompetitive practices of professional leagues. Later, NBA teams and those in other leagues initiated the redistribution of revenues received from national broadcasting contracts as advocated by economists in Government and the Sports Business. Within Pay Dirt, Quirk and Fort evaluate such matters as the distinctive and lucrative features of professional sports facilities, special tax shelters of any franchise owner, the history of players’ reserve clauses, sports markets of teams, and the problems and failures of rival leagues. Based on these authors’ research, they arrive at the following conclusions. First, the most important economic benefit that a professional sports team generates for a city is identification as a symbol, which tends to unify the people within it and the surrounding area’s population. However, the immediate and future values of this benefit are very difficult to determine and then quantify in dollars. Second, to minimize the abuse of monopoly power that occurs because of America’s dominant professional sports organizations, there needs to be new markets created such that each of them consists of two or more independent leagues with roughly equal drawing power and all of their franchises located in megalopolises. Third, no matter how inequality is statistically measured or actually interpreted, the elite sports leagues in America were and are competitively imbalanced.Therefore, according to this result, microeconomic theorists do not agree with or condone team owners who claim that a draft, reserve clause, and other rules are necessary to 4

There are several excellent books on the history and economics of professional sports leagues and teams. Based on my research, I strongly recommend two of them. They are, Roger G. Noll, ed., Government and the Sports Business: Studies in the Regulation of Economic Activity (Washington, DC: The Brookings Institution, 1974); and James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992).


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12


restore and maintain competitive balance among clubs in any of these leagues. Four additional books provided me with some interesting, specific, and useful ideas, insights, and stories about the history of basketball within the US and the role, significance, and structure of the NBA.With respect to Cages to Jump Shots: Pro Basketball’s Early Years (1990), there are dates, facts, and other important details about the initial 64 years of the game and sport. For example, the introduction of a 24-second clock during games, the influence of players’ heights on scoring points, the influx of Jewish athletes into basketball in the 1930s, the impact of NBA games played at Madison Square Garden in New York City, and the experience and novelty of early barnstorming professional teams are each items discussed in the book. Furthermore, author Robert W. Peterson interviews basketball players, legends and celebrities, and reflects on how changes in American society had affected the origins of the game and its leagues and teams.According to a customer’s review of Cages to Jump Shots,“This one [book] is well researched and well written, very satisfying, and provides a good roadmap for hopefully even more books about the early years and teams, which Peterson shows are filled with colorful characters and great scenes from American life.”5 The Official NBA Encyclopedia (2000) contains many historical essays and complete records of everyone who wore a uniform while in the NBA and ABA and the NBL. More specifically, author Jan Hubbard created chapters about basketball seasons in review, developed an all-time player directory, identified international athletes and coaches in the sport, and organized tables of all-time team records. After the title page, there is a 30-page photo essay that highlights the league’s history and later on in the book, information about the draft and commissioners, franchises, referees, and rules. For sure, The Official NBA Encyclopedia is a great reference title and statistical

5

If you enjoy basketball and want to know more about its history including the life of colorful players and wonderful scenes from American life, see Robert W. Peterson, Cages to Jump Shots: Pro Basketball’s Early Years (New York, NY: Oxford University Press, 1990). Customer reviews of Peterson’s book are available online at http://www.amazon.com. For some insights about coaches and players in the game, see Larry Bird, Earvin Johnson, and Jackie MacMullen, When the Game Was Ours (New York, NY: Houghton Mifflin Harcourt, 2009); John Taylor, The Rivalry: Bill Russell, Wilt Chamberlain, and the Golden Age of Basketball (New York, NY: Ballantine Books, 2006); Bill Russell and Alan Steinberg, Red and Me: My Coach, My Lifelong Friend (New York, NY: Harper, 2009).


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Introduction 13

source to verify which teams and their players dominated the game and these leagues throughout history. One reader stated this about Hubbard’s text: “I know what other reviewers said is true: this book does not have everything, but believe me, it’s pretty close. More than 900 pages of basketball history are enough to know who made this game as great as it is today.”6 To explain and trace the origins of basketball and some of its professional leagues, McFarland & Company published Hoop Lore: A History of the National Basketball Association (2007). Authored by Connie Kirchberg, this is a comprehensive book in that it covers such topics as James Naismith’s invention of the game, the rise and fall of the ABA, ABL, BAA and NBL, performances of early teams like the Buffalo Germans and Harlem Rens, and the first professional superstars in the game, dominant franchises, and the status of the NBA as of the early 2000s. That is, Hoop Lore denotes how the game evolved from using fruit baskets as goals, tiny gymnasiums, and players’ two-handed set shots to multimillion-dollar arenas in urban areas, lucrative shoe endorsements, and the ability of players to slamdunk a ball. Indeed, Kirchberg portrays how, why, and when the NBA overcame obstacles to become the most successfully marketed league and brand in pro sports. Hoopsworld.com’s Bill Ingram concluded,“Hoop Lore takes you through it all — the rough days of Basket Ball’s inception to the modern era of glory and worldwide expansion. Connie Kirchberg has done a masterful job of telling the inside story of the history of the greatest game on hardwood.”7 In The First Tip-Off: The Incredible Story of the Birth of the NBA (2008), former basketball coach and player Charles Rosen examines the multiyear history of the BAA and how it evolved into being renamed the NBA in 1949. Based on post-1980 interviews taped by deceased writer Phil Berger, on documents from the BAA’s board of governors meetings, and on a collection of scrapbooks, the book includes chapters for each of

6

Other reviewers said,“This is the best book any hoops fan will ever read.”“I think every NBA fan should buy it.”“This book helped me keep updated on all the roster and salary changes after the 2000–2001 season.” See Jan Hubbard, The Official NBA Encyclopedia (New York, NY: Doubleday, 2000). 7 Most sports fans do not realize that basketball was not popular and well-publicized in America, or how the NBA struggled for decades but continued to improve as entertainment because of efforts by league officials and teams’ coaches, owners, and players. For the inside story, see Connie Kirchberg, Hoop Lore: A History of the National Basketball Association (Jefferson, NC: McFarland & Company, 2007).


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14


the 12 BAA franchises. From the Boston Celtics to the Washington Capitols, Rosen brings the personalities, spirits, and stories of players to life by weaving a fascinating portrait of a league that struggled to win a stake in American consciousness. The First Tip-Off has a Foreword written by Los Angeles Lakers coach Phil Jackson and photographs of such previous but popular coaches as the Capitols’ Red Auerbach and Toronto Huskies’ Ed Sadowski, and of prior but high-profile players as the Philadelphia Warriors’ Joe Fulks and Chicago Stags’ Max Zaslofsky. Nevertheless, the book has only seven sources and no lists or notes. One reviewer, however, praised the title when he said, “Charley Rosen is today’s premier basketball historian and storyteller. I am always religiously looking forward to another [book] from him.”8 Besides the data, histories, and photos within these sports books, in the early 1970s I began to research the business, finance, and operation of the NBA and any decisions by owners of its teams and the performances of their players. Subsequently, for my doctoral dissertation, the topics that I analyzed were league expansions and franchise relocations in professional team sports that had occurred during 1950–1975. To complete the dissertation, I discussed when, where, and why leagues — including the NBA — had increased in size and also which teams moved from one metropolitan or market area to another, and whether they improved athletically, commercially, or competitively relative to their opponents. Between the late 1990s and 2007, I authored four books that dealt with various business, economic, and financial conditions, issues and problems of the NBA and other professional sports leagues based in America. These books were, respectively in titles and years published, Relocating Teams and Expanding Leagues in Professional Sports: How the Major Leagues Respond to Market Conditions (1999), American Sports Empire: How the Leagues Breed Success (2003), Sports Capitalism: The Foreign Business of American Professional Leagues (2004), and Big Sports, Big Business: A Century of League Expansions, Mergers, and Reorganizations (2006). In short, these four books indicate my dedication and interest in, and 8

In short, this book exposes the beginning of the NBA, and when barnstorming teams travelled by vans across the nation to perform in games with emotion, love, and passion. It contains funny stories of events and the offbeat behaviors of players. Several reviews of it appear online at http://www.amazon.com. For the title, see Charles Rosen, The First Tip-Off: The Incredible Story of the Birth of the NBA (New York, NY: McGraw-Hill, 2008).


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Introduction 15

knowledge of, organizations, themes and sports topics from a business perspective, and some of my prior contributions to literature about the industry.9

BOOK ORGANIZATION Apart from the Foreword and a Preface, this book includes this Introduction as Chapter 1 and then five additional chapters followed by an Appendix, Selected Bibliography, and an Index. Chapters 2–6, however, are truly significant because they identify and discuss the core contents of the book. Consequently, next are short summaries of these chapters and brief overviews of the Appendix, Selected Bibliography, and Index. Chapter 2 is entitled “League Expansions and Mergers.” Specifically, the chapter describes why and when league officials approved the entry of new or expansion teams — and those that had transferred from other leagues — into the NBA. Furthermore, it provides data and other information in tables about these clubs’ attendances at home and how successful or unsuccessful they were at winning division and conference titles and/or league championships. The short and long run business implications and effects of NBA expansions and mergers, and the net inflow of more teams, are highlights in different sections of this chapter. Chapter 3, meanwhile, exposes and discusses a few distinct but important characteristics of NBA teams’ home territories. Then, it indicates why and when several of these clubs moved from their original or given metropolitan or market areas within the US and Canada into sites at other locations. Supplemented with data in tables, the chapter reports the home attendances and total win–loss records of each team for specific basketball seasons prior to and after they had relocated. This discussion, in turn, includes the reasons for whether and where these teams had moved again,

9

The complete references of these four books are, respectively, Frank P. Jozsa, Jr. and John J. Guthrie, Jr., Relocating Teams and Expanding Leagues in Professional Sports: How the Major Leagues Respond to Market Conditions (Westport, CT: Quorum Books, 1999); Frank P. Jozsa, Jr., American Sports Empire: How the Leagues Breed Success (Westport, CT: Praeger Publishers, 2003); Sports Capitalism: The Foreign Business of American Professional Leagues (Aldershot, England: Ashgate Publishing Limited, 2004); Big Sports, Big Business: A Century of League Expansions, Mergers, and Reorganizations (Westport, CT: Praeger Publishers, 2006).


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16


merged, or folded. Similar to the topic of league expansions and mergers contained in Chapter 2, the contents in this chapter incorporate some commercial, demographic, and economic aspects of team territories and relocations within the NBA. Chapter 4 reveals and examines the organization and operation of NBA franchises. For example, the chapter includes such topics as the amounts and sources of these basketball teams’ revenues and expenses, and their operating incomes and estimated market values as business enterprises in the sport.Tables list the average ticket prices and fan cost indexes of NBA clubs during various years, and any major or minor differences between them expressed in percentages and American dollars. There is information about the various offices and officials of professional basketball franchises and the assignments, duties, and jobs of their executives and vice presidents, and directors, managers, and supervisors. Furthermore, the chapter provides some reasons for why some NBA teams operate more competently, efficiently, and profitably than do others in the league. Chapter 5 identifies different basketball arenas that teams have played in and markets they occupied during 2008–2009 and/or in previous NBA regular seasons. As such, it discusses the ages, capacities, types of financing, and benefits and costs of these facilities. In addition, the chapter describes the economics of a few modern arenas such as those in Charlotte, North Carolina for the Bobcats; in San Antonio,Texas for the Spurs; and in Memphis, Tennessee for the Grizzlies. From a business perspective, the chapter compares and ranks the home markets and qualities of various NBA arenas. Chapter 6 exposes some of the NBA’s most prominent, unique, and worthy domestic and foreign affairs, and a few of its special campaigns, events, and programs. For example, there is information about the league’s exhibition, preseason, and regular season games in foreign countries and its Development and Summer Leagues in the United States. The chapter includes a table of teams that have participated in a championship series during various postseasons and denotes the results of them. For such international affairs as the role of Basketball Without Borders, NBA Cares and NBA Global, Chapter 6 emphasizes their promotion, publicity, and social effects, and what they have accomplished for basketball and especially the goodwill, image, and reputation of the league. After Chapter 6 is an Appendix. It contains some additional tables of characteristics, data, and statistics that relate to facts and other details about the NBA and to the nicknames, markets, and performances of several former and current teams. Indeed, these tables appear in the Appendix because they


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Introduction 17

refer to and verify specific dates, values, and other events, numbers, and years included in sections of one or more of the chapters. Following the Appendix are the Selected Bibliography and the Index. These parts are included in the book so that readers have an assortment of readings, references, and sources to learn more about the operations and economics, finance, and marketing of the league and history of basketball, and to further research any topics of interest discussed in the Introduction and Chapters 2–6.To conclude, I hope this book establishes itself as a valuable publication and therefore makes an important, relevant, and useful contribution to the literature regarding the game and sport of professional basketball, and the NBA’s 61 or more years of existence in American business, culture, and society.


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Chapter

2 League Expansions and Mergers

LEAGUES UNITE As highlighted in Chapter 1, the National Basketball League (NBL) formed in 1937 and consisted of more than 40 different franchises during its dozen years in existence. For the most part, the league operated in the Mid-west region of the United States (US) and its teams’ home cities ranged from Rochester and Syracuse, New York in the east to Denver, Colorado in the west. In contrast to prior professional basketball leagues, NBL teams depended on the loyalties of hometown fans and most of their star players were college graduates. Furthermore, the NBL became the first modern major sports league in America to admit African-American athletes. To be better informed and aware of the league’s mission, this writer contacted Pennsylvania State University Professor Murray R. Nelson, who authored The National Basketball League: A History, 1935–1949. Nelson believes the most significant reasons for why the league had formed were “one, a fascination with the game and its qualities; two, a concern for keeping some players active in winter (this mostly applied to those who worked for companies that sponsored teams); and three, an unwillingness to give up a game that they enjoyed greatly (this would be a rationale for the players).” For why the NBL merged with its rival in 1949, Nelson further stated,“The answer is always money. To some degree, it involved spreading the professional

19


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20


leagues more widely, but that is just another way of addressing the elimination of competition that saved money. It [NBL] didn’t make money, it just shrunk losses more and saved both leagues from failing.”1 The Basketball Association of America (BAA), meanwhile, organized in 1946 and relative to the emergence, development, and structure of the NBL, it included 16 teams in total who each played between one and three regular seasons.These two leagues greatly differed, however, in the location of their teams and as business enterprises. Because of poor publicity of NBL games and the role of coaches and players within the media, and with little financial opportunity for most of the league’s franchises to survive and become profitable, some of the attractive and more successful NBL teams migrated into the BAA in 1948–1949. During 1948, the Rochester Royals, Fort Wayne Zollner Pistons, Indianapolis Jets, and Minneapolis Lakers transferred from the NBL to the BAA. Then in 1949, the BAA absorbed several other NBL teams. After these events occurred, the NBL folded since the only teams remaining in the league were the Calumet Buccaneers in Hammond, Indiana; the All-Stars in Oshkosh,Wisconsin; and the Rens in Dayton, Ohio. In comparison to the fate of the NBL, the BAA decided to change its title in 1949 and become the National Basketball Association (NBA).2 1

Murray R. Nelson, The National Basketball League: A History, 1935–1949 (Jefferson, NC: McFarland & Company, 2009). For other publications about the history of this league, see Leonard Koppett, 24 Seconds to Shoot (Kingston, NY:Total Sports Illustrated Classics, 1999); Mark Pollak, Sports Leagues and Teams: An Encyclopedia, 1871 to 1996 (Jefferson, NC: McFarland & Company, 1997); James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992); Charles Rosen, The First Tip-Off: The Incredible Story of the Birth of the NBA (New York, NY: McGraw-Hill, 2008);“National Basketball League” at http://www.hickoksports.com [cited 27 August 2005]; “National Basketball League (NBL) Teams” at http://rauzulusstreet.com [cited 31 July 2009]; “Encyclopedia: National Basketball League” at http://www.nationmaster.com [cited 27 August 2005]. 2 The BAA and its merger with the NBL is discussed in “BAA/NBL Merger” at http:// n-c-systems.com [cited 27 August 2005]; “Basketball Association of America” at http://hoopedia.nba.com [cited 31 July 2009]; “Beginnings of the NBA” at http:// hoopedia.nba.com [cited 20 August 2009]; Connie Kirchberg, Hoop Lore:A History of the National Basketball Association (Jefferson, NC: McFarland & Company, 2007); Robert W. Peterson, Cages to Jump Shots: Pro Basketball’s Early Years (New York, NY: Oxford University Press, 1990); Frank P. Jozsa, Jr., Big Sports, Big Business: A Century of League Expansions, Mergers, and Reorganizations (Westport,CT:Praeger Publishers,2006).


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League Expansions and Mergers 21

For the league’s 1949 (or otherwise 1949–1950) season, the NBA consisted of 17 franchises and each of them performed in one of three divisions. Over the next 11 years, the league restructured and drastically fluctuated in composition and size. That is, six NBA teams dropped out in 1950, one moved from the Tri-Cities to Milwaukee,Wisconsin and another disbanded in 1951, one withdrew in 1953 and another in 1954, and the Hawks moved from Milwaukee to St. Louis, Missouri in 1955. Then in 1957, the Pistons relocated from Fort Wayne, Indiana to Detroit, Michigan and the Royals from Rochester, New York to Cincinnati, Ohio. In 1960, the Lakers moved from Minneapolis, Minnesota to Los Angeles, California. Therefore, months after the 1960 season ended, the NBA consisted of teams located in the US cities of Boston, Cincinnati, Detroit, Los Angeles, New York, Philadelphia, St. Louis, and Syracuse. The dominant clubs during the league’s first 12 years were the Minneapolis Lakers with five championships, the Boston Celtics with three, and the St. Louis Hawks with one besides two other appearances in the NBA’s final series of games. Before the early 1960s, NBA officials anticipated and shrewdly recognized that some domestic markets were potentially attractive sites and available for exploitation by one or more of any existing or new rival basketball leagues. Moreover, Major League Baseball (MLB) and the National Football League (NFL) and National Hockey League (NHL) had recently added a combination of new clubs and placed them at sites in cities throughout America. These conditions, in part, compelled the NBA to become more ambitious, businesslike, and risky by extending its power as an economic cartel and invade other sports markets across the US. In the following sections of this chapter, I discuss why, when, and where NBA officials approved the entry of new franchises into the league during two distinct periods, namely 1949–1975 and 1976–2009, and how each of these teams performed as competitors and as business organizations during various years. In addition, I analyze the NBA and American Basketball Association merger that occurred in the mid-1970s, and the economic and financial implications of that consolidation. After examining the future of expansion, there is a summary of this chapter.

NBA EXPANSION FRANCHISES: 1949–1975 While several inferior NBA teams had disbanded and vanished during the early 1950s, a few years later other teams had relocated from one metropolitan area to another. Furthermore, the league’s regular season schedule of


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22


games gradually increased to more than 75 per club in 1960–1961, attendances in arenas evened out at approximately 5,000 per game, and some franchises received enough revenues to stabilize and continue their operations. Indeed, this improvement in the sport encouraged the league’s various commissioners and a majority of owners to admit a number of new teams into their group. Therefore, from 1961–1975 inclusive, the NBA expanded into nine metropolitan areas, some of which had hosted professional clubs in MLB, the NFL, and/or the NHL.The cities within these areas ranged from Chicago and Cleveland in the Mid-west to San Diego and Seattle on the west coast, and from Buffalo and Milwaukee in the north to New Orleans in the south. Next is a review of these different but significant expansions.3

Chicago Packers For an unknown fee, a syndicate headed by executive Dave Trager obtained the rights from the NBA to locate an expansion team in Chicago, Illinois. Although that city already hosted the American Basketball League Chicago Majors, which entrepreneur Abe Saperstein owned, Trager named his new team the Chicago Packers to identify and advertise his meat packing company. In the league’s 1961 regular season, the Packers team won 22 percent of its 80 games and finished ninth or last in attendances at 2,600 per game while playing at home in Chicago’s International Amphitheatre (see Table 2.1). Then as a clever marketing and promotion gimmick, Trager changed his team’s nickname from Packers to Zephyrs in 1962. During that NBA season, the club won seven more games and moved from the International Amphitheatre to the Chicago Coliseum where its attendance averaged about 3,900.When the Zephyrs performed at home, its fans rooted for Rookie-of-the-Year and All-Star center Walt Bellamy, forward Archie Dees, and guard Bob “Slick” Leonard. 3

Expansion of teams in the NBA, in part, is discussed in Frank P. Jozsa, Jr. and John J. Guthrie, Jr., Relocating Teams and Expanding Leagues in Professional Sports: How the Major Leagues Respond to Market Conditions (Westport, CT: Quorum Books, 1999); Roger G. Noll, ed., Government and the Sports Business: Studies in the Regulation of Economic Activity (Washington, DC:The Brookings Institution, 1974); Kenneth L. Shropshire, The Sports Franchise Game: Cities in Pursuit of Sports Franchises, Events, Stadiums, and Arenas (Philadelphia, PA: University of Pennsylvania Press, 1995).


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League Expansions and Mergers 23 Table 2.1 Performances of NBA Expansion Franchises, Selected Seasons Year

Franchise

Seasons

Attendance

Win–Loss

1961 1966 1967 1967 1968 1968 1970 1970 1970 1974

Chicago Packers/Zephyrs Chicago Bulls San Diego Rockets Seattle Supersonics Milwaukee Bucks Phoenix Suns Buffalo Braves Cleveland Cavaliers Portland Trail Blazers New Orleans Jazz

2 5 4 5 5 5 5 5 5 5

129 239 208 301 338 291 353 208 325 410

0.268 0.452 0.362 0.424 0.663 0.463 0.380 0.339 0.324 0.392

Note: Year is the expansion year and teams’ initial regular season in the league. In 1963, the Zephyrs franchise moved from Chicago to Baltimore, and in 1971, so did the Rockets from San Diego to Houston.Thus, they played less than five seasons at their expansion site. Attendance is each team’s average attendance per season at home in thousands.Win–Loss is the average winning percentage of each team during these seasons.The Chicago Bulls, for example, averaged 239,000 per season at home games in the NBA’s 1966–1970 regular seasons and won an average of 45.2 percent of its home and away games.Table 2.1 excludes four former American Basketball Association clubs who joined the NBA in 1976 since these were transfers and not new or expansion teams. Source: The website http://www.basketball-reference.com contains the home attendances and winning percentages of all NBA teams.

After the Packers/Zephyrs teams finished fifth in the league’s West Division (WD) while playing before crowds that averaged less than 3,300 per game during two dismal seasons,Trager and his ownership group moved their franchise from Chicago to the east part of Maryland State and renamed it the Baltimore Bullets.A previous BAA and then NBA team — whose nickname Bullets had originated from a nearby foundry business that produced ammunition during World War II — played in Baltimore until 1954 but then disbanded for various reasons. In short, the Chicago Packers/Zephyrs franchise was a major disappointment to its owners and NBA officials, and especially for basketball fans that lived in the northeast region of Illinois.

Chicago Bulls Despite the Chicago Stags failure in 1950 and Chicago Zephyrs in 1963, a syndicate headed by Illinois businessperson Dick Klein paid the NBA $1.25 million in 1966 for the right to own and manage an expansion team. Shortly


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thereafter, Klein’s group named it the Chicago Bulls because fighting bulls had a relentless attitude and an instinct of not quitting.While playing at home in the city’s International Amphitheatre for one season and then on a court in Chicago Stadium, the Bulls became popular and the club’s annual attendances increased within five years from about 172,000 to approximately 415,000. Nevertheless, the team was defeated in many NBA games for several years.This, in turn, caused Klein to sell his share of the franchise in 1972 for $5.1 million to a corporation led by arena operator Arthur Wirtz.When Wirtz died in 1983, his son William took control of the business. Then two years later, an investment group headed by tax and real estate attorney Jerry Reinsdorf purchased an interest in the Bulls for $9.2 million from William Wirtz, who had owned 26 percent of it, and from other investors such as New York Yankees owner and millionaire George Steinbrenner. Thus, Reinsdorf was the club’s major stockholder owning 89 percent of it, while minority stockholders controlled the other 11 percent. Between 1966 and 1991 inclusive, the Bulls won a division title in 1975. Although it struggled against opponents during most of these seasons, Reinsdorf and his general manager Jerry Krause made a smart decision when the club drafted and then acquired the University of North Carolina AllAmerican Michael Jordan in 1984 and later, when they hired former New York Knickerbockers player Phil Jackson as head coach. Led by Coach Jackson, Jordan and his teammates, the Bulls won some division and conference titles, and NBA championships in 1991–1993 and 1996–1998. In the 1995 season, the club won a league record of 72 games or nearly 90 percent of them. Since the early 1990s, the Bulls have greatly increased the business, image, and popularity of the NBA across the globe, and furthermore, the franchise has generated large amounts of income for Reinsdorf, office executives, and the coaching staff and members of the team. In fact, this organization is the league’s most profitable, successful, and wealthiest expansion team of all time.

San Diego Rockets One year after the Chicago Bulls had joined the NBA, the league awarded a syndicate headed by entrepreneur Robert Breitbard an expansion franchise for $1.75 million. Breitbard nicknamed his team the Rockets because San Diego, California has referred to itself as a “city in motion.” As denoted in Table 2.1, the club’s four-year attendances averaged 208,000 per season or about 5,000 per game while playing at the city’s Sports Arena. Meanwhile, the Rockets won


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only 36 percent of their games during the 1967–1970 regular seasons and zero titles or NBA championships. In part because San Diego’s sports fans preferred to support the Padres team in MLB and Chargers in the NFL, and households preferred to participate in such outdoor activities as golf,soccer and tennis,the Rockets failed to excite many people located in the southern California area.Therefore, the franchise did not become popular or respected while its team performed poorly in games and thus had low attendances at home in the city’s Sports Arena.These circumstances and problems convinced Breitbard and his group to sell their basketball team for $5.6 million in 1971 to banker Billy Goldberg and real estate broker Wayne Puddlestein, who also controlled a business in the southwest titled Texas Sport Investment.With commercial interests and their money invested in Texas properties,Goldberg and Puddlestein received approval from the NBA to move the Rockets from San Diego to Houston, Texas. After the team relocated in mid-1971, it was renamed the Houston Rockets. Since moving to Houston, the franchise has improved competitively and subsequently its teams won four each division and conference titles besides consecutive NBA championships in the 1994–1995 seasons. Moreover, the franchise’s estimated market value significantly increased during the 2000s when the Rockets opened to play at home in Houston’s $235 million and 18,300-seat Toyota Center and furthermore, after the club had acquired 7-foot-6-inch center Yao Ming from his team in China and superstar Tracy McGrady from another NBA team. Although there are many basketball fans in southwest Texas who cheer for Ming and McGrady to play well and who expect them to rebound and score many points in games, these two athletes must remain healthy for the team to succeed in its division and conference. Based on these factors and despite mediocre seasons during most of the 1970s and 1980s,it was a smart business decision for Goldberg and Puddlestein to move the Rockets from San Diego to Houston in 1971. If Ming and McGrady are able to excel and perform at or beyond their potential, the club will continue to win more than 50 percent of its games each season and challenge the Dallas Mavericks, New Orleans Hornets, and other teams in the Western Conference’s Southwest Division (SWD) for the playoffs. If so, this means that the Rockets will likely earn more than enough revenues to expand its payroll, recruit and sign increasingly talented players, hire experienced coaches, and compete for more titles and perhaps a championship. In retrospect, San Diego was an inferior location as an expansion site for the Rockets or any other NBA team during the late 1960s.


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Seattle Supersonics For a fee of $1.75 million, the NBA approved the application of Los Angeles executives Sam Schulman and Gene Klein to locate an expansion franchise in Seattle,Washington and play home games there beginning in the league’s 1967 regular season. These owners nicknamed their club Supersonics because local manufacturer Boeing Corporation had received a multimilliondollar contract from the US government to build a supersonic transport airplane. During its first five seasons, the Supersonics’ annual attendance averaged 301,000 at the 17,000-seat Key Arena even though the club won less than 43 percent of home and away games. For business reasons, the ownership of this franchise changed, in part, during the early 1970s, 1980s, and 2000s. In 1972, for example, Klein sold his interest in the club to Schulman in exchange for Schulman’s investment share of the NFL San Diego Chargers. However, after financial losses that exceeded $3 million in 1981–1983, Schulman sold the Supersonics to Ackerly Communications for $21 million in 1984. Then in 2001, the Basketball Club of Seattle headed by Starbucks Corporation Chairman Howard Schultz purchased the franchise. Finally, the latest sale occurred in 2006 when Oklahoma City businessperson Clay Bennett acquired the Supersonics franchise from Schultz’s group. Even with the publicity and effects of these deals, the Supersonics won six division and three conference titles, and one NBA championship between the late 1970s and early 2000s. After the city and local taxpayers denied the use of public funds for the construction of a new basketball stadium to replace Key Arena, Bennett moved his club from Seattle to Oklahoma City in 2008. Nonetheless, that relocation cost the Supersonics’ owner $45 million to cancel the existing lease at Key Arena before its 2010 expiration date. Subsequent to moving into a new metropolitan area, the club changed its name to Oklahoma City Thunder. In short, the Supersonics’ mediocre performances and belowaverage home attendances, plus its owner’s dispute with local officials about financial support for a new stadium caused this relocation from Seattle to Oklahoma City to occur after the 2007 (or 2007–2008) NBA season.

Milwaukee Bucks Despite political conflict with the government’s Vietnam War and increasing inflation of consumer prices within the US economy, the NBA continued to


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approve the entry of new franchises during the late 1960s. With the twoyear-old Chicago Bulls as the only professional basketball team based in the upper Mid-west, the league awarded a franchise in 1968 to a business group titled Milwaukee Professional Sports and Services, Inc. Headed by executives Wesley Pavalon and Marvin Fishman, their syndicate paid the NBA $2 million for the right to acquire and put a basketball team in southeast Wisconsin and then identify it as the Milwaukee Bucks. As denoted in Table 2.1, the Bucks’ annual attendance for five years averaged 338,000 or 8,200 per game at the Bradley Center. Furthermore, the team performed very well and won two-thirds of its home and away games, division titles in 1971–1974, and an NBA championship in 1971.This success occurred primarily because the club drafted former college All-American player Lew Alcindor (who renamed himself Kareem Abdul-Jabbar) and obtained the great Oscar Robertson in a trade with the Cincinnati Royals. In fact, Abdul-Jabbar and Robertson guided the Bucks to establish a record among NBA expansion teams by winning a league championship in only its third season. Two years after trading Abdul-Jabbar to the Los Angeles Lakers in 1975, minority stockholder and cable television entrepreneur Jim Fitzgerald led a syndicate that successfully purchased the Bucks for an unknown price. Within a few years, the club excelled again by winning seven consecutive titles in the Eastern Conference’s Central Division (CD). Because the estimated market value of the franchise had increased by millions of dollars during the 1970s and early 1980s, Fitzgerald decided to sell the Bucks to retail store mogul Herbert H. Kohl in 1985 for $16.5 million. Since that transaction and change in ownership, the franchise has won one division title. For sure, the Milwaukee area is one of the smallest and least attractive sports markets compared to those that host other NBA clubs. Thus, during the late 1980s and throughout the 1990s and early 2000s, the Bucks’ owner has not been able to greatly expand the team’s payroll and hire productive free agents and outstanding experienced players, and therefore, cannot effectively compete against its divisional rivals in the league. Kohl, a Democrat and US Senator who represents the State of Wisconsin in Washington, DC, has not invested enough resources or personal wealth to make the Bucks a relatively superior team or above average business enterprise. Consequently, if he remains as the owner, I do not expect this 48-year-old expansion franchise to consistently improve and win another conference title or NBA championship in the next five to ten years.


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Phoenix Suns For many years, basketball pundits claimed that the Phoenix metropolitan area was too distant geographically, experienced extreme to very hot temperatures, and/or had too small of a population to be a viable market for an NBA team. Furthermore, there were no major US professional sports franchises located in urban cities of Arizona through the mid-1960s. Despite these problems, an ownership group led by local executives, who included entertainer and singer Andy Williams, applied for admission and received approval from the NBA Board of Governors in 1968 to own and operate an expansion franchise in Phoenix. In part, this group convinced the league of the Phoenix area’s attributes such as its growing population, residents with above average and rising per capita incomes, the large number of television sets per household, and natural basketball rivals within the region like the Los Angeles Lakers and San Francisco Warriors in California. To identify this new franchise from a marketing perspective, a newspaper called the Arizona Republic conducted a “name the team” contest.After evaluating 28,000 or more entries, Suns became the club’s nickname.As denoted in column four of Table 2.1, the Suns’ home games did not initially appeal to sports fans in the Phoenix area because of its inferior performances, inadequate coaches, and inept administrators in positions of office. Although the team won a conference title in 1976 and its division in 1981, fans were not impressed with the Suns’ accomplishments on the basketball court. Therefore, in 1987 the franchise’s former general manager Jerry Colangelo resigned from the Chicago Bulls and organized a syndicate who purchased the Suns in 1987 for approximately $45–$55 million. Then he hired Johnny “Red” Kerr as head coach and restructured tasks in the front office. After a few years, these changes reinvigorated the organization. As such, the Suns won division and conference titles in 1993 and then the former again in 1995 and 2005–2007. According to some experts of the sport, the Suns are an excellent franchise that apparently cannot win a championship. Indeed, the club’s troubles in one season or another have included injuries to key players, substance abuse issues and bickering amongst teammates, dominance by the Los Angeles Lakers of the conference’s Pacific Division (PD), turnover of coaches, executives and some players, and simply bad luck, poor timing, and other misfortunes. In a poll derived and issued by the Entertainment Sports Programming Network (ESPN), the Suns ranked fifth in quality among NBA franchises of all time.This suggests that the Suns are a competitive, profitable,


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and semi-successful NBA expansion team and eventually, it will win a league championship.

Buffalo Braves During the 1960s, the NBA had expanded by six teams.This positive trend in growth continued into the 1970s when league officials approved the entry of more new clubs. For a fee of $3.7 million, a syndicate headed by investors Philip Ryan and Peter Crotty was granted an expansion franchise in 1970. For demographic and personal reasons, they established their club in a small market area of western New York State and named it the Buffalo Braves. Despite an interest in professional basketball, however, within weeks the syndicate sold its new franchise to frozen food company proprietor and theme park owner Paul Snyder for an undisclosed amount of money. While playing its first five seasons at home in the Buffalo Memorial Auditorium, the Braves’ annual attendance increased from 204,000 to 467,000. Meanwhile, the club’s competitiveness gradually improved in the Atlantic Division (AD) when it finished fourth in the league’s 1970 regular season, third two years later, and then second in the 1973–1974 regular seasons. During this period, Buffalo’s best player was former University of North Carolina AllAmerican Bob McAdoo who led the Braves to three conference playoffs. Interestingly, the various Braves teams had played 16 of their home games at the Maple Leaf Gardens in Toronto, Ontario with the intent to grow its fan base and market beyond the Buffalo area into Greater Toronto of Canada. While the Braves struggled to win a division title, the NFL Bills and expansion NHL Sabres were popular teams in Buffalo and dominated the sports market in the western New York region. Thus in 1976, owner Paul Snyder shook hands with Irving Cowan because Cowan agreed to purchase the Braves for $6.1 million from Snyder and move the franchise to Hollywood, Florida. That sale did not occur, however, because the City of Buffalo filed an injunction in court and successfully blocked the move. Later, local government officials and the Braves jointly signed a contract for the team to lease Buffalo Memorial Auditorium for another 15 years. Shortly thereafter, Snyder sold his franchise for an undisclosed amount to fast food chain entrepreneur John Y. Brown, Jr., who previously had owned the ABA’s Kentucky Colonels. To obtain cash and other players, the new owner traded superstar McAdoo to the New York Knicks midway through the NBA’s 1976 season.Then Brown sold a portion of the Braves to a person


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who co-owned the Boston Celtics. When ticket sales to home games in Buffalo plummeted, the local community anticipated that the Braves would relocate to another metropolitan area. After two majority owners of the Boston Celtics swapped their team for the Braves in 1978, they moved their club from Buffalo to a city in southern California and renamed it the San Diego Clippers. Indeed the NBA voted 21–1 to approve this relocation, which the league’s former general counsel and current commissioner David Stern had successfully brokered that year. In retrospect, the western New York sports market experienced economic problems during the early-to-mid-1970s.Thus, it failed to support the games of its three major professional teams. For sure, thousands of high-cost manufacturing jobs shifted from Buffalo to areas in the US south and abroad, or simply, companies eliminated them. Furthermore, the nation’s recession decreased economic growth especially in states of America’s northeast region including within New York.These conditions plus the sale and resale of the Braves and trade of Bob McAdoo reduced the franchise’s ticket sales and revenues, and in part, forced a movement of it to the west into populated, prosperous, and sunny San Diego.

Cleveland Cavaliers Although baseball and football were popular team sports among fans in cities of northwestern Ohio during the 1930s–1940s, the Cleveland area also hosted for a few seasons three professional basketball teams that played in the NBL and one in the BAA.Thus in 1970, a syndicate headed by multimillionaire Nick Mileti paid the NBA $3.7 million for the right to own a new team in the league and name it the Cleveland Cavaliers. Coached by Bill Fitch, the club played at home in the Cleveland Arena and placed fourth in the Eastern Conference’s CD for four consecutive years. Then in 1974, the Cavaliers moved into Richfield Coliseum, which was located in a rural area of Summit County and 30 miles south of downtown Cleveland. Because of its new environment and roster changes, the Cavaliers played better that NBA season. Consequently, the club’s annual attendance at the Coliseum doubled to approximately 335,000 or 8,200 per game. Between the mid-1970s and early 1980s, the Cavaliers experienced financial problems. As such, the team became expendable, was sold, and then repurchased by different groups. Minority owner Louis Mitchell bought Mileti’s shares in 1980, while Nationwide Advertising Services founder Ted Stepien acquired a controlling interest of the franchise. As majority owner,


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Stepien made some questionable decisions. Besides hiring and firing a number of coaches, he traded several players previously drafted in the first round. Furthermore, Stepien proposed to rename his team the “Ohio Cavaliers” and introduced a polka-flavored fight song at games, both ridiculed by fans and Cleveland’s media. After he realized that the Cavaliers had incurred $7 million in losses during 1980–1982, Stepien sold the team in 1983 to businessmen Gordon and George Gund for $20 million. Since signing St. Vincent–St. Mary High School basketball prodigy LeBron James in 2003, the Cavaliers have improved immensely against their competitors. In 2007, for example, the club defeated the Boston Celtics and won the Eastern Conference and then two years later, won a CD title. Because of James, the club’s attendances have soared at home games in Quicken Loans Arena (formerly Gund Arena). If James signs a long-term contract with the Cavaliers, the club will probably win its first NBA championship within three to five years. For decades, this expansion franchise had been mediocre in performances and struggled financially to survive. Recently, Gordon Gund and other owners of the team have become optimistic due to an improvement in its fan base within the Cleveland area and the potential to earn more revenues from television broadcasting contracts and ticket sales, concessions, and parking at the Arena. Consequently, it appears that superstar James has revitalized the Cavaliers into being a contender on the court and in generating enough cash flows to increase the payrolls of coaches and players. After signing veteran all-star Shaq O’Neal to a multimillion-dollar contract in 2009, the team expects to become an NBA champion soon.

Portland Trail Blazers No major professional sports teams existed within Portland, Oregon during the late 1960s despite the area’s growing middle-class population.That situation motivated the NBA to award an expansion franchise in 1970 for $3.7 million to a group of investors led by builder and real estate developer Herman Sarkowsky. Named the Portland Trail Blazers, column four in Table 2.1 indicates that the team’s annual attendance at games played in the city’s Memorial Stadium averaged 325,000 during the 1970–1974 NBA seasons. Moreover, the Trail Blazers won about one-third of their total games and finished between third and fifth in the PD. Disappointed due to inept coaches, mediocre performances of players, and the franchise’s financial problems, Sarkowsky sold his interest in the


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team to minority owner Larry Weinberg in 1975 for an unknown price.Two years later, however, the club had a spectacular season and won an NBA championship due to the leadership of 7-foot center Bill Walton and forward Maurice Lucas, and crafty head coach Jack Ramsey. In fact, the Trail Blazers sold out 814 consecutive games played in Portland from 1977 through 1995. That occurred, for the most part, when the club won division titles in 1978 and 1991–1992, conference titles in 1977, 1990 and 1992, and an NBA championship in 1977. In addition, Paul Allen, the co-founder (with Bill Gates) of Microsoft Corporation in the early 1970s, purchased the Trail Blazers from Larry Weinberg in 1988 for $70 million. Then, Allen invested more resources and money capital into his franchise and increased its payroll. These decisions, in turn, effectively improved the team’s performances in the Northwest Division (NWD) of the Western Conference. Since the mid-1990s, the Trail Blazers have won only one division title. Indeed, the team tends to be inconsistent from year-to-year and usually lacks a superstar player and superior head coach. Although Allen still owns the franchise, he has not made any recent business decisions that have sustained the club’s competitiveness especially in away games against such opponents as the Denver Nuggets,Los Angeles Lakers,and Phoenix Suns.In short,the Trail Blazers have been a viable but mediocre expansion franchise while in the NBA.

New Orleans Jazz Four years after the Braves, Cavaliers, and Trail Blazers joined the NBA, the league awarded an expansion franchise based in New Orleans, Louisiana to a syndicate headed by restaurant founder Sam Battistone for $6.1 million.The club played its home games in Loyal University Fieldhouse for one year and then another four years in the city’s Louisiana Superdome. While there, the New Orleans Jazz team averaged 410,000 spectators per season, won approximately 40 percent of their home and away games, and they finished between fourth and sixth in the league’s CD. One of the NBA’s most entertaining, flamboyant, and great athletes of all time, Pete Maravich, was acquired from the Atlanta Hawks and played for the Jazz beginning in 1974. Although Maravich scored many points each game and passed basketballs to his teammates like a magician, he struggled emotionally and physically with knee injuries, alcohol, and psychological problems. Besides Maravich’s age and deteriorating health, another issue for the franchise’s owners was the terms of its lease at the Superdome. For example, while attempting to compete and qualify for the NBA playoffs in the 1977


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season, Mardi Gras festivities in New Orleans forced the Jazz to play road games for one month. In fact, the Superdome was unavailable for the Jazz even if the team made the playoffs. After the franchise bungled the right to draft Michigan State University basketball All-American Magic Johnson in 1979, fans and the media in New Orleans criticized the team’s owners. Demoralized from the burden of $5 million or more in accounting losses and a decline in attendances at home games within the Superdome, majority owner Battistone received unanimous approval from the NBA to move the Jazz from New Orleans to Salt Lake City, Utah before beginning the league’s 1979 regular season. Despite being a smaller sports market and more remote geographically than New Orleans, Salt Lake City hosted the ABA’s Utah Stars during the early-to-mid-1970s. Indeed, the Stars were competitive and very popular there, but financial problems forced the franchise to fold midway through the league’s 1975 regular season. In short, leasing conflicts, money difficulties, and a series of poor performances caused the New Orleans Jazz team to migrate from its home in southern Louisiana, to a small-to-midsized but conservative city located in a northwest region of the US. Based on the data in column four of Table 2.1, the Jazz, Braves, and Bucks had the highest average home attendances in their regular seasons after expansion. Meanwhile, the Packers/Zephyrs, Cavaliers, and Rockets experienced the fewest number of spectators at their home games. In contrast, the Bucks, Suns, and Bulls won significantly more games on average than the Packers/Zephyrs, Cavaliers, and Trail Blazers.Thus, in the short run, these results combined indicate that the Milwaukee Bucks and Chicago Packers/Zephyrs were, respectively, the most and least successful expansion teams within five years after they had joined the league. Furthermore, five or 50 percent of the clubs in the table relocated to other sites because of inferior performances, change of ownership, attendance problems at home games, and/or opportunities to play in newer arenas within more lucrative sports markets. Before discussing the next group of NBA expansion franchises, I will briefly review the history of the ABA and its business effects in professional basketball during the late 1960s to mid-1970s. For sure, many teams within this special league had a profound impact on sports fans and the development of the game in markets across the US.

ABA–NBA MERGER During the mid-to-late 1960s, a group of investors including sports promoter Dennis Murphy and his partner Gary Davidson organized the ABA.


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The league located the home of one or more of its 11 teams in some relatively small places such as Indianapolis and Louisville, in medium-sized cities like Dallas and Pittsburgh, and in large metropolitan areas such as Los Angeles and New York. What distinguished the ABA from rival basketball leagues was its focus on entertaining fans, adopting a freewheeling and wide-open style of play, and the athleticism and skill of some teams’ superstars. Moreover, while the NBA continued to perform as it did before the 1960s, the ABA adopted a tri-colored ball, three-point shot and 30-second shot clock, and introduced an all-star game that featured a slamdunk contest by players.4 Table A.2.1 in the Appendix provides the names of teams and lists the number of seasons of ABA franchises and other interesting facts about them. Among this group, there was only one expansion team. That is, in 1972, business entrepreneur Leonard Bloom paid ABA officials $1 million for the right to locate a new franchise in a sports city of southern California. After he named it the San Diego Conquistadors, Bloom’s team played at home in 3,200-seat Peterson Gymnasium but won only about one-third of its total games. For personal and professional reasons, Bloom sold his franchise in 1975 for $2 million to sports investor Frank Goldberg who renamed it the San Diego Sails. Because of its low attendances at the city’s Golden Hall Arena and a performance record of winning just three of 11 games, the Sails terminated operations during the league’s 1975 regular season. Thirteen ABA clubs relocated from their home sites within cities to other metropolitan areas — four moved in 1968, three each in 1969 and 1970, and one each in 1973, 1974, and 1975.The majority of these competitors had various deficiencies.These problems included apathetic fans, inferior performances on the court, performing in games at their home sites within dilapidated and small-sized arenas, trying to operate without enough revenues to exist for more than a few years, lack of television and radio broadcasting contracts, and inability to attract support from the media. Simply put, they were unable to successfully promote their organizations 4

See “American Basketball Association (ABA)” at http://www.rauzulusstreet.com [cited 12 August 2005]; “American Basketball Association (1967–1977)” at http:// hoopedia.nba.com [cited 20 August 2009];“Remember the ABA:Team Histories & Fan Memories” at http://www.remembertheaba.com [cited 2 August 2009]; Frank P. Jozsa, Jr., American Sports Empire: How the Leagues Breed Success (Westport, CT: Praeger Publishers, 2003).


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and brand of basketball, and thrive as business enterprises. Nonetheless, the Denver Rockets/Nuggets, Indiana Pacers, and Kentucky Colonels were the most stable franchises in the ABA during its nine seasons as a primary league. After some adjustments in scheduling games, the ABA finished its 1975 (or 1975–1976) basketball season with eight teams. In June 1976,America’s two principal leagues merged when four ABA clubs each paid the NBA a fee of $3.2 million to become a member of this rival organization. Furthermore, the ABA Nets compensated the NBA Knicks with $4 million to enter and compete in the New York area and along with Denver, Indiana and San Antonio, agreed to split the cost and pay the ABA’s Kentucky and Utah team owners $3.2 million each for folding their operations. In the end, the ABA was a temporary but moderately popular league that did not strongly threaten the NBA.Too many ABA clubs had operating problems and thus they were weak, unstable, and financially insecure.Without a lucrative national television contract, the ABA teams could not seriously challenge their counterparts for fans within big and midsized cities. If the ABA had not merged with the NBA in 1976, it would have folded that year or later in 1977 or 1978. Thus, the Nets, Nuggets, Pacers, and Spurs have each performed in the NBA for more than 34 years and have occasionally contended for division and conference titles, and have competed or will compete in a league championship series.The following is an overview of these four former ABA teams — in regular seasons and postseasons — before and after they had transferred into the NBA in 1976. First, the New York Nets were somewhat successful because they won championships in the ABA’s 1973 and 1975 seasons. When the franchise migrated into the NBA in 1976, however, its average three-year win–loss performance significantly declined, from 66 to 33 percent. Similarly, the Nets’ average home attendances and ticket sales decreased at the Nassau Veterans Memorial Coliseum while in the NBA for one season, and then for two more seasons at the Rutgers Athletic Center when the team was renamed the New Jersey Nets in 1977. Despite this, during the early 2000s, the Nets became more competitive and prosperous since they won four AD and two Eastern Conference titles.These results occurred primarily because of point guard Jason Kidd who was then the club’s most popular, talented, and valuable player. After trading Kidd to the Dallas Mavericks in 2008, the Nets have struggled to win its games particularly against the Boston Celtics and have therefore been unable to qualify for the NBA playoffs. In short, the Nets have been and are a moderately profitable franchise whose most


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recent performances suggest it is not a threat to win a league championship anytime soon. Second, the Denver Nuggets won three division titles and one of their conference championships while playing in the ABA for nine years. After joining the NBA in 1976, the team’s average attendance more than doubled at games played in Denver’s McNichols Sports Arena. Despite an increase in spectators and more ticket sales at home games, the club’s win–loss results fell marginally from 61 to 58 percent during the next five regular seasons. Although the Nuggets earned six Midwest Division (MD) titles in total between the late 1970s and 2009, the franchise had failed to top the Western Conference since 1976. In recent years, however, head coach George Karl and superstar Carmelo Anthony are leaders who have inspired the Nuggets to excel in the Northwest Division (NWD) against such opponents as the Portland Trail Blazers and Utah Jazz. Third, frequently more competitive in the late 1960s and early 1970s than the Nets and Nuggets, the Indiana Pacers won a total of three division and five conference titles, and three ABA championships. During those years, such players as George McGinnis, Mel Daniels, and Roger Brown excelled for the Pacers especially when Bobby “Slick” Leonard coached them. Furthermore, the club’s average attendance exceeded 325,000 per season at the Indiana State Fair Coliseum and later, in Indianapolis’ Market Square Arena. Upon entering the NBA, the Pacers deteriorated and almost went bankrupt. Indeed, the franchise traded some of its best players in 1975–1976, paid millions in compensation to ABA teams not included in the ABA–NBA merger, and the club experienced financial problems due to lower ticket sales and revenues while televising its games to local audiences. Fortunately, after a successful telethon, the team’s ticket sales rose and so did the attendance at its games played in Market Square Arena. Since joining the NBA in 1976, the Pacers have won four CD titles and one Eastern Conference championship.To win more of them, the Pacers must overcome and defeat their major rivals in the conference including the Chicago Bulls, Cleveland Cavaliers and Detroit Pistons. Fourth, after transferring from the ABA into the NBA in 1976, the San Antonio Spurs’ average home attendance and win–loss percentage each increased for several years.With more revenue to operate their franchise, various Spurs owners have invested resources and cash in experienced coaches and talented players. Consequently, since 1978, the Spurs have won 17 MD and/or Southwest Division (SWD) titles and four each Western Conference


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and NBA championships. Furthermore, the club qualified to perform in a large number of the league’s last 30 playoffs. Such great athletes as George Gervin, David Robinson, and Tim Duncan provided the rebounds and points for the Spurs to win a majority of their games in several consecutive seasons. Besides Duncan, point guard Tony Parker and shooting guard Emanuel “Manu” Ginobili are team-oriented athletes who play at a fast pace on the court, and are unselfish and stress teamwork.After Duncan retires, the Spurs will likely struggle each season to defeat the Dallas Mavericks, Houston Rockets, and New Orleans Hornets for a SWD title. In part, the NBA is more prosperous and its teams are profitable because the league merged with the ABA in 1976 and admitted only four of its teams. For sure, the Spurs are a superior NBA franchise while the Nets, Nuggets, and Pacers each rank average or above average in such measures as home attendances, operating revenues, and estimated market values. Based on their business decisions, environments and opportunities, I predict that these four clubs will continue to exist for many years and perhaps thrive within, respectively, the San Antonio, New York–New Jersey, Denver, and Indianapolis areas.

NBA EXPANSION FRANCHISES: 1976–2009 After adding 10 new franchises and another four from the ABA between 1961 and 1976 inclusive, the NBA in the late 1970s consisted of 22 franchises or 11 teams each in the Eastern and Western Conference. More specifically, there were five clubs each in the Atlantic and Pacific Divisions, and six each in the Central and Midwest Divisions. Based on the geographic distribution of these clubs, a few of them played at home within very small-to-small sports markets such as Buffalo, Kansas City and Milwaukee; more of them in mid-sized places like Atlanta, Cleveland and Phoenix; and a minor number of them in such large-to-very large cities as Chicago, Los Angeles and New York. In fact, the Chicago Packers/Zephyrs, San Diego Rockets, Buffalo Braves, and New Orleans Jazz were the league’s four expansion clubs established before 1976 that moved from their original sites. It appeared, therefore, that as of mid-to-late 1979 and early 1980, an opportunity existed for the NBA to exploit and enter other markets within the US and Canada. As previously stated in this chapter, I identify these sports areas and explain the circumstances regarding when and why the NBA approved the admission of new franchises into them. While some of these expansion clubs failed to perform at their original sites no more than


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several years, others succeeded to compete and even excel as enterprises into the early 2000s. From this analysis, readers will realize and be informed enough to understand the differences in the performances and business results of NBA expansion teams prior to and after 1976. The first area selected for expansion during the 1980s was located in northeast Texas, while the eighth expansion occurred within southern North Carolina in 2004.5

Dallas Mavericks After playing for six seasons at an arena based in Dallas, a syndicate of investors led by Angelo Drossos and Red McCombs purchased the ABA Chaparrals for an unknown price and moved the franchise in 1973 from Dallas to San Antonio where it performed for three seasons, and then in 1976, it transferred into the NBA. Thus, with the NFL Cowboys and MLB Rangers being the only major professional sports teams located in the Dallas–Fort Worth–Arlington area, Texas entrepreneur Don Carter and his partners Norman Sonju and M. Douglas Adkins headed a syndicate that submitted a bid to the NBA, and in mid-1980, the group paid a $12 million fee and won the right to put a new team in the City of Dallas. These owners named their club the Dallas Mavericks based on a character in a 1957–1962 television western drama titled Maverick. Although this expansion caused some controversy because the University of Texas in the nearby City of Arlington used that nickname, the NBA Mavericks retained their new identity within the MD (later SWD) of the league’s Western Conference. As denoted in column four of Table 2.2, the Mavericks were moderately popular at home since their attendances while playing in Dallas’ Reunion Arena averaged 12,000 per game for five NBA seasons.Yet, the club only won approximately 41 percent of its total games during this period.Then in 1987 the team won its first division title and 19 years later, a Western Conference title, but lost in the league’s championship series to the Miami Heat who 5

The readings in footnote 3 discuss or mention a majority of these former expansions. Also, see “Basketball History” at http://www.history-of-basketball.com [cited 20 September 2005]; “History of Basketball” at http://library.thinkquest.org [cited 24 August 2009]; “National Basketball Association (NBA) History” at http://www. rauzulusstreet.com [cited 12 August 2005]; “NBA Growth Timetable” at http://www. basketball.com [cited 17 September 2005]; “Professional Basketball Leagues” at http://apbr.org [cited 22 August 2009].


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League Expansions and Mergers 39 Table 2.2 Performances of NBA Expansion Franchises, Selected Seasons Year

Franchise

Seasons

Attendance

Win–Loss

1980 1988 1988 1989 1989 1995 1995 2004

Dallas Mavericks Charlotte Hornets Miami Heat Orlando Magic Minnesota Timberwolves Toronto Raptors Vancouver Grizzlies Charlotte Bobcats

5 5 5 5 5 5 5 5

492 970 613 620 812 713 605 619

0.409 0.341 0.319 0.392 0.256 0.357 0.206 0.351

Note: To interpret Year, Seasons, Attendance and Win–Loss, see the Note in Table 2.1. Because of a players’ strike, the NBA’s 1998 regular season equaled 50 games per team.Thus, the Attendance and Win–Loss in Tables 2.1 and 2.2 are not perfectly comparable due to the league’s shortened season in 1998 and other factors. Source: The website http://www.basketball-reference.com contains the home attendances and winning percentages of all NBA teams.

played in the SED of the Eastern Conference. Indeed, head coach Avery Johnson and such players as German-born Dirk Nowitzki and guard Jerry Stackhouse led the Mavericks team to many of its victories. Another factor that has contributed, in part, to the recent success of the Mavericks is basketball enthusiast and former webcasting genius Mark Cuban, a billionaire who acquired the franchise in 2000 from H. Ross Perot, Jr. Previously Cuban had established a technology company named Broadcast Inc. during the 1980s and sold it in 1999 for $5.9 billion to Yahoo! His involvement, management style, and investment increased the Mavericks’ estimated market value to about $500 million in 2008, which ranked it seventh among all NBA teams. With his aggressive but sometimes outrageous behavior, positive attitude, and showmanship during Mavericks’ home games, Cuban inspires the Mavericks and is truly a character among his peers. However, the league’s commissioner, David Stern, has fined him thousands of dollars for acting like a juvenile, arguing with referees and interfering in games, which in turn disrupts the crowd in attendance and gives the NBA a terrible image especially to athletes interested in playing basketball as a career.

Charlotte Hornets For years, the south-southwest region of North Carolina has been a hotbed for amateur and professional basketball. Besides the presence of several


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college and university teams, the ABA Carolina Cougars played at home there in 1969–1974.Thus, after the NBA announced plans to expand by four teams sometime during 1988–1989, millionaire George Shinn assembled a group of prominent businesspersons primarily from the Charlotte area to contact the league and bid for a franchise. For sure, this group’s advantage over others in seeking a new professional team was a 24,000-seat, state-of-the-art arena named the Charlotte Coliseum. This facility was, indeed, one of the largest and most attractive available within the US or Canada to serve as a potential and full-time home of an NBA club. In April of 1987, Commissioner David Stern told Shinn that the NBA awarded his group the league’s 24th franchise for a fee of $32.5 million.After this payment, Shinn conducted a local contest of name-the-team from which the word “Hornets” earned the most votes. Interestingly, this word had derived from Charlotte’s fierce resistance to British occupation during the Revolutionary War of the 1770s when Lord General Cornwallis referred to the city as a veritable “nest of hornets.” Some minor league baseball teams in the area had also called themselves Hornets during the early-to-mid-1900s. Therefore, the Charlotte Hornets became the name of this new basketball franchise. Although some sports officials and Charlotte fans felt that the Coliseum was too large to host a new NBA team, Shinn thought the area’s longstanding goodwill, love, and support of basketball events would transfer to his franchise. Shinn’s beliefs were verified when the club initially sold 15,000 regular season tickets and eventually a peak of 21,000 of them. Moreover, the Hornets played before capacity crowds at the Coliseum for more than 350 consecutive home games or nearly nine of the league’s years.When longtime NBA executive Carl Sheer became general manager and former college and NBA assistant Dick Harter the club’s first head coach, together they organized a roster of veteran players who had the desire, experience, and talent to compete and qualify for the playoffs. As denoted in Table 2.2, the Hornets’ annual attendance averaged 970,000 or 23,700 per game for each of five seasons.This indicated that the franchise earned a large amount of revenues from ticket sales even though it won a disappointing one-third of total games during this period. Furthermore, the Hornets never won a division title and rarely finished at .500 or better in a regular season. Nevertheless, the club’s popularity continued until certain events occurred locally that forced Shinn and co-owner Ray Woolridge to move the Hornets from Charlotte to New Orleans in 2002. This relocation and others are exposed and further analyzed in Chapter 3 of this book.


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In retrospect, the NBA made a prudent business decision by awarding Shinn an expansion team in the late 1980s.The Charlotte area contained a large enough population of basketball followers to form a fan base that enthusiastically supported various Hornets teams at their home games. This love affair between city and team may have lasted a few more years if Shinn and some of his players had not made some stupid and tragic mistakes by acting foolish, irrational,and wrongheaded.These,in turn,embarrassed them and the organization within the community. When local voters overwhelmingly defeated a referendum to build the Hornets a facility to replace the Coliseum, Shinn realized the relationship had ended and that relocation of the Hornets to another area was the only way to maintain his investment in and ownership of the franchise.

Miami Heat During the late 1960s and early 1970s, the southeastern region of Florida hosted the ABA Miami Floridians for a few years, and then since the mid1960s, fans there have cheered for the former AFL and current NFL Dolphins. Later, the MLB Marlins and NHL Panthers teams played their home games in the area. In general, businesses and families in the City of Miami have tended to support high school, college, and professional football events rather than those in other team sports. When Commissioner David Stern announced that the NBA picked Charlotte, North Carolina as a site for a new expansion team, he stated that a syndicate led by Carnival Corporation executive officer Micky Arison had received a right to own and operate an expansion franchise in Miami as well for a fee of $32.5 million.What convinced Stern and the league’s team owners to collectively choose Miami was, in part, Arison’s commitment, success and wealth, and the area’s increasingly large, growing, and affluent number of sports fans and the city’s publicly financed basketball arena. Due to warm temperatures and balmy weather conditions in southeast Florida, and for personal reasons, Arison appropriately named his NBA team the Miami Heat. As reported in columns four and five of Table 2.2, Heat teams were not very popular or competitive during their initial five seasons in the league. On average, they attracted 613,000 spectators during each NBA regular season or about 15,000 per game and won approximately 32 percent of them against their opponents. From commercial and performance perspectives, these results undoubtedly disappointed Arison and NBA officials who expected the Heat to perform better and establish a dedicated, organized, and robust fan base within Miami’s sports market.


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After Arison hired Pat Riley as the club’s head coach in the mid-1990s, Riley made a series of risky deals when he traded some of the Heat’s veteran players in exchange for free agents and skilled athletes on other NBA teams. While this strategy excited fans and Miami’s media, it also improved the team’s ability to compete and win more home and away games.To illustrate, the Heat won AD titles in the 1997–2000 NBA seasons.Then, it won the SED in the 2004 season when veteran all-star center Shaquille O’Neal joined the franchise after playing several years for the Los Angeles Lakers in the Western Conference’s PD. With the experience, strength, and finesse of O’Neal and backup center and shot-blocker Alonzo Mourning, young and high-scoring guard Dwayne Wade, and a quick but veteran player named Gary Payton, the team excelled and won an NBA championship in 2006 by defeating the Dallas Mavericks. Undoubtedly, the Heat’s local, regional, and national market of fans, and its revenues, profits, and value each increased when O’Neal and his teammates dominated their opponents in the league. Because of injuries to Wade and the departure and/or retirement of other star players, the Heat will struggle to overcome recent improvements in the coaches, rosters, and performances of the SED’s Atlanta Hawks and Orlando Magic. Nonetheless, if Arison decides to invest more resources and money to upgrade the quality of coaches and players in the Heat, then the franchise may become competitive enough again to win more division and conference titles, and another NBA championship. Otherwise, the Heat will finish fourth or fifth and out-of-the-playoffs for years. Next, I highlight the histories of the five expansion teams that entered the NBA after the Miami Heat did in 1988.

Orlando Magic For a fee of approximately $32.5 million from basketball investors in 1989, an NBA expansion committee approved the entry of a new franchise that general partners Robert Hewitt and Bill DuPont, and executive, entrepreneur, and author Pat Williams would jointly own and operate from its office in central Florida. Based on entries in a name-the-team contest sponsored by local sports officials and the Orlando Sentinel newspaper, these owners rejected such suggestions as the “Juice” and “Tropics” and instead decided to name their team the Orlando Magic.This name, in part, reflected Disneyland’s Magic Kingdom being a popular tourist attraction located in the Orlando area. Before it played a season, the club hired former NBA player Matt Guokas as head coach.


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With respect to its first five campaigns in the league, the Magic played at home in the Orlando Arena. While there, its attendance averaged about 15,100 fans per game even though the team won only 39 percent of them. Meanwhile, during this period, the DeVos family purchased the franchise for $85 million from its original owners and consequently, multimillionaire Richard DeVos then became the majority owner. For various reasons, the club improved so much that in 1995 it won the AD and Eastern Conference but lost to the Houston Rockets in an NBA championship series of games. Nevertheless, the Magic conquered its opponents and won AD titles again in 1996 and 2008. In short, the Orlando Magic franchise has been a relatively successful NBA organization. Since 1989, it has qualified for and appeared in more than 50 percent of the playoffs in the Eastern Conference. Furthermore, the Magic’s various rosters have featured such notable players as Dwight Howard, Grant Hill, Penny Hardaway, Shaquille O’Neal, Tracy McGrady, and Vince Carter. In recent years, Howard has excelled especially in field goal percentages and rebounds.Thus, because of Howard’s athleticism, performance and skill, the Magic’s games are exciting to watch for fans.This, in turn, has expanded the Magic’s image, popularity, and reputation throughout central Florida and thereby increased its revenue, profit, and estimated market value. If Howard and other key players remain healthy, this franchise will likely win an NBA championship within five years and become more valuable and wealthy as a business.

Minnesota Timberwolves Between 1946 and 1960, the Lakers played at home in the Twin Cities, i.e., Minneapolis–St. Paul, Minnesota.Thirty years after the Lakers left Minneapolis for Los Angeles, NBA officials granted an expansion franchise to co-owners Marv Wolfenson and Harvey Ratner for a fee of $32.5 million. After a namethe-team contest, the club was nicknamed Timberwolves as Minnesota contained the largest number of timber wolves among the lower 28 states, or about 1,200 of this species during the late 1980s. After playing one season at home, the team left the cavernous Metrodome to play in Minneapolis’ Target Center.As denoted in Table 2.2, the Timberwolves averaged almost 20,000 fans per game for five consecutive years and that included a league record of more than one million spectators in the NBA’s 1989 regular season. Interestingly, this turnout of


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fans occurred despite the Timberwolves winning only one-fourth of their home and away games. By 1993, the annual attendance of the Timberwolves at the Target Center had declined to 733,000. One year later,Wolfenson and Ratner attempted to sell their franchise to a group based in New Orleans. Interestingly, the NBA rejected that deal since the southern Louisiana area was not a viable market for a pro basketball team in comparison to the region in southwest Minnesota. Within a few years, however, Wolfenson and Ratner sold their franchise to multimillionaire Glen Taylor who then hired former Boston Celtics all-star player Kevin McHale as general manager. During the late 1990s, head coach Flip Saunders and players Kevin Garnett, Stephon Marbury, and Tom Gugliotta performed exceptionally well and led the Timberwolves into the playoffs. Then in 2004, the club won the MD but later lost to an opponent in the postseason of the Eastern Conference. Shortly thereafter, Garnett became a free agent and demanded a much more lucrative contract from his former team. The Minneapolis area, being a relatively small-sized sports market, did not provide enough revenues for the Timberwolves to retain Garnett and some of his teammates.After Taylor failed to reach a satisfactory agreement with Garnett, he decided to sign a long-term contract with the Boston Celtics. Fortunately for Garnett, this change resulted in a championship for the Celtics. Unless the Timberwolves spend more money on payroll and significantly increase the wages and other monetary incentives of coaches and players, they will not be competitive or consistently defeat such opponents in the league’s NWD as the Denver Nuggets and Utah Jazz. Recently the Timberwolves fired McHale, which may or may not improve the decisions made and implemented by the club’s management.As such, I expect this franchise will flounder for a few years. Whether it recovers and becomes a division winner ultimately depends on Taylor and the leadership of his new general manager and the head coach. Indeed, it may be a decade before the Timberwolves effectively replace Garnett, adjust to McHale’s departure, and play well enough to make the playoffs and win another title.

Toronto Raptors Six years after adding the Orlando Magic and Minnesota Timberwolves, the NBA was determined to increase its membership and expansion of territory in other areas of North America.That strategy succeeded in 1993 when the league awarded the ownership of its 28th franchise to a syndicate headed by


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Canadian John Bitove for a fee estimated at $125 million. To distinguish Bitove’s new team, a nationwide contest in Canada generated more than 2,000 entries and these included such unique nicknames for the team in Toronto as the Beavers, Dragons, Hogs, Scorpions, T-Rex, Tarantulas, and Terriers. After evaluating these results throughout the spring months of 1994, the club selected Raptors as a nickname based on predatory dinosaurs that appeared and terrorized people in the movie Jurassic Park. Before the Raptors’ inaugural season started in November 1995, the team hired former college star and Detroit Pistons player Isiah Thomas as executive vice president of expansion. Thomas then staffed management positions by hiring personnel and among them, his friend Brendan Malone who became the Raptors’ head coach. The team’s roster, meanwhile, consisted of players from an expansion draft held in mid-1995.To perform in the Eastern Conference, the league assigned the Raptors to the CD and that inspired sports fans throughout Canada to demand and generously purchase the team’s apparel, equipment, and merchandise. After playing at home for four years in Toronto’s SkyDome, the Raptors competed in the Air Canada Centre that was located within the city. During each of its initial five NBA seasons, the Raptors averaged 713,000 spectators annually or about 17,300 per game. Furthermore, despite winning an average of only 35 percent of its total games, the club improved in the CD from eighth in 1996 to third in 2000. Originally, the team’s best player was former University of North Carolina All-American Vince Carter who led the Raptors into the NBA playoffs in 2000–2002. After the team reorganized and traded Carter in 2004, center-forward Chris Bosh became its leading scorer and rebounder. Because of Bosh and the appointment of Bryan Colangelo as general manager, and a revamped roster of players, the Raptors improved competitively and won a division title in the 2006 season, thereby qualifying for the playoffs of the Eastern Conference. To win a conference title and championship in the future, however, the Raptors must invest more resources into and upgrade their organization, especially the quality of coaches and players. In recent seasons, such rivals as the Boston Celtics and New Jersey Nets were tough threats that challenged the Raptors in all their mutual home and away games. Besides Bosh, few players on the squad really excite American and Canadian basketball fans and furthermore, they are unable to outperform their opponents’ guards, forwards, and center. Based on results since 1995, it is unlikely that the Raptors will have the administrative officials and wherewithal to become an elite team, an efficient business, and a profitable franchise. In short,Toronto is a difficult


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sports market for any pro basketball club to dominate and from which to receive enough financial, media, and emotional support for the Raptors to win an NBA championship.

Vancouver Grizzlies Besides the Toronto Raptors, the NBA expanded again in 1995 by authorizing the entry of a franchise that originated within the Canadian province of British Columbia. After settling a dispute with the Royal Canadian Mounted Police — who objected to naming the team Vancouver Mounties — the club adopted Vancouver Grizzlies as its title since the grizzly bear is a native animal to British Columbia. To play its home games in the city, the Grizzlies shared the 19,200-seat General Motors Place with the NHL Vancouver Canucks. As denoted in Table 2.2, the Grizzlies’ attendance for each of five regular seasons averaged 605,000 people at its home arena or 14,700 per game. More specifically, the number of fans in attendance dropped from 704,500 in the NBA’s 1995 season to 569,800 five years later.This decline occurred, in part, because the club’s average percentage games won each season was only 20 percent and accordingly, it finished either sixth or seventh within the MD. From a business perspective, the franchise experienced several economic and operating problems while based in Vancouver, which is Canada’s third largest city and is located on the west coast of the country. First, the Grizzlies performed well below expectations, especially in the league’s 1998 season when the team won merely eight or 16 percent of its home and away games. Second, the team drafted some professional players who for one reason or another were not productive and as such, they failed to improve the club’s performances. These athletes, for example, included Shareef AbdurRahim,Antonio Daniels, Mike Bibby, and Steve Francis. In fact, during the late 1990s, Francis publicly stated his dissatisfaction with playing for the Grizzlies and he embarrassed and criticized the franchise in the media.This publicity upset local sports fans, which caused the team to trade Francis to the Houston Rockets in exchange for other players. Third, after the NBA renewed its regular schedule after locking out players in 1998, the Grizzlies’ attendances at General Motors Place declined and that, in part, created financial losses for Orca Bay Sports and Entertainment who, besides the Grizzlies, also owned the Canucks. These losses, in turn, convinced majority shareholder Jeff LaQueef to sell his ownership interest


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in the Grizzlies. However, when NHL St. Louis Blues owner Bill Laurie attempted to purchase the Grizzlies in order to move the team from Vancouver to a site in eastern Missouri of the US, the NBA rejected Laurie’s plans. As a result, in 2000 the league approved executive Michael Heisley’s acquisition of the franchise since he committed to operate and keep it at home in Canada. Nevertheless, one year later, Heisley received permission from the NBA to move his team from Vancouver to Memphis,Tennessee. In hindsight,Vancouver was ill-suited, unable, and unprepared to host an NBA franchise in the mid-to-late 1990s.The city had supported the Canucks and amateur ice hockey games for decades, but not teams in other sports. When the Grizzlies’ financial condition worsened, the franchise’s original owners realized their mistake but lost millions of dollars on their investment.Thus, the club’s sale and relocation from Vancouver after six years was inevitable and realistically, the most prudent decision for Heisley and the NBA.

Charlotte Bobcats When the Charlotte Hornets relocated from Mecklenburg County in North Carolina to New Orleans, Louisiana in 2002, the NBA promised officials in Charlotte that the city was a prime candidate as a site for the league’s next expansion team. Accordingly, in December of that year, the league awarded a franchise for the Charlotte area to an investment group led by Black Entertainment Television founder Robert Johnson.Then six months later, the Charlotte Regional Sports Commission conducted a help-name-the-team contest. From thousands of suggestions submitted, the contest resulted in Bobcats as the best nickname for the team rather than Dragons or Flight.The bobcat is an athletic, fierce, and indigenous predator that roams in forests throughout the Carolinas.Thus, this cat-related name was a natural choice for the club given that NFL Carolina Panthers play their home games at Bank of America Stadium within the city. During its initial five years in existence, the Bobcats drew an average attendance of 619,000 fans each season or 15,000 per game.This happened at the Charlotte Coliseum in the NBA’s 2004 season and then at the Charlotte Bobcats Arena (renamed Time Warner Cable Arena) in the 2005–2008 seasons.Yet, the Bobcats won only 35 percent of their home and away games. That occurred despite the club drafting two former players from the University of North Carolina — Raymond Felton and Sean May — and All-American Emeka Okafor, a center who competed at the University of


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Connecticut. Furthermore, in 2006, Johnson hired Basketball Hall of Fame inductee Michael Jordan to become head of basketball operations and the franchise’s second largest shareholder. Because of the team’s relatively small fan base in the Carolinas and disappointing performances in the league’s SED, and due to its millions of dollars in losses and accumulated debt, Johnson has placed the franchise for sale in the marketplace. Besides these reasons for the sale, Johnson operates his business interests from Washington, DC and thus, he rarely attends Bobcats home games. Since he paid $300 million for the team in 2003 and Forbes magazine valued it at $284 million in 2008, this difference in amount may delay a deal until prospective owners and Johnson negotiate and establish an acceptable selling price. Supposedly, Jordan expressed an interest in organizing a group of investors to purchase the Bobcats from Johnson. When the Bobcats can consistently defeat such competitors as the Atlanta Hawks, Miami Heat and Orlando Magic, the team will win a division title or earn a wild card to qualify for the playoffs.To achieve that goal, the franchise needs local owners who are willing to make public appearances in the community, participate in charitable and social events, and encourage fans and businesses in the Charlotte area to purchase regular and premium seats, and lease suites at Time Warner Cable Arena. If the Bobcats team does not increase its fan base and likewise fails to attract more interest and revenue from advertisers, partners and sponsors, the franchise will continue to flounder and not establish itself as a prominent sports entertainment enterprise within Mecklenburg County and throughout the Carolinas. In my opinion, Johnson should sell his team to a well-known person, family, or estate from the Charlotte area, or to a syndicate that preferably represents investors within North and/or South Carolina. Between 1980 and 2004 inclusive, eight new franchises joined the NBA. Based on the data reported for these teams during their first five seasons, the Charlotte Hornets and Minnesota Timberwolves had the highest average attendances at home games, while the Dallas Mavericks and Vancouver Grizzlies attracted the fewest number of fans per game. In total, the eight teams averaged 680,000 each season in their home arenas or 16,500 per game.With respect to their win–loss performances, the group won approximately 32 percent of their home and away games.While the Dallas Mavericks and Orlando Magic were the most competitive clubs, the worst performing teams were the Vancouver Grizzlies and Minnesota Timberwolves who won between 20 and 26 percent of all games.


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Given this and other facts about them, the Vancouver Grizzlies and Charlotte Hornets failed to continue after a number of years at their original sites and they relocated to, respectively, Memphis in 2001 and New Orleans in 2002. Of the six remaining clubs in Table 2.2, the Dallas Mavericks, Miami Heat, and Orlando Magic operate as average-to-above-average businesses relative to amounts of their revenues, profits, and estimated market values. In contrast, the financially inferior expansion teams are the Charlotte Bobcats, Minnesota Timberwolves, and Toronto Raptors.As such, the latter three franchises are risky enterprises that may or may not be profitable now and in the future.

EXPANSION REVIEW: 1949–2008 Table A.2.2 in the Appendix contains the distribution of years, number of regular seasons, and performances of 18 NBA expansion franchises but excludes the four clubs that had transferred from the ABA into the NBA in 1976.With respect to column one in the table, six or 33 percent of the group expanded during the 1960s and four or 22 percent in the 1970s, five or 28 percent in the 1980s, two or 11 percent in the 1990s, and one or six percent in the 2000s. In short, the pace of expansion fluctuated for almost 30 years, but then it declined in the 1990s and 2000s because the league had already exploited its commercial opportunities by invading sports markets and increasing in size prior to 1990.As a result, at least one NBA team existed in the majority of top-ranked populated areas within the US after that year. Various columns in the table reveal other facts and information about the extent, outcome, and strategy of NBA expansion between 1949 and 2008. First, seven or approximately 40 percent of these clubs moved from their original sites according to column three.The Packers/Zephyrs, Rockets, Braves, Jazz, and Grizzlies experienced immediate operating problems and each of them lasted fewer than nine seasons before moving, while the Hornets and Supersonics each thrived more than 14 years but then relocated when local governments refused to build them new arenas financed with money from taxpayers. Of the remaining 11 franchises, they performed at home from 14–43 seasons and seem likely to exist at those sites unless there is a change in ownership, trouble with obtaining public funds for a new arena, or a depression within their local economy. As of 2008, each expansion team had averaged 21 seasons within their original area (or province in Canada).


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Second, the group of 18 clubs won 84 titles including 53 divisions, 21 conferences, and 10 NBA championships. The Bulls, Bucks, and Heat were the most successful in their respective divisions, while seven or 40 percent of the 18 clubs had no success in qualifying for the playoffs by winning this title. In other words, 11 teams earned additional revenues and some profits from appearing in various playoffs because they finished first against their primary opponents. Third, nine or 50 percent of the expansion teams won 21 conference titles during the 393 total seasons listed in column three of Table A.2.2.The Bulls, followed by the Supersonics and Trail Blazers, were the most productive in the group at winning their conferences.Alternatively, the Bucks, Suns, and Heat generally did not advance beyond the first or second round of the playoffs based on a comparison of their division and conference titles in columns four and five, respectively. Indeed, these and some other teams in the table may be relatively competitive within their divisions and popular among local fans, but they fail to defeat their rivals who are more successful in the league’s postseasons. Fourth, the Bulls won six or 60 percent of the NBA championships as reported in column six of Table A.2.2. Head coach Phil Jackson taught such players as Michael Jordan, Scottie Pippin, and Dennis Rodman to play as a team and win these impressive titles during the 1990s. Besides the Bulls, other NBA champions were the Supersonics, Bucks, and Trail Blazers in the 1970s, and the Heat in the 2000s. Based on their recent performances and current rosters, the Cavaliers, Mavericks, and Magic are likely to become NBA champions for the first time within the next five seasons. Fifth, the Bulls, Bucks, and Supersonics claimed 45 (or 54 percent) of the total titles with respect to the 18 franchises in the table. Eight different clubs won the other 39 titles and these included the Suns,Trail Blazers, and Heat. This indicates, in part, how well these NBA expansion teams performed during their histories in the league and why some of them have become more or less prosperous in generating cash flows, revenues and profits, and inflating their estimated market values.As discussed in the next major section of this chapter, San Diego and Seattle are potential markets for the future relocation of a current NBA franchise and/or the site for a new expansion team. For the ABA teams that had transferred from the ABA into the NBA in 1976, the San Antonio Spurs rank first in performances with 25 titles, and then from second to fourth are the Denver Nuggets and New Jersey Nets each with six and Indiana Pacers with five of them. To accomplish their outstanding results, the Spurs were not only competitive on the court, but the franchise


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also attracted some committed, conscientious, and knowledgeable owners and experienced and dedicated officials who successfully planned, managed, and operated the organization to achieve its mission. These decision makers, in turn, generally hired productive coaches and signed disciplined and skilled players who performed as a group rather than as selfish individualists primarily interested in the number of points they scored and the amount of their salaries. For sure, the Spurs franchise is an excellent example of a business model for other professional sports enterprises to study and copy. In comparison, the Nuggets, Nets, and Pacers franchises and their respective teams are less organized, productive, and sophisticated than the Spurs. They have not won any championships since joining the NBA in 1976 because of ownership issues and/or problems with the quality of their arenas, coaching staff, and players. Thus, they have failed to earn enough revenues from ticket sales at games, local and regional television contracts, and from other sources to significantly increase their payrolls and establish a winning tradition for a number of consecutive years. Moreover, during several NBA seasons, the Nuggets faced tough opponents in their division and conference.Thus, they were defeated in important games by the Seattle Supersonics and Utah Jazz, as were the Nets by the Boston Celtics and Philadelphia 76ers, and the Pacers by the Chicago Bulls and Detroit Pistons. Meanwhile, the Spurs usually won against such archrivals as the Dallas Mavericks and Houston Rockets. In short, the Spurs have evolved into a confident, determined, and profitable business organization within the league while the Nuggets, Nets, and Pacers struggle to achieve similar results. This completes the sections within this chapter about the competitiveness, finance, and operation of the 18 NBA franchises who were expansions since 1949 and of the four clubs that migrated from the ABA in 1976. To further extend this topic, next is an overview of the expectations, opportunities, and prospects for why, when, and where the league will or will not increase in size after the years 2009–2010.This information primarily appeared in articles published in sports magazines, in studies printed in academic journals, and in interviews conducted with NBA and other basketball officials.

FUTURE EXPANSION In 2008–2009, the NBA consisted of 30 franchises with each of them assigned to one of six divisions within either the Eastern or Western Conference. Each division, in turn, contained at least one former expansion team. That is, the Eastern Conference included the Toronto Raptors in the


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AD, the Chicago Bulls, Cleveland Cavaliers and Milwaukee Bucks in the CD, and the Charlotte Bobcats, Miami Heat and Orlando Magic in the SED. Similarly, the Western Conference had the Minnesota Timberwolves and Portland Trail Blazers performing in the NWD, Phoenix Suns in the PD, and the Dallas Mavericks in the SWD. Furthermore, the original ABA New York Nets — now New Jersey Nets — played in the AD, Indiana Pacers in the CD, Denver Nuggets in the NWD, and the San Antonio Spurs in the SWD. If NBA officials decide to expand and increase the size of the league, and consequently add new teams after 2010 located in America or elsewhere, for various demographic and/or economic reasons some US cities that previously hosted ABA and NBA clubs may not likely qualify as the most attractive and viable sites. For the former ABA, such places include Anaheim, Pittsburgh, and San Diego. With respect to the NBA, inferior sites are Buffalo, Rochester, and Vancouver besides very small cities like Anderson, Fort Wayne, and Sheboygan. Furthermore, the New York–New Jersey and Los Angeles areas each host two current NBA teams. As a result, they are occupied and in my opinion, not open or primary locations for an expansion team or teams. Various articles, reports and studies in the literature, however, have identified several of the available and most lucrative markets for a professional basketball franchise.The following describes the advantages and disadvantages of a few of these places within the US and then in other countries.6 Seattle,Washington has a relatively large-to-midsized television market, is currently the home of more than four million people including Microsoft Corporation’s Bill and Melinda Gates, and existed as an NBA site between 1967 and 2008. Moreover, the NBA Oklahoma City Thunder’s owner Clay Bennett must pay the City of Seattle $30 million in 2013 if Washington’s legislature soon approves at least $75 million in public funds to renovate Key Arena and if Seattle does not receive a new NBA franchise by 2013. However, the city and its taxpayers may refuse to pay for the renovation of Key Arena after spending $74 million in 1995 to upgrade it. Another problem in renovating Key Arena is that former Seattle Supersonics’ teams ranked in the bottom third in home attendances during their final five seasons in the league.

6 Other prominent US and foreign cities, respectively, considered potential sites for NBA expansion teams are Hartford, Honolulu and Jacksonville, and Athens, Mexico City and Moscow. See “Summer Forecast: Where Will NBA Expand?” at http://sports.espn. go.com [cited 3 August 2009]; and “Viva Las Vegas and the NBA” at http://www. sportsbusinessnews.com [cited 24 April 2006].


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Therefore, the decision to award an expansion team to Seattle fundamentally depends on whether the city’s residents will or will not finance a multimilliondollar improvement to Key Arena. Despite its relatively high crime rate and tarnished image and reputation, Las Vegas in Nevada is a potential expansion site for an NBA team.The Anschutz Entertainment Group (AEG) plans to construct a 20,000-seat stateof-the-art facility on the city’s Strip for the area’s two million residents and hordes of tourists who visit there annually to enjoy the climate, entertainment and events, and to gamble in various casinos. Regarding the disadvantages about the area, the recent mortgage crisis in the US depressed Las Vegas’ housing market and that caused thousands of foreclosures and unemployed workers in the city’s construction industry while legal betting continued to occur on NBA and other professional sports games.Although there is a minor pro basketball league that exists in the area during summer months, Las Vegas may or may not become a successful and major sports market in the future. An NBA team nicknamed the Kings performed at home in the Kansas City area during 1972–1984 before relocating to Sacramento, California. Furthermore, the Athletics played games in Kansas City during MLB’s 1954–1967 seasons as have the NFL Chiefs since 1970, while in 1974–1976 so did the NHL Scouts. In late 2007, the 18,000-seat Spring Center opened in Kansas City to attract and be the potential host of a minor league or NBA basketball team. Regarding its drawbacks, the area contains two million people (which is not huge), and it ranks no higher than 30th as a television market, and competes for local and regional sports fans with amateur basketball’s famous and successful University of Kansas Jayhawks team. In the end, Kansas City is a mediocre but available place for an NBA expansion franchise. Two other sports markets that may qualify as potential NBA sites are Newark, New Jersey and St. Louis, Missouri. The former city is home to the new Prudential Center and an alternative location for thousands of disgruntled basketball fans who avoid attending games of the NBA’s New Jersey Nets or New York Knickerbockers. Nevertheless, many businesses have abandoned Newark because of the city’s numerous government regulations, high taxes, and excessive crime rates. St. Louis, meanwhile, was the home of the NBA Bombers in 1949 and Hawks in 1955–1967. Furthermore, the city is currently the site of a team in MLB and others in the NFL and NHL. Despite the presence of other popular professional clubs, St. Louis is a viable sports town and business area for a new NBA expansion franchise.


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In a scholarly article published in 2004, two researchers created a hierarchical two-equation system to forecast, identify, and rank the US cities that are the best prospects for new or existing NBA teams. According to these academics, the three most important factors in choosing an ideal locale for such teams are an owner’s personal preferences, the political climate, and economics of a location. Specifically, their general model of location included various market characteristics and measures of revenue potential, political support, and owner preferences.Their revenue potential equation, meanwhile, depended on a number of different market and team characteristics.7 Based on forecasted probabilities of attendance, gate receipts, and total revenue that were determined for each probable city/team, their results denoted that the five best cities without a current NBA club were Louisville, San Diego, Las Vegas, Baltimore, and St. Louis. Others included Norfolk/Virginia Beach/Newport News and Pittsburgh, Hartford, Nashville, and Austin–San Marcos. In addition to these results, the authors emphasized that facility economics had become as relevant as market size in determining a professional sports team’s profits and financial success. Hence, what is important to the location decision of sports officials besides market economics is the lease agreement offered to a team by each city and the quality of the local stadium. In short, these types of models are appropriate and useful for other team sports played within many countries and regions of the world. Besides locating new teams within metropolitan areas of the US and/or Canada, NBA Commissioner David Stern has expressed in interviews to the media his concern, interest, and rationale in organizing a pro basketball league overseas with a few franchises scattered throughout areas of Europe. In more detail, one of Stern’s plans is to create and put five teams in major sports markets to form a European Division within the NBA. These clubs would play a full 82-game schedule and one or more of them will qualify each season for the league’s playoffs and may compete for a conference title and perhaps an NBA championship.Among these teams’ potential home-sites

7

In the article, current NBA teams with the highest forecasted revenues were the Chicago Bulls, New Jersey Nets and New York Knicks, while the Denver Nuggets, Charlotte Bobcats and Sacramento Kings had the three lowest amounts. See Daniel Rascher and Heather Rascher, “NBA Expansion and Relocation: A Viability Study of Various Cities,” Journal of Sports Management (2004), 274–295.


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in Europe are the cities or surrounding areas of London, Berlin and Madrid, and to a lesser extent, of Paris and Rome.8 London, England has several attributes that make it a major sports center. The city’s largest and most attractive arena has a court and capacity to occasionally play NBA preseason games. Furthermore, the London area contains 14 million people who will welcome the 2012 Olympics while male and female children, teenagers, and young adults there participate in many amateur basketball programs. Unfortunately, England’s sports fans prefer cricket, rugby, and soccer games to those in basketball.Therefore, to attract an NBA club, London must further expand as a viable market for pro basketball while the city’s arena needs to develop into becoming more lucrative as commercial property and as an asset for an incoming team. Berlin, Germany and Madrid, Spain are natural places for franchises to exist in a five-team European basketball league. In the case of Berlin, AEG built a modern 16,000-seat arena there, and this new facility could accommodate club seats, luxury suites, and other amenities.With a population that exceeds three million, Berliners will attend and enjoy NBA games and financially support their home team or teams. Madrid, meanwhile, is a city with thousands of enthusiastic, experienced, and knowledgeable basketball fans. Indeed, several popular and competitive amateur and semiprofessional basketball clubs in the city jointly contain enough skilled players to form an average-to-competitive professional team. In other words, several Spanish players are available, capable, and prepared to play for an NBA franchise and accordingly, their participation would increase attendances at, and generate revenues from, an arena located within the Madrid area.

8

For views about the NBA expanding overseas, there is Ian Thomsen, “NBA Mulling Idea of Five-Team Expansion in Europe” at http://www.si.com [cited 3 August 2009]; Anthony Olivier, “Stern: NBA Europe a Work in Progress” at http://sports.yahoo.com [cited 3 August 2009]; “NBA Names Investors in China Venture: New League is Possible,”Wall Street Journal (15 January 2008), B5;Tim Povtak,“NBA Going Full Force in Tapping the Vast China Market,” Orlando Sentinel (17 October 2007), 1; Jason Means and John Nauright, “Going Global: The NBAS Sets Its Sights on Africa,” International Journal of Sports Marketing & Sponsorship (October 2007), 40–50; Marc Edelman and Brian Doyle,“Antitrust and ‘Free Movement’ Risks of Expanding U.S. Professional Sports Leagues into Europe,” Northwestern Journal of International Law & Business (2009), 403–428.


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Besides London, Berlin and Madrid, Paris and Rome are potential but otherwise semi-inferior places in Europe for an NBA team. With respect to France’s major international city, some NBA exhibition games were held there in recent years to entertain sports fans among a population of about 11 million. Although travelling by air from large east coast cities within the US such as Boston, New York and Philadelphia to Paris is relatively convenient, the latter city’s largest venue has seats for only 13,000 people. That is not enough capacity for an NBA team to play a full schedule of home games indoors and attempt to survive from a commercial perspective. In contrast to these conditions in Paris, Rome has a number of active domestic and Euro-league basketball teams with longstanding, prominent, and well-respected traditions. Apparently, there are plans for the construction of a new basketball arena somewhere in this city of approximately four million. However, unlike London, Berlin, Madrid and Paris, Rome is more geographically remote and difficult to access by air from NBA sites in such US cities as Charlotte, Memphis, and Oklahoma City. Of course, different types of issues are involved with eventually locating NBA expansion teams somewhere in Europe. Besides inadequate venues and significant competition from other team sports, complex government regulations and several national basketball federations in European countries tend to discourage and limit sports enterprises from developing into independent, private, and profitable organizations.Across these nations, few big brand names, and coordinated marketing and promotion programs relate to and support elite and high-scale basketball leagues in Europe. Furthermore, European sports fans may not willingly purchase expensive NBA season tickets to 41 home games and adapt to American-style basketball as entertainment. In fact, corporations in London and other major cities have little to no incentive to lease club seats and luxury suites that cost thousands of Euros each season at basketball arenas. Undoubtedly, the NBA researches these matters, but the league must decide soon whether to invade European markets or otherwise let teams from the US and other nations’ professional sports leagues enter them and compete against each other for consumers. As reported in the media during 2008–2009, NBA Commissioner David Stern and a majority of franchise owners preferred to move a financially struggling team from its home area rather than permit the entry of a new club that may flounder economically and thus increase the league’s deficit and/or debt. Therefore, the NBA Board of Governors seems unlikely to approve expansion anytime soon and thereby authorize another franchise to receive its share of revenue from the league’s national broadcasting contracts.


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According to Stern,“There’s a very strong owner reaction at the present time to expansion. But at the same time, there is a very strong recognition, because of the pressures of revenue sharing, that in particular cities that currently can’t support the teams, we should consider moving them to cities that can.” In fact, Dallas Mavericks owner spoke about his disagreement with expansion by stating,“I would always vote against expansion because expansion’s the worst economic move a league like the NBA can make. Expansion is nothing more than a loan because whatever (a new owner would) give you (in expansion fees), you pay them back in equity ownership of the NBA and share of the TV [television] money.”9

SUMMARY This chapter uses data, facts, and other information from the literature to focus primarily on the roles of expansions and mergers in the historical development, growth, and success of the NBA. Several new franchises became members of the league during various years of the 1960s–2000s, while some others joined the NBA when the BAA and NBL merged in 1949 and again in 1976 when the ABA and NBA linked their operations.To examine the number, type, and result of expansions and mergers among professional basketball organizations, there are tables within the chapter and in the Appendix that provide statistics about teams and their business, markets, and performances while playing in the NBA and other leagues. In sum, three of the current and most prosperous NBA expansion franchises are the Chicago Bulls, Miami Heat, and Portland Trail Blazers. Alternatively, the least successful include the former Chicago Packers/Zephyrs, San Diego Rockets, and Vancouver Grizzlies. Some expansion teams, meanwhile, continue to exist as mediocre but viable enterprises. These are the Charlotte Bobcats, Minnesota Timberwolves, and Toronto Raptors.The reasons for differences in the quality of these organizations are the managerial decisions made by their owners and executives, and the performances of their coaches and players while playing home and away games in arenas. Because of recent

9

Regarding an expansion team to replace the Supersonics, Stern said,“I would say that the Board [of Governors] is mindful that Seattle is a first-class city whose fans historically have been terrific fans, and still are, but whose [Seattle’s] infrastructure has not been willing to participate in an arena.” See Gary Washburn,“NBA Owners Cool to Expansion” at http://www.seattlepi.com [cited 3 August 2009].


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improvements to their rosters, the Cleveland Cavaliers and Dallas Mavericks have the potential to each win an NBA championship within five to ten years. During 2012–2015, the NBA will likely expand internationally, form a multi-team division, and add franchises in such European cities as London, Berlin, Madrid, Paris and Rome. If not, then new clubs might be approved by league officials and appear within such US metropolitan areas as Louisville, San Diego, and Seattle.This chapter examines these issues to challenge, educate and inform basketball experts, fans, and other readers about NBA expansions and mergers since the late 1940s and after 2010–2011. Consequently, the future business, development, and prosperity of this professional sport depend, in part, on whether or not the league adopts and implements strategies that involve the invasion of additional and lucrative consumer markets in America and/or abroad.


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Chapter

3 Team Territories and Relocations

After they concluded their regular season and postseason games in 1949, several teams from the Basketball Association of America (BAA) and National Basketball League (NBL) merged their operations and formed one professional basketball group. That new organization became the National Basketball Association (NBA). As such, its clubs existed in cities of various sizes located within a number of different and populated metropolitan areas. Moreover, these NBA teams were each franchises that operated as commercial enterprises in their respective markets.That is, they performed in home and away games at arenas to earn revenues that may or may not have resulted in economic profits each year. For many NBA seasons, the receipts from ticket sales were the teams’ primary source of cash flow since there was very little income generated from television and radio broadcasts, and from other ways such as advertising campaigns, contributions of owners, donations, sponsorships, and sales of basketball clothes, memorabilia, and merchandise. To advise, educate, and further inform readers about the historical development and value of this 60-plus-year-old league, Chapter 3 discusses two important and interesting aspects of the NBA that relate to its business, operation, and success as a major sports organization based in America since the late 1940s.While Chapter 2 focused on the league’s specific expansions and two mergers, this chapter reveals some dates, facts, statistics, and other matters regarding when and where NBA teams originally located and why, 59


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when, and where some of them had decided to move from these places into other metropolitan areas, and then how well they had performed within their divisions and/or conferences.1 For the most part, Chapter 3 highlights a few significant activities, benchmarks, and events that justify and support the competitiveness, popularity, and structure of the NBA during its steady growth and commercial progress as a league during years and decades of the 20th and 21st centuries. First, the chapter’s contents are useful to compare teams’ home sites in the NBA to those of clubs within other professional sports leagues such as Major League Baseball (MLB), Major League Soccer (MLS), and the National Football League (NFL) and National Hockey League (NHL). Indeed, there are both minor and major differences in the demographics, economics, and societies of where clubs previously existed and/or currently perform to entertain basketball fans at games played on courts in their own and competitors’ arenas. Second, Chapter 3 exposes some obvious and underlying reasons for why NBA officials had approved — and various franchise owners had chosen — one city or area and not others as home sites for their respective executives, headquarters, and offices. As the league matured and became more businesslike, developed, and sophisticated through seasons, it encountered problems with establishing competitive divisions and conferences, and then with readjusting teams’ home and away game schedules to minimize travel costs yet encourage and maintain any natural rivalries between them. Third, arguments and compromises had occurred that led to critical decisions involving communities and the league and franchise owners about moving clubs from and into US territories with other sports franchises and may or may not have been located within the United States (US).This chapter reflects upon these discussions and the consequences of them. Fourth, Chapter 3 identifies the most and least successful relocations of NBA teams from a business perspective. Indeed, tables in this chapter and

1 Four books that discuss the relocation of NBA franchises are Frank P. Jozsa, Jr. and John J. Guthrie, Jr., Relocation Teams and Expanding Leagues in Professional Sports: How the Major Leagues Respond to Market Conditions (Westport, CT: Quorum Books, 1999); Roger G. Noll, ed., Government and the Sports Business: Studies in the Regulation of Economic Activity (Washington, DC:The Brookings Institution, 1974); James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992); Kenneth L. Shropshire, The Sports Franchise Game: Cities in Pursuit of Sports Franchises, Events, Stadiums, and Arenas (Philadelphia, PA: University of Pennsylvania Press, 1995).


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Team Territories and Relocations 61

the Appendix contain criteria, dates, names, and numbers to indicate how clubs performed before and after they had moved and whether such actions were in the best short and long run interests of these franchises and others, and with respect to the league’s future and sport of professional basketball. Fifth, the chapter predicts the future movements, if any, of current teams and whether these will occur within areas of the US or from America into other countries like Canada, England, and Mexico. In fact, some experts speculate that the NBA is likely to put existing and/or new teams in a foreign nation to form another division of the league.That group will perform independently or as a division of the NBA’s Eastern or Western Conference.2 Sixth, Chapter 3 hints at how some principles of economics, finance, management, and marketing provide basic guidelines, methods, and rules for NBA decision makers when they evaluate problems; for example, to determine if valid reasons exist for a team to leave its current site and move into another urban or rural area within the US or abroad. For sure, this chapter’s contents include concepts related to these decisions and the business of a pro basketball league and its teams such as cash flow, income, market area, productivity, profit, revenue, and value. In short, these are six unique features about Chapter 3 and its contribution to analyzing the history of the NBA and its commercial success as a professional sports organization in America and elsewhere.

TEAM TERRITORIES Between the late 1940s and early 2000s, more than 50 different NBA teams existed and performed for one or more years in several metropolitan areas within the US and two in Canada (see Table A.3.1 in the Appendix). Six clubs completed a regular season while located in one area and then folded, while

2

Several foreign and American cities are potential sites for NBA franchises.These and others were mentioned in such readings as Pat King,“Las Vegas an Unlikely Fit for the NBA,” Business Press (19 February 2001), 13; Arnold M. Knightly, “Follow the Bouncing Ball to Las Vegas,” Business Press (23 January 2006), 12; Joshua Robinson, “Stern Looks on the Bright Side of the League,” New York Times (11 January 2008), 4; Anthony Olivier,“Stern: NBA Europe a Work in Progress” at http://sports.yahoo.com [cited 3 August 2009];“NBA Teams Heading to Europe for Training Camps Next Fall” at http://www.sportsbusinessnews.com [cited 14 December 2005]; Ian Thomsen,“NBA Mulling Idea of Five-Team Expansion in Europe” at http://www.si.com [cited 3 August 2009].


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the Boston Celtics and New York Knickerbockers retained their original names and have not moved during all regular seasons of the league. Besides these eight teams, others either: (a) joined the league after 1950, (b) migrated to the NBA from a rival league, (c) changed their names, (d) relocated from one area to another, (e) moved again, or (f) simply disbanded after two or more years in existence.3 Two examples of each of these strategies (including clubs and years) were, respectively, as follows: the Phoenix Suns in 1968 and Dallas Mavericks in 1980; the Indiana Pacers and San Antonio Spurs in 1976; the Capital Bullets to Washington Bullets in 1974 and New York Nets to New Jersey Nets in 1977; the Minneapolis Lakers to Los Angeles in 1960 and Vancouver Grizzlies to Memphis in 2001; the Milwaukee Hawks to St. Louis in 1955 and San Diego Clippers to Los Angeles in 1984; and the Washington Capitols in 1951 and Indianapolis Olympians in 1953. Thus, most NBA franchises adjusted themselves in some way to reflect changes in their local and regional economic, financial, and social conditions.Therefore, many of them adopted reforms to survive and continue operating successfully as a member of the league. Similar to clubs within MLB, MLS, and the NFL and NHL, NBA teams have occupied a number of sites in metropolitan areas during decades of the 20th century and in the years 2000–2009. Each of these areas was special and unique. That is, they consisted of different characteristics, dimensions, and social relationships relative to their geographical locations such as the sizes of their populations, the distributions of age, ethnic, and gender groups and of household and per capita incomes, and their economic development and rate of growth. In other words, sports leagues are composed of franchises that play a portion of their games at home before hometown fans who tend to live primarily within a city’s border but also may reside in nearby and surrounding urban and rural places that may extend in distance more than 50–100 miles from a team’s

3

Besides the NBA, other professional basketball leagues and their teams existed in the US for one or more years. For these organizations’ histories, see “American Basketball Association (ABA)” at http://www.rauzulusstreet.com [cited 12 August 2005];“BAA/NBL Merger” at http://n-c-systems.com [cited 27 August 2005]; “Basketball Association of America” at http://hoopedia.nba.com [cited 31 July 2009]; “Encyclopedia: National Basketball League”at http://www.nationmaster.com [cited 27 August 2005];“Remember the ABA: Team Histories & Fan Memories” at http://www.remembertheaba.com [cited 2 August 2009]; Murray R. Nelson, The National Basketball League: A History, 1935–1949 ( Jefferson, NC: McFarland & Company, 2009).


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home arena. Thus, the territories of major sports franchises are especially important since they determine, in part, the demand for basketball games and the culture, organization, and failure or success of NBA business enterprises. To establish the differences and variability in population of NBA teams’ territories — which are measured and identified here as metropolitan areas — I organized Table 3.1 and in the Appendix,Table A.3.2. Combined, they indicate how the home areas of the league’s clubs ranked in population amongst all US metropolitan areas across six decades.This information, in part, reveals why some teams were competitive, dominant, and solvent for one, a few, or many years while located within an area, although others had to relocate to other places in order to attract bigger audiences at their home games and attempt to become profitable enterprises. After discussing some insights derived from these two tables, the next major section identifies the NBA franchises that had moved and examines their performances and business affairs before and following their relocation. In 1949, a majority of NBA clubs played at home within low-ranked populated areas (ranks in parenthesis), while another eight existed in Table 3.1 Population Rank of Teams’ Home Areas, Selected NBA Seasons Rank Season 1949 1959 1969 1979 1989 1999 2009

Very Large–Large

Mid-sized

Small–Very Small

Total

5(29) 5(62) 7(50) 10(46) 12(45) 12(41) 12(40)

3(18) 2(25) 6(43) 8(36) 9(33) 9(31) 7(23)

9(53) 1(13) 1(7) 4(18) 6(22) 8(28) 11(37)

17(100) 8(100) 14(100) 22(100) 27(100) 29(100) 30(100)

Note: An NBA season begins during some week in the fourth quarter (October–December) of each year and extends into one or two quarters of the next year (January–June). The league’s first season in column one is, for example, 1949 (1949–1950).The three ranks reflect the home population of each NBA franchise’s urban or metropolitan area and its ability to sustain a fan base. Total, in column five, is the number of teams in the league during these seven different seasons. The numbers in parentheses are percentages of the total for that season. In 1949, for example, five or 29 percent of NBA clubs existed at home in very large–large areas, three or 18 percent in mid-sized areas, and nine or 53 percent in small–very small areas.The same number of NBA teams existed in 2009 as in the 2008 regular season. Source: The World Almanac and Book of Facts (New York, NY: World Almanac Books, 1950–2008).


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mid-or-high-ranked places (similarly, ranks in parenthesis). These proportions changed dramatically over the next ten years. Some clubs either disbanded or abandoned their home sites in small market Rochester (35),Tri-Cities (81) and Fort Wayne (98); in unranked but tiny Anderson, Sheboygan and Waterloo; in mid-sized Washington (11), Baltimore (12), Indianapolis (29) and Denver (26); while at least one team each entered Detroit (5) and Cincinnati (18).Thus, during the 1950s, several teams withdrew from the league or relocated to different places as the NBA decreased in size from 17 members in 1949 to eight in 1959. Then from 1959 to 1969, more NBA clubs existed in large and mid-sized markets and proportionally fewer in small to very small places. High-ranked Los Angeles (2) and San Francisco (6), and mid-sized Baltimore (11), Seattle (17), Milwaukee (19), Atlanta (20), Cincinnati (21), and San Diego (23) each became homes to teams, along with the Suns in less populated Phoenix (34). Evidently, NBA officials and these franchise owners believed that new and/or existing clubs had better opportunities to establish their fan bases and prosper as businesses within cities in the US Midwest and west where populations were expanding than in those with stagnant or declining population growth like St. Louis (9), Minneapolis (14), and Syracuse (51). As indicated in Table 3.1, the number of teams existing in each rank increased from 1969 to 1979 although their percentages dropped in very large-to-large and mid-sized areas.This means that several new and traditional sports markets became relatively attractive locations for basketball franchises during this 10-year period.These included high-ranked Washington (9) and Houston (10), mid-sized Cleveland (12) and Kansas City (24), and the smaller areas of Portland (26) and Salt Lake City (37). Likewise, the ABA’s Nets shifted into the NBA from New York–New Jersey (1) and so did the Nuggets from Denver (22), Spurs from San Antonio (30), and Pacers from Indianapolis (32).The trend in rank, therefore, somewhat reversed after the late 1950s whereby the NBA decided that approving and allocating teams to perform at home and away games in a variety of high-to-low-ranked populated markets was necessary, practical, and smart from a business perspective. During the 1980s, there was a net increase in the league’s size of approximately 22 percent or by five NBA franchises. While another club appeared in Los Angeles (2) in 1984, new home sites included Dallas (9), Miami (11), Minneapolis (15), Sacramento (26), Orlando (31) and Charlotte (37). Meanwhile, the Clippers left San Diego (17) in 1984 and the Kings moved from Kansas City (24) in 1985. It was new or renovated publicly financed arenas located in most of the former areas that convinced the league’s franchise


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owners, in part, to operate from there instead of in such previous cities as Baltimore, Cincinnati, St. Louis, and Syracuse. From 1989–1999,the number of clubs in the NBA rose from 27 to 29,or by about seven percent. Organized in 1995, the new franchises were the expansion Toronto Raptors and Vancouver Grizzlies in Canada. Based on their populations as international cities, Toronto was a relatively large market while Vancouver ranked as mid-sized. Before 2009, however, some NBA clubs invaded new sites in the US. After five years of dismal performances and low attendances at its home games, the Grizzlies abandoned Vancouver for Memphis (41). Furthermore, the Hornets moved from Charlotte to New Orleans (46) in 2002, and the Supersonics from Seattle to Oklahoma City (44) in 2008. According to column seven of Table A.3.2 in the Appendix, at least one NBA team existed in the 13 most populated US metropolitan areas in 2009. Following that group of locations, the next nine largest areas that were without an NBA franchise consisted of Riverside–San Bernardino–Ontario (14), Seattle (15), San Diego (17), St. Louis (18),Tampa–St. Petersburg–Clearwater (19), Baltimore (20), Pittsburgh (22), Cincinnati (24), and Las Vegas (29). Based on population size and the number of basketball fans therein, these are potential locations to host a new and/or existing team of the league. In short,Table 3.1 indicates that the distribution and rank of the metropolitan areas of teams changed considerably between the late 1940s and early 2000s.That is, the number of teams in very large–large areas increased from five to 12 (or 140 percent), in mid-sized areas from three to seven (or 133 percent), and in small–very small areas from nine to 11 (or 22 percent).This redistribution indicates the differences and trends in the entry and exit of NBA franchises throughout its history of 60-plus years. Furthermore, the table denotes to what extent the league’s membership contracted during the 1950s, expanded throughout the 1960s–1980s, and then stabilized in the 1990s–2000s. In contrast to that data,Table A.3.2 denotes the population rank of each NBA team’s area for seven regular seasons. It reflects how this measurement varied in 2009, for example, between the Knickerbockers and Nets in New York–New Jersey (1), Clippers and Lakers in Los Angeles (2), and Bulls in Chicago (3) as teams with the highest-ranked population areas within the group, and the Thunder in Oklahoma City (44), Hornets in New Orleans (46), and Jazz in Salt Lake City (49) as the teams with the lowest-ranked areas. Indeed, the information contained in this and the other tables of this chapter are useful to appreciate, comprehend, and explain the relocation of NBA teams and their performances as businesses among the group and competitors in the sport. Consequently, Chapter 3 discusses this topic next.


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TEAM RELOCATIONS Tri-Cities Blackhawks → Milwaukee Hawks Established and organized in 1946, the NBL’s Buffalo Bison and its owners Ben Kerner, B.W. Grafton, and Leo Ferris moved their franchise that year from western New York to the Tri-Cities area that consisted of Moline and Rock Island, Illinois and Davenport, Iowa (named Quad Cities during the 1930s). After it played for three years in the league, the club joined the NBA as the Tri-Cities Blackhawks. During two seasons in the NBA, the Blackhawks won less than 42 percent of their games and performed at home games in arenas before fans within the very small market area of Moline, Rock Island, and Davenport (see Tables 3.2 and 3.3).4 Although the club qualified for the league’s playoffs in the 1949 season because of the decisions, leadership, and strategies of coach Red Auerbach, one year later Kerner drafted former College of Holy Cross player Bob Cousy but then blundered and traded his rights to the defunct Chicago Stags franchise who, in turn, surrendered him to the Boston Celtics. In 1950, Kerner acquired all rights to the team from his partners Grafton and Ferris. However, in the NBA’s regular season that year, the Blackhawks performed poorly and failed to make the playoffs. Unable to attract a sufficient number of local basketball fans to its home games and financially survive within the Tri-Cities, Kerner moved the Blackhawks from that area in 1951 to a much larger city in southeast Wisconsin where he renamed his club the Milwaukee Hawks. In short, the TriCities were each inferior sites demographically; thus, the Blackhawks could not generate enough revenue from ticket sales and other sources at home games for the team to continue operating as a business and compete in the league. Kerner’s best option, therefore, was to transfer his franchise to another but more populated location where the club might survive by winning more

4

There are books that reveal the success and other facts about the Tri-Cities Blackhawks and other clubs that operated and performed in the NBA.These volumes include Glenn Dickey, The History of Professional Basketball Since 1896 (New York, NY: Stein and Day, 1982); Connie Kirchberg, Hoop Lore: A History of the National Basketball Association (Jefferson, NC: McFarland & Company, 2007); Robert W. Peterson, Cages to Jump Shots: Pro Basketball’s Early Years (Lincoln, NB: University of Nebraska Press, 2002); Mark Pollak, Sports Leagues and Teams: An Encyclopedia, 1871 to 1996 (Jefferson, NC: McFarland & Company, 1997).


Table 3.2 Characteristics of NBA Team Relocations, 1949–2008 Seasons

Team Relocations

Area Populations Before

After

1951 1955 1957 1957 1960 1962 1963 1963 1968 1971 1971 1972 1973 1977 1978 1979 1984

Tri-Cities Blackhawks Milwaukee Hawks Fort Wayne Pistons Rochester Royals Minneapolis Lakers Philadelphia Warriors Chicago Zephyrs Syracuse Nationals St. Louis Hawks San Diego Rockets San Francisco Warriors Cincinnati Royals Baltimore Bullets New York Nets Buffalo Braves New Orleans Jazz San Diego Clippers

Milwaukee Hawks St. Louis Hawks Detroit Pistons Cincinnati Royals Los Angeles Lakers San Francisco Warriors Baltimore Bullets Philadelphia 76ers Atlanta Hawks Houston Rockets Golden State Warriors Kansas City–Omaha Kings Capital Bullets New Jersey Nets San Diego Clippers Utah Jazz Los Angeles Clippers

2 4 8 8 11 13 2 14 13 4 9 15 10 1 8 5 6

4 13 52 15 49 9 10 46 41 38 38 13 36 32 6 30 25

233 871 183 487 1,482 4,342 6,220 563 2,272 1,357 3,109 1,384 2,070 9,221 1,280 1,183 2,132

863 1,681 3,016 904 6,742 2,648 1,727 4,342 1,255 1,985 3,109 1,271 2,908 9,221 1,750 935 12,738 (Continued )

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After

3:21 PM

Before


After

9/16/2010

Before


Year


68

Year

Sacramento Kings Memphis Grizzlies New Orleans Hornets Oklahoma City Thunder

Before

After

Before

After

13 6 15 41

24 8 6 1

1,493 1,986 1,475 2,640

1,258 1,200 1,319 1,192

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Note: Year is when these NBA teams had moved and played initial regular seasons while based at their new sites. Seasons are the number of NBA regular seasons of these teams at home, respectively, before and after they had relocated. Area Populations are the home-site metropolitan populations in thousands of each team prior to and after it had moved.The number of seasons in columns four and five include teams that changed their nicknames but remained in the same metropolitan area such as the Chicago Packers/Zephyrs and Kansas City–Omaha Kings/Kansas City Kings.The TriCities Blackhawks played their home games in the cities of Davenport, Iowa and in Moline and Rock Island, Illinois.Although they moved within the same metropolitan areas, the Warriors in 1971 and Nets in 1977 were team relocations since New York and New Jersey, and San Francisco and Oakland were different sites with respect to revenue potential and being basketball markets for NBA teams. Source: The World Almanac and Book of Facts, 1950–2008; and James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992), 446–459.

3:21 PM

Kansas City Kings Vancouver Grizzlies Charlotte Hornets Seattle Supersonics

After


1985 2001 2002 2008

Before

Area Populations

9/16/2010

Seasons

Team Relocations


Table 3.2 (Continued)


Table 3.3 Characteristics of NBA Team Performances, 1949–2008 Team Relocations

Attendance

Win–Loss Before

After

1951 1955 1957 1957 1960 1962 1963 1963 1968 1971 1971 1972 1973 1977 1978 1979 1984

Tri-Cities Blackhawks Milwaukee Hawks Fort Wayne Pistons Rochester Royals Minneapolis Lakers Philadelphia Warriors Chicago Zephyrs Syracuse Nationals St. Louis Hawks San Diego Rockets San Francisco Warriors Cincinnati Royals Baltimore Bullets New York Nets Buffalo Braves New Orleans Jazz San Diego Clippers

Milwaukee Hawks St. Louis Hawks Detroit Pistons Cincinnati Royals Los Angeles Lakers San Francisco Warriors Baltimore Bullets Philadelphia 76ers Atlanta Hawks Houston Rockets Golden State Warriors Kansas City–Omaha Kings Capital Bullets New Jersey Nets San Diego Clippers Utah Jazz Los Angeles Clippers

NA NA 118 101 125 194 129 128 222 248 192 145 262 284 329 445 188

NA 199 143 77 208 103 185 120 206 183 236 267 412 218 297 313 347

41 34 52 42 35 61 26 53 54 42 45 40 53 26 41 40 29

31 49 41 32 59 40 44 54 53 40 57 45 63 38 46 31 30 (Continued )

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After

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Before


After

9/16/2010

Before


Year


70

Sacramento Kings Memphis Grizzlies New Orleans Hornets Oklahoma City Thunder

Before

After

Before

After

324 516 603 621

423 608 603 766

46 23 56 36

36 41 43 28

Note: Year is when these NBA teams had moved and played initial regular seasons while based at their new sites. Attendance (at home arenas in thousands) and Win–Loss (in percent) are each averages per season up to — but not exceeding — three years before and then following the movement of a team. For example, the Fort Wayne Pistons averaged 118,000 spectators at its home arena and won 52 percent of games played during the 1954–1956 regular seasons. NA means the data is not available. The Tri-Cities Blackhawks played for two seasons in the NBA before moving to Milwaukee in 1951. The data for the Chicago Zephyrs includes only the 1961 and 1962 NBA regular seasons since the club had formed and was named the Chicago Packers in 1961.The New York Nets played in the NBA in the 1976 season after it had transferred from the ABA earlier that year. Source: “Sports Business Data” at http://www.rodneyfort.com [cited 5 August 2009]; “Teams” at http://www.basketball-reference.com [cited 5 August 2009]; Pay Dirt, 495–500.

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Kansas City Kings Vancouver Grizzlies Charlotte Hornets Seattle Supersonics

After

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1985 2001 2002 2008

Before

Win–Loss


Year

Attendance

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games, by increasing attendances at home, and by adding market value to the wealth of its business.

Milwaukee Hawks → St. Louis Hawks While located in Milwaukee,the Hawks drafted a future superstar player named Bob Petit. Despite that decision and strategy, the team won less than 35 percent of its home and away games played in the NBA’s 1951–1953 regular seasons. Even though the club’s performances improved slightly in the league’s 1954 season, Milwaukee sports fans were much more interested in the city’s newly arrived baseball team, the Milwaukee Braves, which owner Lou Perini and his brothers had moved from Boston in 1953.Thus, the Hawks were not popular locally and were overshadowed in the area since the Braves dominated the marketplace especially while competing at County Stadium and later, by winning consecutive National League pennants and in 1957, a World Series. After five years, Hawks owner Ben Kerner — who had moved the franchise from the Tri-Cities to Milwaukee in 1951 — realized that fans in the area would not support an NBA team that won just one in three games, was not entertaining, interesting or valuable, and always finished near or at the bottom of its conference. As the income generated by the club decreased and remained among the lowest of all teams in the league, Kerner moved the Hawks from Milwaukee to St. Louis in 1955. During that year, this city in eastern Missouri was primarily a baseball town that hosted the MLB Cardinals. Nevertheless, St. Louis had twice the population of Milwaukee and furthermore, its residents earned higher incomes from their manufacturing and service jobs there and other types of occupations. In fact, St. Louis was a relatively prosperous area in the Midwest during the mid-1950s. Moreover, the city had 10,000-seat Kiel Auditorium for the Hawks to perform within during their home games. In short, as in 1949–1951 within the Tri-Cities, the Hawks had apathetic fans in Milwaukee and experienced a dismal business environment and an inferior basketball area while located there. Kerner’s decision in 1955, therefore, was to relocate the Hawks from Milwaukee to another metropolitan area or otherwise terminate the franchise. Since St. Louis was open and not occupied by another NBA team, it welcomed Kerner and approved the Hawks to lease Kiel Auditorium and play their home games there. Meanwhile, Missouri sports fans preferred to support baseball and the MLB Cardinals rather than pressure city officials to provide taxpayer money for building a new and more lucrative arena for the


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NBA Hawks. In other words, during the mid-1950s, St. Louis was clearly a superior place for the Hawks in comparison to Milwaukee.As denoted later in this section, the Hawks achieved more success financially and in their performances while located in eastern Missouri than in the Tri-Cities and Milwaukee areas.

Fort Wayne Pistons → Detroit Pistons Originally, the Fort Wayne Zollner Pistons franchise had established itself in 1941 as a team in the NBL. While performing in that league, the club appeared in four finals and won two championships.Then seven years later, the team changed its name to the Fort Wayne Pistons and shifted from the NBL into the BAA. After playing one regular season in the BAA, proprietor Fred Zollner — who also owned a local foundry that manufactured pistons for automobile, locomotive, and truck engines — transferred his franchise from the BAA into the NBA. For the next eight basketball seasons, the Pistons continued to play their home games within Fort Wayne, a relatively small town located in northeast Indiana. During its years while based in Fort Wayne, the Pistons were popular partly because they won division and conference titles in 1955 and 1956. Moreover, the club’s annual attendance averaged about 118,000 per season while in Fort Wayne due to the great performances of its all-star forward George Yardley and other exciting players like Frankie Brian and Andy Phillip.Yet, owner Fred Zollner did not earn large amounts of cash, revenue, and profit during the early 1950s since Fort Wayne was a tiny sports city that lacked enough local basketball fans to consistently attend Pistons’ home games and fill all seats in the team’s gymnasium. Furthermore, some Pistons players had allegedly conspired with gamblers to lose their team’s games during the NBA’s 1953 and 1954 regular seasons. Supposedly, in 1955, these and/or other players caused the Pistons to lose a final series to the Syracuse Nationals in the NBA championship. After his team struggled with enthusiastic fans but mediocre-to-low attendances at its home games and also financially in trouble for eight years while performing in the Fort Wayne area, Zollner moved his franchise in 1957 to nearby Detroit, Michigan which had not hosted a professional basketball team since the late 1940s. After its name changed from Fort Wayne to Detroit Pistons, the club played four seasons in 16,700-seat Olympia Stadium — home of the NHL Detroit Red Wings — and then it moved to the city’s Cobo Arena.


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From the late 1950s to mid-1980s, the Pistons had some great players; however, they unfortunately performed on inferior teams. During that period, Zollner sold the team for $8.1 million to a syndicate headed by executive William N. Davidson, who in 1978 moved the Pistons from Cobo Arena in downtown Detroit to a suburb of Pontiac, Michigan where it played at home in the mammoth 80,311-seat Pontiac Silverdome. That structure was built as a professional football facility in design and configuration, and thus it hosted the NFL Detroit Lions. Between 1988 and 2009, the Pistons won nine division and five Eastern Conference titles, and three NBA championships.Apparently, sports fans living in the “motor city” had another team besides the Lions, Red Wings, and MLB Detroit Tigers to admire, praise, and support.As attendances at Pistons’ home games soared during the mid-to-late 1980s, the franchise earned more and more revenue to acquire experienced head coaches and talented players. Thus, the Pistons became increasingly profitable and the value of the franchise rose above those of NBA teams located in most of the other cities within US metropolitan areas. After William Davidson’s death in early 2009, his daughter Karen became the principal owner of the Pistons. For sure, the relocation of the Pistons from Fort Wayne to Detroit in 1957 was a smart business decision by owner Fred Zollner. The latter city contained a very large population and vigorous local economy, and hosted a number of prominent businesses in the automobile industry that leased many of the premium seats and luxury suites within Olympia Stadium, Cobo Arena and the Silverdome, and The Palace of Auburn Hills, which were each a facility where the Pistons played their home games.The club’s improvement in attendances and performances, and the payments from local basketball fans for tickets, in turn, resulted in more income for the franchise’s owners, executives, coaches, and players.Therefore, I expect the Pistons to challenge its competitors during most NBA seasons for a Central Division (CD) title in the Eastern Conference.

Rochester Royals → Cincinnati Royals In 1945, an independent barnstorming basketball team named the Rochester Pros joined the NBL. After changing its nickname from Pros to Royals, the club won a league championship in 1946 and division titles in 1947 and 1948.That year, the Royals shifted from the NBL to the BAA along with three other NBL teams.Although very competitive in the former league, the Royals underperformed as a BAA team.That is, the club won less than 60 percent of home and away games and attracted mediocre crowds to its arena in the


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Rochester area. Consequently, Royals owners Jack and Lester Harrison were disappointed that their team struggled and did not win more games and a championship in the BAA as it had done in the NBL. In 1949, the Rochester Royals entered the NBA after the BAA and NBL merged their operations.Within the NBA, the Royals won their conference in 1949 and again three years later, and an NBA championship in 1951. During these seasons of the league, such athletes as Arnie Risen, Jack Twyman, and Red Holzman were popular stars of the club. However, after 1952, the Royals performed poorly in the NBA for five consecutive years.That is, they won less than 45 percent of all their games, experienced a gradual decline in attendances at many games played at home, and incurred financial losses. As a result, the Harrisons decided to move their franchise from Rochester in western New York to the City of Cincinnati in southwest Ohio. Cincinnati was more populated than Rochester by a significant number, included a base of passionate college basketball fans that rooted for the Cincinnati Bearcats, and contained no NFL team yet hosted the Reds in MLB. Nonetheless, as denoted in Table 3.3, fewer hometown fans attended Royals games in Cincinnati than in Rochester because the former group of clubs won only 32 percent of games while in Cincinnati. In the short run, this relocation resulted in less revenue and profit, and a smaller market value for this NBA franchise.

Minneapolis Lakers → Los Angeles Lakers For a payment of $15,000, Ben Berger and Morris Chalfen purchased the Detroit Gems of the NBL, and in 1947, they moved the team to southeast Minnesota and changed its name to Minneapolis Lakers in honor of the State’s reputation as a “land of 10,000 lakes.”After winning an NBL championship in 1948, these owners then transferred the Lakers into the BAA where it won another championship in 1949 by defeating the Washington Capitols in four games.When that season concluded, the BAA merged with the NBL, reorganized, and became the NBA. Between 1950 and 1954 inclusive, the Minneapolis Lakers won four each division and conference titles, and claimed four NBA championships. Led by head coach John Kundla, the club’s superstar players were Hall of Famers George Mikan and Clyde Lovellette.After Mikan retired in late 1954, the club floundered and won fewer of its games.Then, due to a shortage of working capital for the team to effectively operate and perform in the Minneapolis area, more than 100 local businesses and individuals contributed $200,000 to


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a fund for the franchise to compete in 1957. Furthermore, in that year, a group headed by Bob Short purchased the Lakers from Berger and Chalfen for an unknown price. Despite its operating problems in 1958 when placed on financial probation by the league, the Lakers finished runner-up in 1959 to the Boston Celtics in the NBA’s final series of games.As indicated in Table 3.3, the team’s average attendance was 125,000 in Minneapolis where its win–loss record of 35 percent had occurred during the league’s 1957–1959 regular seasons. Apparently, sports fans in Minnesota had become disappointed, disturbed, and unhappy with performances of the franchise. Meanwhile, officials in local, municipal, and state governments refused to provide taxpayer money for the construction of a new basketball arena to ensure that the Lakers would remain in the Minneapolis area. These circumstances and a high probability of declaring bankruptcy caused Bob Short to move his club in 1960 from the “land of 10,000 lakes” to a diversified, expanding, and increasingly populated city in southwest California. Subsequently, Short changed his team’s name to Los Angeles Lakers where it played home games for a few seasons in the city’s 16,021-seat Sports Arena and then in the 17,505-seat Forum, and later, in the 19,079-seat Staples Center. During 1960–2009 inclusive, the Lakers won numerous division and conference titles and ten NBA championships. Besides establishing several league records while playing in games on the court and due to the performances of its superstars and Hall of Fame coaches and players, the Lakers franchise was a $584 million enterprise in 2008. Moreover, the franchise is one of the most dominant professional sports organizations in America. In part, this empire emerged in 1965 when owner Bob Short sold his potentially rich team to entrepreneur Jack Kent Cooke for $5 million, and then mogul Jerry Buss purchased it for $67.5 million in 1979 from Cooke. In that transaction, Buss became owner of the NHL Los Angeles Kings, the Forum arena in Los Angeles, and some real estate in Nevada. Since then, the Lakers have gradually increased in market value because of investments in the Staples Center and the inflow of money from ticket sales at home games, local television and radio contracts, and the sale of Lakers clothing, equipment, and merchandise.As such, the relocation of this franchise from Minneapolis to Los Angeles in 1960 was a brilliant strategy that has rewarded various Lakers’ owners, executives, coaches, and players. In turn, basketball fans in Los Angeles and across the nation have been entertained for decades by the team and many of its great athletes.


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Philadelphia Warriors → San Francisco Warriors Peter Tyrell, who owned the Philadelphia Rockets of the American Hockey League, founded the Philadelphia Warriors franchise in 1946 and entered it into the BAA.Tyrell hired longtime basketball promoter Eddie Gottlieb as the team’s coach and general manager. In the 1946 postseason, the Warriors defeated the Chicago Stags in five games and won a BAA championship due to the large number of points scored by Joe Fulks.After the Warriors transferred from the BAA into the NBA in 1949, the club won two division titles and then in 1956, a conference and league championship. During the 1950s, the Warriors’ best players were Paul Arizin and Neil Johnston.When seven-foot Wilt Chamberlain joined the club in 1959, he led the NBA in scoring for seven consecutive years beginning in 1960. In fact, Chamberlain established a single-game record in the league by scoring 100 points against the New York Knicks in March 1962. As denoted in Table 3.3, the Warriors were somewhat successful in Philadelphia. That is, the club’s average attendance exceeded 190,000 per season and the Warriors won more than 60 percent of their home and away games. Even so, the Warriors were not quite as popular in the Philadelphia area as the MLB Phillies, NFL Eagles, and NHL Flyers. Undoubtedly, this extreme competition for Philadelphia’s sports fans negatively influenced and likely diminished the Warriors’ home-game attendances and the franchise’s amounts of revenue. As a result, a syndicate headed by business executive Franklin Mieuli purchased this franchise for $850,000 in 1962 from Eddie Gottlieb, who had acquired it for an unknown price in 1952 from Pete Tyrell. Despite the Warriors’ previous titles and NBA championship, and the great accomplishments and skills of all-star Wilt Chamberlain, owner Mieuli was dissatisfied with the quality of the team’s arena in southeast Pennsylvania.Thus, in mid-1962, Mieuli decided to move his team from Philadelphia to the Bay Area in California and rename it the San Francisco Warriors.There were professional baseball, football, and ice hockey teams there but none in the NBA. Consequently, the Bay Area was a satisfactory place to play basketball since the 12,950-seat Cow Palace had the space to host a relocating NBA franchise. In fact, a few Warriors teams played some of their home games in arenas within nearby Oakland and San Jose. In short, during the early 1960s, the Warriors’ payroll expenses had increased because of higher salaries for coaches and players. Since the Philadelphia area was large but cluttered with other popular sports teams, the best opportunity for the Warriors to excel and generate more revenue was somewhere on the west coast. With the Cow Palace available in Daly City


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(across the border from San Francisco) and a superior structure to the team’s arena in Philadelphia, the Warriors’ relocation to a diverse, expanding, and populated sports market in California was a reasonable business decision in 1962.

Chicago Zephyrs → Baltimore Bullets The NBA marginally increased in size in 1961 when it approved the entry of a new team named the Chicago Packers. Owned by Illinois packing company entrepreneur David Trager, the club played home games in the city’s 9,000-seat International Amphitheatre where its total attendance for the first regular season was 103,100 spectators or approximately 2,600 per game. Furthermore, the Packers won only 18 or 22 percent of all home and away games. To stimulate local fans’ interest in professional basketball events, Trager changed the team’s nickname from Packers to Zephyrs in 1962 and moved it from the Amphitheatre to the 7,000-seat Chicago Coliseum. As a result, the Zephyrs’ home attendance increased to 155,300 that season and the club won seven more or 25 total games. After playing for two years in the “windy city,” the Packers/Zephyrs’ attendances in Chicago averaged 129,000 or 3,230 per game. Furthermore, the team won 43 games or 26 percent of those on its schedule. For sure, Trager’s franchise had encountered operating deficits and/or financial losses and an accumulated amount of debt in 1961–1962. To avoid additional money problems, Trager decided to transfer his team in March 1963 from northeast Illinois to eastern Maryland.There, it became the Baltimore Bullets to acknowledge the area’s ammunition factories, which had produced bullets for the military during World War II. In retrospect, an expansion team in the BAA named the Baltimore Bullets had joined the NBA when the BAA and NBL merged their operations in 1949. Five years later, this franchise folded midway through the NBA’s 1954 regular season. There was no connection or relationship between these two professional basketball teams each named the Bullets.Trager, however, believed that Baltimore sports fans would support his NBA team during the early-to-mid1960s. Indeed, the club played there for several years but then moved to Washington, DC in 1973 and continued to exist as a member of the NBA.

Syracuse Nationals → Philadelphia 76ers Organized and originally founded and owned by Danny Biasone, the Syracuse Nationals joined the NBL in 1946. Located at home in the west


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central New York area, the Nationals existed as the league’s easternmost team.After playing three seasons in the NBL and not winning any titles, the franchise became an official member of the NBA in 1949. During the 1950s and early 1960s, the Nationals won three each division and conference titles, and an NBA championship in 1955 by defeating the Fort Wayne Pistons in a series of games. Syracuse’s best player and leading scorer then was forward and current Hall of Famer,Adolph Schayes. As denoted in Table 3.3, the Nationals’ average attendance at its arena in Syracuse during each of the 1960–1962 NBA seasons was 128,000 spectators despite the club’s success at winning 53 percent of its home and away games. Medium-sized Syracuse was too small of a city for a professional basketball team to exist for many years and earn a substantial profit.Thus, in 1963, a syndicate led by paper magnate Irv Kosloff purchased the Nationals from its owner Jack Egan for $500,000. Then, Kosloff’s group moved the franchise from New York to southeast Pennsylvania and renamed it the Philadelphia 76ers.This name referred to the year 1776, which was when US government officials signed the Declaration of Independence in Philadelphia. For a few NBA seasons, the 76ers had problems attracting fans to their home games played at the 5,000-seat Philadelphia Arena, 9,600-seat Convention Hall, and 8,722-seat The Palestra on the campus of the University of Pennsylvania. However, when the club recruited and signed Wilt Chamberlain from the San Francisco Warriors and added other outstanding players such as Billy Cunningham, Hal Greer, Chet Walker and Lucious Jackson, the team became more competitive in the league. In fact, during the mid-1960s to late 1970s, the 76ers won five division and three conference titles, and an NBA championship in 1967. Since the early 1980s, the club has won three each additional division and conference titles, and in 1983, another NBA championship.These victories, of course, increased the 76ers’ home-game attendances and contributed to the franchise’s revenue, profit, and market value. From a business perspective, Irv Kosloff’s group made an important, prudent, and smart decision to move the Nationals from Syracuse to Philadelphia in 1963. Indeed, several of the team’s owners, coaches, and players became wealthier because of their organization’s success. In 2008, the 76ers’ estimated market value exceeded $350 million. Recently, however, the team has experienced problems with its coaches and some players, and thus, the club has failed to win a division title since 2001. For traditional basketball fans in the Philadelphia area to be optimistic and enthusiastically support this franchise in the future, the 76ers’ organization must reenergize itself and


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become confident and competitive again as an enterprise, and perhaps similar to its image, power, and prestige of the 1960s and 1970s.

St. Louis Hawks → Atlanta Hawks After this franchise had moved from Milwaukee to St. Louis in 1955, the Hawks excelled as a team. From the mid-1950s to late 1960s, the club won ten division and four Western Conference titles, and in 1958, an NBA championship. Although team owner Ben Kerner was very pleased with these results, he realized that the Hawks needed to perform in a new or renovated arena in order for the franchise to generate more revenue, acquire better players, remain highly competitive, and defeat such rivals as the Boston Celtics, Los Angeles Lakers, and Philadelphia 76ers. To replace aging 10,000-seat Kiel Auditorium and the huge but outdated 20,000-seat St. Louis Arena, Kerner negotiated with city officials and thus requested the use of public funds to finance the construction of a modern basketball facility within the St. Louis area.When his efforts did not succeed, Kerner decided to sell the Hawks in 1968 for $3.5 million to a syndicate headed by Atlanta real estate developer Tom Cousins and a prominent politician, Georgia Governor Carl Sanders. Soon after this transaction concluded, the syndicate moved the team from St. Louis to north-central Georgia where its name changed to Atlanta Hawks. After a few years playing in Georgia Tech’s 9,200-seat Alexander Memorial Coliseum, Cousins’ business firm built the 16,500-seat, state-of-the-art Omni Coliseum in downtown Atlanta. Opened in 1972, this arena was the first phase of a massive hotel, office, retail, and sports complex that eventually became the Cable News Network (CNN) Center. Obviously, the Omni attracted more people from the Atlanta area to the Hawks’ home games, which helped to increase the team’s revenue, profit, and market value. Even so, the club won only one conference title in the 1970s, two division titles in the 1980s and one in the 1990s, and zero from 2000–2009. Lately, the Hawks have improved their performances on the court and thus, they expect to be more consistent and contend for a division and/or conference title every few years. Due to the city’s dilapidated arenas during the early-to-mid-1960s, the Hawks’ new owners had a very small opportunity to continue operating their franchise in the St. Louis area and win more titles and another championship.Therefore, the relocation of the Hawks to Atlanta in 1968 was a well thought out, risky, and strategic business decision by the franchise’s ownership group. Furthermore, Cousins earned a great deal of money, prestige, and


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respect for his leadership. In the end, the location, quality, and size of different basketball arenas during the 1960s and thereafter became an increasingly significant factor in determining where various NBA teams decided to exist as enterprises and play their home games.

San Diego Rockets → Houston Rockets Established in 1967 by a syndicate with entrepreneur Robert Breitbard as its majority owner, the San Diego Rockets had entered the NBA as an expansion franchise for a fee of $1.75 million. The club’s initial head coach was Jack McMahon, while future Hall of Famer Pat Riley became the Rockets’ first draft pick.The Rockets lost 67 games in season one but during its final three seasons in the league, San Diego’s NBA team won 42 percent of all games and qualified for the playoffs in 1969 but lost in the semi-finals of the Western Division to the Atlanta Hawks (see Table 3.3). Furthermore, its average annual attendance at the city’s Sports Arena was only 248,000. Because of the Rockets’ dismal performances and relatively low home-game attendances, Breitbard decided to sell his franchise to the highest bidder. In 1971, a company named Texas Sport Investment (TSI) acquired the Rockets from Breitbard for $5.6 million. Headed by real estate broker Wayne Duddleston and banker Billy Goldberg, TSI moved the Rockets from San Diego to Houston, Texas in 1971. After this relocation, however, the team’s average attendances in games at home and its winning percentage each declined for three seasons. Even so, when the franchise drafted player Moses Malone and later Hakeem Olajuwon, it improved so that between the late 1970s and mid-1990s, the Rockets won four each division and conference titles and consecutive NBA championships in 1994–1995. During the 2000s, the franchise drafted Chinese center Yao Ming and traded for scorer Tracy McGrady. If these athletes remain healthy, the Rockets should occasionally qualify for the playoffs and perhaps win a division title and the league’s Western Conference. For certain, the movement of the Rockets from southern California to southeast Texas in 1971 was a profitable business decision for the club’s owners. Houston is a larger commercial and prosperous market for professional sports than San Diego.When Ming and McGrady play well, hometown fans are enthusiastic and attend the Rockets’ home games at the city’s 18,300-seat Toyota Center. Thus, this relocation has increased the competitiveness, quality, and success of the NBA from 1971 to the early 2000s.


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San Francisco Warriors → Golden State Warriors While located in San Francisco for nine NBA seasons, the Warriors won Western Conference titles in 1964 and 1967 but then lost in the final series of games to, respectively, the Boston Celtics and Philadelphia 76ers. However, during these years, the Warriors were not very popular among sports fans in the San Francisco area and so the team decided to play some of its home games at arenas within the nearby cities of Oakland and San Jose. In the NBA’s 1968–1970 regular seasons, the Warriors’ annual attendances decreased to 192,000 per year while the club won only 45 percent of its home and away games. Besides these problems, the club’s first round draft choice and best player Rick Barry had become angered when the Warriors refused to pay him incentive awards. Thus, Barry left the team in the late 1960s and joined the Oakland Oaks in the rival ABA for several years. Due to low attendances at — and ticket sales from — home games played in the Cow Palace, owner Franklin Mieuli moved the Warriors in 1971 across the Bay to Oakland, California and renamed it the Golden State Warriors. After four seasons there, the team won the Pacific Division (PD), Western Conference, and an NBA championship.After winning the PD again in 1976, the Warriors tended to lose a majority of games during most NBA seasons to the Los Angeles Lakers and in other years to the Phoenix Suns, Portland Trail Blazers, Sacramento Kings, and/or former Seattle Supersonics. As a commercial organization, the Warriors rank among the lowest in the league. The team does not attract capacity crowds to games played in Oakland’s 19,596-seat Oracle Arena and lacks enough advertisers, partners, and sponsors to increase its payroll, profit, and revenue by significant amounts. Although Oakland is a superior location for the Warriors than San Francisco, the franchise has struggled to become a better business enterprise and an elite member of the NBA.

Cincinnati Royals → Kansas City–Omaha Kings After existing for one season as an NBL team and then eight in the NBA, the Royals moved from Rochester, New York to Cincinnati, Ohio in 1957. For the next 15 years, various Royals teams played their home games at venues somewhere within the Cincinnati area. During this period, however, the club experienced some financial problems. As a result, the Harrison brothers sold the Royals to Frank Woods for $225,000 in 1958.Three years later, entrepreneur


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Carl Rich purchased the franchise from Woods for an unknown price, and then in 1969, a syndicate led by businessperson Max Jacobs acquired the Royals from Rich. Unfortunately, these owners did not perform as successful leaders of this basketball organization. While in Cincinnati, the Royals had some outstanding athletes play on its mediocre teams. Such performers included Jack Twyman, Maurice Stokes, Oscar Robertson, and Jerry Lucas. Despite the contributions of these great players, there were frequent disputes among the owners; Stokes suffered a seizure and was permanently disabled; some promising players were injured, traded, or became free agents; and the Boston Celtics dominated the East Division (ED) of the conference. Consequently, the Royals entertained their fans but never won a division title. During the late 1960s, the team began to play a few home games in arenas at neutral sites in Ohio such as within the cities of Cleveland, Columbus, and Dayton.These games indicated that the franchise was in trouble and was not likely to survive much longer in Cincinnati. As listed in Table 3.3, the team’s average attendance fell to 145,000 per season in the early 1970s and its winning performance to 40 percent. Because of huge financial losses, owner Max Jacobs sold the Royals in 1972 for an unknown price to the Missouri Valley Sports, Inc., a syndicate that included a number of wealthy business executives. After receiving approval from the NBA, this group moved the franchise from Cincinnati to northwest Missouri and renamed it the Kansas City–Omaha Kings. Based on the team’s attendances, performances and other factors, the Royals were unable to continue operating in a relatively small town like Cincinnati. Because the franchise had a high turnover of owners, only a few excellent players, and numerous financial difficulties, the club finally abandoned its site in southwest Ohio and moved west to Missouri in 1972. Otherwise, the NBA may have decided to control the Royals and either funded its operations, merged it with another club in the league, or terminated the franchise.

Baltimore Bullets → Capital Bullets After playing at home for two years in the Chicago area while owned by industrialist Dave Trager, the NBA’s Packers/Zephyrs franchise shifted east to Maryland in 1963 and became the Baltimore Bullets. While there, the club improved its performances on the court in the city’s 12,500-seat Civic Center. That is, the Bullets won four division titles and in 1971, one in the Eastern


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Conference.These victories occurred because of such outstanding players as Earl Monroe, Wes Unseld, Gus Johnson, Elvin Hayes, and Kevin Porter. However, despite the accomplishments of these athletes, the club failed to win an NBA championship due to other great teams in the league like the Los Angeles Lakers, Milwaukee Bucks, and New York Knickerbockers. One factor that probably influenced the Bullets’ success in Baltimore was Trager’s sale of the franchise in 1964 to multimillionaire Abe Pollin for $1.1 million. While engaged as the club’s full-time owner, Pollin applied his business experience and knowledge of the sport, and invested more money and additional resources into the franchise. For example, he hired efficient executives as decision makers and productive coaches, and increased the payroll of players on the roster. Furthermore, Pollin traded many of his lowest performing athletes to other teams in exchange for those who blended in and thus conformed to the team’s strategies on offense and defense. In 1968, Pollin bought out his partners for an unknown price and became the franchise’s sole owner. During the NBA’s 1970–1972 regular seasons, the Bullets’ annual attendance at the Civic Center in Baltimore averaged between 250,000 and 275,000 spectators.The team, meanwhile, won more than 50 percent of its home and away games. Because the Bullets needed more revenue from their arena to compete and challenge opponents within the Eastern Conference, Pollin decided to move his club in 1973 to Landover, Maryland and rename it the Capital Bullets. While waiting for the completion of a basketball facility in Landover, the Bullets played home games at the 13,500-seat Cole Field House on the campus of the University of Maryland in College Park. In December 1973, the 18,756-seat Capital Centre opened for the team to play its home games and one year later, the club’s name changed from Capital to Washington Bullets. Before 1980, the Washington Bullets won three each division and conference titles, and in 1978, defeated the Seattle Supersonics to win an NBA championship. Dick Motta coached the team, which included Hall of Famers Elvin Hayes and Wes Unseld. Since winning the Atlantic Division (AD) in 1979, the Bullets (renamed Washington Wizards in 1997) have struggled to become as competitive in the league as in the 1970s. Other NBA clubs such as the Miami Heat, Orlando Magic, and Atlanta Hawks have improved during various regular seasons of the 1990s and 2000s, while the Bullets/Wizards, for various reasons, have seemed leaderless, lethargic, and uninspired.Thus, it may be five or more years before Washington wins another Eastern Conference title and significantly increases the franchise’s revenue, profit, and market value.


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New York Nets → New Jersey Nets After competing in the ABA for one year as the New Jersey Americans and another eight as the New York Nets, owner Roy Boe agreed to enter his club into the NBA in 1976. That year, however, Boe reneged on his offer to pay superstar Julius Irving a pay raise.As a result, Irving refused to play in Nets’ games, so Boe traded him for $3 million to the Philadelphia 76ers.The Nets finished at 22–60 in 1977 and the club’s home attendances dropped from 406,000 in 1976 while in the ABA to 284,000 in the NBA. In total, these problems created severe financial and personal problems for Boe and his franchise. After the Nets completed the NBA’s regular season in early 1977, Boe transferred his team from New York back to its original state and renamed it the New Jersey Nets. For four years, the Nets played their home games at the 8,500seat Rutgers Athletic Center on the Kilmer Campus of Rutgers University in Piscataway, New Jersey. During this period, the club had more losses than wins in consecutive seasons. Furthermore, in 1978, Boe declared bankruptcy and accordingly, he sold his franchise for an unknown price to a group of seven local businesspersons led by Joseph Taub and Alan Cohen.Three years later, the Nets moved into the newly built, $85 million Brendan Byrne Arena (renamed Continental Airlines Arena in 1996 and then Izod Center in 2007) at the Meadowlands Sports Complex located in East Rutherford, New Jersey. Throughout the 1980s and 1990s, the Nets failed to win their division but occasionally qualified for the NBA playoffs in the Eastern Conference. Then during 2002–2004, the club won three AD and two conference titles but was later defeated in these championship series by the Los Angeles Lakers and San Antonio Spurs. In 2006, the Nets won the AD and in the NBA playoffs, lost to the Miami Heat in five games. Consequently, New Jersey is an inconsistent competitor on the basketball court because the Boston Celtics usually win or finish runner-up in the AD, while the Nets must conquer others to make the playoffs. From a business perspective, the Nets franchise is located within a lucrative market and a highly populated area.As such, the team earns enough revenue to survive and each year, marginally increases its economic value.There is speculation and rumor, however, that the club plans to leave New Jersey for a site in the Brooklyn Borough of New York City.Apparently, legal issues have complicated this relocation strategy. Unless there is a significant change in the club’s payroll or the team performs above expectations, the Nets will continue to exist as a moderately successful member of the NBA.


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Buffalo Braves → San Diego Clippers For a fee of $3.7 million, the Buffalo Braves joined the NBA in 1970. Between that year and 1977, the franchise had a series of different owners. Since the team was rarely competitive in its division, the Braves’ home attendances ranked among the lowest in the league.Thus, some local fans predicted that various Braves owners would transfer their club from Buffalo to another metropolitan area in the US. In fact, the City of Buffalo filed a $10 million damage suit in court and obtained an injunction to block a business deal whereby Braves owner Paul Snyder would sell his club for $6.1 million to Irving Cowan, who planned to relocate it to Hollywood, Florida in 1976. During its final three NBA seasons in Buffalo, the Braves’ attendances at the city’s $2.7 million Memorial Auditorium averaged 329,000 per year as the team won only 41 percent of its home and away games.These dismal performances caused owner John Brown — who purchased the club in 1977 from Cowan — to exchange his Braves franchise for the Boston Celtics, which was the property of California businessperson Irv Levin and executive Harold Lipton.Thus, after the team completed its 1977 regular season in western New York, the NBA voted 21–1 to approve the Braves’ relocation from Buffalo to southern California.After that move occurred, Levin and Lipton changed their club’s name to San Diego Clippers. In retrospect, during the early-to-mid-1970s, Buffalo was a small market whose sports fans preferred to attend the home games of the city’s NFL Bills and NHL Sabres. Furthermore, Buffalo’s 15,000-seat Memorial Auditorium was an unattractive facility for professional basketball games and essentially lacked any amenities to generate additional revenue for the Braves. In short, the high turnover of the franchise’s owners, poor quality of the club’s gymnasium, and the subpar performances of the team caused NBA officials to authorize this relocation unanimously in 1978.

New Orleans Jazz → Utah Jazz For an expansion fee of $6.15 million, the New Orleans Jazz joined the NBA in 1974. Shortly thereafter, the club traded several of its high draft picks for the Atlanta Hawks superstar player Pete Maravich.Although he was an entertaining athlete and prolific scorer, Maravich suffered from various injuries. For one season, the Jazz performed in the 6,500-seat Loyola Field House and later in the city’s 7,853-seat Municipal Auditorium, and then in the 55,675seat Louisiana Superdome. Each venue had flaws. With respect to the Field


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House, the court was so high above the floor that players complained of falling off it; the Auditorium was too small; and the Superdome had onerous lease terms for the franchise. In other words, the Jazz incurred financial losses when it played in these facilities. As denoted in Table 3.3, between the 1976 and 1979 NBA seasons inclusive, the Jazz won approximately 40 percent of their home and away games, although the club’s attendances averaged 445,000 per season in New Orleans. Despite the strong demand by local fans to attend home games and watch Maravich perform, Jazz owner Sam Battistone received permission from the NBA in late 1979 to move his franchise from southeast Louisiana to Salt Lake City in northern Utah. In total, such problems as a gradual decline in annual home attendances during the late 1970s, an unprofitable lease at the Louisiana Superdome, and injuries to key players like Maravich caused the Jazz franchise to move from New Orleans in 1979. Although Salt Lake was a smaller and less developed sports market than New Orleans, it had hosted the ABA’s Utah Stars during the early 1970s.When Battistone’s team arrived there, it adopted Utah Jazz as its name even though Salt Lake did not identify itself with or embrace the jazz music culture. Since its relocation in 1979, the Jazz have won eight division and two conference titles, yet zero NBA championships. In 1997–1998, the club featured most valuable player Karl Malone and the league’s all-time assists leader John Stockton. Nonetheless, the Jazz finished runner-up in two championship series to the Chicago Bulls starring Michael Jordan. To qualify for the playoffs again, the Jazz must defeat such tough Northwest Division (NWD) competitors as the Denver Nuggets and Portland Trail Blazers. Because Salt Lake City does not host a MLB, NFL, or NHL team, the Jazz are a popular attraction in the area and a somewhat profitable business enterprise. Thus, the franchise will continue to operate there after 2009–2010 because it has an extensive fan base that attends home games of the team. Besides the revenue generated from corporate sponsors, the Jazz has a small but expanding local and regional television market for broadcasting its games especially against division rivals. In short, the Jazz will remain at its home in Salt Lake City for many years.

San Diego Clippers → Los Angeles Clippers Three years after the Buffalo Braves moved to southern California and was renamed the San Diego Clippers, owners Irv Levin and Harold Lipton sold


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their franchise for $13.5 million to Los Angeles real estate developer and attorney Donald Sterling. During the 1981–1983 NBA seasons, the club struggled and won only 29 percent of its home and away games, while attendance at San Diego’s 14,500-seat Sports Arena averaged 188,000 or approximately 4,600 fans per game. In fact, the club had finished with 43 victories in 1979, which as it turned out, was the Clippers’ last winning season for the next 13 years.The league’s scoring leader World B. Free and San Diego native, center Bill Walton, were the team’s most popular and skilled players while its coaches included Gene Shue and Paul Silas. In the early 1980s, Donald Sterling began to communicate with other basketball officials and thus lobbied the NBA for permission to relocate his franchise to a larger and more populated area on the west coast.This strategy succeeded when Sterling received approval from the league in 1984. As a result, he transferred the Clippers from San Diego to central California, renamed the team Los Angeles Clippers, and leased the city’s 16,161-seat Memorial Sports Arena for its home games. Nevertheless, the team won only 38 percent of all games in the 1984 season, and held losing records for the next seven years while in the PD. Furthermore, the Clippers paid the NBA $6 million in 1988 for invading the territory of the Los Angeles Lakers, who had filed a lawsuit in court against Sterling’s relocation from San Diego. After playing for six years in a 17,608-seat arena named Arrowhead Pond in Anaheim, California, the Clippers joined the Lakers and NHL Kings in 1999 to open the 18,977-seat Staples Center in downtown Los Angeles. Even so and despite a series of changes in coaches and players, the Clippers have yet to win a title.The Lakers and Phoenix Suns are excellent clubs in the Western Conference, while the Clippers, Sacramento Kings, and Golden State Warriors usually play for third, fourth, or fifth place in their division. Based on these results, it is unlikely that Sterling’s franchise will ever prosper in the Los Angeles area.Whether the club relocates back to San Diego or perhaps to another area on or near the west coast depends on several factors. For sure, Las Vegas, Nevada is a city that has the demographic attributes and other amenities that the Clippers could exploit to improve the competitiveness, operation, and value of the franchise.

Kansas City Kings → Sacramento Kings While playing several NBA seasons in Kansas City, the Kings won a Midwest Division (MD) title in 1979 and qualified again for the playoffs in 1980 and 1981. However, during some of these seasons and over the next few years,


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the franchise experienced problems that affected its achievements and reputation within the city. For example, the Kings’ two best athletes left to play for the Cleveland Cavaliers, and the roof in Kansas City’s $23 million Kemper Arena collapsed from a winter snowstorm that forced the Kings to play home games at the 8,000-seat Municipal Auditorium. Furthermore, a syndicate from Sacramento led by executives Frank and Greg Lukenbill purchased the franchise in 1982 for $11 million from Missouri Valley Sports, Inc., and the Kings fired its general manager Joe Axelson because of a bizarre scandal but later rehired him. When it shared the local sports market in winter months with the Kansas City Comets, an indoor soccer team owned by Dr. David Schoenstadt who later founded Discovery Zone, the Kings underperformed in the 1982–1984 NBA seasons. In fact, the Kings won about 46 percent of their games and the average attendance at 17,500-seat Kemper Arena was only 324,000 or 7,900 per season.These issues motivated the Lukenbills to petition the NBA and request authorization to relocate their club out of northwest Missouri. In 1985, the league approved this request and so the franchise’s owners moved the Kings from Kansas City to northern California. The team was renamed Sacramento Kings and played its home games temporarily in the 10,300-seat ARCO Arena. Except for making the playoffs in the 1980–1981 and 1985 NBA seasons, the Kings were a mediocre team from the late 1980s to mid-1990s. However, after the Maloof family acquired the franchise, it changed direction and won PD titles in 2002 and 2003. The Kings have not yet participated in an NBA championship series although the Maloofs are dedicated and wealthy owners who have invested more resources and money into their team.The club’s executives, coaches, and players are professionals, and they have contributed to an increase in attendances at games played within the city’s renovated 17,317-seat ARCO Arena. For the Kings to win a Western Conference title and ultimately an NBA championship, the club’s players must perform as a team and consistently defeat the Los Angeles Lakers and Phoenix Suns during the league’s regular seasons. Otherwise, the Kings’ operation will be mediocre and result in average success as a competitor in the game and as a business in the sport.

Vancouver Grizzlies → Memphis Grizzlies After it joined the NBA in 1995 as an expansion team, the Grizzlies struggled to win games and become popular in the Vancouver area of British


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Columbia. Although the club shared 18,630-seat General Motors Place with the NHL Canucks, attendances at Grizzlies’ home games only averaged more than 500,000 per season during the NBA’s 1998–2000 regular seasons. Unfortunately, the Grizzlies’ management had drafted some players who violated the team’s standards and behaved immaturely and irresponsibly. Furthermore, the NBA lockout in 1998 caused the franchise to incur large financial losses. During 1999–2000, majority owner Jeff LaQueef became so pessimistic about the Grizzlies that he sold his interest in the franchise.Then in 2000, Orca Bay Sports and Entertainment sold the team to multimillionaire Michael Heisley who, in turn, promised to keep the Grizzlies in Vancouver. However, when attendances at Grizzlies’ home games fluctuated in the 2000 season, fans feared the franchise would relocate.After that season concluded, Heisley received approval from the league in March–June 2001 to move his team into a mid-sized city in America’s southeast region, where the club changed its name to Memphis Grizzlies. Interestingly, this city is the home of Federal Express who preferred that Heisley name his team the Memphis Express.The league, however, prohibits teams from adopting the names of corporations.5 Despite a few appearances in the NBA playoffs during the 2000s, the Grizzlies lose most of their away games each season against the Dallas Mavericks, Houston Rockets, and San Antonio Spurs. Located in an expanding sports market where most tourists visit the grave of Elvis Presley and tour his estate, the Grizzlies do not earn enough revenue to hire the most experienced coaches and talented free agents and veteran players. Thus, Heisley must draft college athletes who are capable of immediately starting in positions on the team and who will make a marginal difference in winning close games.Thus far, this task has been difficult especially because of the competitiveness and great traditions and businesses established by the Mavericks, Rockets, and Spurs franchises. Based on my research of teams’ performances in the NBA, the Grizzlies can expect to eventually advance in the playoffs to earn more revenue and profit, but the club will not win a Western Conference title for several years.

5

For more information about this relocation, see Terry O’Neill,“Losing the Grizzlies,” The Report (5 March 2001), 36–37; Idem.“Saving the Grizzlies,” The Report (5 March 2001), 36–37; Howard Tsumura,“Vancouver,” Sporting News (30 April 2001), 52;“NBA Franchise History” at http://www.hickoksports.com [cited 27 August 2005].


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Charlotte Hornets → New Orleans Hornets In 1988, the Charlotte Hornets became an expansion team in the NBA. For several years, the club had the highest home-game attendances in the league and during the early-to-mid-1990s, occasionally qualified for the playoffs in the Eastern Conference. However, after a series of incidents during the late 1990s and in 2000–2001, the Hornets’ popularity sagged and its fans suddenly became disenchanted, irritable, and upset with the team.6 Besides the Hornets trading some key players such as Alonzo Mourning, Larry Johnson and Glen Rice, there were events off the court that affected the team’s image, performance, and reputation. For example, a woman claimed that owner George Shinn had raped her in 1997. Although he avoided a civil suit, the trial tarnished Shinn while Charlotte fans became suspicious of the team.Then in 2000, player Bobby Phills died in an automobile accident whilst racing a teammate after they had practiced at the Charlotte Coliseum. Phills was a popular player whose death shocked the city, and the team later retired the number on his jersey. During 2000–2001, the Hornets’ attendances at home declined and Shinn issued an ultimatum for the city to build his club a new arena within the area or he would move the Hornets to another market.After a non-binding referendum for a large arts-related package of projects — that included an arena — failed by a significant percentage, Charlotte political officials devised a way to construct a new facility without the support of voters. One condition of the proposal, however, required that Shinn sell his franchise to someone else or to a group of investors. After evaluating the economic costs and benefits of playing at home in Louisville, Norfolk, St. Louis and other places, Shinn decided to relocate his team in 2002 to southeast Louisiana and rename it the New Orleans Hornets. Although that city’s television market was smaller than Charlotte’s, Shinn

6

Various articles highlight different aspects about the Hornets’ move from Charlotte in 2002 and the club’s circumstances in New Orleans. For example, see “Hornets, City Officials Agree to Win-Win Practice Site Deal,” New Orleans CityBusiness (24 January 2005), 26; Jere Longman, “Hornets Thrive Amid Empty Seats in New Orleans,” New York Times (12 February 2008), 1; Jack McCallum, “Hello, New Orleans,” Sports Illustrated (11 November 2002), 76; Irwin Speizer, “Shinn Given City a Surprise Boost,” Business North Carolina (December 2002), 10; “The Buzzing Sound,” New Orleans CityBusiness (21 January 2002), 26.


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retained ownership and the club scheduled its home games at the 18,500-seat New Orleans Arena, which was adjacent to the 55,675-seat Louisiana Superdome, and in the city’s central business district. As part of the deal to approve a move of the Hornets to New Orleans, the NBA promised Charlotte that within two years it would award the league’s next expansion team to the city. Indeed, the NBA fulfilled its promise and the Charlotte Bobcats became a new team in 2004 that performed for one season in the Coliseum and then in a new 19,000-seat downtown stadium currently named the Time Warner Cable Arena. Since 2004, the Hornets have been gradually more competitive within the Southwest Division (SWD) of the Western Conference.The club’s point guard, Chris Paul, was NBA Rookie-of-the-Year in 2006 and since then, he has improved in making assists and steals per game. His leadership has increased the Hornets’ ability to play professional basketball, which means more fans attend their games in New Orleans or watch them on television.As such, the franchise’s local advertisers, partners, and sponsors are increasingly interested and financially more involved with the team. Potentially, this will add revenue, profit, and net worth to the club and income for Shinn and his coaches and players. From a business perspective, the Hornets have begun to recover from Hurricane Katrina and marginally prosper after relocating to New Orleans from Charlotte. Whether this upward trend continues depends, in part, on the productivity of playmaker Paul and the club’s performance each season in its division, and on the economy of New Orleans and southeast Louisiana.

Seattle Supersonics → Oklahoma City Thunder As an NBA expansion team since 1967, the Seattle Supersonics competed for 41 years in the league. During this period of the league’s regular seasons and postseasons, the club won more than 50 percent of its home and away games and finished its tenure in Seattle with six division and three conference titles, and in 1979, an NBA championship. For business and personal reasons, the Supersonics’ owners sold their franchise for $350 million in 2006 to a group of investors led by entrepreneur Clay Bennett. Bennett spent a great deal of his time in 2007 negotiating with Seattle government officials to publicly finance the construction of a new facility for his team with taxpayer money or alternatively, to invest in and significantly renovate the city’s 17,000-seat Key Arena. After his efforts failed, Bennett announced


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plans in the media to move his basketball club from Seattle to Oklahoma City when its lease expired at Key Arena.7 During mid-2008, the City of Seattle and Bennett settled a lawsuit in federal court. Accordingly, Seattle received $45 million from Bennett for terminating the Supersonics’lease at Key Arena,and if certain conditions occur,the city would be due an additional $30 million payment from Bennett in 2013. Furthermore, Bennett agreed to leave the Supersonics’ colors, logo, and name in Seattle for use by a future NBA team. However, he owned these three items of property plus other assets such as the club’s championship banners and any trophies. After moving from the State of Washington to Oklahoma in 2008, Bennett’s team adopted Oklahoma City Thunder as its new name and scheduled all home games in the 19,600-seat Ford Center. After two regular seasons of competition in the league, the Thunder had won 43 games in total or 26 percent of them.Although forward Kevin Durant is a highly skilled player with great potential, the franchise needs to hire executives who are efficient and an experienced head coach who can improve the team’s short run confidence, performance, and stability. The Thunder plays in the league’s Northwest Division. Thus, it must compete in games each season and challenge such strong rivals as the Denver Nuggets and Utah Jazz. It is too soon in years to determine whether the Supersonics’ relocation from Seattle to Oklahoma City in 2008 was a prosperous, smart, and worthwhile decision by Bennett and the NBA. If the Thunder establishes a passionate and midsized-to-large fan base in the area within five years and the team receives some grassroots support from local businesses, civic organizations, and the media, then the franchise will survive and eventually earn enough revenue to realize a profit. Otherwise, the Thunder will struggle to win games and will incur deficits, as did some other NBA clubs that had moved from one area to another during the 20th century.

7

This is the most recent movement of an NBA franchise.To read about its significance and other details, there are “Deal Allows the Sonics to Leave Seattle for Oklahoma City,” New York Times (3 July 2008), 6; Richard Sandomir,“Sonics Given Approval to Move to Oklahoma,” New York Times (19 April 2008), 2;“Sonics’ Bid to Leave Seattle Gets League Nod,” Wall Street Journal (21 April 2008), A10; “Sonics the Most Likely to Move,” Charlotte Observer (19 February 2006), 14C; Howard Bloom, “Welcome to Franchise Relocation Hell — the Seattle Sonics” at http://www.sportsbusinessnews.com [cited 5 November 2007]; Jim Cour, “Sonics Looking to Arena Alternatives” at http:// www.netscape.sports.com [cited 1 February 2006].


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Thus far, this chapter has discussed differences between the territories of NBA teams, and revealed why and when a fraction of them relocated from their original sites. The latter group consisted of 21 clubs of which four or 19 percent of them had moved during the 1950s, five or 24 percent in the 1960s, seven or 33 percent in the 1970s, two or 10 percent in the 1980s, and three or 14 percent in the 2000s. With respect to years before and after these clubs had moved,Table 3.2 indicates that five or 24 percent of them played more NBA seasons at their former sites or prior to their relocation year, and only 10 or 48 percent of the 21 teams settled in more populated areas. Surprisingly, the Royals/Kings and Braves/Clippers franchises each transferred to other markets twice, while the Hornets and Supersonics/Thunder each moved to other places only once. In contrast, the Warriors in 1971 and Nets in 1977 each shifted to different sites within the same metropolitan area. Table 3.3, meanwhile, provides interesting information about the group. For example, it denotes that after relocation, the average attendance increased for 10 or 53 percent of the teams and especially by large proportions for home games of the Kansas City–Omaha Kings, Capital Bullets, and Los Angeles Clippers. In addition, the average winning percentage of ten clubs fell after they moved and that group included, for example, the Detroit Pistons, Utah Jazz, and New Orleans Hornets. Failure to win more games at their new locations occurred for several reasons such as a change in their owners and coaches; the injuries, retirement, or trade of skilled players; improvement in other teams within a division; and/or financial problems. Interestingly, the Lakers in Los Angeles, Bullets in Baltimore and Washington, DC, Warriors in Oakland, Kings in Kansas City–Omaha, Clippers in Los Angeles, and Grizzlies in Memphis each experienced higher attendances and improvements in their winning percentages when they moved than before at their previous home sites. In short, the data within these tables report various results and contrast what occurred before and after a number of NBA franchises had shifted from one area to another sometime between the early 1950s and 2000s.To differentiate amongst these teams and their respective relocations, I evaluate and rank them in the next section based on a combination of their pre- and postmove attendances and seasons of performances. In other words, some franchise movements were more successful for the league, team owners, and communities than others from business, competitive, and/or economic perspectives.


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EVALUATION: TEAM TERRITORIES AND RELOCATIONS Superior Group After they had settled, several NBA clubs substantially matured through the years and became increasingly more established and valuable within their home territories and/or market areas. For various demographic, financial, and personal reasons, these include — in chronological order within Table 3.3 — the Detroit Pistons, Los Angeles Lakers, Philadelphia 76ers, Atlanta Hawks, Houston Rockets, Capital Bullets (now Washington Wizards), New Jersey Nets, Utah Jazz, and Sacramento Kings. Among this group of nine franchises, the Los Angeles Lakers rank first, Detroit Pistons second, and Philadelphia 76ers third for being the three most successful franchises at their respective post-move sites. Meanwhile, the Atlanta Hawks, New Jersey Nets, and Sacramento Kings are the least superior among the nine within this group. If the Houston Rockets, Washington Wizards, and Utah Jazz win their conference and a championship in or soon after 2010, then their status will improve such that they will rank closer in quality and other relevant criteria to the Lakers, Pistons, and 76ers. This information and the data suggest, in part, that these nine clubs will not likely relocate again or return to their original metropolitan areas. To illustrate, the cities of Fort Wayne, Kansas City, and Syracuse are each too small to host an NBA team, while Minneapolis contains the Timberwolves, New York has the Knickerbockers, and New Orleans is home to the Hornets. Furthermore, Baltimore is near Washington, DC where the Wizards reside, while San Diego and St. Louis are primarily excellent sports towns for professional baseball, football, ice hockey, and/or soccer than for an elite basketball club. After evaluating all factors and measurements, the Lakers, Pistons, and 76ers and the other six teams herein are well-entrenched within their respective communities even when they experience conflicts such as a change of ownership, financial problems, perform below expectations, and/or suffer a temporary decline in their home-game attendances. In short, they rank as superior relocations relative to the other dozen that occurred among the group of 21 listed in Table 3.3.

Average Group Based on readings in the literature, different statistics, and other information reported in this book’s chapters, the average relocations in chronological


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order are as follows: to St. Louis, Missouri from Milwaukee,Wisconsin by the Hawks in 1955; to Baltimore, Maryland from Chicago, Illinois by the Zephyrs in 1963; to Oakland, California from San Francisco, California by the Warriors in 1971; to Kansas City, Missouri from Cincinnati, Ohio by the Royals in 1972; to Los Angeles, California from San Diego, California by the Clippers in 1984; and to Memphis,Tennessee from Vancouver, Canada by the Grizzlies in 2001. In other words, each of these movements involved issues that in some way caused minor and/or semi-major difficulties and therefore ranked them as average rather than superior or inferior. The following are some comments about the rationale for these rankings and their various effects. The Hawks played in St. Louis for 13 seasons and then moved to Atlanta, Georgia in 1968. Although the team performed more successfully in eastern Missouri than at home within southeast Wisconsin, sports fans in the St. Louis area were more entertained by — and preferred to support — the city’s MLB Cardinals, NHL Cardinals, and NHL Blues than attend basketball games at the Hawks’ arena in St. Louis. Next, although not very popular among fans while playing home games at its arena in eastern Maryland, the Bullets nevertheless existed for ten years in Baltimore and then relocated 45 miles south to Washington, DC. Realistically, basketball fans and various businesses in the Baltimore area failed to identify with the Bullets and their success in games. Thus, the franchise floundered during the early 1970s, which resulted in its relocation from Baltimore to the nation’s capital city in 1973. After the Warriors franchise moved from San Francisco to Oakland in 1971, it won more games before a larger number of spectators at its arena. However, during its 38 seasons there, the club won two division titles but never appeared in an NBA championship series. Because of various conflicts, the business of the Warriors franchise was mediocre and this fact ranked its relocation from San Francisco as merely average. In contrast, the Kings played fewer seasons in Kansas City–Omaha than the former Royals did in Cincinnati. The Kings won only one division title and failed to become as popular in the Kansas City area as the MLB Royals or NFL Chiefs. Furthermore, the club had financial problems and its relocation from Kansas City was imminent before the mid-1980s. Because of these matters, the Kings in northwest Missouri ranked as an average enterprise. The Clippers’ attendances at its home games in Los Angeles greatly increased after the franchise moved from San Diego in 1984. However, the Clippers have yet to win a division title or compete in an NBA championship.The Lakers and MLB Dodgers, according to sports experts, dominate the Los Angeles sports market each year while the Clippers struggle to fill


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seats at their local arena during most home games.Thus, the franchise and its move from San Diego rank average relative to others in the group of 21. Similarly, the Grizzlies are more impressive in Tennessee than before while they performed in British Columbia. Even so, the team’s relocation from Vancouver in 2001 was significant but nonetheless, the Grizzlies franchise in Memphis is average based on its popularity, fan base, and success as a member of the SWD and Western Conference. For the reasons stated here, these few NBA franchises and their relocations to different territories since the early 1950s rank as average and not superior or inferior. If the Warriors, Clippers and Grizzlies improve enough over the next ten NBA seasons to win at least two or more division and conference titles, and their business increases within the Oakland, Los Angeles and Memphis areas, respectively, then each of them would rank higher in status at these current locations. However, if they fail to succeed at home within their sports markets, another evaluation of them may downgrade their relocation to inferior.

Inferior Group Of the 21 relocations listed in the second and third columns of Table 3.3, the inferior movements of clubs while at their new homes are chronologically as follows: the Blackhawks (renamed Hawks) from the Tri-Cities to Milwaukee in 1951; the Royals from Rochester to Cincinnati in 1957; the Warriors from Philadelphia to San Francisco in 1962; and the Braves (renamed Clippers) from Buffalo to San Diego in 1978. For each of these events, the franchises had significant financial and performance problems that exceeded those for teams and relocations previously cited in this section as superior or average. To explain further,the Tri-Cities Blackhawks won 41 percent of their games during two NBA regular seasons. If reported, their attendances at home games would likely be among the lowest in the league. Even so, owner Ben Kerner did not invest sufficient resources in — or improve the financial condition of — his franchise, so it deteriorated while operating in southeast Wisconsin. Clearly, the Hawks’ move from Milwaukee to St. Louis in 1955 was necessary and a requirement for it to continue in the NBA. Otherwise, Kerner’s team may have folded. After winning two Western Conference crowns and a championship while in Rochester, the Royals moved to Cincinnati in 1957 but did not win any division or conference titles there. In fact, the Royals won less than 40 percent of home and away games when based in southwest Ohio and fans in the area attended other events like those of the MLB Reds and AFL then NFL Bengals. Furthermore, the Royals franchise had three different


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ownership groups, which in turn, retarded its progress and stability as a competitive business in the league. For these and other reasons, the Royals in Cincinnati were a worse operation than when it existed in Rochester and then later while in Kansas City as the Kings. When the Warriors relocated from Philadelphia to San Francisco in 1962, the team’s average home-game attendance and winning percentage each declined dramatically because of ownership problems and its inferior coaches and players. Moreover, the Boston Celtics and Los Angeles Lakers were the superior NBA teams, although the Warriors finished runner-up in NBA championships during 1964 and 1967. Even so, the Warriors in San Francisco did not appeal to the area’s sports fans that, for the most part, attended games of — and cheered for — the city’s MLB Giants and NFL 49ers, and Oakland’s MLB Athletics and AFL Raiders. In short, the Warriors franchise was inferior in the NBA while operating in San Francisco. The expansion Buffalo Braves did not succeed during eight years at home in the western New York area. Indeed, a combination of factors affected the Braves franchise and caused it to perform below average in performances and as an enterprise. Located in a small market whose sports fans respected performances of the NFL Bills and NHL Sabres, the Braves failed to attract a consistent audience at its home games nor did the team establish any viable support among local businesses. Moreover, the franchise shifted between different owners who seemed intent on moving it somewhere outside of the country’s northeast region. In retrospect, it was a mistake for the NBA to approve the entry of a new team into Buffalo in 1970 and then allow it to move to San Diego.Thus, the Braves’ relocation to southern California in 1978 ranked as inferior since the San Diego Clippers franchise ceased to continue operating in that area after six seasons. The transfer of the Hornets from Charlotte to New Orleans in 2002 and the Supersonics (renamed Thunder) from Seattle to Oklahoma City in 2008 involved recent movements.Therefore, these relocations are not included in this section. Since the Hornets and Supersonics each played home games and performed for many NBA seasons in their former territories,it will be a while before they establish themselves (or not) in, respectively, the New Orleans and Oklahoma City areas. Thus, these franchises at their relatively new sites are not evaluated as superior, average, or inferior.As such, this concludes a discussion of the relocations that occurred within the NBA between 1950 and the early 2000s. Besides the relocations and specific teams analyzed here, nine other clubs in the league existed within divisions of the Eastern Conference during the NBA’s 2009 regular season. These were the Boston Celtics, Toronto


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Raptors, and New York Knickerbockers in the AD; the Cleveland Cavaliers, Indiana Pacers, Chicago Bulls, and Milwaukee Bucks in the CD; and the Miami Heat and Orlando Magic in the SED. Meanwhile, another six clubs played within the Western Conference. These consisted of the Denver Nuggets, Minnesota Timberwolves, and Portland Trail Blazers in the NWD; the Phoenix Suns in the PD; and the San Antonio Spurs and Dallas Mavericks in the SWD. Based on their histories as franchises in the NBA, the most vulnerable of them to relocate are the Raptors from southeast Canada, the Bucks from southeast Wisconsin, and the Timberwolves from southeast Minnesota. In short, the majority of current territories are superior or average as basketball markets and as sites of NBA teams.

SUMMARY After presenting the Introduction in Chapter 1 and an analysis of expansions and mergers in Chapter 2, this chapter discusses the dates, demographics and sizes of territories occupied by previous and current NBA teams, and any movements of franchises that had occurred between 1949 and 2009 inclusive.There are tables of data, used as measurements, which respectively indicate the distribution and rank in population of NBA teams’ home metropolitan areas during seven regular seasons of the league, some characteristics about teams at their sites before and after they had relocated, and their home attendances and the win–loss percentages of these clubs. According to results reported in Chapter 3, the number of teams in the league increased from 17 in 1949 to 30 in 2009, and their areas ranked from 53 percent being small-to-very small in the former year to 40 percent being very large-to-large during the latter year.This redistribution of the population of areas during the NBA’s 60-plus years, in turn, affected each team’s revenue, profit, and market value. With respect to their relocation, the majority of clubs moved to areas with larger populations, they played more seasons at their post-move than pre-move sites, and they experienced greater attendances at home games after relocating even though about the same proportion of them had higher and lower winning percentages. Thus, there are differences between the home areas, and tenures and performances of NBA teams prior and subsequent to their movements. After organizing the data and relating it to these topics, the chapter highlights whether the relocations of NBA teams into new territories were superior, average, or inferior strategies from a business perspective. In other


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words, readers of this section learn why the Pistons’ move from Fort Wayne to Detroit in 1957 was superior, the Hawks’ move from Milwaukee to St. Louis in 1955 was average, and the Warriors’ move from Philadelphia to San Francisco in 1962 was inferior. Meanwhile, it is premature to evaluate the relocation of the Hornets from Charlotte to New Orleans in 2002 and the Supersonics (renamed Thunder) from Seattle to Oklahoma City in 2008. In sum, the information in Chapter 3 is helpful for league officials and professional franchise owners, and also for basketball fans, researchers, and the general public to acknowledge, appreciate, and realize how the NBA has changed and become one of the world’s most competitive, mature, and prosperous sports organizations in the world. Indeed, readings in the literature and a study of the sport’s history suggest to me that differences in the cost, financing, and quality of basketball arenas have emerged to become significant factors relative to where NBA franchises locate and operate for one or more years, or leave from to dwell and perform in other metropolitan areas.

David Stern After serving as the NBA’s outside legal counsel, general counsel and executive vice president, David Stern became Commissioner in 1984. Under his leadership, the NBA added franchises, greatly increased its revenues and television exposure, launched a women’s and development professional basketball leagues, and opened offices in major cities of several foreign nations. [Steve Lipofsky Basketballphoto.com]


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100 The National Basketball Association

Mark Cuban Since the 1980s,American entrepreneur Mark Cuban has founded several technology companies. In 1999, he sold Broadcast.com to Yahoo! in exchange for shares of the company's stock. One year later, Cuban purchased majority ownership of the NBA Dallas Mavericks for approximately $258 million. [Steve Lipofsky Basketballphoto.com]

Wycliffe Grousbeck Venture firm partner Wycliffe Grousbeck organized Basketball LLC and in 2002, his group acquired the NBA Boston Celtics for $360 million. Besides being its co-owner, Grousbeck is also the franchise’s chief executive officer and governor. [Steve Lipofsky Basketballphoto.com]


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Red Auerbach Red Auerbach coached such NBA teams as the Washington Capitols, Tri-Cities Blackhawks, and then from 1950 to 1966, the Boston Celtics. His Celtics teams won nine championships including eight in succession. In 1968, Auerbach was enshrined into the Basketball Hall of Fame. He died in 2006 at the age of 89 in his hometown of Washington, DC. [Steve Lipofsky Basketballphoto.com]

Michael Jordan During Michael Jordan’s career in the NBA, his Chicago Bulls won six championships. Besides earning numerous awards, he was elected into the Basketball Hall of Fame in 2009. Jordan is a co-owner of the league’s expansion Charlotte Bobcats and its head of basketball operations. [Steve Lipofsky Basketballphoto.com]


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TD Banknorth Garden Constructed for $160 million during the early 1990s, Boston’s 18,600-seat Shawmut Center was renamed the TD Banknorth Garden in 2005. Simply called The Garden, the arena is primarily home of the NBA Boston Celtics and NHL Boston Bruins. [Steve Lipofsky Basketballphoto.com]

Indiana Pacers When the two professional basketball leagues merged in 1976, the Indiana Pacers and three other ABA franchises joined the NBA. Based in Indianapolis, Indiana and owned by billionaires Melvin and Herb Simon, the Pacers’ President is former NBA superstar Larry Bird (right in photo). [Steve Lipofsky Basketballphoto.com]


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Charlotte Hornets An NBA expansion team in the 1988 season, the Charlotte Hornets qualified for seven playoffs between 1993 and 2002. After the city refused to finance a new arena for the franchise, the Hornets relocated from Charlotte, North Carolina to New Orleans, Louisiana. Dell Curry (in photo) was a very popular player for the Hornets during the late 1980s through the 1990s. [Steve Lipofsky Basketballphoto.com]

Yao Ming China’s Yao Ming played six years for the Shanghai Sharks in the Chinese Basketball Association. In 2002, he was the NBA’s top draft choice and joined the Houston Rockets. At 7-feet 6-inches tall and weighing more than 300 pounds, Ming has been an all-star in seven seasons of the league. His salary reportedly exceeds $16 million per year. [Steve Lipofsky Basketballphoto.com]


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Pau Gasol Born in Spain, 7-foot Pau Gasol performed three years for basketball’s FC Barcelona. In 2001, the NBA Atlanta Hawks drafted and then traded him to the Memphis Grizzlies, which had moved to Memphis, Tennessee from Vancouver, Canada. After he established several records in eight seasons,the Grizzlies traded Gasol to the Los Angeles Lakers who won a league championship in 2009. [Steve Lipofsky Basketballphoto.com]

Bob Lanier After playing 14 years in the NBA and scoring more than 19,000 points, Bob Lanier (right in photo) retired from the game. In recent years, Lanier served as a special assistant to NBA Commissioner David Stern and as the league’s community ambassador. [Steve Lipofsky Basketballphoto.com]


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The Forum Built for $16 million during the late 1960s in Inglewood, California,The 17,500-seat Forum — renamed Great Western Forum in 1988 — hosted several professional sports teams including the NBA Los Angeles Lakers. Because it lacked premium skyboxes and retail space for commercial development, the venue became obsolete and in 1999, the Lakers moved into Los Angeles’ Staples Center to play their home games. [Steve Lipofsky Basketballphoto.com]


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Chapter

4 Franchise Organizations and Operations

BACKGROUND During the 20th and 21st centuries, many teams had existed within five professional sports leagues based in America. For the minimum and maximum number of teams in each of these leagues, Major League Baseball (MLB) consisted of 16 in 1901–1960 and 30 in 1998–2009, the National Hockey League (NHL) consisted of three in the 1918 (or 1918–1919) regular season and 32 in the 2005–2008 seasons, and the National Football League (NFL) eight in 1932 and 32 in 2002–2009. Furthermore, Major League Soccer (MLS) included ten teams in 1996–1997 and 15 in 2009, while the National Basketball Association (NBA) contained eight in the 1954–1960 regular seasons and then 30 in the 2004–2009 seasons. Because of league consolidations, expansions and mergers, the total numbers of clubs and their years in existence varied among and between these five sports groups.1

1

Some books contain the histories and operations of professional sports leagues. These include, for example, Frank P. Jozsa, Jr., Big Sports, Big Business: A Century of League Expansions, Mergers, and Reorganizations (Westport, CT: Praeger Publishers, 2006); Connie Kirchberg, Hoop Lore: A History of the National Basketball Association (Jefferson, NC: McFarland & Company, 2007); Official Major League Baseball Fact Book 2005 Edition (St. Louis, MO: Sporting News, 2005); 107


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Within the sports literature, there are books and numerous readings about each league and the performances of teams and their players during regular seasons and in postseasons. Indeed, there are detailed historical facts, records, and statistics about divisions, conferences, championships, league standings, and other information. Although interesting, measurable and straightforward, the data in the literature does not provide enough current and useful insights about the business, finance, management, and marketing nature of these teams, nor does it reveal how they actually operate as competitive enterprises with structures within the sports industry. Nevertheless, in order to join and become an active member of these professional sports groups, each league’s officials must award them a franchise or the right to participate during one or more years. This chapter discusses the conduct, mission, and role of NBA franchises, specifically with respect to their business operation, organization, and strategy. To expose and analyze various duties, elements, and requirements of these privately owned but interdependent companies, there is a combination of different qualitative and quantitative data listed in various tables. This information, in turn, reflects how job assignments and offices that involve executives, managers, and other personnel complete the workloads accepted, distributed, and performed by them within each of the league’s franchises. The lessons of this chapter are educational and are therefore listed and highlighted here. First, basketball fans will appreciate, learn, and realize that the performances of NBA teams and their coaches and players in games depend, in part, on the ability, discipline, and efficiency of those people who accomplish tasks within offices of them as franchises in the league.That includes officials from the individual owner or syndicate at the top of these organizations down to employees at the lowest level of the managerial structure. Second, owners of teams in other American and foreign professional sports leagues will understand how cooperation, coordination, and interaction within various NBA and franchise offices affect the revenue, profit, and market value of these professional clubs. This knowledge, in turn, should

Official 2008 National Football League Record & Fact Book (New York, NY: Time Inc. Home Entertainment, 2008); Keir Radnedge, The Ultimate Encyclopedia of Soccer: The Definitive Illustrated Guide to World Soccer (London, England: Carlton Books, 2004); Andrew Podnicks and Sheila Wawanash, eds., Kings of the Ice: A History of World Hockey (Richmond Hill, Ontario, Canada: NDE Publishing, 2002).


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Franchise Organizations and Operations 109

increase the awareness, confidence, and results of decision makers in the sports industry who attempt to use business laws, methods, and principles to solve pricing, revenue, and other financial issues that may occur as internal problems. Third, many educators, researchers, and sports analysts, historians, and practitioners will have an opportunity to study the business operation and organization of NBA franchises and apply this chapter’s contents to create, develop, and employ their models to estimate the behavior of firms and predict outcomes of their decisions. Indeed, there is numerical data and measurements about basketball teams reported in the tables of this and other chapters of the text and in the Appendix. In fact, the information included here is not directly available in other books and readings on the business of professional sports. Fourth, undergraduate and graduate students who major in sports administration, management, and/or marketing in schools will learn about the economics and finance of NBA franchises and what types of assignments and different tasks their officials tend to complete in their work. In other words, students will understand that successful NBA teams like the Boston Celtics, Los Angeles Lakers, and San Antonio Spurs win more games and championships than do others, in part, because of the dedication, efficiency, and support of executives and their staff. Fifth, some readers and other people living in sports cities will be more informed about how NBA clubs exist as business enterprises and the reasons for their failure or success from a financial perspective. These insights may help local taxpayers make better decisions when they vote on proposals and referendums to construct a new arena for their hometown sports team or teams. Furthermore, newspaper columnists, editors, and journalists who author stories about basketball for fans in cities will be more accurate, factual, and unbiased when they report on teams and the performances of their coaches and players. In short, these are five lessons that distinguish and evolve from this chapter.

FRANCHISE ORGANIZATIONS Similar to small, mid-sized, and/or large businesses in other industries, NBA franchises have a chain of command, an organizational chart, and a structure and staff. The top official or group of officials within each franchise is an owner or syndicate, and accountable and/or reporting to them are executives, and then within the hierarchy are managers and supervisors who


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oversee various offices.To examine the organizations of 30 franchises in the league, I researched the 2006 edition of Street & Smith’s Sports Business Resource Guide & Fact Book. This book provided me with the names, positions, and titles of executives and their assignments by department, division, and/or unit in each franchise.2 Table 4.1 compares the differences in the numbers and types of officials within all the NBA clubs. Readers should remember, however, that since 2006 a number of these officials have changed due to illnesses, layoffs and retirements, and perhaps some offices were revised because of departmental and/or divisional expansions, mergers, and other forms of reorganizations. President. During 2006, 39 presidents were included among this group of 30 NBA franchises. Based on a distribution of them, three clubs had more than two presidents each, while four of the total had zero. As denoted in column two of Table 4.1, the Knicks, Suns, and Kings composed the former group, and with no presidents were the Bulls, Nuggets, Clippers, and Spurs. To illustrate their specific positions, these officials for the Knicks included the chief operating officer of MSG (Madison Square Garden) and alternate governor Steve Mills, alternate governor Isiah Thomas, and MSG Networks president Michael Blair. Meanwhile, the three presidents of the Suns served, respectively, as general manager, operating officer, and general manager of sports and entertainment services; and for the Kings as either president of the Maloof Companies, head of basketball operations, or simply as the President of the team. In short, three (or 10 percent) of the NBA franchises had three presidents, seven (or 23 percent) of them had two, and 20 (or 67 percent) of them had one or zero.Thus, the typical NBA franchise in 2006 employed at least one person in the position of President, who fulfilled the duties of a general manager or had another title with the same or different assignments. Executive/Senior VP. Based on the numbers listed in column three of Table 4.1, the Pistons, Knicks, and Suns contained the most Executive/Senior Vice Presidents (E/SVPs); the Bucks had none; while the Cavaliers,Timberwolves, 2

Besides offices and officials of professional sports franchises, this book includes other information such as the names of sponsors, amounts and dates of leagues’ broadcasting agreements, and ownership data. See Sports Business Resource Guide & Fact Book 2006 (Charlotte, NC: SportsBusiness Journal, 2006). Other sources are the Official NBA Guide 2008–2009 Edition (Chesterfield, MO: Sporting News Books, 2009); and “NBA Teams” at http://www.basketball-reference.com [cited 18 August 2009].


Table 4.1

Types of Franchise Officials, by NBA Team, 2006 Types of Officials

Team

1 1 1 0 1 1 0 2 1 1 2 0 1 2 2 1 1 1 1 3

7 3 7 3 1 4 3 12 2 2 4 2 4 4 6 0 1 2 3 10

8 3 7 1 9 3 7 13 4 6 14 4 3 2 7 2 5 5 6 7

23 6 15 12 13 7 20 11 15 25 23 5 1 18 20 3 21 7 8 7

17 16 11 11 21 11 17 28 19 14 19 9 19 15 28 8 7 17 13 12

Total 56 29 41 27 45 26 47 66 41 48 62 20 28 41 63 14 35 32 31 39 (Continued )

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Director

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Manager


VP

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Executive/Senior VP


Atlanta Hawks Boston Celtics Charlotte Bobcats Chicago Bulls Cleveland Cavaliers Dallas Mavericks Denver Nuggets Detroit Pistons Golden State Warriors Houston Rockets Indiana Pacers Los Angeles Clippers Los Angeles Lakers Memphis Grizzlies Miami Heat Milwaukee Bucks Minnesota Timberwolves New Jersey Nets New Orleans Hornets New York Knicks

President

Types of Officials Manager

Director

Total

1 2 3 1 3 0 1 1 2 2 39

4 7 8 1 2 5 3 6 4 4 124

5 11 6 7 6 6 4 5 6 2 174

13 10 7 16 26 23 17 7 8 4 492

16 20 9 24 28 9 13 18 24 19 391

39 50 33 49 65 43 38 37 44 31 1,220

Note:To clarify, columns two–six include the number of various types of top- and mid-level managerial positions within these basketball organizations. VP is Vice President. The slash (/) indicates that in column three, the officials of each team and in total consist of two positions: Executive Vice President and Senior Vice President. The numbers beneath Director for each team include executive, senior, associate, and assistant directors. Manager consists of teams’ senior and junior managers. Some teams’ President also served as the chairman, chief executive officer, and/or the general manager. In 2006, some NBA teams had more than one President besides several other officials of each type. Source: Sports Business Resource Guide & Fact Book (Charlotte, NC: SportsBusiness Journal, 2006), B-81 to B-110.

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Executive/Senior VP


Orlando Magic Philadelphia 76ers Phoenix Suns Portland Trail Blazers Sacramento Kings San Antonio Spurs Seattle Supersonics Toronto Raptors Utah Jazz Washington Wizards Total

President

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Team


(Continued)


Table 4.1


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and Trail Blazers each had one. The Pistons assigned E/SVPs to such offices as corporate sales, facility operations, booking and marketing, broadcasting and media, and as the chief financial officer. Alternatively, the Bucks’ owner and Wisconsin Senator Herb Kohl was also the franchise’s President and reporting directly to him were a few executives and the head of basketball operations, director of finance, director of sales, and other individuals who were not E/SVPs. Since the average was four E/SVPs per team, there was a wide distribution of them among the group of 30. Some teams with less than four E/SVPs had assigned their top-level executives to other offices where they performed as vice presidents, managers, and/or directors. Therefore, it appears from the distribution that nine (or 30 percent) of these NBA franchises had a surplus of E/SVPs, and 16 (or 53 percent) of them had less than the average number.Thus, the Pistons, Knicks, and Suns apparently over-ranked some of their executives during 2006, while many of the other teams did not give them enough priority within their hierarchy. Thus far, 39 or three percent of the officers in these franchises were Presidents, while 124 or ten percent of the total served as E/SVPs. Generally, these proportions were appropriate, reasonable, and about equal to what likely existed in businesses within other industries of the private sector in America. In other words, the fewest number of officers existed at the two toplevels of companies whose net worth exceeded $300–$400 million per year. Nevertheless, it is peculiar to me that almost 50 percent of the NBA clubs had three or less E/SVPs, while 30 of these executives belonged to merely three franchises, namely the Pistons, Knicks, and Suns.To be sure, the title of E/SVP was unique for each franchise and thus it included a different combination of assignments, tasks and responsibilities, with specific levels of compensation that matched those requirements. Vice President. The next category of teams’ officials — ranked below President and E/SVP — was Vice President (VP). As indicated in column four of Table 4.1, these 30 NBA franchises included 174 VPs in total, which was about 15 percent of those in the entire group. The Pacers employed 14 of them, Pistons 13 and 76ers 11, and that sum equaled 38 (or 21 percent) of all VPs. The average number of them was approximately six per team.Thus, ten (or 33 percent) of the franchises had more than average, while 14 (or 46 percent) employed less than six VPs. The majority of VPs within the Pacers existed in marketing and facilities offices while others had performed in finance, management information


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systems, human resources, and sales. Interestingly, there were no VPs in the Pacers’ basketball operations and only one within the executive group. Alternatively, the Bulls had one VP assigned and he or she worked in ticket sales of the franchise’s marketing and broadcasting section. Furthermore, the Grizzlies, Bucks, and Wizards each utilized two VPs and they worked in such departments, respectively, as arena operations and in sales and services of the Grizzlies, as an alternate governor and in business operations of the Bucks, and in marketing and sales of the Wizards. For this group of 30 franchises, the total number of VPs was 135 more than the total quantity of Presidents, and furthermore they exceeded the number of E/SVPs by 50. Again, this is a rational distribution of officials since VPs normally have less authority, power, and span of control in organizations than do their superiors. Combined, the top three levels of officers in these NBA teams consisted of 337 executives or 28 percent of the group. This suggests that these basketball enterprises, on average, did not assign too many individuals to top management positions since the other 72 percent of the total were managers and directors. Besides,Table 4.1 excludes such positions as senior, associate and assistant supervisors, and other key employees in departments or divisions who were without titles. Based on the distribution of the three types of officials as reported in columns two–four of Table 4.1, the allocation of them in 2006 among these 30 franchises seems consistent, efficient, and sensible. For the most part, teams tended to have fewer presidents than E/SVPs or VPs, but not necessarily more VPs than E/SVPs. It was likely, therefore, that a minor distinction in rank existed between an E/SVP and the VP of some clubs. Furthermore, a few teams contained too many or not enough presidents based on the league’s average, while others had a relatively large number of E/SVPs and VPs. However, such successful organizations as the Celtics, Lakers, and Rockets each had fewer than ten of these officials in contrast to the Pistons, Pacers, and Knicks who each used at least 20 of them. Manager. During 2006, the group of 30 NBA franchises included 492 managers. Teams with the largest number of managers were the Kings with 26, Rockets with 25, and the Hawks, Pacers, and Spurs each with 23.The fewest of these officials, meanwhile, belonged to the Lakers with just one, Bucks with three, and the Wizards with four. The majority of managers for the Kings completed tasks in arena operations, for the Rockets and Hawks in ticket sales and services, and for the Pacers and Spurs in simply sales. In contrast, the Lakers had an equipment manager assigned in basketball operations, the Bucks


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employed one in basketball operations and two in business operations, and the Wizards placed one each in basketball operations and community relations and another two in sales/corporate marketing. Relative to the other groups of officials listed in Table 4.1, there were 453 more managers than the number of presidents, 368 more than the total E/SVPs, 318 more than the quantity of VPs, and 101 more than all the directors.Thus, managers likely ranked fourth within their franchises in authority, power, and responsibility, although some of them were probably equal in the hierarchy to directors. Furthermore, managers could have reported to VPs in various departments or divisions. However, the extent of these relationships was unavailable in the 2006 edition of the Sports Business Resource Guide & Fact Book. For some reason, the Pistons, Lakers, and 76ers had more VPs than they did managers, while the Knicks employed seven each of these officials. Consequently, 26 (or 87 percent) of the NBA teams established offices that ranked VPs ahead of managers in their chain of command. Nevertheless, there were significant differences in numbers between these two groups of officials, for example, within such clubs as the Grizzlies, Timberwolves, Kings, Spurs, and Rockets. In short, most franchises distributed their managers among various departments but also assigned some of them to different tasks in the same department like in basketball operations, media relations, and ticket sales and services. Director. Column six in Table 4.1 shows the number of directors for each of the 30 NBA franchises in 2006. Although the largest quantity of them performed within the Pistons, Heat and Kings organizations with a total of 84, fewer than ten each were working in offices of the Clippers, Bucks, Timberwolves, Suns, and Spurs. According to the 2006 Sports Business Resource Guide & Fact Book, some senior and junior directors headed various offices such as community development, finance and ticket sales, while other directors reported to managers,VPs, and perhaps E/SVPs. This distribution follows a normal chain of command, which indicates that directors were very common employees within NBA franchises and thus had less authority as decision makers than the other four types of officials. The Pistons had most of their directors assigned to events, the marketing staff and sales department; the Heat to basketball operations, broadcasting and corporate partnerships; and the Kings to basketball operations, arena operations, and the marketing and brand development group. Alternatively, the Clippers had three directors in communications, the Bucks had two in ticket sales, the Timberwolves had five among the executive staff, the Suns


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had two each in player personnel and scouting, public relations/community relations and productions, and the Spurs had three in sales.Thus, these and other franchises used directors in various offices but especially assigned them to community affairs, marketing, and ticket sales. In comparison to executives in the three upper levels of these organizations, all NBA franchises had more directors than presidents, E/SVPs or VPs. Indeed, there were much larger differences in numbers between VPs and directors than between presidents and E/SVPs, or between E/SVPs and VPs. Moreover, 20 or two-thirds of all teams employed more directors than managers, while the other ten or 33 percent of the total incorporated fewer directors than managers. This was especially apparent for the Timberwolves and Spurs who each had a difference in those officials of 14, and the Rockets of 11. In short, with respect to the 30 franchises in the league during 2006, directors and managers were the two most common groups of officials, but nonetheless, they may have performed similar or identical tasks within the same or different departments and/or divisions. Total. Among the 1,220 officials listed in column seven of Table 4.1, the Pistons had the largest number of them with 66, followed by the Kings with 65 and Heat with 63. The three fewest totals in the group were 14 officials for the Bucks, 20 for the Clippers, and 26 for the Mavericks. However, on average, each club employed about 40 officials and these typically consisted of one President, four E/SVPs, six VPs, 16 managers, and 13 directors. Besides these professional men and women, other types of staff that had performed within offices of NBA franchises and successfully completed their organizational tasks included various administrators, advisors, coaches, consultants, coordinators, partners, scouts, specialists, supervisors and trainers, and different assistants, associates, and seniors. Interestingly, such wealthy franchises as the Boston Celtics and Los Angeles Lakers each contained fewer executives than the average number. In contrast to them, some less prosperous organizations as the Los Angeles Clippers and Milwaukee Bucks operated with only several executives. Thus, any NBA franchise employing fewer than 30 total officials or more than 50 deviated from the average by at least ten. The owners of these teams should review their respective staff to determine whether some officials are productive or not productive enough, and therefore whether they require promotion, replacement, or transfer to another office. Based on the data in Table 4.1 and performances of teams in the league, we can surmise that a number of franchises have internal problems with the distribution of assignments, tasks, and/or workloads of officials in their offices.


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Team Owners Other than executives, coaches and players, NBA teams exist, perform, and fail or succeed during regular seasons and in postseasons partly because of their franchise owner who, in turn, may be an individual or a type of group. His, her, or their primary role besides providing entrepreneurship, investment capital, leadership and resources, is complex and sensitive but varies for each club in the league. Some owners, as decision makers, are very involved in the day-to-day or week-by-week operations of a franchise. Other owners are less informed, interested and knowledgeable, and thus they leave the majority of decisions, tasks, and responsibilities to executives who have assignments within offices of the organization. With respect to announcements, interviews and marketing campaigns, NBA owners tend to avoid publicity and the media except when significant newsworthy events or major problems occur within or about their organization. These may concern, for example, the firing of any current, experienced and/or popular coaches, signing a valuable player to a lucrative long-term contract, losing a number of games consecutively during a regular season, negotiating with local government officials for funds to finance the construction of a new arena, and other kinds of actions and/or circumstances. For sure, these sensitive issues require statements from a franchise’s owner or a spokesperson for the syndicate of investors that control it. Within the data supplement of Pay Dirt, the authors identify and briefly discuss the ownership histories of teams in the NBA and of those in the former Basketball Association of America (BAA) from the mid-to-late 1940s to early 1990s. Beginning with the Anderson Packers and ending with the Waterloo Hawks of a league, there is such information as the year when teams had organized, who were their original and subsequent owners and at what price or dollar amounts did these men or groups sell and/or purchase a specific franchise, and any important business transactions and legal matters related to them. Furthermore, the ownership histories may have included a series of teams and their relocations in one group such as the Tri-Cities Blackhawks followed by the Milwaukee Hawks, St. Louis Hawks, and Atlanta Hawks. Indeed, the supplement provides an overview of histories but also a few details about NBA and BAA teams and their different owners. Unfortunately, any changes among these teams after 1991 were not included in the data since Pay Dirt was published in 1992. Some facts and other characteristics about NBA franchise ownership — as of 2008 — are contained in Table A.4.1 of the Appendix. The table reveals


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the names and single or majority owners of the 30 teams in the league, years when these owners had purchased their club, and then in millions of dollars, each final sales price (cost) and an estimated market value of the clubs. Although not explicitly stated in the table, various syndicates currently own or had previously owned a few of these teams such as the Atlanta Hawks by the Atlanta Spirit LLC and the New Jersey Nets by the Brooklyn Basketball LLC. The following are highlights of columns two–five as they appear in Table A.4.1. First, specific private companies own the New York Knicks and Philadelphia 76ers while a public-sector group owns the Toronto Raptors, and when the Detroit Pistons’ 85-year-old owner and philanthropist William Davidson died in March 2009, his daughter Karen replaced him. Wealthy men own the remaining 26 clubs and some of them are in fact the dominant head or leader of a syndicate that may consist of a few or several investors.Furthermore, the majority of these males are very rich like the co-founder of Microsoft Corporation Paul Allen whose net worth supposedly exceeds $20 billion, Carnival Cruises’ Mickey Arison whose fortune is about $5 billion, and Alticor’s Richard DeVos whose personal assets were more than $4 billion in 2008. Second, as indicated in column three of the table, one or 3 percent of the group became an owner of an NBA franchise during the 1960s, two or about 7 percent in the 1970s, eight or 27 percent in the 1980s, nine or 30 percent in the 1990s, and ten or 33 percent in the 2000s. Thus, almost two-thirds of them have owned a team for fewer than 20 years. Third, the costs or most recent sales prices of these franchises varied between $1 million for the Baltimore Bullets (now named Washington Wizards) in 1964, to $404 million for the Phoenix Suns in 2004. However, these amounts do not reflect the rate of inflation and therefore they require adjustment to equate their original value in dollars as of 2008. In other words, the current value of costs in column four are significantly different from the amounts reported there. Fourth, the average and estimated worth of an NBA team was $380 million in 2008. As such, the values of 12 (or 40 percent) of these clubs exceeded that amount, while 18 (or 60 percent) of the total were below $380 million. Furthermore, column four’s cost in dollars exceeded the 2008 value of the Oklahoma City Thunder (former Seattle Supersonics) by $25 million, of the New Jersey Nets by $5 million,and of the Charlotte Bobcats by $16 million. This suggests that owners of the other 27 NBA teams have each accumulated a largeto-very large capital gain from the financial appreciation of their sports business. There are other interesting and specific features of these owners worth discussing here. Based on performances within their divisions and conferences


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and in winning NBA championships, the most and least successful of them have been, in order, the Lakers’ Jerry Buss, Bulls’ Jerry Reinsdorf and Spurs’ Peter Holt, while in the inferior group are such owners as the Warriors’ Christopher Cohan, Raptors’ Ontario Teachers’ Pension Plan, and the Clippers’ Donald Sterling. Moreover, Robert Johnson’s Bobcats and Clay Bennett’s Thunder have never qualified for the playoffs because they lost too many games during various regular seasons of the league. Finally, besides Buss, Reinsdorf and Holt, the only other owners listed in the table to win championships are the Celtics’ Wycliffe Grousbeck, Rockets’ Leslie Alexander, Heat’s Mickey Arison, and the Wizards’ (or former Baltimore Bullets’) Abe Pollin. In May 2009, Sports Illustrated magazine ranked the best and worst owners of the 30 NBA teams. In order, the five best in 2008 were the Lakers’ Jerry Buss, Spurs’ Peter Holt, Mavericks’ Mark Cuban, Rockets’ Leslie Alexander, and Cavaliers’ Dan Gilbert (see Table A.4.2). Besides their teams’ outstanding performances, these individuals exhibited such personal and/or memorable organizational qualities as establishing a basketball dynasty and great tradition (Buss), stressing good values like hard work, humility and sacrifice (Holt), being down-to-earth yet ambitious, fun-loving and passionate (Cuban), taking risks for the team and streamlining its structure (Alexander), and hiring a topnotch general manager and installing a players’ coach (Gilbert).3 3

See “SI’s Best & Worst Owners” at http://www.si.com [cited 16 October 2009]. More readings about various NBA franchise owners are Ric Bucher,“For Many in the NBA, You’re in Good Hands With One Man,” Basketball Digest (January 1996), 38; Lynn Hoppes,“Why Are You Selling the Magic?” Orlando Sentinel (13 January 2002), C1, C9; “Letter Signed by Pacers’ Owner Ignites Revenue-Sharing Talks,” Indiana Business Journal (1 January 2007), 13–14;“NBA Owners” at http://www.hoopshype.htm [cited 10 August 2009]; Gary Washburn,“NBA Owners Cool to Expansion”at http://www.seattlepi.com [cited 3 August 2009]. For the controversies about one specific owner, see David Moore, “Pistons Coach Blasts Dallas Owner Cuban,” Dallas Morning News (9 February 2004), 4C; John McFarland, “Cuban’s Comments Draw Record Hit — $500,000,” Charlotte Observer (9 January 2002), 4C; Elliot Spagat, “Dallas Mavericks Owner Bets Big on HDTV,”Wall Street Journal (7 March 2002), B5, B6. Besides the information in these articles, doctors informed New Orleans Hornets owner George Shinn in early November 2009 that he had prostate cancer. For more about this report, read Tom Sorensen, “Shinn ‘Full of Life’ Battling Serious Illness,” Charlotte Observer (8 November 2009), 1C, 5C. Furthermore, one NBA franchise owner recently settled government allegations that he refused to rent apartments to blacks, Hispanics, and to families with children. This situation was explained in “Clippers Owner Sterling Will Pay $2.73 Million to Settle Suit,” Charlotte Observer (4 November 2009), 4C.


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According to the article printed in Sports Illustrated, the five worst NBA owners in 2008 were the Clippers’ Donald Sterling, Knicks’ Cablevision Systems (whose chief executive is James Dolan), the Grizzlies’ Michael Heisley, Warriors’ Christopher Cohan, and Bobcats’ Robert Johnson. Each of them have detrimental and/or character flaws as owners of their franchises because of such reasons as being excessively cheap and associated with futility (Sterling), overcompensating players who underperform and employing bad coaches (Cablevision Systems’ Dolan), trading star players and ignoring the needs of fans (Heisley), sticking too long with inferior coaches and continuously rebuilding the team (Cohan), and underfunding operations and not attending enough home games (Johnson). From my research, these selections of the best and worst NBA owners by Sports Illustrated are accurate, justified, and realistic.4 Before finishing this section of the chapter, the types of ownership of the New Jersey Nets and Boston Celtics are interesting business arrangements to review. Since the mid-1970s, the Nets have struggled to win games while they performed under different owners. Entrepreneur Roy Boe purchased the franchise for $8 million in 1976 and sold it two years later to a group of New Jersey capitalists for $12 million. Then in 1998, that group sold the club for $150 million to Ray Chambers and Lewis Katz, who in 2004, resold it for $300 million to Bruce Ratner. As such, these owners overpaid millions for the Nets because they spent between $174,000 and $1.5 million for each win achieved by the club.5 For $200 million, Russian billionaire and oligarch Mikhail Prokhorov agreed in 2009 to acquire 80 percent of the Nets franchise, 45 percent of the

4

In late 2009, Cablevision Systems revised James Dolan’s employment contract. As the company’s controlling shareholder, Dolan will earn $1.5 million annually as a minimum base salary. Moreover, he may qualify for a yearly target bonus of approximately $6 million. During 2008, Dolan’s salary was $1.8 million in addition to a $6.6 million bonus. Furthermore, he obtained a five-year employment agreement in 2009 with Madison Square Garden and accordingly, Dolan will receive an annual base salary of $500,000 plus a target bonus four times that amount. See Shira Ovide, “Cablevision Executives Obtain New Pay Deals,” Wall Street Journal (26–27 December 2009), B5. 5 This NBA franchise’s ownership problems and sales are discussed in Matthew Futterman, “Russian Tycoon Moves Closer to Netting Nets,” Wall Street Journal (23 September 2009), D8; Brad Parks, “The Curious Case of the Nets’ Ownership,” Wall Street Journal (28 September 2009), B6; Kathy Shwiff, “Russian Billionaire to Buy Nets,Arena Project Stakes,” Wall Street Journal (24 September 2009), B3.


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Barclays Center arena project in Brooklyn, New York, and a 20 percent interest in the city’s Atlantic Yards Development Company. Prokhorov, who heads a private investment fund named Onexim Group, believes that investing in the Nets will improve the quality of basketball in Russia and give his compatriots access to NBA technology and training techniques. The NBA’s Board of Governors must approve this deal, whose target completion date is early-to-mid-2010. During the early 2000s, a syndicate composed of several rich men — who had earned their fortunes in private equity, venture capital, or a hedge fund — acquired a financial stake in the Celtics for approximately $200 million from the franchise’s original owners and multimillionaires Irving Grousbeck and his son Wycliffe, and Bain Capital managing director Stephen Pagliuca. Each of these individuals invested about $10 million in the team and since then have agreed collectively, hired conscientious managers, and supported them in good and bad years. Although busy with initiating, negotiating, and finishing business deals, the Celtics’ ownership group has increased the team’s competitiveness, contributing to its revenue, profit, and value.6 This concludes the section of Chapter 4 that describes how administrators, executives, and other types of officials control, direct, and/or manage NBA franchises, and who owns these professional basketball businesses as competitors and enterprises in the league. That information, in turn, is relevant to identify, examine, and analyze the operations of franchises including any differences in the cultures, structures, and tasks of their offices. This topic forms the next major section of this chapter.

FRANCHISE OPERATIONS Offices and Teams Each NBA franchise has an organizational structure that includes various types of offices with personnel who accept and competently complete tasks within them. Among the group of 30 teams in 2006, these offices may have

6

According to the article’s author,“They [investors] are a motley bunch, sometimes competing directly against one another for deals. Each has varying opinions on what their stake represents.A number view themselves as trustees of a Boston institution. Others admit that as an investment, the Celtics wouldn’t stand up to their own firms’ investing criteria.” This was stated in Peter Lattman,“Band of Financiers Brings Luck to Celtics,” Wall Street Journal (31 May 2008), B1, B16.


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existed as branches, departments, divisions and/or units, and they were different in several ways for each of the clubs.That is, some of them consisted of one or more executives; utilized staff and a few or many employees; contained only directors, managers, and/or supervisors; and performed such similar but unique operations as accounting, broadcasting, creative imaging, graphic design, internet marketing, and security. In other words, NBA franchises organize themselves internally to effectively, efficiently, and ethically assign, distribute, and accomplish tasks associated with being in the business of providing sports entertainment for basketball fans and other consumers within the marketplace.7 For this section of Chapter 4, I researched the 2006 edition of the Sports Business Resource Guide & Fact Book and other forms of literature to determine the offices within all NBA franchises. My study revealed different combinations of offices with various numbers and types of officials. For example, one franchise had, besides the names of owners, such office groups as executive management, basketball operations, communications, finance and administration, human resources, legal, community development, ticket sales and services, and advertising, branding, and promotion. Others, meanwhile, had fewer or more groups as offices. After obtaining and studying this information, I organized Table 4.2. It denotes six of the available and most common offices for the majority of NBA franchises during 2006. Since then, however, these groups have changed because one or more of the league’s franchises restructured and thus they likely eliminated, expanded, and/or merged some of their offices for various business and operating reasons. In order to differentiate one office from the other, the following are key aspects about franchise operations that I derived from the literature and included in the contents of this table. Executive/Administration. Within this office, six NBA teams each had 15 or more employees, while fewer than three officials performed exclusively for the Boston Celtics, Los Angeles Clippers, Memphis Grizzlies, and Seattle Supersonics in 2006. Among the 19 who existed in the executive office of 7

For commercial and economic data, facts, or statistics about the NBA and various franchises, see Frank P. Jozsa, Jr., American Sports Empire: How the Leagues Breed Success (Westport, CT: Praeger Publishers, 2003); Roger G. Noll, ed., Government and the Sports Business: Studies in the Regulation of Economic Activity (Washington, DC:The Brookings Institution, 1974); James Quirk and Rodney D. Fort, Pay Dirt:The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992).


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the Toronto Raptors, there were six executive/senior vice presidents and five vice presidents. Some of these persons worked as officials in communications and community development, corporate sales and services, and in finance, marketing and operations, while others had tasks associated with the Air Canada Centre and Raptors NBA TV, and with serving on the Board of Directors. In contrast, the Grizzlies did not assign this office title within its organization, while the Celtics’ majority owner Wycliffe Grousbeck performed as managing partner and governor and was the only executive of the franchise. Based on the entries in column two of Table 4.2, the number of personnel within this office for the 30 NBA franchises ranged between zero and 19 inclusive. These differences occurred because some teams used executives and/or administrators to head other departments, or they had simply assigned to this office only a few of the highest ranked and most prominent personnel. To illustrate two of the latter franchises, owner and Chair of the Board Donald Sterling and alternate governor Andy Roeser were the only executives of the Los Angeles Clippers, and for the Seattle Supersonics, the two executives included Chairman Howard Schultz and its president and chief executive officer Wally Walker. Typically, however, teams had an average of eight officials in the office of Executives and/or Administration. The group of clubs with eight included the Charlotte Bobcats, Orlando Magic, Portland Trail Blazers, and San Antonio Spurs. The Administration office of the Bobcats, for example, consisted of the franchise’s owner and Governor Robert Johnson, two alternate governors and one each executive vice president of administration and vice president of human resources, and an office manager and two administrators. In comparison, the Magic’s office incorporated a chairman and executive vice chairman, and three each general vice chairmen and other executives. Within the majority of NBA franchises, this office contained top-ranked officials who made critical decisions about the short, intermediate, and longrun operations of their team. Furthermore, some of these officials served on the club’s board of directors and resolved issues or problems that involved salaries and the roster of players, final contracts of the head coach and his subordinates, television broadcast agreements, and high-level negotiations with advertisers, partners, and sponsors. In 2006, there were 247 individuals assigned to tasks in this office of these franchises. Finance. As reflected in Table 4.2, the officials employed in this department or division of NBA franchises ranged from 15 for the Houston Rockets to only

Relations Franchise

Community

Media/Public

16 1 8 7 6 4 5 17 11 9 6 2 9 0 7 6 17 10 9 16

7 3 8 4 8 6 9 4 3 15 8 4 1 4 7 3 3 5 3 3

37 17 6 26 25 18 19 24 20 22 41 13 11 12 16 4 12 22 10 6

17 11 14 12 11 25 11 8 19 19 16 14 17 12 11 17 8 9 11 21

2 4 3 4 2 2 2 4 2 1 4 2 2 4 3 2 2 2 2 5

5 3 2 4 3 0 2 5 2 3 4 5 5 2 5 3 3 2 0 4 (Continued)

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Marketing


Finance

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Atlanta Hawks Boston Celtics Charlotte Bobcats Chicago Bulls Cleveland Cavaliers Dallas Mavericks Denver Nuggets Detroit Pistons Golden State Warriors Houston Rockets Indiana Pacers Los Angeles Clippers Los Angeles Lakers Memphis Grizzlies Miami Heat Milwaukee Bucks Minnesota Timberwolves New Jersey Nets New Orleans Hornets New York Knicks

Exec/Admin


Number of NBA Franchise Officials, by Selected Offices, 2006


Table 4.2


(Continued) Relations Operations

Community

Media/Public

8 5 6 8 17 8 2 19 5 3

8 3 12 7 11 5 6 2 11 5

12 18 7 27 26 36 20 5 16 22

12 20 11 22 20 16 15 18 15 17

8 1 2 2 2 7 3 2 1 3

0 2 8 0 3 2 4 3 0 7

Note: Franchise offices include Exec/Admin for Executive/Administration, Finance for Finance and Accounting, Marketing for Marketing and Sales, Operations for Basketball Operations, Community for Community Relations, and Media/Public for Media and Public Relations. Source: Sports Business Resource Guide & Fact Book (Charlotte, NC: SportsBusiness Journal, 2006), B-81 to B-110.

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Finance


Orlando Magic Philadelphia 76ers Phoenix Suns Portland Trail Blazers Sacramento Kings San Antonio Spurs Seattle Supersonics Toronto Raptors Utah Jazz Washington Wizards

Exec/Admin


Franchise

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Table 4.2


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one for the Los Angeles Lakers. Within the Rockets, there were specific financial assignments for various accountants and a controller, and furthermore, for general counsel and administrative services, information technology, human resources and development, telecommunications, and accounts payable. The Lakers, meanwhile, employed Joe McCormack as the club’s senior vice president of finance and chief financial officer. In 2006, the average number of officials within the finance division of teams was six, which equaled those assigned to the Dallas Mavericks and Seattle Supersonics.For the Mavericks,the staff included such professionals as a chief financial officer, controller and senior accountant, while the Supersonics had a controller and assistant controller, staff accountant, and others in payroll and benefits, and accounts payable. Interestingly, the Mavericks and Supersonics had no executives or administrators designated as finance officials. More specifically, this office was responsible for all tasks that involved a franchise’s finances. Besides accounts payable and payroll, some of the duties in finance dealt with accounts receivable, budgets, forecasting, investor services, planning and analysis, and purchasing. To accurately complete this type of work, many of the staff in this office had likely earned academic degrees from community colleges and universities in accounting, finance, and/or investments, and perhaps studied concepts, practices, and principles to become certified public accountants and other professionals in the discipline. For sure, NBA teams have various activities that require knowledge of basic accounting and financial management, and investment theory. Specialists in franchises should know how to classify and estimate costs, revenues, profits and losses, and how to prepare tax forms, balance sheets, and cash flow and income statements. Furthermore, asset and liability accounts and owners’ equity amounts need documents that conform to the best practices of the profession. Thus, in 2006, approximately six individuals with experience, knowledge, and/or skills related to finance had performed tasks in this department or division of these 30 NBA franchises. Marketing. Similar to businesses in other US industries, NBA franchises employ people to advertise, market, and/or promote their team, and to sell tickets for games and different products and services in campaigns and during spots on television and radio programs, in the print media, and in mailings to fans and the public. As reflected in column four of Table 4.2, the marketing staff of the Indiana Pacers, Atlanta Hawks and San Antonio Spurs in 2006 each contained at least 36 officials, while those clubs with fewer than eight were the Charlotte Bobcats, Milwaukee Bucks, New York Knicks, Phoenix Suns, and Toronto Raptors. From a business perspective, there were


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significant inequalities in the number of marketing personnel between these two groups of clubs. The Pacers, Hawks, and Spurs allocated their resources by assigning various staff to such marketing areas as alumni relations, broadcasting engineering, creative services, entertainment, game operations, memorabilia, and public information. Furthermore, these teams had several employees who worked in ticket sales and services, which involved premium and sponsorship services for the Pacers, customer and suite services for the Hawks, and corporate suite sales and guest services for the Spurs. For those NBA clubs with relatively few marketing staff, their personnel performed tasks related to business and ticket operations, corporate and broadcast sales, new media and event presentation, communications and graphic projects, and suite services and programming. On average, each NBA franchise used approximately 18 officials in their marketing (and/or sales) division during 2006. This number of officials exceeded the average of eight assigned to Executive/Administration and six in Finance and Accounting. Therefore, these basketball teams kept several vice presidents, directors, and managers very busy with selling tickets for ordinary and premium seats within their arenas; generating accounts and establishing databases with current clients and new customers; contacting corporations and some local sponsors, partners, and other groups for them to lease luxury suites at home games; and promoting events and other activities of the team. As such, marketing is a fundamental and vital profit center of NBA franchises. This office performs tasks that increase a club’s revenue,profit,and estimated value as a business and professional sports organization. For economic and personal reasons, however, there were vast differences between the numbers of marketing officials who had positions within these teams’ offices. Some franchises in the league may outsource their ticket sales and services and other marketing tasks rather than complete this work internally. Based on my research, some clubs need to reallocate resources and thereby assign more officials to marketing and sales while others have too many employees in that department and, respectively, should redistribute and downsize accordingly. Operations. In 2006, this department appeared as an office of each NBA franchise. Its staff concerned themselves with any activities and work assignments that directly affected basketball operations. The teams with 20 or more officials within this office were the Dallas Mavericks, Portland Trail


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Blazers, New York Knicks, and Sacramento Kings. In contrast, those NBA teams with less than ten officials included the Detroit Pistons, Minnesota Timberwolves, and New Jersey Nets. The average number of officials per team in Operations was 15, which was seven more than the average assigned to Executive/Administration and nine greater than in Finance, but three less than the average number of personnel who performed in Marketing. Some examples of the different types of basketball operations of these teams included a massage therapist and some scouts and trainers for the Mavericks; a video coordinator and player personnel and a club house manager for the Trail Blazers; a basketball consultant and various security and administration directors for the Knicks; and an equipment manager, media relations coordinator, and a facility operations director for the Kings. For those franchises with relatively few officials in Operations, the Pistons had directors of player personnel and scouting, the Timberwolves employed a general manager and an athletic trainer, and the Nets assigned officials to basketball and video operations. In short, Operations ranked second to Marketing (including sales) in the total number of officials, but placed ahead in employees with respect to the offices of Executive/Administration, Finance, and Community and Media/Public Relations. Furthermore, 27 (or 90 percent) of the franchises had 11 or more officials in Operations. Consequently, this office’s vice presidents, directors, and managers played an important role in dealing with the basketball matters of these franchises and especially in such tasks as athletic training, equipment management, and scouting. Community Relations. In 2006, the typical NBA franchise had an average of three personnel working within this office.Teams that assigned the most officials to Community Relations were the Orlando Magic with eight officials, San Antonio Spurs with seven,and the New York Knicks with five. Alternatively,only one person each existed in this office for the Houston Rockets, Philadelphia 76ers, and the Utah Jazz.Accordingly, Community Relations was not significantly important to NBA teams based on the number of employees within it. To identify a few officials of these clubs and their specific responsibilities, a vice president, director, and manager of fan relations were in power for the Magic; an education and recreation manager and an appearance coordinator for the Spurs; and for the Knicks, the personnel consisted of a director, coordinator, and assistant in field marketing and a director in special projects. In this office for the Rockets, one person served as a director, while in Community Relations of the 76ers and Jazz there were directors who represented their


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franchises and they organized affairs, events and projects, and then coordinated them with local groups and other organizations within their cities and metropolitan areas. Because of the demanding workload and daily requirements that existed within the offices of Marketing and Operations, this author assumes that a Community Relations department is not a high priority within the majority of NBA franchises. Nevertheless, in North Carolina’s Charlotte area, some Bobcats administrators, coaches, and players attend, organize, and participate in several community and social activities, events, and programs each year. They visit hospitals, neighborhoods in low-income housing areas, and student groups in elementary and high schools. For sure, these efforts have enhanced the team’s image and its prestige and reputation within Mecklenburg County. If Michael Jordan, as the head of basketball operations, devotes more of his time to meet with fans and youth organizations, and with kids, teenagers, and young adults who play on basketball teams in Charlotte, then the Bobcats will become increasingly popular and challenge the NFL Carolina Panthers in the region’s sports market. Furthermore, after Robert Johnson sells his franchise, the Bobcats must have one or more local owners who interact with groups in the community and actively support the Bobcats at home games. Otherwise, the team will continue to flounder as a competitor and not attract enough local sports fans when such southeast division rivals as the Atlanta Hawks, Miami Heat, and Orlando Magic play the Bobcats in the city’s Time Warner Cable Arena. Media/Public Relations. Approximately equal to the number of personnel employed in Community Relations, an average of three officials performed within this office of NBA franchises during 2006. While the Phoenix Suns had the most with eight officials followed by the Washington Wizards with seven, five each existed in the Atlanta Hawks, Detroit Pistons, Los Angeles Clippers, Los Angeles Lakers, and Miami Heat organizations. For some reason, however, there was no specific Media/Public Relations office or any of these types of officials within the organizational structure of the Dallas Mavericks, New Orleans Hornets, Orlando Magic, Portland Trail Blazers, and Utah Jazz. More specifically, some of the former seven clubs assigned their officials to complete Media/Public Relations tasks that involved game operations and electronic graphics, communications and publications, photography, media services, and video production. The latter five franchises, on the other hand, had no single office designated as Media/Public Relations in 2006. There was


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another office, however, titled Communications for the Mavericks, Hornets, Magic,Trail Blazers, and Jazz. This suggests that the Communications department or division of these franchises had similar tasks and therefore established relationships, which likely involved the media and the public. Regarding the specific assignments of officials in 2006, there were a combination of vice presidents, directors, managers, and coordinators employed in this office of teams. The Boston Celtics, for example, had a vice president of media services and alumni affairs, the Nuggets had a director of marketing and public relations, the Rockets a manager of corporate media relations, and the Grizzlies a coordinator of media relations. Thus, 25 (or 83 percent) of the NBA franchises had one or more individuals who officially specialized in communicating and meeting with representatives from the media, and engaged in making contact and establishing relations with persons and groups within the public sector. In turn, these teams received publicity and earned more respect and support from fans and organizations within their communities. Besides the six offices highlighted in columns two–seven of Table 4.2, most NBA franchises also contained other different branches, departments, and/or divisions, each with few officials. For example, some teams had community investment, corporate affairs, creative services, human resources, legal, and/or a medical staff, while others included arena administration, broadcast services, event information and management, facility operations, merchandising, retail sales, and sponsorships. In other words, each of these franchises was composed of several offices that accomplished various tasks so that the organization could achieve its goal of maximizing profit as an enterprise in the professional sports industry. To review, Table 4.2 denotes that 1,600 officials in total were members within these six offices of 30 NBA teams during 2006. Based on the highest and lowest number of officials assigned to them, 550 or 34 percent had jobs in Marketing, 449 or 28 percent in Operations, 247 or 16 percent in Executive/Administration, 178 or 11 percent in Finance, 91 or six percent in Media/Public Relations, and 85 or five percent in Community Relations. In fact, these offices and their officials formed the core business of most franchises in professional basketball in 2006, and particularly while they competed for conference titles and NBA championships after completing their regular seasons. Besides the 30 NBA franchises, the 2006 edition of the Sports Business Resource Guide & Fact Book also lists the offices and names of 66 executives who held official positions in the league itself that year. According to


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my identification and a count of these executives, Commissioner David Stern and Deputy Commissioner and Chief Operating Officer Russ Granik each ranked ahead of the others in the hierarchy. Then, ranked below and after these two executives were 24 executive/senior vice presidents, 26 vice presidents, 12 senior directors/directors, and a special assistant to the commissioner who also served as a community ambassador. In short, this assortment of decision makers had become the league’s most professional and prominent officials in 2006. As a group, these NBA officials occupied several different offices that included at least one executive. According to the types of offices and the numbers of executives in them, they included the office of marketing with 12, entertainment with eight, basketball communications with seven, international with six, and basketball operations and player development/ programs/relations each with five. Four officials were assigned to legal counsel, and then business affairs/development, information technology/services, and officials/referee programs each had three. An executive and senior vice president worked in finance, while one executive each performed in administration, broadcasting, design and construction, events/attractions, security, and community relations. In fact, the list of 66 executives did not include any coordinators, managers, or specialists. Based on this inside information, the league’s business priorities in 2006 were involved with marketing and then with entertainment, basketball communications, and international programs. Indeed, these four offices included nine (or 24 percent) of the executive/senior vice presidents, 16 (or 62 percent) of the vice presidents, seven (or 58 percent) of the senior directors/directors, and 25 percent of the other types of officials. In short, 33 (or 50 percent) of the NBA executives completed tasks in these four offices during 2006. For sure, many of these NBA officers had two or dual titles. For example, Scott O’Nell was senior vice president of marketing and team business operations, Charles Rosenzweig served as vice president of entertainment and player marketing, and Paul Brazeau acted as director of basketball operations and officiating performance analysis. This indicates, in part, how the NBA’s hierarchy accomplished and continues to achieve its goals. In retrospect, the NBA organization assigns dedicated, experienced, and talented business people with knowledge of basketball to positions of authority, command, and responsibility. Indeed, David Stern has won numerous awards for his great leadership, marketing abilities, and innovative programs to entertain sports fans in America and across the globe. For their


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contribution to the league’s power and prosperity, some experts rank the NBA’s executive staff very highly amongst all groups within professional sports leagues in the world.

FINANCIAL INFORMATION Being prominent sports team businesses, especially in metropolitan areas of North America, NBA franchises earn revenue from various sources and then deduct their expenses (or costs) to determine whether they had realized a profit or loss from operations during a specific month, quarter, and/or fiscal year. This information, plus the data published in various financial statements and the net cash flows generated from games in their arenas, provide some evidence to estimate these teams’ market values. For years, Forbes magazine has reported the revenue and operating incomes — which are earnings before interest, taxes, depreciation, and amortization (EBITDA) — to estimate the market value of professional sports franchises including those that perform in seasons of the NBA.To analyze these types of financial statistics, I have listed in Table A.4.3 of the Appendix the revenue, operating income, and value of 26 NBA teams in 1999 and 30 of them as of 2008.8 Next, I will discuss a few of these amounts and then examine the fan cost indexes and average ticket prices of the NBA and its clubs for a number of years. In doing so, this section of the chapter will reveal some interesting business data, history, and relationships about the financial condition of these teams between the early 1990s and 2008 inclusive. First, the average revenue of NBA franchises increased $80 million or by 224 percent from 1999 to 2008. During the former year, the Knicks, Bulls, and Lakers ranked the highest in revenue with $59 million or more, while the lowest amounts received were $23 million for the Clippers, $24 million for the Nuggets, and at $26 million each, the Bucks and Mavericks. Then in

8

This and other pertinent financial information about NBA franchises is reported in such readings as Kurt Badenhausen, Michael K. Ozanian, and Christina Settimi,“The Business of Basketball” at http://www.forbes.com [cited 30 July 2009]; “NBA Team Historical Value” at http://nbahoopsonline.com [cited 3 August 2009]; “NBA Team Valuations” at http://www.forbes.com [cited 3 August 2009]; Rick Roso,“NBA Ticket Sales and Attendance: 2008–2009 Was a Great Year” at http://www.ticketnews.com [cited 10 August 2009].


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2008 the Knicks, Lakers and Bulls placed, respectively, first, second and third with $165 million or more in revenue, but the Thunder at $82 million, the Bucks at $94 million, and the Bobcats, Grizzlies, and Hornets at $95 million each finished at the bottom of the league. These results indicate that one club located in New York City and another in Los Angeles, and the Bulls in Chicago had entertained their local fans enough to earn the most amounts of revenue. However, relocations negatively affected the revenue of teams with homes in Charlotte, Memphis, New Orleans and Oklahoma City, and in addition, so did the poor performances of franchises that had arenas in Dallas, Denver, and Milwaukee and at the Staples Center for the Clippers in Los Angeles. Second, 19 (or 73 percent) of these NBA franchises reported negative operating incomes or accounting losses in 1999. That year, total expenses from their operations exceeded earnings of the Heat, Hawks, and Pacers by more than $18 million. In contrast, seven of the league’s clubs including the Bulls, Suns, and Timberwolves had incomes equal to or above zero dollars. Improvements in finance occurred in 2008, however, when 19 (or 63 percent) of the NBA teams had operating incomes greater than a zero amount. Nevertheless, that year, the Nuggets, Mavericks, and Thunder each operated with financial losses of more than $8 million. For several teams, low attendances at home games, below-average ticket revenue and sales receipts at their arenas, high player and transportation costs, and other issues caused them financial problems from their operation. Interestingly, the Celtics, Bulls, Cavaliers, Knicks, 76ers, and Suns were the only franchises that avoided negative operating income or any losses in both 1999 and 2008. Third, between 1999 and 2008 inclusive, the average value of an NBA team increased an estimated $193 million or by 103 percent. The values of the Knicks, Bulls, and Lakers led the group in 1999, while the bottom three that year included the Clippers in 26th place at $103 million, the Bucks in 25th at $111 million, and the Nuggets in 24th at $124 million. Nine years later, the Knicks, Lakers, and Bulls remained at the top of the NBA in market value, but placing 30th was the Bucks at $278 million, 29th the Bobcats at $284 million, and 28th the Hornets at $285 million. These differences in value between the former and latter group of clubs existed because of the economy, size, and wealth of their home territories, the age, capacity and quality of their arenas, and of course, their regular season and postseason performances in a division of the Eastern or Western Conference. Based on the financial information reported in Table A.4.3, the three superior franchises from 1999 to 2008 were the Knicks, Lakers, and Bulls.


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Alternatively, among the most inferior in the group — at least from a financial perspective — were the Bucks, Clippers, and Nuggets. Besides the three latter clubs, the financial conditions of the Bobcats, Grizzlies, and Thunder each deteriorated during the US recession in 2008–2009, which meant that they struggled to compete in games against opponents while their earnings flattened or declined, and deficits and debts inflated, during the league’s 2009 regular season and perhaps will again in 2010–2011. Despite these and other issues, I expect that the market value of most NBA franchises will gradually increase in 2010 and thereafter.As the US and world economy expands and unemployment slowly or moderately decreases, particularly in the metropolitan areas where NBA teams play, then these clubs’ home-game attendances should improve and that means more revenue for them from fans and eventually from various advertising campaigns, broadcast networks, partners, and sponsorships. Furthermore, Commissioner David Stern and executives in the league anticipate and are anxious to expand the sport and add franchises in Europe.Thus, the revenue, operating income, and value of NBA teams will likely improve when the business of basketball experiences more growth and prosperity in areas across America and from the sport’s marginal development and eventual success among populations in other nations of the world. Besides the sports financial information contained in Forbes, other indicators as measurements reveal something about the finances of NBA franchises. In fact, a company located in Chicago, Illinois and named Team Marketing Report (TMR) has collected numerical data for several years and used the data to publish an index of what it costs in dollars for sports fans to attend the home games of teams in the NBA and of clubs in MLB, the NFL, and in the NHL. Furthermore, the company has published on its website (teammarketing.com) the average ticket prices for individuals and families to personally see games of these professional basketball, baseball, football, and hockey teams.To establish a record of these amounts for several years and to denote their impact on the NBA and its member franchises, I organized Tables 4.3 and 4.4 and then developed Table A.4.4 in the Appendix. An analysis of this financial information appears next and within the final section of Chapter 4.

Fan Cost Indexes Between 1991 and 2008 inclusive, the Fan Cost Index (FCI) of the NBA increased $150 or by 106 percent. Meanwhile, FCIs inflated during this period for MLB and the NFL as well, and in 1995–2008 inclusive, for the NHL


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(see Table 4.3). These amounts and percentage changes were, respectively, $115 or 151 percent in MLB, $245 or 162 percent in the NFL, and $60 or 42 percent in the NHL since, for various reasons,TMR did not report the FCIs of this ice hockey league until 1995. Although I excluded the NHL in 1991 and 1993 but then included it in 1995–2008, the average FCI of the group increased $169 or by 138 percent.9 As indicated in Table 4.3, the NBA’s FCI fell from $277 in 2001 to $261 in 2003. Most likely, it was the collapse of the US stock markets, terrorist attacks in New York City and Washington, DC, and a recession during the early 2000s that forced several of the league’s teams to lower the cost for families to Table 4.3

Fan Cost Index and Average Ticket Price, by League, Selected Years Year

League

1991 1993 1995 1997 1999 2001 2003 2005 2007 2008

Fan Cost Index MLB NBA NFL NHL Average

76 141 151 NA 122

90 168 173 NA 143

97 192 206 203 174

105 214 221 228 192

121 266 258 267 228

145 277 303 274 249

148 261 301 256 241

164 267 329 247 251

176 281 367 282 276

191 291 396 288 291

8 22 25 NA 18

9 27 28 NA 21

10 31 33 34 27

11 36 38 40 31

14 48 45 45 38

18 50 53 49 42

18 44 53 44 39

21 45 58 41 41

22 48 67 48 46

25 49 72 49 48

Average Ticket Price MLB NBA NFL NHL Average

Note: These sports leagues are Major League Baseball (MLB), National Basketball Association (NBA), National Football League (NFL), and National Hockey League (NHL). NA means the data is not available. To my knowledge, the Team Marketing Report company has not reported fan cost indexes and average ticket prices for clubs in Major League Soccer and the league. Source:“Fan Cost Index” at http://www.teammarketing.com [cited 10 August 2009]; and “Sports Business Data” at http://www.rodneyfort.com [cited 10 August 2009].

9

A few references report such financial data as the Fan Cost Indexes and Average Ticket Prices of NBA clubs. See, for example, “Fan Cost Index” at http://www. teammarketing.com [cited 10 August 2009]; “NBA FCI” at http://www.rodneyfort. com [cited 12 August 2009]; “Sports Business Data” at http://www.rodneyfort.com [cited 10 August 2009].


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attend their home games. Indeed, some teams dropped ticket prices for seats and the amounts to lease suites at their arenas, and/or had reduced the prices of beverages and food items, of hats and other clothing, merchandise and pennants, and of fees for parking automobiles. When the US economy improved after 2002, however, the majority of NBA franchises raised prices and fees for fans to attend their games.As a result, the league’s FCI increased by $6 or 2.3 percent from 2003–2005 and then by $14 or 5.2 percent from 2005–2007, and by $10 or 3.5 percent from 2007–2008. Similar to the NBA, the FCIs of the NFL and NHL each diminished between 2001 and 2003, and again from 2003 to 2005 in the NHL. MLB, however, experienced a marginal increase of $3 or by two percent in its FCI during 2001–2003 despite economic and financial troubles of households in cities across America. Because of the sport’s popularity, MLB Commissioner Bud Selig accepted the policies of executives in baseball franchises who decided in 2001–2003 not to raise or lower their ticket prices for fans but instead, inflate slightly the prices of beverages, food, and other products and services available for purchase during games at their ballparks. During other years, the FCIs in the NBA appreciated by various incremental amounts and percentages.The most significant changes occurred in 1991–1993, 1993–1995, 1995–1997, and 1997–1999 when the league’s FCIs increased, respectively, by $27 or 19 percent, $24 or 14 percent, $22 or 11 percent, and $52 or 24 percent.Therefore, NBA teams had transferred a portion of their costs to fans throughout the 1990s but less so between 1999 and 2008, as did many clubs in the other professional sports leagues. Another interesting feature about Table 4.3 is that except in 2008, the NBA’s FCIs exceeded the average of all leagues. Nevertheless, the gap between the two had narrowed from $38 in 1999 to $5 in 2007, and then they equaled each other in 2008 at $291. Thus, it appears that some NBA officials had charged excessive prices at their teams’ games during the 1990s but decided to limit their increases in regular seasons of the 2000s in order to more vigorously compete for sports consumers within their home areas and expand market share. Furthermore, after 2000, the US economy experienced great turbulence because of two recessions, collapse of the stock and real estate markets, and a huge and unsustainable increase in federal government deficits and debts. Consequently, NBA teams responded by controlling the costs for families to attend their regular season and postseason games, and making these contests more affordable relative to those in MLB, and the NFL and NHL. To view, measure, and analyze the FCIs of all NBA franchises, there are specific dollar amounts of these for ten of the league’s regular seasons


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entered in Table 4.4. In the various columns, these amounts appear in odd years from when TMR had originally published them. The FCIs of NBA expansion teams and those that relocated during this period are also included in the table, e.g., the expansion Charlotte Bobcats as of 2005, the Toronto Raptors and Vancouver Grizzlies each as of 1995, and for clubs that moved and acquired new names, the Memphis Grizzlies in 2001, New Orleans Hornets in 2003, and Oklahoma City Thunder in 2008. The table reveals some interesting details, facts, and outcomes. First, for the most part and as expected, FCIs tended to be among the highest for excellent, mediocre, and inferior performing franchises within large and some mid-sized areas, and alternatively, the lowest for those located in smaller markets. During several years, for example, the former group entertained any basketball fans who attended games of the Celtics in Boston, Lakers in Los Angeles, Knicks in New York, and Bulls in Chicago. Meanwhile in 1999 and then in 2008, the latter but low-coat clubs were the Magic in Orlando, Timberwolves in Minnesota and Pacers in Indianapolis, and more recently the Grizzlies in Memphis, Hawks in Atlanta, and Wizards in Washington. Such differences in FCIs likely prevailed also in MLB between the Yankees in New York and Brewers in Milwaukee, in the NFL between the Bears in Chicago and Bills in Buffalo, and in the NHL between the Red Wings in Detroit and Florida Panthers in the City of Sunrise. Second, some NBA clubs realized reductions in their FCIs.This occurred, for example, in 1991–1993 for the Lakers and in 1995–1997 for five teams, in 1997–1999 for the Magic, in 1999–2001 for 11 teams, and then for 18 teams in 2001–2003, eight in 2003–2005, and seven each in 2005–2007 and 2007–2008. With respect to FCI changes of some teams, the Hawks had the most volatility with four decreases throughout the 2000s, while the Bucks’ FCIs increased each year as depicted in Table 4.4. Specifically, the Hawks’ strategy was to encourage more fans to attend their home games and spend money while there. In comparison, the Bucks raised prices for families throughout since its costs were significantly below the league’s average each year during the 1990s and early 2000s. Third, the FCIs of expansion franchises were lower than the league’s average except for the Raptors in 2007. Similar experiences occurred in the 2000s for the Grizzlies, Hornets, and Thunder who had each moved from other cities. This suggests that these teams had focused on increasing their home-game attendances, revenues, and market shares within their areas rather than maximizing profits. It is unlikely, therefore, that the market values significantly appreciated for NBA expansion franchises and those who relocated since they

Fan Cost Index 1997

1999

2001

2003

2005

2007

2008

Atlanta Hawks Boston Celtics Charlotte Bobcats Charlotte Hornets Chicago Bulls Cleveland Cavaliers Dallas Mavericks Denver Nuggets Detroit Pistons Golden State Warriors Houston Rockets Indiana Pacers Los Angeles Clippers Los Angeles Lakers Memphis Grizzlies Miami Heat Milwaukee Bucks Minnesota Timber. New Jersey Nets New Orleans Hornets

138 151 — 125 183 133 125 121 165 139 144 118 137 257 — 118 121 121 143 —

153 203 — 145 215 164 143 144 178 166 164 133 157 199 — 164 136 139 176 —

161 247 — 165 222 193 176 166 178 197 225 190 168 212 — 183 156 172 196 —

168 248 — 163 269 188 199 154 210 200 249 222 179 250 — 223 177 194 253 —

275 285 — 183 306 221 238 226 220 270 309 273 274 427 — 261 201 238 314 —

248 286 — 198 294 223 313 235 198 242 324 278 260 446 261 335 212 228 293 —

242 318 — — 292 230 299 204 207 184 330 250 261 387 237 278 234 219 308 235

258 316 237 — 304 252 301 229 241 174 321 264 271 402 222 297 249 238 312 206

244 358 196 — 335 317 339 271 282 206 270 250 317 453 228 339 268 231 328 182

235 389 213 — 344 293 344 287 284 267 279 252 316 479 182 352 273 230 309 192

(Continued)

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1991

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Fan Cost Index, by NBA Team, Selected Years


Table 4.4


Table 4.4

(Continued) Fan Cost Index 1999

2001

2003

2005

2007

2008

New York Knicks OC Thunder Orlando Magic Philadelphia 76ers Phoenix Suns Portland Trail Blazers Sacramento Kings San Antonio Spurs Seattle Supersonics Toronto Raptors Utah Jazz Vancouver Grizzlies Washington Wizards Average

194 — 109 132 139 144 128 157 131 — 124 — 123 141

232 — 178 151 205 165 148 180 173 — 168 — 162 168

246 — 211 191 210 225 165 208 191 153 193 178 181 192

292 — 237 203 227 269 207 188 255 158 231 171 282 214

455 — 224 243 233 279 243 217 318 241 281 185 331 266

460 — 269 278 285 254 316 234 241 253 261 — 300 277

362 — 216 250 240 262 324 255 207 235 229 — 269 261

388 — 223 263 274 232 310 270 215 242 228 — 269 267

394 — 229 269 302 251 318 303 229 320 235 — 194 281

420 237 234 272 355 329 318 329 — 284 252 — 203 291

Note: A dash (—) indicates that no NBA team existed at the site during that season.Timber. is Timberwolves, and OC is Oklahoma City.The Charlotte Bobcats,Toronto Raptors, and Vancouver Grizzlies were expansion teams after 1991.The Grizzlies moved from Vancouver to Memphis in 2001, the Hornets moved from Charlotte to New Orleans in 2002, and the Supersonics from Seattle to Oklahoma City in 2008. Source:“NBA FCI” at http://www.rodneyfort.com [cited 12 August 2009]; James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992); Frank P. Jozsa, Jr. and John J. Guthrie, Jr., Relocating Teams and Expanding Leagues in Professional Sports (Westport, CT: Quorum Books, 1999).

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1993

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Team


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tended to charge affordable prices for families to purchase their tickets for seats and to buy products and services at games. Moreover, each of them perform in relatively small areas where there likely is less demand for professional basketball than other team sports such as amateur and/or college baseball, football, and indoor ice hockey. Fourth, from a sample of a few NBA franchises at home within large markets, FCIs increased $238 or 157 percent for the Celtics between 1991 and 2008, $161 or 88 percent for the Bulls, $222 or 86 percent for the Lakers, and $226 or 116 percent for the Knicks. For four teams located in smaller cities, the FCIs had inflated by $97 or 70 percent for the Hawks, $160 or 120 percent for the Cavaliers, $134 or 113 percent for the Pacers, and $125 or 114 percent for the Magic. Based on this sample of four each, the clubs located in large markets realized average gains in FCIs of $211 or 111 percent as opposed to $129 or 104 percent for those in much less populated areas. In short, families paid absolutely more money to attend the home games of popular clubs in big cities while basketball fans in Atlanta, Cleveland, Indianapolis, and Orlando spent considerably fewer dollars. Fifth, 9 or 33 percent of teams had FCIs higher than the NBA average of $141 in 1991. Seventeen years later, there were 13 or 43 percent of clubs with FCIs above the league’s average of $291. Apparently, franchises with very high costs during the early 1990s inflated them relatively less than did others during the mid-to-late 1990s and early 2000s. This strategy, in turn, resulted in a more equitable distribution among the group in FCIs from 1991 through the 2008 regular season. In other words, these NBA franchises became more alike with respect to their FCIs, which meant that basketball fans in large, mid-sized, and small cities had to pay unequal but gradually smaller differences in prices for tickets, products, and services. Sixth, to compare the FCIs of teams within the same area, it cost families in Los Angeles $120 or 187 percent more to attend a Lakers game in 1991 than one played at home by the Clippers. In 2008, the difference between them was $163 or 151 percent. Furthermore, families paid $51 or 135 percent more in 1991 to watch the Knicks perform at home than the Nets. Seventeen years later, the difference was $111 and as before, 135 percent more.As such, the differences in FCIs between these two sets of teams increased in dollar value in 1991 versus 2008, but decreased percentagewise in Los Angeles and remained the same within the New York area. Thus, home games of the Lakers and Knicks are more expensive to attend, respectively, than those that involve the Clippers and Nets because the former clubs are far more entertaining, popular, and well-respected within their


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sports markets especially among households who have male teenagers and young adults. Seventh, an FCI of a team includes four each average-price tickets, small soft drinks and regular-size hot dogs,two each small draft beers,game programs and least expensive adult-size caps,and one space for parking a car.Since it is an index of these items, an FCI does not mean that all prices and fees are higher or lower for one team than for another one. In fact, some tickets, drinks, hot dogs, draft beers, game programs, caps, and/or parking may cost more for fans of teams in small areas than in mid-sized or large markets. Nonetheless, these and other FCIs roughly measure how expensive games were in dollars and their allocation among NBA franchises since the early 1990s. This is important, relevant, and useful financial information for economists and others who research the business and operation of franchises in professional sports leagues.

Average Ticket Prices The lower section of Table 4.3 contains the Average Ticket Prices (ATPs) of franchises within the NBA and in MLB, the NFL, and NHL for various years. Similar to determining the FCIs for families, TMR surveyed these teams to determine the average price they had charged spectators for a ticket to a home game in their arena. Rather than list the prices for all of each team’s regular seasons, I chose to include prices for the odd years from 1991–2007 inclusive, and then in 2008 because it was the latest year that TMR had published this data. What does the table reveal about these four leagues’ATPs? Between 1991 and 2008 inclusive, the ATPs of NBA franchises increased $27 or by 122 percent.These amounts and percentages for the other leagues were $17 or 212 percent in MLB, $47 or 188 percent in the NFL, and $15 or 23 percent in the NHL for only those regular seasons beginning in 1995 and every odd year after that, and also in 2008 but not 2009.As such, NBA teams had the second largest increase in dollar amounts for tickets on average during these periods, but ranked only third in percentage changes following MLB and the NFL. In part, these differences in amounts and percentages reflect the pricing power of franchises within each league and their performances, popularity, and prosperity during the mid-to-late 1990s and early 2000s. Other interesting and major results were uncovered from analyzing the leagues’ATPs in Table 4.3. For example, NBA teams raised their ticket prices more aggressively before 1999 than after that year. In amounts and percentages, these were $5 or 22 percent during 1991–1993, $4 or 14 percent in


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1993–1995, $5 or 16 percent in 1995–1997, and $12 or 33 percent in 1997–1999. From 1999–2008, however, the net change in the cost of tickets to NBA games was $1 or two percent. This pattern in pricing tickets also appeared in the league’s FCIs whereby the largest increases of the indexes occurred during the 1990s rather than in the 2000s. Because of the excitement generated by Michael Jordan and championships won by his Chicago Bulls, and due to the gold medal earned in 1992 by America’s “Dream Team” at the Summer Olympics in Barcelona, Spain, the NBA became a global brand and thus the league’s teams used their market power to raise the prices of seats in their arenas. Since the late 1990s, the difference between the NBA’s ATPs and the average of all leagues steadily declined from $10 in 1999 to $1 in 2008. Meanwhile, this difference increased for teams in MLB and the NFL and fluctuated among years for clubs in the NHL. Evidently, after the midto-late 1990s, the demand for NBA games decreased somewhat given investors’ problems with the US stock markets, a recession then multiyear expansion of the nation’s economy followed by a steep depreciation of values in the commercial and residential housing markets. These events undoubtedly contributed to unemployment troubles, which in turn affected expenditures, personal income, and the wealth of households and profits of businesses. Although the revenue streams of most NBA franchises remained stable or improved, their ATPs had barely changed for the majority of them. For the years 1991 and 2008, the ratios of ATPs to FCIs within the NBA had been consistent and stable at approximately 16 percent. In contrast to that league, the ratios in 1991 were 10 percent in MLB and 16 percent in the NFL, and then 17 years later, 13 percent in MLB and 18 percent in the NFL. However, in the NHL, the ratios equaled 17 percent in 1995 and 2008. These results denote very little variation in the relationships of ticket prices to FCIs within the leagues during these two years of the period. Furthermore, this data denotes the fraction of fans’ costs that they had spent to attend games besides the price paid for tickets. In fact, the ratios of other costs to FCIs ranged from about 82–84 percent in the NFL, 87–90 percent in MLB, and 83 percent in the NHL. In short, officials in the NBA and other franchises are well aware of and sensitive to what fans will spend or will not allocate from their disposable income for basketball tickets, products, and services at games played in their hometown arenas. As such, this completes an analysis of ATPs for the sports leagues listed in Table 4.3.


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The ATPs of all the NBA franchises appear in Table A.4.4 of the Appendix. What financial information does this table reveal about the business, policy, and strategy for each of the league’s teams? That is, were there any differences, similarities, and trends in how ticket costs became established and changed, and in addition, whether and why NBA clubs had reformed any of them during the 1990s and early 2000s? First, the ATPs and FCIs of most NBA teams changed in the same direction during years of this period but were disproportionate and unequal in their dollar amounts and percentages. In other words, as ATPs of clubs increased or decreased, so did their FCIs. Even so, a small change in the former may have resulted in even greater costs for their fans to purchase food, beverages, and other items at home games within their arenas. This means that some NBA franchises adopted a business strategy of intentionally holding ticket prices low to boost regular season attendances, but then charged spectators increasingly more dollars for food, products, and services while they enjoyed games played on the court. Consequently, this pricing policy provided additional revenue for these franchises so that they could obtain and allocate more resources and perhaps expand the payroll of coaches and players. Second, for the most part, the ATPs of teams located in large metropolitan areas exceeded those who had existed and performed at home in small and mid-sized markets.To illustrate, the ATPs of the Lakers, Knicks, and Bulls ranked from first to third in 1991 and then 17 years later, the Lakers placed first and Knicks second, while the ATPs of the Bulls tied for fourth with the Suns at $64. Alternatively, the Magic, Nuggets, and Timberwolves had the lowest ATPs in 1991, but in 2008, the bottom three in prices per ticket were the Grizzlies in 30th place at $24, Hornets in 29th at $25, and the Wizards in 28th at $29. Therefore, basketball fans in the Orlando, Denver, and Minneapolis areas in 1991, and in the Memphis, New Orleans, and Washington DC areas in 2008 paid much less for tickets to home games than those in Chicago, Los Angeles, and New York.Again, this was about the same differences that applied to the distribution of FCIs for these clubs during one or more of the years. Third, changes in amounts and percentage changes of ATPs varied between groups of NBA teams. During 1991–2008, for example, the ATPs of the Lakers increased by $46 or 98 percent, the Knicks by $40 or 133 percent, and the Bulls by $35 or 120 percent. In contrast, the Wizards increased their ATPs by $10 or 52 percent while those of the Grizzlies and Hornets declined since they had relocated, respectively, from Vancouver in


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2001 and Charlotte in 2003. For the ATPs of other clubs located in small metropolitan areas or sports markets since 1991, the Timberwolves experienced an increase of $19 or 111 percent, the Nuggets of $30 or 176 percent, and the Magic of $25 or 166 percent. Thus, except for a few clubs, tickets to most NBA games became more expensive in dollar amounts and perhaps when compared to the costs of other entertainment activities within these cities. Fourth, the average price of tickets declined for fans who attended Bobcats games in Charlotte. While the team’s attendances at home have ranked among the lowest in the league, owner Robert Johnson decided to sell his franchise because of estimated losses that have exceeded $30 million per year. In 2008, the Bobcats charged an average of $33 for a ticket to a seat in its arena, which was among the lowest of the 30 teams and only 67 percent of the NBA average that season.When the club is sold and then eventually repurchased, it will be a challenge for the Bobcats’ new owner to increase ticket prices at home games unless the team excels and competes better in regular season games for a division title.10 Fifth, some groups of loyal basketball fans cannot afford to attend more than a few home games of various NBA teams. For a family of four, it costs at least $350 for tickets to see the Lakers play in Los Angeles’ Staples Center and more than $250 each for seats to watch the Celtics perform in Boston’s TD Banknorth Garden, the Knicks in New York’s Madison Square Garden, the Bulls in Chicago’s United Center, and several other teams in their respective arenas. Thus, for more revenue and additional profit, a number of franchises in the league charge corporations and other local organizations tens of thousands of dollars to lease suites and premium seats within their or the city’s arenas. In fact, the search for alternative revenue streams is complex and tedious, and is an all-important task assigned to executives and staff within NBA clubs.

10

The Charlotte Bobcats and its financial matters and/or basketball operations within the league are featured in Dallas Branch, Jr.,“The Charlotte Bobcats: (Re) Launching a New (Old) NBA Franchise,” Sport Marketing Quarterly (2008), 57–62; Jack McCallum,“Charlotte’s Web,” Sports Illustrated (17 November 2008), 48–52; Kirsten Valle,“Bobcats Get Good Bounce,” Charlotte Observer (29 October 2009), 10A–11A. To boost revenue at home games, Bobcats’ season ticket holders may trade in unused tickets for additional seats at other games.That means four tickets to a future game — the original two season tickets plus two for a previously unused game. See Ron Green, Jr., “Bobcats Let Season Ticket Holders Trade Games,” Charlotte Observer (6 November 2009), 4C.


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Sixth, the extraordinary performances of a superstar player or players and/or accomplishments of an outstanding team or teams can make financially significant differences in what basketball fans will spend for tickets to home games. To illustrate, Michael Jordan and the success of the Bulls caused ATPs at the United Center in Chicago to increase 41 percent from 1995–1999. Likewise, LeBron James and improvements in the Cavaliers pushed ticket prices up in Cleveland’s Quicken Loans Arena by $14 or 33 percent during 2005–2007. Similar results occurred for the Spurs in San Antonio when the franchise signed Wake Forest University’s Tim Duncan to a contract, in Miami for the Heat when it drafted Dwayne Wade, and in Dallas for the Mavericks when it acquired point guard Jason Kidd from the New Jersey Nets. In the end, NBA officials realize that ATPs are what fans willingly pay to attend games in order to see great players score points and to see their hometown team win division and conference titles and NBA championships. Seventh, since the early 2000s, NBA franchises reacted to domestic economic and financial problems and the lack of consumer confidence by increasing their ATPs less than three percent each year. Indeed, these clubs attempted to control admission costs to their games and make them more affordable especially for fans whose occupations are not professional and similarly, for low- and middle-income families who have children and teenagers that play basketball on school teams and in youth programs.This strategy is commendable, innovative, and realistic. It may even have expanded the league’s market share since NFL and NHL games continue to become increasingly expensive for many sports fans. Meanwhile, the television ratings of MLB’s regular season and postseason games have remained flat or declined in recent years because of drug abuse by ballplayers, and furthermore, due to differences in competitiveness between teams with large payrolls that exist in big cities and those with substandard payrolls within smaller markets. Besides types of revenue, and the operating income and market value of NBA franchises and their FCIs and ATPs, other information exists about them for researchers to study and better understand their operations. Such information includes the names and contributions of these teams’ sponsors; age and quality of hometown arenas; numbers and amounts of local, regional, and national broadcasting agreements; and the growth rate in attendances at their home games. Moreover, the sales of clothing, equipment, and merchandise at NBA arenas in America, and the experience, power, and talent of franchises’ executives are important factors for them to survive and then


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prosper as business organizations. In writing Chapter 4, I discovered details and several aspects of this information in the literature and used that data in various sections.11 To conclude, the NBA and its franchises have a number of current, strategic, and unique financial environments and different opportunities, operations, and problems. The conditions and effects of NBA arenas in areas across the country and one in Toronto, Canada, and the business and economics of naming rights, are topics discussed in Chapter 5. Then in Chapter 6, I reveal the domestic and international affairs of the league, and explain how these matters have affected and will influence the growth, development, and success of professional basketball and the future prosperity of the NBA.

SUMMARY To become increasingly competitive, efficient, and profitable as a business enterprise in the sport of professional basketball, an owner or syndicate of each NBA franchise establishes, controls, and monitors an organization that includes different offices whose officials are responsible for various types of operations. Besides being led by an owner or group of owners, most franchises in the league have a president and several junior and senior executives, and contain in their structures such offices as Administration, Finance, Marketing, and Community Relations. In fact, these and other offices might be branches, departments and/or divisions, and each of them may involve one or more vice presidents, managers, and directors who specialize in and complete various assignments, duties, and tasks. To that end, Chapter 4 discusses the organizations and operations of NBA franchises and the types of offices and officials that exist within them. There are a few but important tables in the chapter and Appendix that provide names and other specific information about the characteristics of team owners and executives, and the distribution of these officials and their offices among teams in the league for different years or some of its regular seasons. Readers learn, for example, details about who owns the Atlanta Hawks, Detroit Pistons and Utah Jazz; what executives accomplish for the 11

To control their spending in 2009 and thereafter, some NBA teams have cut rosters, assistant coaches, scouts, holiday parties, and even texting. Such clubs include the Charlotte Bobcats, Cleveland Cavaliers, Denver Nuggets, Detroit Pistons, Miami Heat, and Minnesota Timberwolves. For more details about this strategy, see David Biderman, “The NBA:Where Frugal Happens,” Wall Street Journal (27 October 2009), B12.


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Charlotte Bobcats, Houston Rockets and Philadelphia 76ers organizations; and which offices administratively support such teams as the Cleveland Cavaliers, Miami Heat and Sacramento Kings. After a discussion of these matters, there is a section on the finances of NBA franchises.This material reveals the differences in their revenue, operating income, and value during 1999 and 2008. Moreover, the information denotes why the Chicago Bulls, Los Angeles Lakers, and New York Knicks are rich and successful clubs, while the Golden State Warriors, Los Angeles Clippers, and Milwaukee Bucks rank below average in popularity, prestige, and wealth among the group. Within this chapter, other interesting financial statistics that relate to teams are their Fan Cost Indexes (FCIs) and Average Ticket Prices (ATPs) as reported during a number of years throughout the 1990s and 2000s. While one table lists and compares the FCIs and ATPs of four American professional sports leagues, others display this financial data for a group of clubs that had performed in the NBA. As reported, the FCIs indicate the total costs for such groups as families and households to attend games at these teams’ home arenas, while the ATPs are the dollar amounts spectators spend on average to purchase tickets for seats at regular season games. In part, FCIs and ATPs reflect the pricing policies of NBA franchises and somewhat of their vendors. Furthermore, they measure any differences in costs and prices for those fans who had attended games of NBA clubs that performed in arenas located within large, mid-sized, and small sports markets of America and in Vancouver and Toronto, Canada. Besides identifying and examining the offices and officials of franchises, Chapter 4 also contains financial issues, problems, and/or topics that are important to the owners and executives of NBA teams and for any scholars who analyze, research, and study the history of the league and its member teams’ cultures, organizations, operations, and strategies. Interestingly, this chapter includes financial data and statistics that are relevant to NBA expansions and mergers and team relocations, and from a business perspective, most importantly to the conduct, performance, and failure or success of these basketball clubs. In sum, readers of this book will appreciate, comprehend, and realize how NBA franchises are organized and why they must operate as enterprises to earn a profit in the short and long run.


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Chapter

5 Basketball Arenas and Markets

Similar to ballparks of teams in Major League Baseball (MLB), and to stadiums of clubs in the National Football League (NFL), National Hockey League (NHL) and Major League Soccer (MLS), basketball arenas have become increasingly important assets to the business, operation, and value of franchises within the National Basketball Association (NBA). These structures and where they had previously existed, and/or are currently located, within metropolitan areas of local and regional sports markets have each contributed, in part, to the cash flow, revenue, and profit of such professional enterprises as the MLB Red Sox in Boston, NFL Panthers in Charlotte, NHL Red Wings in Detroit, MLS Wizards in Kansas City, and NBA Clippers in Los Angeles.1 Especially since the 1950s–1960s, the required investments in — and potential economic and social returns from — new ballparks, stadiums, and

1

For books about the economics, facilities, and histories of franchises in professional team sports, see Frank P. Jozsa, Jr., Big Sports, Big Business: A Century of League Expansions, Mergers, and Reorganizations (Westport, CT: Praeger Publishers, 2006); Roger G. Noll, ed., Government and the Sports Business: Studies in the Regulation of Economic Activity (Washington, DC:The Brookings Institution, 1974); James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992). 149


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arenas have caused various local, municipal, and state governments to provide hundreds of millions of dollars in taxpayer money to pay for the construction of these buildings. Other existing professional sports venues, meanwhile, have received additional public funds for renovation so that they can become attractive, convenient, and fun places for those fans who had attended any of a team’s regular season and postseason games there. As a result, new and/or renovated ballparks, stadiums, and arenas are relevant and contribute to the image, prosperity, and success of franchises in each major sport, and in turn, they may determine whether these organizations in the short and long run add market share, increase cash flow and revenue, operate at a profit, and maximize their economic value for the owners. Based on the league’s history and its competition, popularity and significance, this chapter focuses primarily on the business, development, and operation of NBA arenas. Furthermore, Chapter 5 discusses the location, quality, and other features of markets that contain the franchises of national and prominent basketball organizations and those in other professional sports. In fact, several events, facts, and relationships establish that the arenas and markets of NBA teams have become commercially, economically and socially controversial, special, and unique.The following items, for example, highlight a few of these issues and their impact, if any, on communities, sports fans, or other types of groups. First, the previous and current arenas of NBA teams normally vary in such characteristics as age, location and size, and in the amounts of their construction costs and maintenance expenses.That is, they began depreciating in different years; existed within small, mid-sized, and/or large metropolitan areas; contained various numbers of concessions, seats and suites; and were constructed and renovated with public and/or private funds.These differences, in turn, are interesting and relevant because they influence several groups including basketball athletes and fans, local taxpayers, the investors, partners and sponsors of teams, and officials within the NBA. Second, the majority of NBA arenas host clubs who belong to other sports organizations such as the American Hockey League (AHL), National Lacrosse League (NLL), and Women’s National Basketball Association (WNBA). Certainly, the sharing of facilities between them affects the finances of franchise owners in these leagues and the schedules, regular seasons, and performances of their home teams. Indeed, this type of arrangement requires planning and the initiation of legal agreements among — and the cooperation of — any teams at the same sites. In other words, they collectively must decide which of them will or will not use a local arena to play their home


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and away games during holidays, weekdays, and weekends. The NBA Washington Wizards team, for example, shares the Verizon Center in the nation’s capital city with NHL and WNBA clubs but also with the Georgetown Hoyas, a college team that plays basketball in Division I. Third, when any NBA club moves from one arena to another and then plays a schedule against competitors at home, this transfer affects its operations and thus, will likely change attendances, performances, and revenues at games. This occurs because spectators really enjoy the amenities available within new or renovated arenas and teams respond to the challenge, excitement, and novelty of performing before bigger crowds in a modern and more expensive facility. Furthermore, basketball franchise owners financially benefit from their new arenas since additional income flows occur from ticket and concession sales, television and radio broadcasts, and the sale of clothing, memorabilia, and merchandise. Fourth, most NBA arenas acquire a name after companies purchase and obtain naming rights from the building’s owner. Since the 1990s, such rights have greatly increased in economic value and become more and more important as a marketing and promotion strategy of businesses whose name appears on the entrance of any arena. This activity, in turn, links sponsors with particular NBA teams and therefore puts pressure on the latter to perform above expectations on a basketball court, especially at home games against rivals in their division and/or conference. In this chapter, a table denotes how the league’s arenas recently ranked in quality based on such criteria as fan involvement, entertainment, and parking. Fifth, teams in professional sports leagues have their homes within various areas of the US or in provinces of Canada. Indeed, some markets of clubs seem saturated while others contain only one or a few NBA and/or MLB, NFL, NHL, and MLS clubs. This distribution of franchises across North America indicates which areas and provinces have the potential to be future sites for an NBA expansion team or for the movement of one that currently exists within the league. In short, the demography, number, and quality of sports markets partially determine why basketball’s Knicks and Nets, baseball’s Yankees and Mets, football’s Giants and Jets, ice hockey’s Devils, Islanders and Rangers, and soccer’s Red Bulls each play their home games in the New York–New Jersey area and benefit from being located there. Readers should remember these five aspects of arenas and then relate them to the information discussed throughout this chapter. As stated before, NBA franchises are businesses that depend for most of their revenue — and support of fans — at the site and market where they perform home games. To


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explain these matters in more detail, the major sections of this chapter include tables that provide different types of data, statistics, and interesting facts regarding arenas and respectively, their NBA tenants during specific years.

BASKETBALL ARENAS During the 2008 regular season, 30 NBA teams competed and as a group, they occupied 29 different arenas that had various characteristics as reported in the columns of Table 5.1. With respect to the ages of these facilities, 15 (or 52 percent) of them originated during the 1990s, seven (or 24 percent) in the 2000s, five (or 18 percent) in the 1980s, and one each for a total of six percent in the 1960s and 1970s. More specifically, six of these arenas opened for teams in 1999 and three each in 1988 and 2002.Thus, these 29 venues’ average age in 2010 was about 17 years, approximately when the United Center in Chicago became the home of the Bulls and the Quicken Loans Arena in Cleveland of the Cavaliers. From the oldest to newest arena, New York’s Madison Square Garden (MSG) welcomed the Knicks in 1968 and 37 years later, Time Warner Cable Arena opened to host the Charlotte Bobcats. Interestingly, the Lakers and Clippers jointly share the Staples Center in Los Angeles with teams that play in the NHL and WNBA.2 Column three in Table 5.1 lists the names of these 29 buildings as of 2008–2009.Among the list are the identities of some popular companies that 2

Numerous articles discuss issues and the quality of specific arenas in the NBA. A sample of these readings include “Arena Managers Discuss NBA/NHL Relationships,” Amusement Business (2 October 2000), 23; “Digest: Sports Facilities,” Amusement Business (November 2004), 77–78; Sam Walker, “Building a New Arena? A Winning Team Helps,” Wall Street Journal (25 June 1999), B1; Jim Watts, “Governors Back Arena Tax,” Bond Buyer (4 March 2008), 9; Mike Barnes, “It’s Getting Hot in Here,” Amusement Business (November 2004), 3. Other data and facts about venues are reported in “Arenas” at http://www.ballparks.com [cited 19 November 2009]; Official NBA Guide: 2008–2009 Edition (Chesterfield, MO: Sporting News Books, 2009); The World Almanac and Book of Facts (New York, NY: World Almanac Books, 1930–2008). Some serious concerns about the age, cost, and function of specific basketball arenas are expressed in Mark Yost,“Building Teams, Brick by Brick,” Wall Street Journal (19–20 December 2009),W14; and in Hannah Karp,“Last-Minute Gift Ideas: Old Stadiums,” Wall Street Journal (23 December 2009), D6. In Karp’s article, these facilities include the Pontiac Silverdome in Pontiac, Michigan, the Pyramid Arena in Memphis, Tennessee, the Alamodome in San Antonio, Texas, and The Forum in Los Angeles, California.


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Table 5.1 Characteristics of Arenas, by NBA Team, Selected Years Team

Year

Arena

Capacity

Cost

New York Knicks Golden State Warriors New Jersey Nets Detroit Pistons Milwaukee Bucks Sacramento Kings Orlando Magic Minnesota Timberwolves Utah Jazz Phoenix Suns Chicago Bulls Cleveland Cavaliers Boston Celtics Portland Trail Blazers Philadelphia 76ers Washington Wizards Atlanta Hawks Denver Nuggets Indiana Pacers Los Angeles Clippers Los Angeles Lakers Miami Heat Toronto Raptors Dallas Mavericks New Orleans Hornets San Antonio Spurs Houston Rockets Memphis Grizzlies Charlotte Bobcats Oklahoma City Thunder

1968 1971 1981 1988 1988 1988 1989 1990 1991 1992 1994 1994 1995 1995 1996 1997 1999 1999 1999 1999 1999 1999 1999 2001 2002 2002 2003 2004 2005 2008

Madison Square Garden Oracle Arena Izod Center The Palace of Auburn Hills Bradley Center Arco Arena Amway Arena Target Center Energy Solutions Arena U.S. Airways Center United Center Quicken Loans Arena TD Banknorth Garden Rose Garden Wachovia Center Verizon Center Phillips Arena Pepsi Center Conseco Fieldhouse Staples Center Staples Center American Airlines Arena Air Canada Centre American Airlines Center New Orleans Arena AT&T Center Toyota Center FedEx Forum Time Warner Cable Arena Ford Center

19,763 19,596 20,049 22,076 18,717 17,317 17,248 19,006 19,911 19,023 21,711 20,562 18,854 19,980 20,444 20,674 18,729 19,099 18,345 18,997 18,997 19,600 19,800 19,200 18,500 18,500 18,300 18,400 19,026 19,163

43 25 85 70 90 40 102 104 94 90 175 152 160 262 210 260 213 165 183 400 400 194 175 420 112 195 175 250 265 89

Note:Year is when these arenas opened for each team. Cost is in millions of dollars of construction costs.The names of the arenas existed in 2009. Source: The World Almanac and Book of Facts (New York, NY:World Almanac Books, 2007); and Kurt Badenhausen, Michael K. Ozanian, and Christina Settimi, “The Business of Basketball” at http://www.forbes.com [cited 30 July 2009].


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compete within several commercial industries such as airlines, communications, and financial services. Meanwhile, the homes of the Knicks, Pistons, Bucks,Trail Blazers, Hornets, and Thunder have names that do not represent a specific business even though three or 50 percent of these facilities belong to private owners. In fact, it is public sports authorities or other official groups within cities, counties, and municipalities that control, maintain, and manage the operations of most NBA arenas, while the teams are tenants who have signed leases which will expire in one or more years. Furthermore, since these venues originally opened, many of them have had new sponsors who acquired the naming rights to them. In contrast, the Bobcats played for one year in the City of Charlotte’s Coliseum until there was a new facility built in 2005 eventually named Time Warner Cable Arena. Later in this chapter, there are more details about contracts for the naming rights of some NBA arenas. As portrayed in column four, the capacities of these structures ranged from approximately 17,000 to 22,000 seats in the mid-2000s. The three largest arenas existed in Detroit, Chicago and Washington, and the smallest in Orlando, Sacramento and Houston. In 2008, the average NBA arena had 19,000 seats and that number was less than the capacity of facilities located in such large cities as New York and Philadelphia, in two mid-sized markets as Dallas and Miami, and in relatively small areas as Cleveland and Salt Lake City. Surprisingly, Boston’s TD Banknorth Garden and San Antonio’s AT&T Center each contained fewer seats than Oklahoma City’s Ford Center or Toronto’s Air Canada Centre.Thus, some popular, traditional, and successful NBA teams play at home in smaller arenas than those of clubs who fail to win a number of titles and championships. Column five of the table shows the construction costs of these teams’ arenas in millions of dollars.As of 2010, the most expensive among the group was $420 million for the Mavericks’ 10-year-old American Airlines Center in Dallas, Texas. Meanwhile, the Oracle Arena (originally named the Oakland–Alameda County Stadium) in northern California was the least expensive to build at $25 million in 1966 although five years later, the Warriors moved there from San Francisco to play home games in Oakland. For sure, the cost to build new NBA arenas especially in Oakland and East Rutherford, New Jersey and in Detroit, Milwaukee, Sacramento, Salt Lake City, and Phoenix is now at least $200 million for each of them.Thus, rather than replace some venues, cities and counties have allocated funds from reserves to renovate the venues and thereby avoided raising fees, penalties, and taxes on local households and businesses.


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Of those 29 facilities listed in Table 5.1, there were four each professional teams (including NBA and WNBA) who had recently leased New York’s MSG and Los Angeles’ Staples Center, and three each who played games at home in such places as Milwaukee’s Bradley Center, Orlando’s Amway Arena, and Washington’s Verizon Center. During 2008, only one each NBA club had occupied, for example, the Oracle Arena, Izod Center, The Palace of Auburn Hills, Arco Arena, Target Center, Energy Solutions Arena, American Airlines Arena, New Orleans Arena, Ford Center, and the FedEx Forum. Furthermore, one or more local college basketball teams scheduled and performed their home games in a few of these arenas. Since the average number of tenants per facility was two professional sports franchises, the most common of them were basketball and then ice hockey, lacrosse, and arena football. Table 5.1 reveals the following information: (a) 22 (or 76 percent) of these arenas had become active and then occupied by NBA teams after the late 1980s, and their average age as of 2010 was 17 years; (b) the only clubs in the league to share a venue in regular seasons and postseasons were the Lakers and Clippers, who jointly played their home games in Los Angeles’ Staples Center; and (c) except for a few of these buildings, businesses based in the United States (US) acquired the naming rights to a majority of them for a number of years. The table further indicates that (d) their average capacity was 19,000 seats and these ranged from 22,000 in Detroit to less than 18,000 in Sacramento and Orlando; (e) on average, the seven NBA arenas built during the 2000s each cost $215 million, in contrast to $189 million each for the 15 constructed in the 1990s, $77 million each for the five erected in the 1980s, $25 million in 1966 for Oracle Arena that was occupied in the 1970s, and $43 million for MSG in the 1960s. Finally, (f) some professional ice hockey, lacrosse and arena football teams, and a few in college basketball were also tenants of NBA arenas during various years of the 1960s–2000s.

Arenas and Teams Throughout the 20th century and early 2000s, economists and other researchers have studied effects of how new or renovated arenas have influenced the movement, performance, and business operation of NBA franchises. That is, after entering into more modern and/or improved venues, were these clubs and their players more motivated to win additional regular season games on their home court before larger numbers of spectators? If


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so, then perhaps these different, improved, and more expensive venues had a positive effect and therefore helped to increase the attendance, revenue, and profit of any team that performed at home in them.3 To measure this result, I collected some historical data about NBA teams and then prepared Table 5.2. It compares how the average attendances and winning percentages of 29 clubs in the league — but not the Orlando Magic — changed from before to after they had transferred into a new or renovated arena. Ultimately, it shows whether these franchises became more or less valuable as business enterprises and improved as basketball operations during the transition from their former gymnasium into a new or renovated arena, or one located in another city. For further clarification of various columns in Table 5.2, the San Francisco Warriors played in Daley City’s Cow Palace during 1962–1971.Then after the 1970 NBA regular season or during the league’s 1970–1971 postseason, the franchise moved to Oakland where it became the Golden State Warriors and performed at home games in the city’s Coliseum (now Oracle Arena) to open the 1971 regular season. Furthermore, the Hornets moved from their home in Charlotte to New Orleans during mid-2002, while the former Supersonics left Seattle’s Key Arena and became the Oklahoma City Thunder to play in the Ford Center in 2008. Otherwise, the remaining teams simply shifted their operations from one arena to another within the same metropolitan area.This excludes, of course, the expansion Orlando Magic who opened their first season playing home games in the Orlando Arena in 1989 (renamed TD Waterhouse Centre in 1999 and then Amway Arena in 2006). After moving into a new or renovated arena within its metropolitan area, or into one that had existed then in another city, 23 (or 79 percent) of the NBA teams experienced an increase in their average or per game attendances.As indicated in Table 5.2, relatively large or major increases in spectators occurred for the Knicks at MSG, Bucks at the Bradley Center, and Bulls at the United Center. However,only small or marginal improvements in attendances happened for the 3

To research the history of attendances, finances, or winning percentages of NBA clubs, some references include Kurt Badenhausen, Michael K. Ozanian, and Christini Settimi,“The Business of Basketball” at http://www.forbes.com [cited 30 July 2009]; “Complete Team List” at http://www.databasebasketball.com [cited 20 September 2005]; “Fan Cost Index” at http://www.teammarketing.com [cited 10 August 2009]; “NBA Team Historical Value” at http://nbahoopsonline [cited 3 August 2009]; “NBA Teams” at http://www.basketball-reference.com [cited 18 August 2009]; “Sports Business Data” at http://www.rodneyfort.com [cited 10 August 2009].


Table 5.2 Teams’ Average Attendance and Win–Loss, by Arenas, Selected NBA Seasons Average Attendance

Seasons Arenas

Before

After

1965–1967 1968–1970 1978–1980 1985–1987 1985–1987 1985–1987 NA 1989–1989 1988–1990 1989–1991 1991–1993 1991–1993 1992–1994 1992–1994 1993–1995 1994–1996 1996–1998 1996–1998 1996–1998 1996–1998

1968–1970 1971–1973 1981–1983 1988–1990 1988–1990 1988–1990 1989–1991 1990–1992 1991–1993 1992–1994 1994–1996 1994–1996 1995–1997 1995–1997 1996–1998 1997–1999 1999–2001 1999–2001 1999–2001 1999–2001

10.7 4.7 6.1 21.6 10.7 10.3 NA 25.0 12.5 14.2 18.5 17.7 14.7 12.8 12.2 16.9 14.9 11.5 15.7 9.9

16.9 5.8 13.0 21.4 16.4 16.8 15.3 18.6 19.7 18.9 23.3 18.3 17.3 20.6 16.1 16.8 13.5 15.3 17.6 15.4

44.7 45.5 29.3 61.8 60.5 36.6 NA 26.8 65.0 65.8 72.7 64.2 46.7 57.7 39.8 42.3 63.7 22.3 61.4 27.5

67.5 57.7 56.1 69.9 57.3 30.4 28.4 25.6 61.6 71.9 76.4 53.6 34.1 56.5 40.2 40.8 34.9 41.4 56.5 34.5

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Before


After

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Before


Madison Square Garden IV Oracle Arena Izod Center The Palace of Auburn Hills Bradley Center Arco Arena Amway Arena Target Center Energy Solutions Arena U.S. Airways Center United Center Quicken Loans Arena TD Banknorth Garden Rose Garden Wachovia Center Verizon Center Phillips Arena Pepsi Center Conseco Fieldhouse Staples Center (Clippers)

Average Win–Loss

After

Before

After

1996–1998 1996–1998 1996–1998 1998–2000 1999–2001 1999–2001 2000–2002 2001–2003 2004–2004 2005–2007

1999–2001 1999–2001 1999–2001 2001–2003 2002–2004 2002–2004 2003–2005 2004–2006 2005–2007 2008–2008

17.0 15.0 17.3 15.7 15.4 21.8 12.6 14.8 14.4 15.1

19.2 16.5 19.1 19.8 14.7 18.0 15.7 15.7 15.4 18.6

68.2 69.1 34.0 50.4 36.9 68.6 47.1 41.0 22.0 53.7

73.5 56.1 54.4 68.7 43.1 71.5 52.8 47.1 36.9 28.0

Note: NA means not applicable. Seasons Before and After are regular seasons such as 1965–1966, 1967–1968, and so on.The years displayed in bold are the league’s regular seasons, and indicate when these NBA arenas had originally opened for the teams, including 1968 when the fourth version (IV) of Madison Square Garden opened to host the New York Knicks.Attendance (in thousands per home game) and Win–Loss (in percentage per season) are each three-year averages of teams before and after they occupied the arenas in column one. For example, the New York Knicks averaged 10,700 spectators per game and won 44.7 percent of games during the league’s 1965–1967 regular seasons whilst playing in outdated Madison Square Garden III.After moving into a new or fourth version of Madison Square Garden in 1968, the team’s average attendance increased to 16,900 per game and its winning percentage to 67.5 percent.The Minnesota Timberwolves played in the Hubert H. Humphrey Metrodome while at home in the 1989 season, the Charlotte Bobcats performed at home in the 2004 season in the Charlotte Coliseum, and the Oklahoma City Thunder played at home in the Ford Center during the 2008 regular season. Source:“NBA Teams” at http://www.basketball-reference.com [cited 18 August 2009].

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Staples Center (Lakers) American Airlines Arena Air Canada Centre American Airlines Center New Orleans Arena AT&T Center Toyota Center FedEx Forum Time Warner Cable Arena Ford Center

Before

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Arenas

Average Win–Loss


Average Attendance

Seasons




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Cavaliers at Quicken Loans Arena, Heat at the American Airlines Arena, and Pacers at the Conseco Fieldhouse. Although the Knicks and Bulls won more games subsequent to changing arenas, the other four clubs played worse at home in their regular seasons. Alternatively, the average attendances of another half-dozen clubs declined at home games played in their new or renovated arenas, or in others located within a different city. The Timberwolves at the Target Center, Hawks at Phillips Arena, and Spurs at the AT&T Center suffered relatively big decreases in their home-game attendances. In contrast, minor decreases in attendances at home games occurred for the Pistons at The Palace of Auburn Hills and Wizards at the Verizon Center. Furthermore, the Hornets attracted only 700 fewer spectators per game after the franchise relocated from Charlotte to New Orleans in 2002. In part, inferior performances by their coaches and players at home caused the Timberwolves, Hawks, and Wizards to play before smaller audiences, while the Spurs, Pistons, and Hornets each had performed more competitively. Apparently, other factors influenced these latter three teams’ attendances besides winning proportionately more games at home than in their previous arenas. Since a majority of these NBA clubs had a larger number of fans that attended their home games after relocating, the arenas they played in after moving made a real difference for them from a business perspective.That is, their revenue from ticket sales, concessions, and parking fees likely increased from the spending by additional people at home games. For the other group of franchises, they failed to provide sufficient entertainment, excitement or fun at home games, and thus their teams did not greatly appeal to basketball fans within the local market area.Two each of the most and least successful arenas relative to teams’ attendances at home games included, respectively, Arco Arena for the Kings in Sacramento and Energy Solutions Arena for the Jazz in Salt Lake City, and for least successful, the Target Center for the Timberwolves in Minneapolis and AT&T Center for the Spurs in San Antonio. At their new or renovated arenas within the same area, or at a different venue in another city, 17 (or 59 percent) of the NBA clubs had higher winning percentages than they did in prior seasons, while 12 (or 41 percent) of the total in the group lost more games in regular seasons of the league. Such teams as the Knicks, Nets, Nuggets, Raptors, and Mavericks played much better in their new arenas in seasons after than before, but some clubs whose winning percentages significantly declined were the Cavaliers, Celtics, Hawks, Pacers, and Heat. In comparison, marginal improvements in winning games occurred in seasons after for the Bulls, 76ers, Lakers, Spurs, and


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Rockets. Alternatively, however, the Bucks, Kings,Timberwolves,Trail Blazers, and Wizards had relatively small declines in their regular season records within other arenas. For teams that had relocated, the Hornets won a much larger percentage of home games in the New Orleans Arena than in the Charlotte Coliseum during regular seasons. Inversely, the Oklahoma City Thunder’s winning percentage declined significantly in the NBA’s 2008 regular season compared to 2005–2007 when the franchise was located in Seattle and then nicknamed the Supersonics. The Hornets conquered its opponents more successfully in games after the franchise’s owner had drafted guard Chris Paul from Wake Forest University. Meanwhile, despite rookie Kevin Durant from the University of Texas playing excellent basketball for the Thunder, his team was unable to defeat any of the rivals in its division on a consistent basis in the league’s 2008 season. Regarding the relationship between average winning percentages in different arenas, undoubtedly a number of factors and/or circumstances influenced some teams’ performances. These included, for example, a change in owners or top executives, leadership problems with head coaches and their staff, injuries to players who played important positions on defense and/or offense, financial issues, improvement or deterioration in the competitiveness of other teams within a division or conference, and more or less challenging schedules of 41 each home and away games during the league’s regular seasons. In short, only a few clubs experienced significantly more or fewer wins or losses in their arenas before moving versus after that change had occurred. After evaluating the two each before and after averages listed in Table 5.2, 14 (or 48 percent) of the respective NBA teams won more games and attracted larger attendances at their new or renovated arenas, or one located in a different city. This group and their seasons included the Knicks in 1968–1970, Nets in 1981–1983, Bulls in 1994–1996, 76ers in 1996–1998, Raptors in 1999–2001, and Bobcats in 2005–2007 of the league’s Eastern Conference. In the Western Conference, it was the Warriors in 1971–1973, Suns in 1992–1994, the Nuggets, Clippers, and Lakers each in 1999–2001, Mavericks in 2001–2003, Rockets in 2003–2005, and Grizzlies in 2004–2006. In short, there was probably an increase in the cash flow, revenue, and profit of these franchises, in part, because they each changed venues and thus played their home games on another but more attractive and friendly court. In contrast to the above 14 franchises, only three or 11 percent of the NBA teams won fewer games in front of fewer spectators within a new or renovated venue, or different arena in another area.These clubs were the Timberwolves at the Target Center in 1990–1992, Wizards at the Verizon Center in 1997–1999,


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and Hawks at the Phillips Arena in 1999–2001. In other words, these respective franchises may have earned more cash flow, revenue, and/or profit while they performed previously at home at Minneapolis’Hubert H.Humphrey Metrodome in 1989, Washington’s U.S. Airways Arena in 1994–1996, and Atlanta’s Georgia Dome in 1996–1998. Even so, their change in venues was a practical business decision for them in the decades that followed these few years. For other relationships with respect to the two sets of averages in Table 5.2, the home attendances of nine or approximately 30 percent of these NBA clubs increased while their winning percentages declined following their transition into another arena. Four teams in this group were the Bucks who moved from the Milwaukee Arena to the Bradley Center in 1988, Kings from the Sacramento Sports Arena to the Arco Arena in 1988, Jazz from the Salt Palace to the Energy Solutions Arena in 1991, and Cavaliers from the Richfield Coliseum to the Quicken Loans Arena in 1994. Other teams who played in front of larger audiences but then won fewer games in regular seasons were the Celtics who transferred from the Hartford Civic Center Coliseum to the TD Banknorth Garden in 1995,Trail Blazers from Memorial Coliseum to the Rose Garden in 1995, Pacers from Market Square Arena to the Conseco Fieldhouse in 1999, Heat from the Miami Arena to the American Airlines Arena in 1999, and nine years later, the Thunder (formerly the Supersonics) from the Key Arena in Seattle to the Ford Center in Oklahoma City. Despite lower winning percentages, these franchises attracted more spectators to their home games.As a result, each of them likely earned larger cash flows and revenues after moving than what they received before from ticket sales, concessions, and parking while in games at their previous arenas. Finally, the average attendance of merely three or about 11 percent of these NBA teams decreased even though they won more games in their new or renovated arenas, or another one in a different area.This occurred for the Pistons at The Palace of Auburn Hills in 1988–1990, and for the Hornets at the New Orleans Arena and Spurs at the AT&T Center each in 2002–2004. Because the differences in their average winning percentages before and after moving arenas were relatively small or minor, these three clubs experienced a temporary drop in popularity and therefore, fewer fans attended their home games when they abandoned respectively the Pontiac Silverdome in 1988, and the Charlotte Coliseum and Alamodome each in 2002. Thus, the Pistons, Hornets, and Spurs likely earned less revenue at games following their movements into other venues. Tables 5.1 and 5.2 report different types of data obtained from readings in the literature that, in turn, reveal some interesting business and financial


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developments, facts, and relationships about how arenas affect various franchises in games during seasons before and after in the NBA. Besides listing and discussing the age, capacity, and cost of these basketball venues, the average attendances and winning percentages of teams were determined and then analyzed for whilst they had performed in games for various regular seasons within their former and current arenas. In 2010, for example, the average age of these 29 arenas was approximately 17 years, with each of their capacities at about 19,000 seats.Their construction costs ranged from a low of $25 million for the Oakland–Alameda County Stadium (later Oracle Arena) in Oakland, California to accommodate the Golden State Warriors in 1971, to a high of $420 million for the Reunion Arena (later American Airlines Center) in Dallas, Texas that welcomed the Dallas Mavericks in 2001. Furthermore, these and other NBA arenas have been the home sites of clubs in such professional leagues as the AFL, AHL, NLL, and WNBA. Moreover, a few Division I college and/or university basketball teams play their home games in various NBA venues. For a large majority of arenas of teams in this basketball league, the owners and decision makers of these facilities include sports authorities or other groups assigned to offices of city, county, and/or municipal governments. With respect to investigating and uncovering other results from different data in the tables, there were both major and minor differences in the average attendances and winning percentages of teams while they played in games at home and then after they had shifted into a new or renovated arena or one located within another metropolitan area. In fact, almost 80 percent of them realized increases in their attendances at home during regular season games. Indeed, significant improvements in attendances at home occurred during the late 1960s for the Knicks at MSG in New York and in the early 1970s for the Warriors at Oakland–Alameda County Stadium (now Oracle Arena), and in the 1980s for the Nets at the Izod Center in East Rutherford, New Jersey and Bucks at the Bradley Center in Milwaukee.Then in the 1990s, similar results happened for the Jazz at the Energy Solutions Arena in Salt Lake City and Trail Blazers at the Rose Garden in Portland, and in the early 2000s for the Mavericks at the American Airlines Center in Dallas and Rockets at the Toyota Center in Houston. Unfortunately, however, teams of the Pistons, Timberwolves, Wizards, Hawks, Hornets, and Spurs each performed before smaller crowds for a few years from when or after they had transferred into other arenas.This change suggested less cash flow, revenue, and/or profit for them at home games and perhaps lower market values of their franchises. Nevertheless, for those


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clubs whose home-game attendances had increased after moving, it was a smart and worthwhile decision for them to abandon, for example, the Arizona Veterans Memorial Coliseum in Phoenix by the Suns in 1992, the Spectrum in Philadelphia by the 76ers in 1996, and in 1999, the McNichols Sports Arena in Denver by the Nuggets and the Great Western Forum in Los Angeles by the Lakers. After comparing winning percentages before and after at their home arenas, about 60 percent of the clubs won more games on the basketball court, while 12 others failed to improve in competition against their opponents. Respectively, the former group of clubs included the Pistons at The Palace of Auburn Hills in the 1980s, the Bulls at the United Center in the 1990s, and the Rockets at the Toyota Center in the 2000s.Among the latter teams were the Bucks at the Bradley Center in the 1980s, the Wizards at the Verizon Center in the 1990s, and the Thunder at the Ford Center in the 2000s.Thus, more NBA teams were competitive in regular season games after they had moved into other arenas within the same or different metropolitan areas. To interpret these results as a group, about 50 percent of the 29 NBA clubs represented in Tables 5.1 and 5.2 had higher average attendances and winning percentages at games for at least a few regular seasons subsequent to when they had moved from their former arenas. Thus, these franchises earned more revenue in total from ticket receipts, concessions, and parking fees. In addition, another nine or 30 percent of teams in the league played games in front of larger numbers of spectators at home although they won fewer games than before they changed venues. Only the Timberwolves, Wizards, and Hawks experienced more losses in games and attracted fewer fans into their new or renovated arenas. Undoubtedly, their organizations had some financial problems for a while at least from a business perspective. This concludes my analysis of any financial and sport-specific relationships that existed between and among NBA teams’ performances while they played in two different venues.To extend this section of Chapter 5, I discuss next another interesting but relevant and special aspect of arenas for teams in the league — the business and economics of naming rights and the implications of whether these assets have or have not affected the image, reputation, and value of some franchises of this 60-plus-year-old basketball league.

Arenas: Naming Rights Simply put, this concept generally means that a sponsor (or sponsors) agrees to pay someone else or another organization for the right to place its name (or


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their names) on a private or public building,and/or on one or more signs or displays within the building. As such,there is an exchange of compensation and/or commercial value between two or more parties in a business transaction. With respect to franchises of professional sports leagues, some of the earliest and well-known of these commercial deals occurred in the 1970s. During those years, a few NFL clubs or other owners of stadiums decided to sign rights agreements with various sponsors to earn income and generate publicity. There were naming rights contracts established, for example, between the league’s Buffalo Bills and Rich Products Corporation, and the Detroit Lions and City of Pontiac, Michigan. Furthermore, an agreement between the City of Foxborough, Massachusetts and Schafer Brewery authorized the Boston (later New England) Patriots to perform at home games in Foxborough within Schafer Stadium. After the 1970s–1980s, the revenue from the sale and purchase of naming rights became an increasingly lucrative business and was thus worthwhile to pursue among the owners of America’s sports facilities and several US companies and foreign enterprises. Subsequently, the development of this market caused naming rights transactions in the sports industry to expand even though such deals involved different and complex relationships between the owners of arenas, ballparks and stadiums, and any current and potential sponsors. That is, the rights to name arenas became features within detailed and sophisticated types of marketing packages that involved various benefits, communications and opportunities, which in turn included such commercial elements as advertisements, coupons, event tickets, club seats and luxury suites, retail spaces, and services. Therefore, in reality, the naming rights contracts for arenas not only focused on finance and an exchange of marketing value, they ultimately established cooperative, coordinated and legal relationships, and in some cases, even initiated partnerships, trusts, and other relationships between respective parties of the transaction.4

4

The business of naming rights on the buildings where NBA teams play their home games is a topic discussed in such articles as David Biderman,“Staples Stays in LA in Deal of a Lifetime,” Wall Street Journal (20 October 2009), D10; “Naming-Rights Deals at Major League Facilities,” in Sports Business Resource Guide & Fact Book 2006 (Charlotte,NC:SportsBusiness Journal,2006),F-124,F-125;Bill Miller,“National Basketball Association Naming Rights” at http://www.namingrightsonline.com [cited 6 November 2009];“Naming Rights Online”at http://www.namingrightsonline.com [cited 14 August 2009]; “Stadium Naming Rights” at http://sports.espn.go.com [cited 14 August 2009];“What’s in a Name?”at http://www.forbes.com [cited 14 August 2009].


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165

Throughout the 1990s and early 2000s,American corporations in a number of industries became more aware, aggressive, and proactive to negotiate and actually acquire naming rights from the owners of private and public basketball arenas. In retrospect, these mid-sized and large business firms sought to promote and expand the sales of their products and/or services especially in the weeks just before, during, and immediately after NBA regular season and postseason games. However, to accomplish this goal, the entities — that is, the owners of arenas and any potential sponsors — needed to learn how to negotiate proposals that contained a series of fundamental questions requiring review and inevitably compromises between them. These questions were (and still are), in steps from one to eight, as follows: What do you want to sell? Do you own the naming rights? How will you administer the sale of naming rights? What are you selling? Who are your potential targets? How do you price the agreement? What will the contract look like? How will you service the contract? In other words, conscientiously answering these straightforward but multifaceted questions, in part, has led to the popularity, proliferation, and success of generating additional revenues for the owners of basketball arenas and likewise, of promoting the business of companies who had purchased any types of naming rights. Among professional sports leagues based in the US, the NBA typically ranks each year after the NHL but ahead of MLB, the NFL, and MLS in the number of teams with naming rights displayed on and/or within their arenas. In fact, during recent years, approximately 75–80 percent of NBA franchises had signed new or renegotiated agreements with various sponsors. Some NBA clubs, however, had to share an arena with a team from the NHL or with a tenant who played in the AFL, AHL, NLL, WHL, and/or WNBA. Historically, naming rights sponsors have tended to be a combination of travel-related and telecommunications companies, financial institutions and retailers, and to a lesser extent, individuals and firms in such industries as automobiles, beverage, electronics, energy, and transportation. Prior to the early 1990s, very few US or foreign companies had signed contracts and purchased naming rights to arenas of NBA teams.Two prominent sponsors who had previously acquired these rights, however, were the Compaq Corporation for the Rockets who played home games in Houston, and U.S. Airways for the Bullets (now Wizards) who performed on their court in Washington, DC.Therefore, because of the scarcity of naming rights during the 1950s–1970s, the majority of NBA clubs played games and based their operations in arenas that belonged to cities, counties, and municipalities.


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Then in the mid-to-late 1980s, the demand for naming arenas increased when potential sponsors realized that the NBA and its teams and their players were becoming more competitive, popular, and powerful as sports entertainers and businesses across America.As a result, owners of these venues agreed to sell naming rights, and some corporations responded by purchasing them for millions of dollars. Indeed, this activity accelerated throughout the 1990s and into the early 2000s to benefit franchises in each major professional sports league including the NBA. To identify, explain, and organize some of these deals, I researched data in the literature and prepared Table 5.3. It includes, as of 2006, 23 NBA teams and 22 arenas, and accordingly lists sponsors and the amounts, years, and expiration dates of their naming rights.The table, however, does not include the arenas of seven other NBA clubs because, for various reasons, corporations or other types of businesses did not sponsor the right to name these venues. Those facilities without commercial names were Madison Square Garden for the Knicks in New York, The Palace of Auburn Hills for the Pistons in Detroit, the Bradley Center for the Bucks in Milwaukee, the Rose Garden for the Trail Blazers in Portland, New Orleans Arena for the Hornets in New Orleans, Key Arena for the Supersonics in Seattle (team moved from Key Arena in Seattle to the Ford Center in Oklahoma City in 2008), and for the Bobcats in Charlotte, whose venue was renamed Time Warner Cable Arena in 2008–2009. As previously indicated in Table 5.2, some NBA arenas have new sponsors and different naming rights.The Nets, for example, currently play home games in the Izod Center, Jazz in the Energy Solutions Arena,Wizards in the Verizon Center, Suns in the U.S. Airways Center, and Spurs in the AT&T Center. As such,Table 5.3 does not reflect the most recent rights contracts of these teams and their facilities as it provides information that was contained in the 2006 edition of the Sports Business Resource Guide & Fact Book.5 According to Table 5.3, the most common sponsors of NBA venues in 2006 were airlines, followed by one or more companies within various industries such as banking, energy, and retail. Some airlines and other naming

5

This publication contains the naming rights deals at major league facilities, minor league stadiums, college facilities, and minor league arenas. For each of them, the information includes the rank of these deals and their respective city, sponsor, price, number of years, average annual value, and expiration year. See this and other editions of Street & Smith’s Sports Business Resource Guide & Fact Book 2006 (Charlotte, NC: SportsBusiness Journal, 2006), F-124–128.


Table 5.3 Sample of Naming Rights, NBA Teams’Arenas, 2006 Naming Rights Expiration

Arco Arena Target Center Continental Airlines Arena Delta Center United Center Quicken Loans Arena Oracle Arena MCI Center Amway Arena Phillips Arena Pepsi Center Conseco Fieldhouse Staples Center Staples Center American Airlines Arena American West Arena SBC Center

BP Products LLC Target Corp. Continental Air Delta Airlines UAL Corp. Quicken Loans Oracle Corp. MCI Amway Global Phillips Elect. PepsiCo, Inc. Conseco, Inc. Staples, Inc. Staples, Inc. AMR Corp. AW Holdings SBC Comm.

8 19 21 25 36 14 3 44 40 185 68 40 116 116 42 26 40

10 15 15 20 20 20 10 20 10 20 20 20 20 20 20 30 20

2010 2011 2011 2011 2014 2014 2016 2017 2018 2019 2019 2019 2019 2019 2019 2019 2019 (Continued )

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Amount


Sponsor


Sacramento Kings Minnesota Timber. New Jersey Nets Utah Jazz Chicago Bulls Cleveland Cavaliers GS Warriors Washington Wizards Orlando Magic Atlanta Hawks Denver Nuggets Indiana Pacers Los Angeles Clippers Los Angeles Lakers Miami Heat Phoenix Suns San Antonio Spurs

Arena

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167

Years

Expiration

Air Canada Toyota Motor Wachovia Corp. TD Banknorth Federal Express AMR Corp.

27 95 40 120 90 195

20 20 29 20 23 30

2019 2022 2023 2024 2024 2031

Note:The abbreviations are Timberwolves (Timber.), Electronics (Elect.), Communications (Comm.), Corporation (Corp.), and Incorporated (Inc.). The Staples Center has been the home court of the Los Angeles Clippers and Los Angeles Lakers since 1999.Although the Charlotte Bobcats’ home court is the Time Warner Cable Arena, there was no specific amount involved in the naming rights contract between the Bobcats, City of Charlotte, and Time Warner. Since 2006, new naming rights of arenas of NBA teams include the Izod Center for the Nets, U.S. Airways Center for the Suns, Energy Solutions Arena for the Jazz,Verizon Center for the Wizards, AT&T Center for the Spurs, and Time Warner Cable Arena for the Bobcats. Source: “Stadium Naming Rights” at http://sports.espn.go.com [cited 14 August 2009]; “Naming-Rights Deals at Major League Facilities,” Sports Business Resource Guide & Fact Book 2006 (Charlotte, NC: SportsBusiness Journal, 2006), F-124, F-125; “Naming Rights Online” at http://www. namingrightsonline.com [cited 14 August 2009];“What’s in a Name?” at http://www.forbes.com [cited 14 August 2009].

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Amount

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Air Canada Centre Toyota Center Wachovia Center TD Banknorth Garden FedEx Forum American Airlines Center

Sponsor


Toronto Raptors Houston Rockets Philadelphia 76ers Boston Celtics Memphis Grizzlies Dallas Mavericks

Arena

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Team


Naming Rights


Table 5.3 (Continued )


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rights sponsors have their headquarters located in or adjacent to metropolitan areas where the NBA clubs perform at home in games.This includes the Target Corporation in Minneapolis, United Airlines in Chicago, and Federal Express in Memphis. Other companies, meanwhile, have major operations or business relationships in big cities and so they take advantage of marketing opportunities to link themselves with consumers by paying to display their name at the entrance of a sports arena that hosts an NBA franchise. For the 22 sponsors listed in column three of the table, which includes Staples, Incorporated in Los Angeles for the Clippers and Lakers, their average amount in dollars or per right is $59 million.Annually, the three most lucrative contracts for arena owners are $9 million paid by Phillips Electronics to the Atlanta Spirit LLC for the Hawks in Atlanta, $6.5 million spent by AMR Corporation to the Arena Operating Company for the Mavericks in Dallas, and $6 million provided by TD Banknorth to the Delaware North Companies for the Celtics in Boston.The three least expensive agreements in dollars per year include $300,000 by Oracle Corporation to the City of Oakland for the Warriors in Oakland, $700,000 by Quicken Loans to the Gateway Economic Development Company for the Cavaliers in Cleveland, and $800,000 by BP Products LLC to the Kings Arco Arena LP for the Kings in Sacramento. In contrast, the remaining 16 contracts have a yearly value to venue owners and sponsors of between $1 million and $5.8 million. Besides these amounts expressed in millions, the typical rights deal in 2006 to name arenas for NBA franchises had covered approximately 20 years. Thus, five or 23 percent of them expired sooner than 20 years, while four or 18 percent lasted for 23 or more years.The shortest duration in the former group was ten years each for the Kings, Warriors and Magic, whereas the most lengthy duration involved 30 years each for the Suns at American West Arena (now named U.S. Airways Center) and for the Mavericks at the American Airlines Center. More than likely, the majority of these and other such agreements included provisions that allowed arena owners and/or sponsors to terminate the agreement if specific benchmarks, goals, and/or targets were not achieved.These conditions, in part, related to teams’ minimum attendances per game and/or their totals for one or more regular seasons, and perhaps to receipts from tickets sold at games in dollars and volumes, performances of a team in a season or across seasons, and changes in the ownership or investors of a franchise. As denoted in column six of Table 5.3, eight or 36 percent of these contracts will expire in 2019, three or 14 percent in 2011, and two each or nine percent in 2014 and 2024.Thus, 21 of the total deals will expire within the


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next 15 years.As such, these will be renegotiated between arena owners and current or different sponsors, or otherwise they will simply terminate and not be renewed. In fact, energy company BP Products LLC is expected to continue its contract for the Kings at Arco Arena in Sacramento. Before 2012, so is retailer Target Corporation for the Timberwolves at the Target Center in Minneapolis, Izod apparel company for the Nets at the Izod Center in East Rutherford, and Energy Solutions for the Jazz at the Energy Solutions Arena in Salt Lake. Furthermore, I anticipate successful negotiations between respective venue owners and sponsors, and the awarding of new contracts in order to rename the New Orleans Arena in New Orleans for the Hornets, and maybe the Ford Center in Oklahoma City for the Thunder. In short, the naming rights of 22 NBA arenas in 2006 amounted to about $1.3 billion in total, or $59 million for each deal.These agreements averaged approximately 20 years each and several of them will expire in 2019. Before 2009, arena contracts with Continental and Delta Airlines, MCI, and SBC Communications had changed, in part, because of financial problems in the airline industry and the merger or dissolution of MCI by Verizon and SBC Communications by AT&T. Whether any naming rights deals will be amended and/or terminated in 2010 and thereafter depends on such factors as each team’s home attendances and performances, reallocation of tenants, scheduling of other events in venues, and the cash balances and solvency of current sponsors. Besides venues in the NBA, the home facilities of many teams in other pro sports leagues have identities that became popular because of naming rights contracts. In MLB, for example, there is the Astros’ Minute Maid Park in Houston,Texas that the Minute Maid Company has committed to sponsor for 28 years at $170 million. Second, the Diamondbacks’ Bank One Ballpark in Phoenix, Arizona that JP Morgan Chase & Company is sponsoring for 30 years at $66 million. Third, the Tampa Bay Rays’ Tropicana Field in St. Petersburg, Florida that Tropicana Products Incorporated has agreed to sponsor for 30 years at $46 million. In comparison to them, some prominent ballparks within the American League of MLB without naming rights contracts in 2009 were the Red Sox’ Fenway Park in Boston, the Blue Jays’ Skydome in Toronto, and the Royals’ Kauffman Stadium in Kansas City. In the National League, three nonsponsored ballparks included the Braves’ Turner Field in Atlanta, the Cubs’ Wrigley Field in Chicago, and the Nationals’ Nationals Park in Washington, DC. Within the NFL, three lucrative, significant, and expensive naming rights deals during the very early 2000s were Bank of America Stadium for 20 years


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at $140 million for the Carolina Panthers in Charlotte, North Carolina; Reliant Stadium for 30 years at $300 million for the Houston Texans in southeast Texas; and Invesco Field at Mile High for 20 years at $120 million for the Denver Broncos in Colorado. Because the NFL is the most competitive, popular, and prosperous professional sports organization in North America, sponsors spend more money per year and per game for these rights than they would to name the facilities of teams in other sports leagues. NFL teams play two preseason games at home and eight there during the regular season, and from zero to three at home in the playoffs.Thus, the average cost of rights is higher for sponsors to name football stadiums than basketball or ice hockey arenas, or ballparks in baseball. In the NHL, the stadiums of six ice hockey franchises based in Canada have naming rights. The two most lucrative of them per season as of 2006 were, respectively, $3.2 million for Bell Canada to name the Bell Centre in Montreal for the Canadiens, and $1.5 million for Air Canada to name the Air Canada Centre in Toronto for the Maple Leafs.Alternatively, two of the least expensive for sponsors were $722,000 per year for Pengrowth Management to name the Pengrowth Saddledome in Calgary for the Flames, and $925,000 for General Motors of Canada to name General Motors Place in Vancouver for the Canucks. With respect to other Canadian teams in the league, the deals included Rexall’s sponsorship of Rexall Place in Edmonton for the Oilers, and Scotiabank’s annual payments to name Scotiabank Place in Ottawa for the Senators. For three stadiums with rinks of ice hockey franchises within the US, the naming rights amounts each year were $6.5 million for the NHL Stars to share Dallas’American Airlines Center with the NBA Mavericks, $1.8 million for the NHL Blackhawks to share Chicago’s United Center with the NBA Bulls, and $1.3 million for the NHL Flyers to share Philadelphia’s Wachovia Center with the NBA 76ers. Differences in naming rights amounts and years between domestic and Canadian NHL stadiums exist, in part, due to the distribution of populations in Canada and the US, economies of NHL cities within areas or provinces, growth in demand for ice hockey in markets of each country, estimated exchange values of their currencies, and the business, location, and number of sponsors within each nation. For teams that perform in MLS, the owners of their home facilities have endorsed naming rights contracts with various companies especially since 2004. At a cost ranging from $750,000 to $1 million per year, some agreements in MLS include such companies as Dick Sporting Goods Incorporated who recently signed a 20-year contract to name a soccer park in suburban Denver for the Colorado Rapids franchise, and mining conglomerate


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Rio Tinto who agreed to make payments for 15 years to name a stadium located in Utah for the Real Salt Lake team. Other rights transactions between arena owners and businesses for stadiums within this professional soccer league were multiyear deals.These involved such companies as BMO for MLS’ Toronto FC club,Toyota Corporation for the league’s Chicago Fire franchise, and Pizza Hut and Hunt Sports Group for MLS’ FC Dallas in Frisco,Texas.Therefore, during 2000–2009, the home stadiums of a few MLS teams acquired original names or were renamed because of financial capital provided by enterprises in various industries.

Arena Studies After researching numerous readings in the literature, I discovered two studies that evaluated the quality of teams’ home arenas within the NBA. In the first study, which ended during early 2005, USA Today sports writer Greg Boeck ranked the 29 arenas of franchises using five categories, namely Seat, Parking, Fans, Entertainment, and Concessions. In turn, each of the five was rated on a scale of six (highest score or above superior) to one (lowest score or inferior). The results of this study appeared in an article titled “NBA Arenas: Fantastic or Not?” that USA Today published in April 2005. The following summarizes how different arenas ranked in each category based on the scores reported in Table A.5.1 of the Appendix.6 Regarding the category titled Seat, the New Orleans Arena, Pepsi Center, and Wachovia Center ranked highest in 2005, while the three lowest-ranked arenas consisted of TD Banknorth Garden and Continental Airlines Arena who tied at 28th and the Verizon Center at 27th. In the study, these two groups of NBA arenas had, respectively, the best and worst seats for spectators relative to their cost, location, value, and comfort, which included such conveniences

6

See Greg Boeck,“NBA Arenas: Fantastic or Not?” at http://www.usatoday.com [cited 30 October 2009]. In his article, Boeck explains how he conducted the study and lists credits for it. Furthermore, he describes the criteria within each category and the system used to score them for the arenas. For example, the TD Waterhouse Center (renamed The Arena in Orlando and then Amway Arena) scored 3.3, or average, as the home venue for the NBA Magic. Journalist Shelley Sigo has written some articles about replacing this facility. See, for example,“Orlando’s $772 Million Development Plan,” Bond Buyer (26 October 2006), 1, 40;“Orlando, Orange County Hotelier Seeks Vote for Arts, Sports Centers,” Bond Buyer (22 August 2007), 3;“After Delays, Orlando Ready to Deal,” Bond Buyer (21 February 2008), 1, 8.


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as leg room, cushions, and cup holders. Interestingly, only six arenas rated below average in seats, while none in the group of 29 was inferior or superior according to Boeck. Thus, fans of the Hornets in New Orleans, Nuggets in Denver, and 76ers in Philadelphia enjoyed the amenities attending games while seated within their home arenas, but not those spectators who sat at games in arenas of the Celtics located in Boston, Massachusetts, Nets in East Rutherford, New Jersey, and Wizards in Washington, DC. For the category of Parking, the top-ranked arenas in 2005 were U.S. Airways Center in Phoenix and the TD Waterhouse Center (now Amway Arena) in Orlando, and then tied for third, the Target Center in Minneapolis and Delta Center (now Energy Solutions Arena) in Salt Lake.Venues ranked at or near the bottom in Parking, however, were the AT&T Center in San Antonio and TD Banknorth Garden in Boston each tied at 28th, and then Madison Square Garden in New York at 27th. Of the five categories, Parking had the fewest arenas ranked at above average or higher. Evidently, the availability, fee, location, and space for fans to park at Suns, Magic,Timberwolves, and Jazz home games far exceeded what was accessible, affordable, and convenient for others who parked at games to watch the Spurs, Celtics, and Knicks compete against opponents within their respective home arenas. Undoubtedly, such options as buses, streetcars, trains, and other types of public transportation affected how arenas ranked within this category. From personal experience, the Charlotte Bobcats Arena was located a few miles from the city’s central business district and its parking lot consisted of a large paved area adjacent to the arena but very near a boulevard from which to exit and enter it.As a result, traffic was frequently congested and problems occurred with automobiles before and after each home game. Currently, the Bobcats play their home games in downtown Charlotte where plenty of car lots exist for visitors to rent a parking space at $10–$20 per day. Therefore, the Bobcats’ Time Warner Cable Arena should rank average or above average in 2009–2010 within this category. The next variable evaluated by Greg Boeck in his study and then reported in USA Today was fans’ involvement (or simply Fans) at NBA teams’ games in their hometown arenas. As denoted in column four of Table A.5.1, superior rankings for Fans existed in Sacramento’s Arco Arena for the Kings, Detroit’s The Palace of Auburn Hills for the Pistons, Boston’s TD Banknorth Garden for the Celtics, Indianapolis’ Conseco Fieldhouse for the Pacers, and Philadelphia’s Wachovia Center for the 76ers. Indeed, the local fans of these teams were informed, knowledgeable, and smart concerning basketball and very enthusiastic while attending local games of the league.


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In contrast to them, the arenas of teams that ranked the lowest within this category — and with respect to the involvement of spectators — included the Target Center for the Timberwolves and Continental Airlines Arena (now Izod Center) for the Nets. Perhaps sports fans in Minneapolis were more aware, enthusiastic, and knowledgeable about baseball’s Twins, football’s Vikings, and ice hockey’s Wild than the NBA Timberwolves. Similarly, fans in New Jersey preferred to support MLB’s Mets and Yankees, NFL’s Giants and Jets, and the NHL’s Devils, Islanders and Rangers, and even the NBA Knicks rather than the Nets. In short, basketball fans enjoyed, paid attention to, and really understood the efforts and performances of teams like the Kings, Pistons, and Celtics while competing in their home games, but not those played by the Timberwolves and Nets, or those of the Bucks in Milwaukee’s Bradley Center, Clippers in Los Angeles’ Staples Center, and Grizzlies in Memphis’ FedEx Forum. The fourth variable in the study, Entertainment, measured the originality and entertainment value of time-out skits at home games and of the dance team, mascot, and scoreboard.The NBA teams and their top-ranked venues in this category were the Miami Heat in the American Airlines Arena and then tied for second, the Phoenix Suns in the U.S. Airways Center and Los Angeles Lakers in the Staples Center. For sure, the activities and programs provided in NBA arenas within the Cities of Miami, Phoenix, and Los Angeles excite, entertain and thrill fans, and thus encourage fans to enjoy their experiences before, during, and after the home games of these basketball franchises. Alternatively, four clubs that had boring, dull, and unexciting entertainment as attractions at their home games included the Celtics at Boston’s TD Banknorth Garden, former Supersonics at Seattle’s Key Arena, and tied at 26th, the Clippers at Los Angeles’ Staples Center and Wizards at Washington’s Verizon Center. In fact, these were the only venues among the group of 29 that ranked below average in Entertainment. To change this outcome, owners of these arenas must attempt to be more original in the scheduling and types of programs offered during time-outs and with the use of any dance teams, mascots, and scoreboards during home games. The final category contained in the study was Concessions, which included such criteria as television screens and their availability and service within NBA arenas, and furthermore, each concourse’s atmosphere and the location, number, and size of food and beverage outlets.The best venues in the league that featured various concessions were the Hawks’ Phillips Arena in Atlanta and in a three-way tie for second, Pistons’ The Palace of Auburn Hills in Detroit, Spurs’ AT&T Center in San Antonio, and the Jazz’s former


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Delta Center in Salt Lake. Indeed, each of these venues ranked above average based on the aforementioned criteria. In contrast to them, the three NBA arenas with the least attractive and serviceable concessions included the Warriors’ home (then named Arena in Oakland), the Rockets’ Toyota Center in Houston, and the Lakers’ Staples Center in Los Angeles.These facilities ranked below average because of problems associated with the arrangement, convenience, and quality of their concessions and with deficiencies in the atmosphere of their arena’s concourse and the inferior availability and location of food and beverage services. Based on the measurements for these different categories in Boeck’s study, five (or 17 percent) of the NBA arenas ranked at least above average in 2005, while another 22 (or 76 percent) of the total were average, and two (or seven percent) scored below 3.0 and thus finished below average.To improve performances of the top three venues for spectators who attend any home games, the Nuggets’ Pepsi Center in Denver, Pacers’ Conseco Fieldhouse in Indianapolis, and 76ers’ Wachovia Center in Philadelphia must essentially provide better entertainment and more affordable and convenient parking areas. Such investments in infrastructure will in turn cost the owners of these arenas who are, respectively, the Kroenke Sports Enterprises, City of Indianapolis, Indiana, and the Comcast Spectacor telecommunications company. For the Wizards’ Verizon Center ranked 28th among the group, arena owner Washington Sports and Entertainment needs to focus on improving qualities of the Seat, Parking, and Entertainment categories. Meanwhile, the Nets’ former Continental Airlines Arena, which was renamed Izod Center in 2007, scored average at 3.3 each in Parking, Entertainment and Concessions, but below average in Seat and Fans. Based on these results and other problems at the Izod Center in the City of East Rutherford, the New Jersey Sports Authority as owner should invest more resources so that the arena scores at least a 3.0 or average in all categories. Otherwise, the Nets franchise will not attract enough fans at home games to increase its revenue and the players’ payroll and thus seek to be more competitive in the Atlantic Division of the NBA’s Eastern Conference. During December 2008, an article appeared in the Orange County Register that identified and briefly described the best-to-worst arenas of teams in the NBA. Authored by Kevin Ding, the article listed the league’s five best venues in order as Indianapolis’ Conseco Fieldhouse and Portland’s Rose Garden, followed by New York’s Madison Square Garden (MSG), Salt Lake City’s Energy Solutions Arena, and Toronto’s Air Canada Centre. Ding highlighted the best features of each arena. For example, he said that Conseco Fieldhouse


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“Borrowed from old-time baseball with a hand-tiled out-of-town scoreboard instead of an electronic one,” and that the Rose Garden was “Unfathomable . . . and is 13 years old but manages to feel cutting-edge yet cozy.” Furthermore, MSG is “. . . a classy dump,” Energy Solutions Arena “. . . puts fans right on top of the opposing players,” and the Air Canada Centre is “Beautifully done . . . and it doesn’t smell like hockey (the stench of stale perspiration by the way).”7 For NBA clubs in 2008, Ding stated that the five worst arenas in the league were Washington’s Verizon Center, New Orleans’ New Orleans Arena, New Jersey’s Izod Center, Orlando’s Amway Arena, and Detroit’s The Palace of Auburn Hills. He described in his article the problems with each of these venues. Accordingly, the Verizon Center was “Boring, boring, boring,” New Orleans Arena was in “a . . . city [that] doesn’t merit a team,” and the Izod Center was “. . . voted the worst NBA arena by USA Today a few years back [2005].” Moreover, the Amway Arena is where “[player] Dwight Howard could take a running start from the parking lot and knock over this entire tiny building,” and The Palace of Auburn Hills is “Too dark, feels bigger than it is, way out in the middle of nowhere, ugly and dirty.”8

7

According to the author, the Pacers’ Conseco Fieldhouse is the prettiest arena in the NBA and a perfect place for basketball in Indiana. Indeed, the state is rich in hoops tradition. For how he ranked each venue in the league, see Kevin Ding,“NBA Arenas: The Good, the Bad and the Ugly” at http://www.ocregister.com [cited 30 October 2009]. As a former high school and college basketball player from Terre Haute, Indiana, I concur with Ding’s assessment of the sport and its status as the most popular game in the region. 8 Ibid. Three other NBA venues that Kevin Ding ranked very low were the Bradley Center because it felt like Milwaukee in 1988, Phillips Arena in Atlanta since it was weird with luxury suites stacked up on one side of the court, and Quicken Loans Arena for being a “nondescript blob downtown.” For recent problems and plans to replace the 27th-ranked Izod Center for the Nets in New Jersey, see Adam L. Cataldo, “N.Y. MTA Issues RFP for Brooklyn Arena Site,” Bond Buyer (26 May 2005), 3; Ted Phillips,“New York: The Russian Connection,” Bond Buyer (28 September 2009), 9; Kathy Shwiff, “Russian Billionaire to Buy Nets, Arena Project Stakes,” Wall Street Journal (24 September 2009), B3. In December 2009, Manhattan State Senator Bill Perkins lobbied New York Governor David Paterson to prevent the public Empire State Development Corporation from closing a half-billion-dollar bond sale to finance the construction of a new $511 million arena for the Nets in Brooklyn. According to Perkins,the Public Authorities Control Board had no opportunity to vote on the bond sale, thus making the transaction illegal. This report appeared in Matthew Futterman, “Opponents Unbowed Amid Nets’Arena Deal,” Wall Street Journal (23 December 2009), D6.


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The other 19 arenas mentioned in the article ranked between 6th and 24th inclusive. For Ding’s comments about five of these, Los Angeles’ Staples Center at 8th “Doesn’t try to be anything but what it is . . . an entertainment haven,” and Denver’s Pepsi Center at 10th is “Not quite as cool as Coors Field down the street, but a solid arena in every way.” Then, Chicago’s United Center at 14th “feels comparably cavernous to Staples, but without the pizzazz,” Oklahoma City’s Ford Center at 18th really “Looks just like the Charlotte and Memphis arenas,” and for Philadelphia’s Wachovia Center at 21st, Ding states that “Elton Brand is just 5–4 here this season. It’s no Cameron Indoor Stadium, apparently.”9 The previous paragraph concludes an analysis of basketball arenas occupied by a number of former and current NBA teams for various years and/or some regular seasons of the league. Given the history and the different business aspects and operations of these arenas, the next and final section of this chapter examines the markets of these professional sports clubs. Furthermore, the section discusses if there are other metropolitan areas in the US, or cities within nations elsewhere, in which NBA franchises could potentially exist, perform, and succeed.

BASKETBALL MARKETS To attract more and diversified sports fans to their home games during the 1950s–2000s, NBA franchises established themselves geographically and existed for one or more years in various very small-to-small towns, mid-sized places, and in large-to-very large populated cities of metropolitan areas within the US and two provinces in Canada. Because of demographic, financial, and other types of problems, however, some of these clubs failed to generate enough revenue from their local and regional basketball markets to continue operating there as business enterprises. Other teams in the sport, meanwhile, played competitively in games, won titles and championships, and became popular among local fans

9

Ibid.According to Ding, other good arenas were American Airlines Center in Dallas (ranked 6th) because of its very cool Texas-themed architecture, the Oracle Arena in Oakland (ranked 9th) for its character, and the Toyota Center in Houston (ranked 11th) based on a rocket built into the scoreboard that comes out to simulate a take-off during pregame introductions. See Kevin Ding,“NBA Arenas:The Good, the Bad and the Ugly” cited in footnote 7.


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even when the league struggled as an organization in the entertainment industry.10 Before discussing the current and potential sites of NBA clubs, it is worthwhile to identify any franchises that folded and importantly, whether their areas as markets contain a population size for them to reenter and compete in the league and survive as ongoing businesses. With their area’s population rank denoted in parenthesis as of 2008, former NBA members existed for at least one year and played their home games in arenas located — from most to least populated — within Fort Wayne in Indiana (17), Baltimore in Maryland (20), Cincinnati in Ohio (24), Kansas City in Missouri (29), Buffalo in New York (47), Rochester in New York (54), and Anderson in Indiana (289). Besides the above seven franchises, another seven NBA clubs had their arenas and headquarters located for a while within such areas as San Francisco in California (13), San Diego in California (17), St. Louis in Missouri (18), Syracuse in New York (81), Tri-Cities of Moline and Rock Island in Illinois and Davenport in Iowa (133),Waterloo in Iowa (237), and Sheboygan in Wisconsin (315). Based on their rankings in 2008, only a few areas among this group of 14 are of sufficient size, are hospitable to the sport of basketball, and are economically attractive enough to host an NBA expansion team or one that decides to move from its present site. Although such metropolitan areas as Fort Wayne, Baltimore, Cincinnati, Kansas City, San Francisco, San Diego, and St. Louis each ranked no worse than 30th in population during 2008, they may or may not qualify as potential markets for a new or current professional basketball team. For sure, some of these places are inadequate since they lack an arena with amenities, host professional teams who perform in other sports leagues, have only a few major companies or no corporate headquarters located there, and primarily

10

More specific demographic and economic data, statistics, and other types of information about prior, current, and potential basketball markets are available for research purposes in various editions of The World Almanac and Book of Facts, in “Estimates of Population Change for Metropolitan Statistical Areas and Rankings, July 1, 2007 to July 1, 2008” at http://www.census.gov [cited 11 November 2009], and in such interesting and unique books about the sport as Connie Kichberg, Hoop Lore: A History of the National Basketball Association (Jefferson, NC: McFarland & Company, 2007); Kenneth L. Shropshire, The Sports Franchise Game: Cities in Pursuit of Sports Franchises, Events, Stadiums, and Arenas (Philadelphia, PA: University of Pennsylvania Press, 1995); and Alexander Wolff, Big Game, Small World: A Basketball Adventure (New York, NY:Warner Books, 2002).


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depend for employment on one or two major industries. Furthermore, some of them have experienced a recent decline or significant slowdown in population growth, economies that lagged behind those in other cities or areas within their regions and/or nationally, and include households whose per capita incomes, real wages, and/or amounts of wealth are ranked below average. These factors, in part, eliminate some sports markets in the US and abroad as current and perhaps future sites of NBA franchises. To analyze locations, qualities, and types of basketball markets based on their arenas, populations, economic growth, labor force and other criteria, I investigated the information in the literature, applied the data, and therewith prepared Table 5.4. It displays the distribution of 27 metropolitan areas and one city in Canada that contained at least one NBA team in 2008, and within these various sports markets, included one or more clubs that participated in MLB, MLS, the NFL, and/or NHL.As such, the table indicates how saturated or open these places were in a recent year with teams among five professional sports. Table 5.4 excludes the home sites of some clubs that played in other or non-NBA leagues. For example, there was the Tampa Bay Rays in MLB, Columbus Crew in MLS, Green Bay Packers in the NFL, and Pittsburgh Penguins in the NHL. Even so, it might be practical, profitable, and realistic for league officials to consider these and other places of non-NBA franchises as potential markets for one or several new or relocating professional basketball teams. Next, a sample of MLB sites listed and not listed in column two of the table are examined first, followed by a few sites included and not included in the other columns for, respectively, some of the current teams in MLS, the NFL, and NHL.

MLB Sites Column two of Table 5.4 lists 18 markets of 22 professional baseball teams and of 20 non-amateur clubs in basketball. Furthermore, the column includes ten areas that hosted a franchise in the NBA but not one in MLB such as Orlando (27), Indianapolis (33), and Memphis (41) — in which the population ranks of these markets appear within a parenthesis. In fact, for those without a MLB club, the most and least populated areas were, accordingly, Portland (23) and Charlotte (24), and then Salt Lake (49) and New Orleans (46).Alternatively, 17 areas had both NBA and MLB teams, and the two largest and smallest of them each in population were, respectively, New York–New Jersey (1) and Los Angeles (2), and then Milwaukee (39) and Cleveland (26).


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180 The National Basketball Association Table 5.4 Number of Professional Sports League Teams, by NBA Metropolitan Areas, 2008 Professional Sports Leagues Areas Atlanta Boston Charlotte Chicago Cleveland Dallas Denver Detroit Houston Indianapolis Los Angeles Memphis Miami Milwaukee Minneapolis New Orleans New York–New Jersey Oakland–San Francisco Oklahoma City Orlando Philadelphia Phoenix Portland Sacramento Salt Lake San Antonio Toronto Washington

MLB

MLS

NBA

NFL

NHL

Total

1 1 0 2 1 1 1 1 1 0 2 0 1 1 1 0 2 2 0 0 1 1 0 0 0 0 1 1

0 1 0 1 0 1 1 0 1 0 2 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 1 1

1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1

1 1 1 1 1 1 1 1 1 1 0 0 1 0 1 1 2 2 0 0 1 1 0 0 0 0 0 1

1 1 0 1 0 1 1 1 0 0 2 0 1 0 1 0 3 0 0 0 1 1 0 0 0 0 1 1

4 5 2 6 3 5 5 4 4 2 8 1 4 2 4 2 10 5 1 1 4 4 1 1 2 1 4 5

Note: The professional sports leagues are Major League Baseball (MLB), Major League Soccer (MLS), National Basketball Association (NBA), National Football League (NFL), and National Hockey League (NHL). MLS expanded into Toronto in 2008–2009, and the league plans to add a new team in Philadelphia, Pennsylvania in 2010 and put another team in Portland, Oregon in 2011. Clubs that play their home games in nearby areas are included in various columns such as the MLB Angels of Anaheim in Los Angeles, MLS Chivas USA in Los Angeles, NFL New England Patriots of Foxborough in Boston, and NHL Ducks of Anaheim in Los Angeles. Source: “2008 Major League Soccer Season” at http://en.wikipedia.org [cited 12 August 2009]; “NBA Standings, 2008–2009 Season” at http://sports.espn.go.com [cited 12 August 2009]; 2008 NFL Record & Fact Book (New York, NY:Time Inc. Home Entertainment, 2008); The World Almanac and Book of Facts, 2007.


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Therefore, this data suggests that MLB sites with NBA teams there tended to have greater populations than those without them. The areas of eight MLB clubs are absent from column two of Table 5.4 because they currently are not sites of NBA teams. Ranked from high to low in population, they include Seattle (15), San Diego (17), St. Louis (18), Tampa Bay (19), Baltimore (20), Pittsburgh (22), Cincinnati (24), and Kansas City (29). In priority, the most attractive of these eight MLB sites for an NBA team are St. Louis and Tampa Bay. Since St. Louis is a great sports town, the fans there would likely support an NBA team as they did the Hawks for 13 years, while a club in Tampa Bay may compete and succeed if it establishes an intra-state basketball rivalry with the Magic in Orlando and Heat in Miami. For the other six areas in the group, they previously failed as sites of NBA or American Basketball Association (ABA) teams. Furthermore, some of them are very popular baseball, football, and/or ice hockey towns whose fans embrace and have knowledge of other team sports but not basketball. In short, at least two MLB sites not listed in Table 5.4 are potential candidates for an NBA team. Besides them, officials in professional basketball should also consider Anaheim, California as a site for an expansion team that shares the market there with the MLB Angels and NHL Ducks. A problem with this strategy, of course, is that the Los Angeles area has several popular sports franchises and many different types of college events for fans. Alternatively, NBA teams might choose to locate or relocate in markets abroad such as within some relatively big and international cities in nations of Western Europe and Asia.Among the former places are Dublin in Ireland, Frankfurt in Germany, London in England, Madrid in Spain, Paris in France, Prague in the Czech Republic, and Rome in Italy. Likewise, potential NBA markets in Asia consist of Beijing and Shanghai in China, and Osaka and Tokyo in Japan.

MLS Sites Column three in Table 5.4 includes 11 MLS teams distributed among nine US areas and Toronto in Canada. The two most and least populated sites each with MLS and NBA teams were, respectively, New York–New Jersey (1) and Los Angeles (2), and then Salt Lake (49) and Denver (21). Furthermore, there are 18 urban areas where an NBA team exists but not any clubs in MLS. For example, basketball’s Pistons play at home in Detroit (11), Bobcats in Charlotte (24), and Cavaliers in Cleveland (26). In the future, MLS will likely


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expand into some markets that NBA teams currently occupy and play their home games in. From a strictly population perspective, among the most attractive of these places are Philadelphia (5), Miami (7), Atlanta (8), and Phoenix (12). Table 5.4’s column one, however, does not list four metropolitan areas in the US that had hosted MLS franchises in 2008.These were, in order of their population ranks, Seattle in Washington (15), Kansas City in Missouri (19), San Jose–Sunnyvale–Santa Clara in California (31), and Columbus in Ohio (32). In other words, several small, mid-sized, and large markets exist within America where NBA clubs entertain fans but not necessarily people who enjoy and attend amateur and pro soccer matches. This information denotes that many markets exist in which MLS could expand but, unfortunately, they must be shared with professional clubs in other leagues of team sports. In fact, MLS plans to expand in 2010 into the Philadelphia area and compete for fans there with the popular MLB Phillies, NBA 76ers, NFL Eagles, and NHL Flyers.Then one year later, new MLS teams will open in Portland and Vancouver. Portland currently hosts the NBA Trail Blazers but no clubs in the other major sports leagues, while the NHL Canucks play at home in Vancouver.Thus, these are available and relatively open sites that new MLS clubs might exploit in the future for revenue and profit. In short, 12 NBA and 11 MLS clubs shared the same sports markets in 2008.Therefore, very little overlap exists among the homes of teams within these two leagues. Alternatively, there were four sites that year where MLS had franchises but not the NBA. Of these, Seattle was the most populated and also congested with pro teams, while Columbus had the smallest population of the four sites and contained only one major pro club. As mentioned earlier, MLS clubs plan to enter the cities of Philadelphia and Portland before 2012, where, respectively, the NBA 76ers and Trail Blazers each currently perform their home games. Furthermore, a new soccer franchise will compete in Vancouver, where the NBA Grizzlies previously played for six seasons before moving in 2001 to Memphis in southwestern Tennessee. The sport of soccer has become increasingly popular among sports fans in the US. Thus, MLS will invade NBA markets and expand across North America provided the league’s franchise owners, investors and sponsors finance the construction of new stadiums, and more athletes who are amateurs and skilled players participate in the game of soccer while in schools and within youth programs.


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183

NFL Sites According to column five of Table 5.4, 20 NFL teams existed among 18 different sports areas in 2008. Furthermore, there were ten places that had professional basketball clubs but none in football.The most populated of these areas in the US were (and are) Los Angeles (2), Portland (23), and Sacramento (25), while the smallest of them consisted of Salt Lake (49), Oklahoma City (44), and Memphis (41). This group of ten includes Toronto whose population exceeded five million in 2008. As such, approximately 60 percent of NBA clubs share their home sites with NFL teams. Excluded from column five in the table are 12 metropolitan areas that hosted NFL but not NBA franchises in 2008. Ranked from largest to smallest in population, these were Seattle (15), San Diego (17), St. Louis (18),Tampa Bay (19), Baltimore (20), Pittsburgh (22), Cincinnati (24), Kansas City (29), Nashville (38), Jacksonville (40), Buffalo (47), and Green Bay (153). For sure, a few areas of this group are eligible, large enough, and qualified to support a professional basketball club, while certain others are not attractive, interested, or welcome as NBA homes. Among the l2 NFL sites listed in the previous paragraph, the areas of Seattle, St. Louis, Tampa Bay, Pittsburgh, and Kansas City are each a host for three non-NBA teams. Two non-NBA clubs are each located in San Diego, Baltimore, Cincinnati, Nashville and Buffalo, while only the NFL Jaguars perform at home in Jacksonville and the NFL Packers in Green Bay. In order to avoid metropolitan areas with too many or too few people and/or those with an abundance or undersupply of teams in other professional sports, the best sites for an NBA team in the US — if based on their mid-sized populations — are San Diego and Baltimore, followed by Cincinnati and Nashville.This group excludes, of course, the sites of NHL teams that exist in provinces of Canada. In short, some sports markets where NFL clubs played at home during 2008 are also potential sites for new or relocating NBA teams in 2010 and thereafter. It is uncertain, however, whether fans in these areas will enthusiastically or financially support professional basketball and therefore attend any home games scheduled by the league. Despite being the most populated and popular among sports places, it is unlikely that another NBA team will enter into the New York–New Jersey or Los Angeles areas because of territorial rights and potential lawsuits from lawyers of the Knicks and Nets on the east coast and of the Clippers and Lakers on the west coast.


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NHL Sites As reported in column six of Table 5.4, 16 NHL clubs played in 13 areas within the US in 2008, and another six of the league’s 32 teams performed at home in cities within provinces of Canada.The highest-ranked areas of ice hockey teams in population — that had at least one NBA club in 2008 — were New York–New Jersey (1) and then Los Angeles (2), Chicago (3), and Dallas (4). The lowestranked area in the group, meanwhile, was Denver (21), followed by Minneapolis (16), Detroit (11), and Boston (10). In Canada, both the NHL and the NBA had a team located in Toronto but not in the nation’s other five NHL cities. Although not listed in column six of the table, several other areas, one US city, and some Canadian provinces hosted NHL teams but not any NBA franchises in 2008. Within the US, they included the areas of St. Louis (18), Tampa Bay (19), Pittsburgh (22), San Jose (31), Columbus (32), Nashville (38), Buffalo (47), Raleigh (50), and Newark with 281,000 people. With respect to the populations (in millions) of ice hockey markets in Canada besides Toronto (5.7), NHL clubs performed in Montreal (3.7), Vancouver (2.2), Ottawa (1.2), Calgary (1.0), and Edmonton (1.0). Amongst this group of 15, the best NHL sites for an expansion or relocating NBA team are St. Louis and other areas in the US whose population ranks at least 38th. This includes Tampa Bay, Pittsburgh, San Jose, Columbus, and Nashville. In Canada, the only potential NBA city is Montreal since the Grizzlies abandoned Vancouver after playing there for six years while Ottawa, Calgary, and Edmonton are not viable sites for professional basketball. Regarding the data in Table 5.4, the NBA may expand or place a team somewhere else besides any of these 28 markets after 2010–2011. That is, there are potential MLB sites with population differences to evaluate such as Baltimore, Cincinnati and Tampa Bay; MLS sites such as Columbus, Kansas City and San Jose; NFL sites such as Jacksonville, Pittsburgh and San Diego; and NHL sites such as Nashville and St. Louis in the US and Montreal in Canada. Based on factors other than the population of each site, the NBA should choose Tampa Bay, Columbus, Pittsburgh, and/or St. Louis in the US.

Other Sites As of 2008–2009, the metropolitan areas of Riverside–San Bernardino–Ontario in California (14), Las Vegas in Nevada (30),Virginia Beach–Norfolk–Newport News in Virginia (35),Austin–Round Rock in Texas (36), Providence in Rhode Island (37), and Louisville in Kentucky (42) did not have any elite or major professional teams within the five professional sports leagues indicated in


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Table 5.4. Besides being small-to-midsized basketball markets, they may or may not have a large enough fan base for an NBA team and each lack a big and modern arena with amenities. Meanwhile, some sites among these areas suffer from social issues like gambling in Las Vegas and criminal activity in the Virginia Beach area, are simply too small like the Austin–Round Rock and Providence areas, or are located near another NBA site such as Louisville to Indianapolis,Austin to Dallas and Houston, and San Bernardino to Los Angeles. Of these six areas, Las Vegas is the most determined and focused to be the next site of an NBA team. To commit and achieve this goal, Mayor Oscar Goodman plans to continue his quest to build a new arena in the city’s downtown using public money. A 100-year-old Baltimore-based real estate development and entertainment enterprise named the Cordish Company is expected to receive an exclusive contract from Las Vegas’ City Council for the right to construct a project that includes a 20,000-seat basketball arena. Furthermore, Goodman promotes Las Vegas’ advantages as an ideal site given that the city has successfully hosted NBA exhibition games and its Summer League.11 In addition, Las Vegas experiences warm temperatures and a favorable year-round climate. Moreover, the city makes it easy for a team located there to attract players as free agents, and it has the authority to finance the building of a new arena with fees, surcharges, and taxes on tourist activities. In my opinion, these are economic, significant, and worthwhile reasons for NBA officials to consider Las Vegas as a leading and viable site for an expansion team or one that moves from its current home.

SUMMARY Chapter 5 addresses the role of basketball arenas and markets in the NBA, and explains how each of these influenced, and most importantly contributed in some way to, the business, culture, and prosperity of former and 11

Some readings about the opportunity and future for an NBA team to exist in this city include Jaime Aron, “2 Owners Like Vegas for Expansion Team,” Charlotte Observer (23 January 2004), 4C; Jackie Cohen,“Las Vegas Plans New Arena With Eye Towards Luring a Pro Team,” Bond Buyer (2 April 2007), 6; Pat King, “Las Vegas an Unlikely Fit for the NBA,” Las Vegas Business Press (19 February 2001), 13;Arnold M. Knightly,“Follow the Bouncing Ball to Las Vegas,” Business Press (23 January 2006), 12; “Could Las Vegas Be the Next NBA City?” at http://nba.fanhouse.com [cited 30 October 2009];“Goodman: 20,000-Seat Downtown Arena Could Lure NBA Team” at http://m.lasvegassun.com [cited 17 November 2009];“Viva Las Vegas and the NBA” at http://www.sportsbusinessnews.com [cited 24 April 2006].


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current franchises in the league. Indeed, the chapter highlights characteristics and provides other details about the NBA’s arenas such as their capacity, cost and location. Furthermore, it reveals whether these venues as structures significantly affected revenues, average attendances and winning percentages of those teams that had moved from one arena to another within the same or different metropolitan area.Then, there are the dollar amounts, expiration dates, and sponsors of naming rights for the arenas of clubs along with other prominent, special, and relevant features about them. After a discussion of these topics, I examine the identity, location, and quality of small, mid-sized, and large basketball markets that exist within the US and among cities in other nations of the world and especially in Canada. Interestingly, this section denotes which areas of teams in MLB, MLS, the NFL, and NHL are lucrative and therefore potential sites to host any current and/or future NBA franchises. Besides those markets, other places exist in America and abroad where sports fans may or may not attend games and thereby support an expansion or relocating team in the league.They rank as either inferior, mediocre, or superior sites for NBA teams based on their populations and local economies. To measure the extent and effect of arenas and markets in this professional sport, Chapter 5 includes a few tables of data, statistics, and/or values pertaining to the business, finance, and operation of franchises in the NBA. In other words, these tables list the various basketball arenas and markets of teams and collectively, they contain certain facts that relate to the cash flow, income, and profit of the league’s members as interdependent but competitive enterprises. In short, this chapter adds to the contents analyzed before regarding expansions and mergers, territories and relocations, and organizations and operations, and then later in Chapter 6 about the NBA’s domestic and international affairs.When compared to other professional leagues, readers of this book will appreciate, learn, and recognize the NBA based on its historical development, maturity, and success as a business in the sports industry across America and in other countries.


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Chapter

6 NBA Domestic and Foreign Affairs

INTRODUCTION Since they emerged and then reorganized and matured, the National Basketball Association (NBA) and Major League Baseball (MLB), and the National Football League (NFL), National Hockey League (NHL), and Major League Soccer (MLS) have each adopted and voluntarily implemented many modern and well-conceived policies, practices, rules, standards, and tasks. Their efforts, in turn, created opportunities and furthermore caused them to involve themselves and participate in various internal and external organizational matters. Besides scheduling home and away games for teams in preseason and regular seasons, these professional sports leagues have, during recent years, also established, financed, monitored, performed, and supervised different domestic and international affairs — that is, activities, events, operations, and programs — in order to increase their popularity and market share, revenue, and profit in the short and long run. As denoted in Chapter 4, offices of the NBA and its franchises have executives and other officials who receive job assignments and complete requirements that are within such departments and divisions as marketing, entertainment, community and player relations, and broadcasting. In fact, managers in the other four sports leagues and personnel staff of their member teams have similar responsibilities to improve, maximize, and otherwise support their organization’s mission. For sure, the majority of these 187


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issues relate to these leagues’ and teams’ business, growth, image, reputation, and success within the sports industry throughout the United States (US) and in other countries. Thus far, this book has discussed in Chapters 2–5, respectively, the historical purposes and the important consequences of NBA expansions and mergers, and its teams’ territories and relocations, franchise organizations and operations, and basketball arenas and markets. These topics and their relationships denote several interesting, significant, and unique features about the commercialization, modernization, and socialization of the league. First, the NBA has evolved into a more reliable, stable, and prosperous business entity, in part, because of adding several new teams and in 1976, when it merged with the American Basketball Association (ABA) and absorbed four more teams from the ABA.Although some of these clubs have struggled on the court and in attendances of fans at their home games, they have nevertheless contributed to the league’s competitive balance and increasing economic power and wealth especially during the 1990s and early 2000s. Second, the distribution of teams’ home territories and any movements from them reflect how some teams have existed for years and even decades within specific metropolitan areas, while others have left and invaded other areas for demographic and economic reasons. It seems apparent, however, that the current sites of NBA clubs are relatively secure at least temporarily, and relocations from and to them will be less common during the earlyto-mid-2000s. In other words, the Celtics will remain indefinitely in the city of Boston and Knicks in New York, Cavaliers in Cleveland, and the other teams in their respective home territories. Third, the number and type of offices, officials, and operations differ between NBA franchises within the Eastern and Western Conferences.While some teams have more officials including executives, vice presidents, and directors assigned to administration, information technology and security, others emphasize and put their most skilled employees in jobs concerned with communications, merchandising, and television partnerships. In 2006, for example, there was a wide and uneven distribution of officials, offices, and operations among these clubs. Fourth, the age, cost, and ownership of arenas are strategically vital to NBA teams’ competitiveness and their attendances, cash flow and revenue, and estimated valuation in millions of dollars. For arenas within the downtown area of a local sports market, basketball fans prefer fair ticket prices, seats close to the court, plenty of entertainment at half-time and during time-outs, and convenient concessions and parking at games. Indeed, there is variation in the quality and


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NBA Domestic and Foreign Affairs 189

other characteristics of arenas among NBA clubs.As a result, fans have expectations about the benefits of these structures even before they decide to attend any preseason, regular season, and postseason games. Before I identify and then discuss the details and implications of some active domestic and foreign affairs that affect, expose, and/or relate to operations of the NBA, a few activities, events, and/or programs — other than regular seasons — are perhaps obvious or unknown, and essentially important or unimportant to sports fans of teams in the four other professional leagues. MLB, for example, has an all-star game and World Series each year between the American and National Leagues, while a majority of its teams own and operate baseball academies to recruit, train, and sign ballplayers in nations of Latin America. The NFL has or sponsors Hall of Fame, Pro Bowl and Super Bowl games each season, and the league formed a World League of American Football in Western Europe that failed in the early 2000s. Meanwhile, the NHL has six teams located in Canada, plays exhibition ice hockey matches in Europe, and awards a Stanley Cup to the champion of the Eastern–Western Conference series each year. In MLS, there is a championship soccer game played for a Cup, and the league recruits numerous athletes from colleges and amateur programs within England, Mexico, and countries in South America. In addition, professional sports leagues and some or all of their teams participate in various domestic and international affairs each year. These activities may consist of camps, clinics, and workshops to teach amateur athletes how to play and excel in basketball games, and of charitable, humane, and social events in communities to raise awareness, funds, and resources for disadvantaged, minority and poor individuals and groups. Many NBA clubs and their coaches and players also allocate time to visit hospitals, nursing homes, and retirement facilities to meet with patients, senior citizens and the infirmed, and to speak with students in local elementary and high schools about the need to behave, learn, and study. In short, there are business, economic, and social reasons for pro sports leagues to lead by example and therefore adopt programs and affiliate with different types of domestic affairs within their community, region and nation, and also with international affairs within countries across the globe. I highlight and reveal in the next sections of this chapter a few but important and relevant domestic and then foreign affairs of the NBA. As such, these matters distinguish the NBA from MLB, the NFL, NHL and MLS, and make it an accomplished and popular, special, and unique professional sports organization.


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DOMESTIC AFFAIRS Championship Series After completion of their regular seasons, each professional sports league has divisional playoffs from which two teams emerge and then compete in a game or series to determine a champion and runner-up. In MLB, the winners of the American and National League pennants play each other in a World Series. Similarly, NFL teams who win their respective conferences participate in a Super Bowl, as do NHL clubs in a Stanley Cup competition. In MLS, the two teams with the best records after the playoffs meet in a championship game to win a MLS Cup. Interestingly, the first World Series occurred in 1903, the first Super Bowl in 1967, the first Stanley Cup in 1927, and the first MLS Cup in 1996. All these impressive events are affairs that conclude the postseasons of these leagues. Before merging with the National Basketball League (NBL) in 1949 and being renamed the National Basketball Association, the Basketball Association of America (BAA) had playoffs in the 1946 through 1948 seasons. In consecutive years, the champions and runners-up of the BAA were, respectively, the Philadelphia Warriors and Chicago Stags in 1947, Baltimore Bullets and Philadelphia Warriors in 1948, and Minneapolis Lakers and Washington Capitols in 1949.Then one year later, the NBA held games in a final series in which the Minneapolis Lakers defeated the Syracuse Nationals to become the league’s official champion in 1950. For the next 21 years, a number of different NBA teams won the Eastern and Western Conference, and in the 1970 season the league reorganized itself into the Atlantic, Central, Midwest and Pacific Divisions, but later restructured again from four into six divisions in 2004.1 Table 6.1 denotes the NBA teams that had performed in championship series during the years from 1950 to 2009 inclusive. The table, however, 1

For information about the NBA and its various events, seasons and teams, see Frank P. Jozsa, Jr. and John J. Guthrie, Jr., Relocating Teams and Expanding Leagues in Professional Sports: How the Major Leagues Respond to Market Conditions (Westport, CT: Quorum Books, 1999); Connie Kirchberg, Hoop Lore: A History of the National Basketball Association (Jefferson,NC:McFarland & Company,2007);Robert W.Peterson, Cages to Jump Shots: Pro Basketball’s Early Years (New York, NY: Oxford University Press, 1990); James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992); Bill Simmons, The Book of Basketball:The NBA According to the Sports Guy (New York, NY: Ballantine, 2009).


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NBA Domestic and Foreign Affairs 191 Table 6.1 NBA Championship Series, by Team, 1949–2008 Seasons Team Baltimore Bullets Boston Celtics Chicago Bulls Cleveland Cavaliers Dallas Mavericks Detroit Pistons Fort Wayne Pistons Golden State Warriors Houston Rockets Indiana Pacers Los Angeles Lakers Miami Heat Milwaukee Bucks Minneapolis Lakers New Jersey Nets New York Knickerbockers Orlando Magic Philadelphia 76ers Philadelphia Warriors Phoenix Suns Portland Trail Blazers Rochester Royals San Antonio Spurs San Francisco Warriors Seattle Supersonics St. Louis Hawks Syracuse Nationals Utah Jazz Washington Bullets

Seasons

Champions

Runners-Up

1963–1972 1949–2008 1966–2008 1970–2008 1980–2008 1957–2008 1949–1956 1971–2008 1971–2008 1976–2008 1960–2008 1988–2008 1968–2008 1949–1959 1977–2008 1949–2008 1989–2008 1963–2008 1949–1961 1968–2008 1970–2008 1949–1956 1976–2008 1962–1970 1967–2007 1955–1967 1949–1962 1979–2008 1974–1996

0 17 6 0 0 3 0 1 2 0 10 1 1 4 0 2 0 2 1 0 1 1 4 0 1 1 1 0 1

1 3 0 1 1 2 2 0 2 1 14 0 1 1 2 5 2 4 0 2 2 0 0 2 2 3 2 2 2

Note: Champions and Runners-Up in seasons of the Basketball Association of America (BAA) were, respectively, Philadelphia Warriors and Chicago Stags in 1946–1947, Baltimore Bullets and Philadelphia Warriors in 1947–1948, and the Minneapolis Lakers and Washington Capitols in 1948–1949.The BAA was renamed National Basketball Association (NBA) in 1949. Source: James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992), 446–459; The World Almanac and Book of Facts (New York, NY:World Almanac Books, 1945–2008);“NBA Teams” at http://www.basketballreference.com [cited 18 August 2009];Table A.3.1 in the Appendix.


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excludes those NBA clubs who did not compete in a series because they failed to qualify for the playoffs as a result of not winning their divisions or based on their dismal win–loss records during regular seasons. The table indicates that the two most dominant champions were the Boston Celtics and Los Angeles Lakers, while the least successful in the group included four clubs that had played in one series but failed to win any of the clubs. In the latter group were the Baltimore Bullets, Cleveland Cavaliers, Dallas Mavericks, and Indiana Pacers. Combined, the Celtics and Lakers won 27 (or 54 percent) of the league’s championships and furthermore, they finished runners-up in 17 (or 28 percent) of them.Thus, in total, these two NBA franchises placed first or second in 44 (or 37 percent) of the league’s championship series from 1950–2009. With respect to the 30 teams in the NBA’s 2008 season, nine or 33 percent of these clubs had never been a champion or runner-up in their history within the league. That list included the three most experienced of the clubs, namely the 41-year-old Atlanta Hawks, 33-year-old Denver Nuggets, and 24-year-old Sacramento Kings. Meanwhile, the three least experienced franchises among the group of 30 were the 9-year-old Memphis Grizzlies, 6-year-old New Orleans Hornets, and 5-year-old Charlotte Bobcats. As a result, some competitive imbalances have occurred historically in the NBA’s championship series with the elite Celtics and Lakers being at the top in excellence, followed by the New York Knickerbockers and then the Chicago Bulls and Philadelphia 76ers. By decade, the Minneapolis Lakers dominated in the 1950s, Celtics in the 1960s, no particular NBA club in the 1970s, Los Angeles Lakers in the 1980s, Bulls in the 1990s, and the Los Angeles Lakers and San Antonio Spurs in the early 2000s. For sure, differences in performances during years and within decades affected all of the league’s franchises with respect to changes in their revenue, profit, and market valuation. In short, the NBA championship series is an important, lucrative, and popular affair that the league will continue to advertise, invest in, and promote after 2010. Although the television ratings of this event tend to marginally fluctuate, the series results in a champion and runner-up in each postseason. From a financial perspective, NBA officials prefer a series that features one or two clubs from Boston, Chicago, Los Angeles or New York, and not those teams from such areas as Memphis, Milwaukee, and Portland. Nevertheless, despite the data reported in Table 6.1, any historical competitive imbalances due to the performances of such dynasties as the Celtics and Lakers appear less important to fans and the long-run welfare of the league


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than having the most talented, smart, and well-coached teams qualify, compete, and struggle to win a championship series or finish runner-up.

Development League With the consent and support of NBA franchise owners and the league’s Board of Governors, Commissioner David Stern established the NBA Development League (NBDL) in 2001. It consisted then of eight teams with their home sites located in the US southeast. After four years of instability whereby some clubs folded while others relocated, NBA officials authorized that the NBDL expand with various teams placed into states within the US southwest and west including California, New Mexico, Oklahoma, and Texas.2 Besides these types of expansions, at least one sports team from Colorado, Idaho, and the Dakotas left the Continental Basketball Association and joined the NBDL. Because of movements into small and mid-sized areas of the southwest and west, some of the league’s existing clubs folded such as the Fayetteville Patriots located in southeast North Carolina, Florida Flame in southwest Florida, and the Roanoke Dazzle in southwest Virginia. Meanwhile, the Los Angeles Lakers and other NBA teams gradually affiliated with and became owners of current and/or new NBDL franchises. Thus, in 2008–2009, the NBDL included 16 teams. Most interestingly, a direct but uncommon single-affiliation partnership occurred in 2009 between the NBA Houston Rockets and NBDL Rio Grande Valley Vipers.This model of ownership allowed the Rockets to secure complete control of the Vipers and be responsible for the payment of any expenses related to its basketball operations.Although it was the fourth partnership of this type between the two leagues, the majority of NBA franchises had at least one NBDL club as an affiliate in order to assign or reassign players between them in their first or second season. Nevertheless, some NBDL teams had affiliated with two or more franchises in the NBA. 2

Some readings about aspects of the NBA’s Development League include “NBA Development League” at http://en.wikipedia.org [cited 27 November 2009]; Gerald Green, “A Celtic Goes South,” Sports Illustrated (30 January 2006), 38; William C. Rhoden, “D-League Team Could Bring Rens Back to Harlem,” New York Times (12 November 2007), 7; Ian Thomsen,“Minor League Might Have Major Role,” Sports Illustrated (4 April 2005), 34; Anne Chapman, “The Competitive Edge,” Black Enterprise (April 2008), 66–67; Stephen Cannella and Mark Bechtel, “Cleaning House,” Sports Illustrated (11 July 2005), 28–29.


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To illustrate, there was the Dakota Wizards in Bismarck, North Dakota with the Memphis Grizzlies and Washington Wizards; and the Springfield Armor in Springfield, Massachusetts with the New Jersey Nets, New York Knicks, and Philadelphia 76ers. There are other interesting and unique aspects about the conduct and operation of the NBDL. For example, as part of the February 2007 NBA All-Star Weekend held at the Mandalay Bay Resort and Casino in Las Vegas, Nevada, NBDL East and West teams played a game with fans determining the starting lineups.Then at all-star games in February 2008 and 2009, the NBDL presented events at Dream Factory Friday Night. Accordingly, there was a three-point shootout, a slamdunk contest, and a skills contest named “horse.” These and other activities provided entertainment for people who attended any all-star games and enjoyed basketball performed by players on teams in this minor league. Another fan-friendly event is the NBDL Showcase in which the league’s clubs compete against each other in a “carnival” format.That is, they play two games apiece in front of fans and NBA general managers and scouts. Since this event began in 2005, more than 15 NBDL players were so competitive that they have received promotions or have been recalled again to teams in the NBA. Several of these athletes were originally NBA draftees and players who were undrafted or waived.As an aside, the NBDL Draft is a major source for NBA teams to build their rosters. In November 2009, a yet-to-be-named NBDL team in Frisco, Texas — owned by the Dallas Mavericks — hired a new coach named Nancy Lieberman. Prior to that, Ms. Lieberman had played basketball on professional women’s teams for many years and performed on some US Summer Olympic teams, but then she retired and became a women’s basketball television analyst. Nancy is the first female head coach to lead an NBDL team or one that is an affiliate of an NBA franchise. It will be fascinating, interesting, and memorable to see how fans, franchise owners, and referees adjust to her style of leadership, and to see whether she can motivate her club to win the most games in the league and perhaps even a championship. After establishing a relationship with a team in the NBDL, Boston Celtics President of Basketball Operations Danny Ainge said,“We [Celtics] are excited to announce our affiliation with the Maine Red Claws.Although our recent partnership with the Utah Flash was an extremely positive experience in every respect, having our NBA Development League affiliate just a short drive away from Boston will be an invaluable tool in the


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progression of our players as they strive to perfect their game and contribute at the NBA level.”3

Summer League Following its draft of players in the late spring of each year, the NBA operates a Summer League (NBASL) in which teams’ rosters include newly drafted players from college and universities plus those with three or less years of experience in the NBA. Originally founded as a basketball organization in 2004 by a group of business executives, the NBASL’s teams play their games in arenas on the campus of the University of Las Vegas in Nevada. That is, they compete within the Thomas & Mack Center and in Cox Pavilion. In general, the NBASL’s rules are similar to the NBA’s except that each player may commit ten violations before he fouls out of a game, rather than just six as in the NBA.The following are some other highlights about the NBASL during its 2004–2009 seasons.4 Between 2004 and 2006 inclusive, the name of this league changed from Reebok to Toshiba Vegas Summer League because of the change in sponsor, while the number of NBA teams that had participated in it increased from six in 2004 to 16 in 2006. Then in 2007, the league grew from 16 to 19 teams, became known as the NBASL, and Adidas decided to replace Toshiba as its sponsor. Furthermore, that year the Chinese national team joined the league. Finally, EA (Electronic Arts) Sports became the NBASL’s

3

See “NBA D-League Announces Affiliates for 2009–2010 Season” at http://www. nba.com [cited 23 November 2009]. Besides Danny Ainge’s comments, the president of basketball operations for the New York Knicks, Donnie Walsh, made the following statements with respect to this minor league:“I am a true believer in the NBA D-League and it’s great to be affiliated with the Springfield franchise.We have had a special relationship with the league, and we plan to continue that because it has great value to us.” 4 The NBA’s Summer League is discussed in “Summer League History” at http://www. nba.com [cited 23 November 2009];“NBA Summer League” at http://en.wikipedia.org [cited 27 November 2009];“NBA Summer League” at http://hoopedia.nba.com [cited 27 November 2009]; Ian Thomsen, “Hot Italian Coach Gets a Summer Job,” Sports Illustrated (19 May 2003), 74;“Summer Surprises,” Sports Illustrated (25 July 2005), 84; “NBA Team Reports,” Sporting News (9 October 2000), 68; “Beasley Returns to Practice,” New York Times (4 July 2008), 6.


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sponsor in 2008–2009 when an NBDL Select Team became a member of it in the summer. With respect to team participation, the NBA’s Orlando Magic dropped out of the league after the 2006 season and one year later, so did the Boston Celtics. In contrast, the Cleveland Cavaliers, Denver Nuggets, Phoenix Suns, and Washington Wizards have been involved with the NBASL since its inception in 2004. Regarding one of its primary purposes, the NBASL allows rookies and other players with very little experience as professionals in the sport to compete against each other in games during summer months. In fact, former college All-Americans Blake Griffin of the NBA’s Los Angeles Clippers, Greg Oden of the Portland Trail Blazers, and Kevin Durant of the Oklahoma City Thunder each performed for their respective teams in the NBASL. Likewise, so did such high draft picks as Michael Conley of the Memphis Grizzlies, Yi Jianlian of the Milwaukee Bucks, and Corey Brewer of the Minnesota Timberwolves. Although these and other athletes play hard on defense and smart on offense to improve their basketball skills, they risk being injured, being embarrassed by the performances of their opponents or even teammates in games, and being criticized or downgraded by general managers, coaches, and scouts. Based on what I have read in the literature, the NBASL will continue to operate in future summers and its teams will continue to play games in arenas within Las Vegas. Indeed, these basketball games are attractive events for tourists visiting the city and for others who live in the area. For some reason, however, several NBA clubs did not join the league in 2009. They included the Eastern Conference’s Celtics, Nets, and 76ers of the Atlantic Division, Pacers of the Central Division, and Bobcats, Hawks, Heat, and Magic of the Southeast Division, and the Western Conference’s Utah Jazz of the Northwest Division. Perhaps financial issues, player injuries, or other potential problems and risks caused these nine NBA franchises to not enter any teams into the NBASL that summer. Thus far, I have identified and then evaluated and justified the NBA’s Championship Series and the league’s participation in development and summer leagues as being three important domestic affairs in the operation of the sport. Undoubtedly, NBA administrators and teams will continue to invest money and resources into these affairs since they each contribute in significant ways to, respectively, the postseasons in professional basketball, a minor league basketball system, and the training of rookies and players with limited experience who need exposure and an opportunity to compete against other excellent athletes.


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Women’s National Basketball Association Between the late 1970s and early 1990s, some women’s professional basketball leagues emerged in America and then existed for one or more years but eventually dissolved. They failed because of several economic, financial, or sport-specific reasons. Some major and minor difficulties, issues, and problems that plagued them included a number of inferior teams and their poor attendances; boring entertainment events and performances at home and away games; small, unenthusiastic, and uncommitted fan bases; and flawed management decisions made by league officials and franchise owners. Furthermore, the women’s leagues and their teams were unable to negotiate any lucrative national, regional, or local television and radio contracts. Moreover, they lacked assets, money reserves and resources, experienced cash outflows and revenue shortages, and incurred significant amounts of debt and cumulative financial losses. Nonetheless, despite the failure of these organizations, the NBA Board of Governors was confident that if a women’s basketball league was efficiently organized and adequately financed, sports fans within several US cities would support it and any of its teams during the mid-1990s and thereafter. Due to such beliefs, ideals and experiences, the NBA approved the formation of a Women’s National Basketball Association (WNBA) in 1996. One year later, the new league began its inaugural season with eight teams who each had an association or was affiliated with an NBA franchise. Demographically, their home sites were in midsized-to-large metropolitan areas that ranged in population from Salt Lake City, Utah to New York City, New York. Besides Salt Lake City, other mid-sized markets of WNBA clubs were Charlotte, North Carolina and Cleveland, Ohio, and within such large areas as Houston,Texas and Los Angeles, California.5 5

Various readings report information about the WNBA and its business operations and players, seasons, and teams. For example, see “Women’s National Basketball Association” at http://www.wnba.com [cited 23 November 2009]; Jeffrey Gitomer, “Sold on the WNBA? Go to One Game,” Budapest Business Journal (24 September 2001), 20; Ladd Kochman and Randy Goodwin,“Market Efficiency and the Women’s NBA,” American Business Review (June 2004), 135–137; Cara Griffin, “Personal Connection Key for WUSA, WNBA,” Sporting Goods Business (11 June 2001), 34; Melody K. Hoffman, “WNBA Boosts Staying Power and Best Talent in the World,” Jet (28 May 2007), 48–50; Judy Leand,“Adidas Teams With NBA and WNBA,” Sporting Goods Business (July 2002), 18;Adrienne Mand,“WNBA Shoots for Online Ballots,” Advertising Age (23 July 2001), 4; Miriam Kreinin Souccare and Aaron Elstein,“WNBA Courts All-Star to Lead League Toward Profitability,” Crain’s New York Business (8 November 2004), 37.


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The following items are some business news about the WNBA and its growth, maturity, and success. First, despite being subsidized by NBA franchises, most WNBA teams normally operate at a loss in each season. In 2003, for example, the amount of losses was approximately $12 million. Since then, however, the finances of some women’s clubs have reportedly improved enough that they occasionally break even or earn a small profit. In fact, because of the economic recession in America during 2007–2009, several NBA teams have suffered financially and much worse than some franchises in the WNBA. Second, according to certain sections within the WNBA’s 2008 Collective Bargaining Agreement (CBA), each team’s salary cap increases from $803,000 in 2009 to $900,000 in 2013. In addition, the minimum salary of a player with three plus years of experience increases to $51,000 in 2009 and the maximum salary of a six-plus-year veteran to $99,500. This will help encourage talented female athletes graduating from US colleges to commit and sign with WNBA clubs instead of playing on foreign basketball teams. Third, any female player who wins a league award also receives a bonus besides earning additional amounts for making the playoffs and being on a championship team. The bonus can vary from $5,000–$10,500. Fourth, the league’s merchandise sales expanded by at least 36 percent in 2008, while the sales of players’ jerseys rose more than 40 percent. This suggests that the apparel, merchandise, and other products of WNBA teams and their players are becoming more popular with fans at games and in the NBA Store and on the website WNBAStore.com. In fact, the WNBA’s Phoenix Mercury and Los Angeles Sparks teams secured partnerships with different companies to establish brands of their jerseys. Fifth, regarding the attendances of fans, the average attendance has declined from about 10,000 per game in the late 1990s to 8,000 in recent years. The latter number has remained relatively stable for several of the WNBA’s seasons in the 2000s.Thus, this result may create opportunities for the league to expand geographically and add franchises, advertise and promote the brands of its teams, and generate more revenue to offset expenses and sustain operations. Sixth, the WNBA switched from broadcasting its teams’ games on only two women’s oriented stations — Lifetime and Oxygen — to such networks as NBC and then ABC, ESPN2, and NBA TV. Furthermore, in mid-2007, the league signed an eight-year contract extension with ABC under which 18 regular season and 11 postseason games will each appear on any of


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these networks. The contract also awards rights fees to the WNBA for the first time. Other activities, events, and programs have business implications for the league too. To illustrate, there is an annual WNBA all-star game held each year featuring star players from teams in the Eastern and Western Conferences. Then when a season ends, votes from various basketball experts determine who will win such WNBA awards as the Sixth Woman of the Year, Rookie of the Year, Most Improved Player, Defensive Player of the Year, Kim Perrot Sportsmanship, Coach of the Year, and Most Valuable Player. Other honors include the selection of players on any All-WNBA and All-Defensive teams, and on an All-Rookie team. These awards matter to players since they may receive additional bonuses from an assignment to one or more of these special teams. Since the late 1990s, there has been a steady increase in the number of foreign-born players in WNBA clubs.They numbered ten in 1997 and several years later, they equaled more than 30. Some have qualified for all-star teams or have won awards for their accomplishments playing excellently on defense and offense. These athletes include Australia’s Lauren Jackson, Democratic Republic of Congo’s Mwadi Mabika, and Poland’s Margo Dydek. Other all-stars were Brazil’s Erika DeSouza, Belgium’s Ann Wauters, and Saint Vincent and the Grenadines’ Sophia Young. In addition, Portugal’s Ticha Penicheiro played for the champion Sacramento Monarchs in 2005, while Australia’s Penny Taylor-Gil performed in 2007 and 2009 for the Phoenix Mercury which won WNBA championships in those years. In short, the league is increasingly diversified, multi-ethnic, and international compared to before 2000 because teams aggressively recruit and sign great athletes from countries besides the US. In order to distinguish performances between inferior, mediocre, and superior teams in the WNBA, I developed Table 6.2. It indicates the variation in the teams’ regular seasons and between those who have won championships and finished runners-up in postseasons during the league’s initial 13 years in operation. More specifically, the table shows the most and least successful franchises and denotes their home sites within sports markets of various sizes and in urban areas. In total, 20 different clubs have participated in the WNBA since 1997. While the Sparks, Liberty, Mercury, and Monarchs played in every season of the league, the Dream, Sol, and Fire performed in only three or less of them. Even so, the Monarchs franchise folded in Sacramento after completing the 2009 season, as did the Sol in Miami and Fire in Portland during 2002.Then


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200 The National Basketball Association Table 6.2 WNBA Teams, 1996–2008 Seasons Team Atlanta Dream Charlotte Sting Chicago Sky Cleveland Rockers Connecticut Sun Detroit Shock Houston Comets Indiana Fever Los Angeles Sparks Miami Sol Minnesota Lynx New York Liberty Orlando Miracle Phoenix Mercury Portland Fire Sacramento Monarchs San Antonio Silver Stars Seattle Storm Utah Starzz Washington Mystics

Seasons

Champions

Runners-Up

2008–2009 1997–2006 2006–2009 1997–2003 2003–2009 1998–2009 1997–2008 2000–2009 1997–2009 2000–2002 1999–2009 1997–2009 1999–2002 1997–2009 2000–2002 1997–2009 2003–2009 2000–2009 1997–2002 1998–2009

0 0 0 0 0 3 4 0 2 0 0 0 0 2 0 1 0 1 0 0

0 1 0 0 2 0 1 1 1 0 0 4 0 1 0 1 1 0 0 0

Note : Some teams folded like the Cleveland Rockers in 2003 and Charlotte Sting in 2006, while others moved to another metropolitan area such as the Utah Starzz to San Antonio in 2002 and Orlando Miracle to Connecticut in 2003. Moreover, the Detroit Shock relocated to Tulsa, Oklahoma to open there in the 2010 season. Source: The World Almanac and Book of Facts 2007, 910; and the Sports Business Resource Guide & Fact Book 2006 (Charlotte, NC: SportsBusiness Journal, 2006), B-112–B-114.

one year later, the Rockers terminated its operations in Cleveland, followed in 2006 by the Sting in Charlotte and in 2008 by the Comets in Houston. Interestingly, the Comets won four consecutive WNBA championships during 1997–2000 because of performances by most valuable player Cynthia Cooper and all-star Sheryl Swoops. In short, between 1997 and 2008 inclusive, eight was the average number of seasons that teams had existed in the league. For more information about a franchise that folded, the Sting had low attendances at its home games in the Charlotte Coliseum, and won one each division and Eastern Conference title while based there.The club’s fan base


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was primarily young and middle-aged women who lived within the city of Charlotte.At the Sting’s games, there were some activities to entertain audiences before, during, and after games. Nonetheless, the demise of the Sting began in 2002 when franchise owner George Shinn moved his NBA Hornets from Charlotte to New Orleans. After the Bobcats entered the NBA in 2004 to replace the Hornets in Charlotte, the franchise’s new owner Bob Johnson cut the operating budget of his organization and this change, in part, eventually forced the Sting to cease operations. For some reason, there were no bids to reactivate, purchase, and then move the Sting to another area in the US. Consequently, the club played its final season in 2006. Based on column three in Table 6.2, the Comets, followed by the Shock, Sparks, and Mercury won the most WNBA championships, while 14 (or 70 percent) of all clubs failed to win any of them. Evidently, a few teams dominated performances in the league, particularly the Comets who folded in 2008, and the Shock who relocated from Detroit to Tulsa, Oklahoma for the league’s 2010 regular season. Therefore, the most competitive WNBA team in recent years has been the Mercury who won league championships in 2007 and 2009 due to the experience, leadership, and scoring of shooting guard Diana Taurasi, a former All-American player from the University of Connecticut. Based on the information in Table 6.2, which covers 13 seasons of the WNBA, the Comets, Shock, Sparks, Mercury, and Liberty — because of its four runners-up — ranked as superior teams in the league, while the Sting, Sun, Fever, Monarchs, Silver Stars, and Storm each rated as mediocre. Since they failed to play in any championship series during these years, the WNBA’s inferior clubs included the Dream, Sky, Rockers, Sol, Lynx, Miracle, Fire, Starzz, and Mystics. These results suggest that the WNBA was competitively unbalanced between 1997 and 2008, and that franchises located in large-to-very large markets (except for the Mercury in Phoenix) tended to qualify for and dominate the league’s championship series. Such outcomes, in turn, may have caused financial problems for mediocre and inferior teams and thus limited their ability to allocate resources to improve performances and expand the payrolls of their coaches, players, and staff. In the early 2010s, I expect the WNBA to experience marginal growth and prosperity, in part, because of larger attendances at teams’ games, more media coverage and merchandise sales, and higher television ratings. Other factors that will help make the league more popular and stable, and perhaps profitable, include the entry and performance of several outstanding players


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who excelled on their basketball teams while in college, the league’s rights fees and its television deals with ABC and ESPN, and the excitement created by the 2009 Championship Series in which the Phoenix Mercury defeated the Indiana Fever 3–2 in games. In short, the WNBA has a promising future as a business operation if it successfully expands market share by providing an environment for its teams to entertain female and male basketball fans, and by encouraging superstar players to perform above expectations and thus increase the competitiveness of the game in sports markets throughout America.

NBA Cares Because of its popularity, prestige and status, the NBA influences the attitudes, behaviors, and lifestyles of athletes and other groups in America and among people in nations across the world. To initiate and fulfill its social responsibilities domestically, the league invests money and resources into various activities and coordinates efforts in conjunction with community partners, non-profit organizations, and business partners. NBA Cares (NBAC) is an example of these activities and efforts, and is a meaningful, sincere, and straightforward way for the league to contribute to and participate in improvements within communities and groups. The following are four primary affairs of NBAC and their benefits to society.6 First, NBAC’s Programs involve social issues like education and literacy, environmental protection, health and wellness, and family and youth development. For example, within this category are NBA Fit, which encourages physical activity and healthy living for children and families, and Read to Achieve, which helps young people develop a lifelong love of reading and motivates adults to read regularly to their and other family’s children. Besides NBA Fit and Read to Achieve, there is an environmental initiative named NBA Green, as well as Basketball without Borders, HP Digital Assist, and Coaches 6

The NBA’s website (nba.com) contains more details about the campaigns, events, programs, and team programs of NBA Cares. In addition, see Andrew Gilman,“Charities Reap Fine Reward,” The Daily Oklahoman (3 March 2006), 1; Stephen Maloney,“NBA All-Stars Sink $20 Million into N.O. Recovery,” New Orleans CityBusiness (25 February 2008), 14–15; Don Walker, “Brief: Yi Makes Plea, Donations for Relief,” Milwaukee Journal Sentinel (17 May 2008), 1; Bob Lanier,“The Hoops Star, the Movie Star and the Size 22 Feet,” New York Times (18 December 2007), 6; Mike Branon, “All-Stars Bring More Than Game,” Mesa Arizona Tribune (11 February 2009), 1.


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for Kids.These four activities provide youngsters with opportunities and the resources to be emotionally aware, to develop themselves conscientiously and physically, and to better prepare for the future. Second, NBAC’s Events are a variety of community outreach efforts that the NBA uses to further its mission of becoming the most generous, popular, and respected sports league in the world. To illustrate, NBA Finals are projects such as the creation or renovation of basketball courts, libraries, and technology centers, whereas Week of Service is realized when NBA teams host and sponsor hands-on service activities for children and families within communities. Other types of Events are Season of Giving, International Preseason Games, Basketball without Borders, and NBA All-Star. As before in Programs, Events demonstrate the league’s affairs and leadership in social responsibility. Third, NBAC’s Campaigns are concerned with current but important issues such as the promotion of literacy, eradication of malaria, and education about HIV/AIDS. More specifically, there is a grassroots campaign titled Nothing But Nets that saves lives by preventing malaria through the purchase and distribution of bed nets, and a Sports Envoys Program whereby NBA and WNBA coaches and players act as ambassadors of the sport, conduct clinics, visit schools, and make presentations to inspire young people. Five other Campaigns are Vaccines for Teens, Get Caught Reading, Ninemillion.org, Get Tested, and Changemakers. In short, the NBA commits money, personnel, and time to raise awareness about vital issues to communities and children within them. Fourth, NBAC’s Team Programs highlight different social problems and help people understand or cope with them. Through Blessings in a Backpack, the NBA’s Orlando Magic helps feed elementary school children whose families qualify for the federal free and reduced meal program. In Heat Learn to Swim, the league’s Miami Heat joins with Blue Cross Blue Shield of Florida and the American Red Cross to increase the awareness of water safety amongst children and adults. Other programs and franchises engaged with this part of the NBAC are the Mavs’ Reading Challenge conducted by the Dallas Mavericks, Rolling Thunder Book Bus performed by the Oklahoma City Thunder, Cool School Field Trip established by the Charlotte Bobcats, and Team Fit operated by the Denver Nuggets. With respect to several national and international crises and local and regional issues, the NBA has provided money, resources, and other types of economic aid and financial support. After Hurricane Katrina flooded much of New Orleans, for example, the league held a basketball clinic for girls,


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played an all-star game there, and contributed millions in donations to charities, churches, and neighborhoods for recovery and rebuilding the area. Furthermore, in various other cities, NBA teams and their coaches and players participate in activities that support the Boys and Girls Clubs of America, Habitat for Humanity, and Hoops for Hope, and they generously help with kids’ camps, minority scholarship funds, and victims of catastrophes. Because of these affairs and the goodwill generated, the league receives positive feedback, praise and recognition, and in time, this will attract more fans to attend preseason, regular season, and postseason games or watch them on television. Although the NBA has additional internal and online social campaigns, events and programs, commercial deals with investors, partners and sponsors, and agreements, contracts and legal relationships with governments and private organizations, I selected the Championship Series, Development League, Summer League, WNBA and NBA Cares as effective, interesting, and significant domestic affairs of the league. The next section of this chapter identifies and evaluates some of the NBA’s international affairs in order to determine their effect on the business, growth, and operation of the league and its member franchises.

FOREIGN AFFAIRS Important but different compared to the types of domestic affairs within America, the NBA controls, finances, manages, operates, and supervises various international basketball activities and programs, and interacts with companies, social institutions, and populations within rural areas and urban cities from a global perspective. These matters, in turn, have short and long run implications especially for basketball fans worldwide, for the league’s current franchises and their coaches, owners and players, and for sports markets within the US and in cities abroad, and clubs in MLB, the NFL, NHL, and MLS. This section discusses some historical events and trends in the globalization of the league and expansion of its brand into countries besides the US and Toronto, Canada.

History Before the mid-1980s, only a few athletes from foreign countries joined clubs in the NBA, and some of them played for the league’s teams in several nonregular season games especially within cities of China. After David Stern became the league’s Commissioner, he emphasized the international appeal,


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potential, and power of the NBA, and thus he gradually increased its exposure, popularity, and programs in other nations. For example, between 1985 and 1995, NBA teams performed in exhibition or preseason games in such places — besides China — as England, Italy, Puerto Rico, Spain, and in cities of the Soviet Union. Furthermore, the league established television agreements with British Satellite Broadcasting and a state committee of the United Soviet Socialist Republic (USSR) in 1989, and five years later, opened an office in Tokyo, awarded an expansion team to Vancouver in Canada, and held a three-day basketball tournament in Mexico City.7 From 1995 to 2008 inclusive, the NBA became even more interested in globalizing its brand and expanding the sport.As a result, during the midto-late 1990s, the league introduced a grassroots basketball program titled NBA 2ball in Canada and Taiwan, and launched a tour named 3-on-3 Mexico in the foreign cities of Guadalajara, Mexico City, and Monterrey. In addition, it established a tournament called Hoop-It-Up 3-on-3 in five Canadian cities including Edmonton, Montreal and Winnipeg, and permitted players on some NBA teams to volunteer and promote the sport in rural and urban areas of Argentina, Australia, Brazil, Hong Kong, Japan, Korea, Malaysia, and the Philippines. Throughout the early 2000s, the NBA planned, organized, and financed a number of similar basketball programs, tournaments, and tours in foreign nations, and encouraged NBA teams and their coaches and players to schedule camps, clinics, and workshops in order to teach youngsters in countries of Asia, Europe, and Central America about any drills, fundamentals, and skills of the sport. Besides these events, the league developed a Legends Tour with a series of exhibition games in China that were played by former stars such as Buck Williams, Clyde Drexler, and Rolando Blackman versus the Chinese men’s national basketball team. Furthermore, it showcased a premier interactive fan event named Jam Session in Portugal and Taiwan, and in 2005, the league held such grassroots activities as NBA Jam Van, Celebrity Jam and 7 For sure, the league will increase its business, investment, and organization in foreign affairs. This strategy, in part, is discussed in “NBA international Historic Timeline, 1946–2000” at http://hoopedia.nba.com [cited 1 December 2009];“NBA international Historic Timeline, 2001–” at http://hoopedia.nba.com [cited 1 December 2009]; “NBA.com: Global” at http://www.nba.com [cited 30 November 2009]; “NBA.com: International” at http://hoopedia.nba.com [cited 30 November 2009]; “NBA. com: Season Opens With Record-Tying 83 International Players” at http://www. nba.com [cited 22 November 2009].


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Madness, and Junior NBA within, respectively, cities of China, Hong Kong and Japan, and then again in areas of China. Since 2005, the league’s foreign affairs have included broadcasting various NBA all-star games into more than 35 countries and territories by more than 100 international telecasters, operating a Skills Challenge Final and Training Camp in China and elsewhere, and scheduling Basketball without Borders programs in Africa, Lithuania, Puerto Rico, and South Africa. Meanwhile, each year, some amateur, semiprofessional, and professional basketball teams from China, France, Germany, or Spain have visited the US and competed in exhibition games against NBA teams or against a group of allstar players from some of these clubs. For sure, these activities have contributed to the international growth of the sport and therefore increased the NBA’s popularity among populated groups in many developed, developing, and remote nations. During the 2007 season, the league achieved its broadest and most comprehensive global television distribution in history through new partnerships and key renewals. Besides providing games and programming in 215 countries in 41 different languages, that season the NBA had relationships with 202 television networks, 14 of which aired content for the first time including CBC in Canada, and TVB Jade and TVB Pearl in Hong Kong. Moreover, the league renewed its partnerships with networks in other markets such as NHK in Japan, Five in the United Kingdom, SKY and Sport Italia in Italy, Premiere in Germany, 7TV in Russia, and Beijing TV in China.Then, following the success of 2007 NBA Europe Live as presented by EA Sports, there was a new program called NBA 360. This show, which featured highlights and “the best of the NBA” from the previous weekend, appeared in prominent television slots within several European markets, and on networks like Sport 1 in Hungary and Sport Klub in Slovenia.8 In 2008, the NBA held its first program in India. This affair was a Basketball without Borders camp that involved charity events and basketball 8

See Matthew Glendinning,“2007–2008 NBA Season Offers Broadest Ever Global TV Distribution” at http://www.sportbusiness.com [cited 2 December 2009]. Furthermore, the league’s business in broadcasting its events, games, and shows online is discussed in Hilary Cassidy, “NBA, WNBA, and AOL Link UP,” Sporting Goods Business (26 June 2000), 10; John Dempsey,“NBA Groups Ink Web Deal,”Daily Variety (3 January 2001), 33; Jon Lafayette,“NBA Puts Turner on Net Duty,” Television Week (21 January 2008), 6, 33; “NBA TV Contracts” at http://www.insidehoops.com [cited 19 August 2009].


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clinics in which some of the teams’ players educated young athletes there about the sport and taught them how to react, think, and conscientiously compete in games. Despite a national obsession and people’s passion for cricket matches across India, NBA executives plan to introduce, expose, and extend amateur basketball programs throughout the country. In fact, throughout India, there are requirements to build basketball courts in remote villages, to request endorsements of the American sport from Bollywood movie stars, and to assign various NBA players to perform exhibition games in large cities like Delhi, Kolkata (Calcutta), and Mumbai (Bombay).9 Because cricket is beloved with such passion in India, and intensely respected and played by children and adults in any space where a ball can be hit, the NBA’s plans will require knowledge of India’s culture, politics and traditions, and in addition, such inputs as financial investment, leadership, and perseverance. Although basketball will never replace cricket as a national sport in India, the country is an untapped territory with a population of over one billion whose expenditures on sports have and will continue to expand due to their technological advancements, numerous jobs, and increasing income and wealth. During the months in mid-to-late 2009, major grassroots events depicted the international progress of the NBA. First, in October, six of the league’s clubs and one from Spain played against each other abroad in preseason games. These competitions involved the NBA Bulls and Jazz in London, United Kingdom; the Real Madrid and NBA Jazz in Madrid, Spain; the NBA Nuggets and Pacers in Taipei, Taiwan and Beijing, China; and the NBA Suns and 76ers in Monterrey, Mexico. More specifically,Taipei became the seventh Asian city to host a professional basketball game following Beijing, Guangzhou, Macao, and Shanghai in China, and Tokyo and Yokohama in Japan. In addition, the Nuggets versus Pacers game in China marked the opening of the refurbished Wukesong Arena, which was previously the Beijing Olympic Basketball Arena. Second, since 1978, there have been approximately 57 games played between NBA and Euroleague basketball teams. In October 2009, such foreign clubs as Partizan Belgrade from Serbia, Olympiacos Piraeus from 9

To read more about the league’s interest in India as a market, see “Basketball NBA Off to India,” New Zealand Herald (8 May 2008), 1;“NBA Brings Basketball to CricketCrazy India” at http://sports.espn.go.com [cited 2 December 2009]; “Mutombo in India for NBA,” Charlotte Observer (10 December 2009), 4C.


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Greece, and Maccabi Electra Tel Aviv from Israel traveled to America and played against various NBA teams in arenas within sports cities of the US. The latter group of clubs included the Nuggets at the Pepsi Center in Denver, Suns at the U.S. Airways Center in Phoenix, Spurs at the AT&T Center in San Antonio, Cavaliers at the Quicken Loans Arena in Cleveland, Knicks at Madison Square Garden in New York, and Clippers at the Staples Center in Los Angeles. From a business perspective, these games benefited the NBA because of lower expenses from playing elite foreign teams at home rather than overseas, while the Euro clubs received money guaranteed by their counterparts. Various other affairs have expanded the NBA’s global fan base and enhanced its goodwill, image, and reputation within communities across the world.As evidence, the number of basketball players from foreign countries and territories on the rosters of NBA teams increased from 77 athletes and 33 nations during the league’s 2008 regular season to, respectively, 83 athletes and 36 nations one year later. The NBA clubs that contained the most international players during the league’s 2009 season were the Milwaukee Bucks with seven and the Charlotte Bobcats, Sacramento Kings, and Toronto Raptors each with five. France provided ten or 12 percent of these athletes, while five each or 18 percent of the 83 were natives of Argentina, Slovenia, and Spain. Indeed, basketball experts and most fans of the sport are familiar with the skills of the San Antonio Spurs’ Manu Ginobili from Argentina, Philadelphia 76ers’ Primoz Brezec from Slovenia, and the brothers Marc Gasol of the Memphis Grizzlies and Pau Gasol of the Los Angeles Lakers who are natives of Spain.Truly, the NBA is more entertaining, popular, and productive because of these and other athletes that had immigrated to America from other countries. Another important sports affair in 2009 was the NBA’s Korea Development Camp sponsored by Shinhan Card with the cooperation and support of the Korea Basketball League (KBL). At the Yangjae Seoul Education and Culture Center in May, this Camp consisted of 40 16-to-19 year-old Korean athletes who learned to improve their skills, received formal training from professional basketball players, and performed on teams in a series of games. In fact, some experienced NBA players served as coaches of the Koreans and so did a few veteran managers of teams within the KBL. During the final day of the Camp, the top athletes there competed in an all-star game. As a reward, the Most Valuable Player among the campers earned an opportunity to participate in Basketball without Borders Asia, which was a global basketball development and community outreach


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program held in Beijing during August of 2009. Since the Camp was a successful venture in Korea, this type of affair may occur again in other nations of Asia such as Japan, the Philippines, and Taiwan. Also in 2009 was the Adidas NBA 5 United Tour.This competition combined outdoor tournaments — that included local teams with five players each — with pick-up games and interactive basketball programs. This Tour originated in Athens, Greece and from there it moved to Madrid, Spain and then to Rome, Italy and Istanbul, Turkey, and finally ended in London, England. Undoubtedly, the friends, parents, and relatives of players and most sports fans within these cities were amazed, enthusiastic, and excited because of the challenge, competition, and entertainment of these activities. Furthermore, they learned about the commitment, dedication, demand, and skill required to be on a team in the NBA. American professional sports leagues have increasingly established promotions and other marketing efforts to attract more Latino fans to their teams’ games and other events. In 2009, 15 percent of the US population was Hispanic and in 2050, this group will consist of approximately 128 million people. Moreover, Latinos’ aggregate purchasing power will increase 36 percent to $1.3 trillion by 2014 or 10 percent of the nation’s total. To further penetrate this market, in 2009 the NBA recast itself in the Spanish pronunciation of its initials as “ene-be-a” for a marketing campaign that included advertising on various Spanish-language television networks. According to an NBA player from Mexico,“If we [NBA teams] can somehow get to them [Hispanics] and relate to them, they’re going to respond.” An issue with this strategy, however, is whether the league invests enough money, resources, and time in order to convert more soccer fans to basketball within various countries of Central, Latin, and South America.10

Basketball without Borders During 2001, the NBA and the Federation of International Basketball Association (FIBA) jointly agreed to establish a global program named Basketball without Borders (BwB).Their goal was to unite young basketball 10

This quote appeared in Ana Campoy,“League Make Pitch to Hispanics,” Wall Street Journal (30 November 2009), A4. Besides these efforts by the NBA, salsa star Marc Anthony has invested in the NFL Miami Dolphins, while MLS Commissioner Don Garber said in the article,“For us, the Hispanic Market is incredibly important” as his league sponsors games that feature Latin American teams.


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players in different nations and encourage them to participate in and promote, besides the sport, some positive social changes in education, health, and wellness. Since the program’s first camp in that year, BwB camps have occurred in 11 countries and territories on five different continents. In turn, the camps involved more than 300 coaches, players, and other personnel from 30 NBA clubs as counselors, instructors, and mentors to more than 1,600 athletes, who were natives of numerous cities in at least 100 nations.11 Besides holding camps in such foreign cities as Beijing, Johannesburg and Mexico City, BwB includes programming affairs and community outreach. Under programming affairs, the NBA and FIBA select the top basketball players aged 19-and-under from camps in Africa,Asia and Latin America, and from some federations to receive training by NBA coaches and players, and then compete against their peers in official games. Meanwhile, community outreach focuses on improving friendships among children and teenagers within various international countries and territories.After each of these efforts end, there is an NBA Cares Legacy Project. Its purpose is to create groups and safe places where kids and families can learn, live, and play together. In other words, BwB programs benefit people of many ages, races, and social classes. The following are specific examples of why some BwB programs, in part, were successful during 2004.Within Africa, a group of NBA coaches and players conducted a five-day camp in Johannesburg that featured basketball instruction and competition for athletes aged 16–20, and the implementation of extensive programming, outreach, and educational seminars. These African players shared housing facilities with their teammates and they participated in each of the seminars. Besides classroom sessions and teaching basketball skills to athletes at that camp, the outreach included a visit to a Youth Empowerment Program named the Ithuteng Trust located in Soweto, South Africa. Most of the students in this Program came from families facing extreme poverty, while some were orphaned as a result of political crimes and illnesses among 11 Through this program, the NBA operates and finances camps, clinics, tours, and tournaments in various countries. See David Moore, “Mavs to Work With Camps in Africa,” Dallas Morning News (18 April 2006), 1; Michael Hunt,“Going Back to Root of Dreams,” Milwaukee Journal Sentinel (26 August 2009), 1; Christine Graf, “Basketball Without Borders,” Faces (October 2006), 24–27; “NBA Cares: Basketball Without Borders” at http://www.nba.com [cited 23 November 2009]; “Basketball Without Borders 2003 Fact Sheet” at http://www.nba.com [cited 13 August 2003].


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neighbors, parents, and relatives. The NBA opened a Reading and Learning Center at the Trust and the league donated desktop computers, printers, servers, and software manufactured by the Dell Corporation.The seminars at the camp, meanwhile, addressed important social issues such as the prevention of drug abuse, awareness of HIV/AIDS, and promotion of healthy living styles. Furthermore, students were encouraged to interact and talk about their political and religious differences, and any cultural, economic, and social diversity amongst them. Regarding the program’s objectives and outcomes in Africa and elsewhere, NBA legend and Community Ambassador Bob Lanier remarked, “Basketball without Borders is a perfect complement of community outreach and basketball development. NBA players have an extraordinary opportunity and commitment to touch the lives of young fans all over the world and we are looking forward to returning to Africa so that we can touch the lives of more people in need.” In addition to Lanier’s remarks, FIBA International Relations and Development Manager Anicet Lavodrama stated his views thus:“Through partnership with the NBA, we will provide the best teaching that will foster progress, knowledge, cooperation, and leadership for young talented basketball players and will bring African basketball to a higher level. Basketball without Borders Africa is an excellent showcase for the talent and passion for basketball that exists across Africa.”12 In Europe, the NBA and FIBA organized BwB camps in Treviso, Italy during various years of the early 2000s. Sponsored by such global companies as Champion, Nike, Spalding, and United Colors of Benetton, the three-day camp in 2004 collaborated with the United Nations International Children’s Emergency Fund (UNICEF) to support education and HIV/AIDS prevention programs for 50 athletes aged 16–17 that FIBA had selected contingent on their basketball skills, leadership abilities, and interest in the sport. Some NBA coaches, players, and other personnel served as counselors, instructors, 12 These and other comments by NBA Commissioner David Stern and the league’s Community Ambassador Bob Lanier are in “Basketball Without Borders: Program to Encompass Three Continents in 2004” at http://www.nba.com [cited 6 April 2004]. Also, see “Basketball Without Borders: NBA Back in Africa for Basketball Without Borders” at http://www.nba.com [cited 6 April 2004]; Shannon Ryan,“Programs Help African Players Pursue Basketball Dreams,” Chicago Tribune (18 March 2008), 1;Tania Ganguli, “Magic’s Howard Builds Hoops Dreams While in Africa,” Orlando Sentinel (10 September 2009), 1.


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and mentors to the group, which had divided into four different teams based on their nationality. Each player at the camp in Treviso received new apparel and types of footwear from the sponsors for use in basketball drills, games, or practices. As in Africa, the NBA and FIBA donated such basketball products as balls, nets, rims, shoes, and uniforms. Interestingly, NBA players who were from the Czech Republic, Romania, and Ukraine participated in the camp and consequently, they became heroes, leaders, and role models to the European athletes on the various BwB teams. Regarding the camp in Italy, NBA Commissioner David Stern commented,“The NBA is committed to use the sport of basketball as an international language to promote global friendship and sportsmanship. Through Basketball without Borders, we bring together young people from all walks of life to create important dialogue and to teach them about important social issues.” Meanwhile, the Global Director of Nike Basketball Ralph E. Greene, Jr. spoke about the program as follows: “Nike has had a lead role in global basketball for years and is pleased to work with the NBA for Basketball without Borders to spread this excitement and give young European players the chance to play and improve.”13 Given the effects of these events as reported in readings within the literature, I admire and commend the NBA and FIBA for organizing, investing in, and operating this educational and sports program for athletes, students, and underprivileged teenagers from many developed and emerging nations of the world.As long as Stern continues to serve as the NBA’s Commissioner, he will support and expand BwB into the same and other countries especially within Africa, Eastern Europe, and Latin America. In short, Basketball without Borders is an effective, ethical, and humanistic way for the league and its teams to globalize the game and make it more accessible, fun, and popular at the grassroots level, and to enhance the sport’s goodwill, image, and reputation among athletes and families who struggle to survive in today’s poor or developing nations. 13 “Basketball without Borders: NBA Stars Return to Europe to Educate Youth” at http://www.nba.com [cited 6 April 2004]. In regards to this camp, former Seattle Supersonics forward-center Vitaly Potapenko remarked, “I look forward to teaching the European youth at the camp. I hope they learn various lessons from me as I have learned from players before me,” while Los Angeles Lakers forward Stanislav Medvedenko from Ukraine said,“This is a great basketball camp and it’s important to do what we can to contribute back to the community.”


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NBA Global As discussed and illustrated before in this chapter, the NBA has committed itself to become the world’s most likeable, prominent, and respected professional sports organization.To accomplish that goal, the league and its teams have financed, organized, and implemented a number of basketball, educational, participative, and social events, programs, tours, and tournaments for years within several foreign countries.At the website nba.com and in other online sources, there are articles, reports, and studies from journals, magazines, and newspapers that describe, evaluate, or simply highlight many of these activities. Based on that data and historical information, I discuss below some basketball and business relations that have occurred or may occur between the NBA and six different countries.14

Africa Thus far, the league has initiated several important programs including Basketball without Borders (BwB) camps in cities of Africa. Prior to 2000, there were visits by NBA executives, coaches, and players to Kenya and Zambia in, respectively, northeast and central Africa, and tours by them and WNBA players to operate basketball clinics for youths in such cities as Cape Town, Durban, and Johannesburg. Then, during 2000–2006, the league launched other special events. In 2003 through 2005, for example, different BwB programs occurred in Johannesburg for over 100 young athletes from at least 19 African nations, and the NBA opened Reading and Learning Centers in that city and constructed dormitories and basketball courts there. Furthermore, the league became partners with US embassies in Algeria, Nigeria, and Senegal, and with the US Department of State’s Bureau of Educational and Cultural Affairs (ECA) to sponsor basketball clinics for African boys and girls. Besides NBA and WNBA players, the clinics also featured ECA sports envoys who reformed and supported the Senegalese Basketball Federation. Finally, the 14

For the information in this part of the chapter, see “NBA.com Global” at http:// www.nba.com [cited 30 November 2009]. Other readings include Tim Povtak,“NBA China Game Looking to Fuel Worldwide Growth,” Orlando Sentinel (17 October 2007), 1; Daniel Eisenberg, “The NBA’s Global Game Plan,” Time Europe (31 March 2003), 115; “Yao Vs. Yi Duel Reinforces NBA’s Global Brand,” Toronto Star (11 November 2007), 1;Travis E. Poling,“International Stars Ginobili, Parker of Spurs Help Fuel NBA’s Global Prosperity,” San Antonio Express-News (14 June 2007), 1.


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leagues’ and these groups of US officials taught basketball techniques and drills, and team building rewards at clinics in Algeria and then spoke about proper lifestyles to boys and girls who were there. Despite these accomplishments, however, Africa has disappointed NBA officials in other ways. In particular, the region, has failed to produce enough productive athletes to qualify and perform as basketball players on teams in the league. Although they increased in number from three before 1989 to nine in the 1990s and then 12 during the 2000s, these totals were considerably below the expectations of the league.According to one sports journalist, the five most talented of them include Hakeem Olajuwon, Dikembe Mutumbo, Luol Deng, Michael Olowokandi, and the 7-foot-7 Manute Bol. Others are superstar Steve Nash — who was born in Johannesburg but then migrated to British Columbia in Canada — and Mouhammed Sene, Obinna Ekezie, and Pape Sow. The import of so few players from Africa into the NBA has occurred mainly because the arenas, field houses, and gymnasiums in Africa are substandard and they lack any amenities. Furthermore, most of the amateur and professional coaches there are undisciplined, inexperienced, and not welltrained. Meanwhile, large majorities of the region’s young people are poor and live in poverty, and they suffer from health issues, nutritional deficiencies, and food shortages.As a result, NBA teams are not overly enthusiastic or thrilled about allocating more of their scarce resources to recruit and sign athletes who excel on teams in Africa’s amateur, semiprofessional, and professional basketball leagues or play the sport there in colleges and other schools. Thus, the future is not optimistic for African-born men who enjoy playing basketball and seek a career in the NBA.

China For at least two decades, China has been the NBA’s most promising international market and potentially, the sport’s best nation to expand and thrive. According to statistics, more than 80 percent of Chinese males aged 15–24 are NBA fans, while each week at least 30 million people there watch the league’s games on television. In addition, nba.com averages three million page views per day from China, and more than 20,000 of the country’s retail outlets sell basketball merchandise. Indeed, the NBA is very popular there and is involved in the culture, economy, and society of China in other ways. For example, most national and regional television networks in China and numerous local radio stations in communities broadcast the league’s games,


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programs, and shows. These include some of the games in regular seasons and all of them in postseasons, and such programs as interviews of coaches and players, and action and lifestyle shows. Different types of NBA clothing, equipment, and products are distributed across the nation in stores and are therefore easily available for consumers. These items include a full range of accessories and branded basketball shoes, caps, jerseys, and shorts. To promote and market such apparel, footwear and merchandise, the league and Reebok became partners and established small shops and stores in malls and other locations for consumers to make their purchases. Besides Reebok, some of the league’s other marketing partners include the Homenice Wood Group, Amway, Nokia, the China Mobile Communications Corporation, Li-Ning Company, and Red Bull. Furthermore, marketing and packaging promotions, event sponsorships, or customized media programming for the league involve such firms as Adidas, Budweiser, Coca-Cola, and Nike. There are even more activities and various initiatives with respect to the league’s business in China. To illustrate, such magazines as Inside Stuff and NBA Shi Kong (NBA Space & Time) are circulated among thousands of Chinese people, while fantasy sports games developed by Mtone Wireless, real-time platforms between NBA basketball games and fans, and special programming with NuSports exist for those in China who engage interactively with the league and sport. Within the country, former and current Chinese basketball players are regarded as celebrities or legends, especially those whose NBA teams had drafted them before 2008 and who played one or more years in the league. To name a few of them and their teams, there are the Houston Rockets’Yao Ming, Miami Heat’s Wang Zhizhi, Denver Nuggets’ Mengke Bateer, and Dallas Mavericks’ Xue Yuyang. In contrast, two Chinese athletes signed professional contracts with teams but never played any games in the NBA. Sung Tao was the first Asian player ever drafted, but he was then selected and released by the Atlanta Hawks in the late 1980s. Meanwhile,China’s Ma Jian attended training camps and signed agreements with the Los Angeles Clippers, but the club waived him after endorsing each of his contracts. The website nba.com/china complements eight of the other international websites of the league and recently averaged more than 120 page views and 12 million visits during one month. In 2005, nba.com/china unveiled a new webpage design that included more contents and interactive activities for sports fans. Among the contents were a flash photo section, localized wallpapers, and a short photo feature of the day that was titled


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“24 Seconds.” Because of the high volume of traffic on nba.com, international web destinations such as China’s will continue to be busy, popular, and create additional business for the NBA. In January 2008, the league formed an entity named NBA China. This entity is responsible for conducting all NBA business within that nation of 1.3 billion people. Reportedly, five strategic partners invested $253 million to acquire 11 percent of the entity in preferred equity that Goldman, Sachs and Company sold as its agent.Tim Chen, a former executive of Microsoft Greater China — who joined the league in October 2002 — leads NBA China. Representatives of the partners sit on the Board of Directors along with other officials from teams and the league’s executive staff. According to Chinese Basketball Association Executive Vice President and Secretary-General Li Yuanwei,“With the support of its strategic investors and additional investments in China, I think the NBA and CBA [Chinese Basketball Association] can expand upon our past cooperation to further develop basketball in China.”15 In short, the NBA ranks China as its primary and most attractive and lucrative foreign market. Basketball is a very popular sport there, in part, because of the league’s events, grassroots programs, and opportunities for young male and female athletes to excel in the game. Due to the nation’s impressive economic growth, development and trade, Chinese merchants sell large amounts of NBA products in dollars and yuan that vendors advertise, display, and promote on television and radio networks and in their kiosks, shops, and stores.With respect to the future, I expect that the basketball business will flourish in China while sports fans there become increasingly passionate about the NBA and its teams and their coaches and players.

France During the 1990s, France hosted several professional basketball activities. In 1991, for example, the NBA’s Los Angeles Lakers competed against some well-coached European basketball clubs in a McDonald’s Championship held in Paris, and three years later the NBA staged a European tour that featured games played again in Paris.At one of these events, a sellout crowd of more than 15,000 attended a spectacular game at the Palais Omnisports de Bercy 15

See “NBA China” at http://hoopedia.nba.com [cited 23 November 2009]. With respect to this entity, Commissioner David Stern mentioned in the article that,“The opportunity for basketball and the NBA in China is simply extraordinary. The expertise, resources and shared vision of these immensely successful companies will help us to achieve the potential we see in the region.”


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arena in which the league’s Golden State Warriors defeated the Charlotte Hornets 132–116.Then in 1997, the NBA champion Chicago Bulls performed before big audiences, against some great international clubs, in another McDonald’s Championship at an arena within Paris. Other basketball events appeared in France throughout the early 2000s. In 2003, a preseason NBA game played in Paris drew 14,500 spectators who cheered for the San Antonio Spurs’ Tony Parker, a native of France. Because of his performance, Parker won a Most Valuable Player award after the game. Besides Parker, other Frenchmen such as Boris Diaw, Johan Petro, and Michael Pietrus have played for some years on NBA teams, while a few female athletes from France performed for clubs in the WNBA. Finally, several French cities hosted the Bouygues Telecom NBA Basketball Challenge in 2004–2005. This 5-on-5 tournament, which attracted at least 3,500 players and 50,000 spectators, began in the resort town of Antibes, France and ended with games in Paris. To highlight, market, and promote basketball across the country, the NBA launched the French-language website nba.com/france in 2003. This online site provides the latest news about professional French basketball players and events, and reports local broadcast schedules, information about sales of merchandise, and detailed in-language photo galleries, polls, and editorial features of NBA teams and their coaches and superstars. Furthermore, basketball fans in France are able to enjoy at least one live NBA game each day on television, and view other classic and original programming about the sport on a weekly schedule. Given that France trails China, it is a secondary market and location as a business center of the NBA. Indeed, the country’s arenas are substandard for hosting pro basketball games, while the population there enthusiastically supports local and national outdoor soccer events and roots for its amateur and professional teams.Although a few French players have played for clubs in the NBA and WNBA, there are not enough grassroots programs or junior leagues in France to attract thousands of youngsters into the sport of basketball. Other than scheduling some games, tours and tournaments there and recruiting players, there are only minor incentives for the NBA to invest additional resources into basketball events in France.

Germany In contrast to France and some other European countries, athletes and sports fans in Germany are aware and interested in basketball. That is, they attend teams’ games and otherwise participate in events as coaches,


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managers, or players. Because of several US military bases and US civilians amongst the population, German people’s ability and willingness to speak English as a second language, their corporations’ close relationships with American businesses, and the outstanding performances of the Dallas Mavericks’ Dirk Nowitzki, the country is open to basketball.Thus, Germany is an attractive, lucrative, and current and future site and source of revenue for the NBA and its franchises. Since the early 1990s, some NBA clubs have competed against international basketball teams in Munich, Germany while others have played before sellout crowds in preseason games within the cities of Berlin and Seville. For more than ten years, the NBA Basketball Challenge has been the ultimate basketball tournament in Germany. In fact, the event has taken place in several German markets including Stuttgart, where one particular team’s number of points set a record of 400 in 2005. Another popular basketball program in Germany is the Sprite Dirk Nowitzki Basketball Academy. Developed by the Sprite Company in a partnership with the NBA in 2002, this program begins each year with a screening process from which 40 or more of the country’s most talented basketball players accept invitations to attend and receive training at the Academy. Then, the finalists among this group of players get an opportunity to meet Nowitzki, who coaches these athletes and teaches them the fundamentals of basketball while at an arena in his hometown of Wurzburg, Germany. Similar to online information about basketball in China, France, and other nations of the world, the league established nba.com/germany as the official German-language website of the NBA. At the site, fans can research and read news reports, statistics, and stories about the league and its teams and some of their players. Fans can also enjoy numerous television broadcasts of games, programs, and shows of the league on Germany’s DSF Premiere network. Indeed, its coverage includes games played during regular seasons and the playoffs and finals, and those for all-star events. Germany has the potential to be a top-notch and valuable sports market for the NBA in the long run because basketball is popular there and is enjoyed by thousands of fans. For sure, some German cities are capable of successfully hosting games, tours, and tournaments of NBA clubs despite containing arenas that fail to meet the league’s standards. If more of Germany’s high school students earn athletic scholarships after graduation and join basketball programs in US colleges and universities, then the NBA may decide to greatly increase its investments and presence in that country


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and likewise improve its character, image, and reputation throughout other countries of Western Europe.

Philippines In this nation, which consists of more than 7,000 islands and ranks 12th in population worldwide, basketball dominates its sports culture. The NBA is very popular especially in such urban places as Cebu, Manila, and Quezon City. According to statistics, 99 percent of Filipinos are aware of the NBA and 75 percent consider themselves fans of it. About 62 percent of the population watches the league’s regular-season games on television at least once per month and 40 percent at least once per week.About 33 percent of the people and 44 percent of men plan to purchase NBA branded items each year. Furthermore, approximately 40 percent of people in the Philippines participate in basketball in some capacity. This proportion is twice the totals that engage in popular sports like badminton and volleyball. For several decades, local and national amateur and professional basketball leagues have existed within the country. They include commercial and industrial teams whose players excelled while competing domestically in league playoffs and championships, and internationally in such events as the Far Eastern and Greater Asian Games, Summer Olympics, and FIBA tournaments. To support these activities, the US State Department has invested funds and resources into the Philippine economy for many years and sponsored basketball clinics, training programs, and workshops for kids and teenage athletes. In addition,American envoys travel to islands of this country and praise local government officials for establishing a history of democracy, market capitalism, and freedom in society. Recently, Commissioner David Stern assigned five NBA legends including Dominique Wilkins, Kareem Abdul-Jabbar, and Vlade Divac to visit the Philippines to promote the sport of basketball and his league. Besides the contributions of these former but great athletes, the tour also contained six players from the NBA Development League, six New Jersey Nets Dunking Divas and the team’s mascot, Sly the Silver Fox.According to Carlo Singson, Sr., the manager for markets of NBA Asia,“This country [Philippines] is probably No. 1 in the world on NBA brand awareness.The fans are passionate, [and] the percentage of people who play is awesome. NBA players who come here are amazed at how much Pinoys [people of Filipino descent] know about teams and players. Commissioner David Stern actually sees how important


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basketball is here and what it means to Filipinos. So the Philippines is definitely a priority market for the NBA.”16

Spain For more than two decades, the NBA has been involved with basketball programs in Spain. Historically, for example, NBA teams participated in McDonald’s championships during 1988 in Madrid and 1990 in Barcelona. In addition, some of the league’s clubs performed against Spanish teams in various European games or tours during the 1990s and 2000s. For instance, the NBA’s Golden State Warriors defeated Spain’s Joventut Badalona team at the city’s Pavello Olympic arena in 1994, and then nine years later, the Memphis Grizzlies beat FC Barcelona in which Spaniard Pau Gasol performed for the Grizzlies and not his former Spanish team. Other affairs previously scheduled by the league in Spain were a Budweiser NBA Basketball Jam in 2004 and a grassroots tour in 2005 named the NBA Madness.The former event, which occurred for five days each in the cities of Barcelona, Bologna and Milan, included a mobile Pop-a-Shot competition and a 3-on-3 outdoor basketball tournament. Meanwhile, the latter event appealed to Spanish fans and spectators who enjoyed the atmosphere and festive excitement of the league in a range of off- and on-the-court activities. In fact, it successfully attracted 16,000 participants and 35,000 spectators in Barcelona and Malaga. To advertise, promote, and sell consumer products in Spain, the NBA established some partnerships with European licensees.Three of these companies and their respective products were Coty Astor in fragrances, Enri in school folders and notebooks, and Sportandem in school bags. During the early 1990s, a communications business titled Recoletos published each month a licensed but Spanish version of Hoop magazine that achieved a circulation of 30,000. Besides these commercial ventures, Adidas, Nike, and Reebok have also acquired licenses of the league in footwear and Sprite in beverages. Pau Gasol is the most popular and talented athlete from Spain to have performed on any team in the NBA. Drafted by the league’s Atlanta Hawks in 16

“The Philippines is the NBA’s Next Frontier” at http://www.dimemagazine.com [cited 3 December 2009]. Besides Singson’s statement and Stern’s views, this article contains statistics from the 2008 Sponsorship Intelligence research survey on the Philippines as an NBA market.


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2001, and then traded from the Hawks to the Memphis Grizzlies and later from the Grizzlies to the Los Angeles Lakers, Pau was the first European basketball player to win a Rookie of the Year award.While playing for the Lakers in 2009, he teamed with superstar Kobe Bryant to defeat the Orlando Magic and win a league championship.17 A few other Spaniards played competitively on NBA teams during the 1980s–2000s. These basketball athletes included Fernando Martin who signed with the Portland Trail Blazers in 1986, Roberto Duenas with the Chicago Bulls in 1997, Jose Manuel Calderon with the Toronto Raptors in 2001, and Juan Carlos Navarro with the Washington Wizards in 2002. In addition, since the late 1990s, more than five female athletes from Spain have joined teams in the WNBA. Similar to the league’s online sites for China, France and Germany, the NBA organized an official Spanish-language website titled nba.com/espanol in the early 2000s. This site contains information about the NBA and its events, and news, reports, and statistics about the performances and lifestyles of Latin and Spanish players who compete on teams in the league. In 2003, the NBA launched a special section to its online contents about basketball and Spain. Labeled nba.com/espanol/espana and printed in Spanish, this section highlights topics of special interest for those sports fans who do not communicate, speak, or understand English, but seek more information about NBA events, players, and teams. In short, Spain is one of the NBA’s most dynamic and important business markets within Western Europe.There is a history of development, growth, and popularity among team sports within that country, with basketball having a significant tradition. Based on these and other facts, the NBA should

17

In December 2009, the NBA’s Lakers paid $57 million to extend Pau Gasol’s contract for another three years. Last season, he made his second appearance in an allstar game and earned a position on the third team in the league.Whilst performing in Spain before 2009, Gasol played on a FIBA World Championship team and won most valuable player in a World Championship. Furthermore, he helped Spain win a silver medal at the 2008 Beijing Summer Olympics and that year, Gasol was the European Player of the Year.According to Lakers’ General Manager Mitch Kupchak,“The impact he [Gasol] has had on and off the court for the Lakers is significant, and we look forward to watching Pau continue as one of the best players in the league for years to come.” For more details about this story, see Janis Carr,“Gasol Gets 3-Year Extension With Lakers,” Charlotte Observer (24 December 2009), 4C; and “Gasol Signs ThreeYear Extension With Lakers” at http://www.nba.com [cited 24 December 2009].


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and will continue to invest money and resources into campaigns, grassroots programs, and tournaments in Spain. In fact, such cities as Barcelona, Madrid, Seville, and Valencia each contain enough friendly, hospitable, and numbers of sports fans to host one or more local teams of a basketball division that is financed, operated or sponsored, in part, by the NBA.

Future Affairs Putting borders, government restrictions, and intra-country politics temporarily aside and assuming the cooperation of FIBA and its national federations, there are plenty of opportunities for the NBA to continue expanding globally and thus further advertise, market, and promote its brand in foreign countries. These efforts include, for example, locating basketball academies in nations of Africa and Latin America, and establishing minor basketball leagues or divisions within countries of Asia and Eastern and Western Europe. In my opinion, the NBA will become more admired, marketable, and popular in America and elsewhere if it evaluates the financial benefits and costs of different basketball, business, and social programs, and then adopts some new, revised, and unique domestic or international strategies that exist within other professional sports leagues. These strategies may consist, in part, of local conservation or greening efforts within communities as in MLB, auctions and entertainment events as in MLS, personal communications on Facebook and Twitter as in the NFL, and new websites for shops and a learning center as in the NHL. In total, these and other initiatives will generate interest from sports fans and the public, and therefore expand the NBA’s economic share of the sports industry across the globe.18

SUMMARY Besides a literature review and this book’s organization in Chapter 1, and various topics about the NBA and its franchises in Chapters 2–5, domestic 18

To read about prior, current, or future domestic and foreign business prospects of the NBA, see Rick Harrow, “Business of the NBA Pretty Good at the Start of Their Season” at http://www.sportsbusinessnews.com [cited 5 November 2006]; “As the NBA Playoffs Get Underway, All is Good With the Business of the NBA” at http://www.sportsbusinessnews.com [cited 28 April 2006]; Ian Thomsen, “Weekly Countdown: Stern Open to Legalized Betting, Rule Changes” at http://si.com [cited 13 December 2009]; “Weekly Countdown: A Women’s Place Could Soon be in the NBA” at http://si.com [cited 5 December 2009].


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and foreign affairs are portrayed in Chapter 6 as important reasons for the league’s historical growth, power, and prosperity. As discussed in this chapter, the NBA has preseason, regular season, and postseason schedules of games, and the latter includes a championship series that determines a winner and runner-up each year. Since the late 1940s, such teams as the Boston Celtics, Los Angeles Lakers, and New York Knickerbockers have been the most dominant in this event. Consequently, these and other clubs have contributed to the sport’s competitiveness and productivity, and its exposure and success across North America and in many foreign countries. Other than the championship series, some additional domestic affairs are significant to the operation, popularity, and commercialization of the NBA. More specifically, this chapter highlights such affairs as the Development and Summer Leagues,Women’s National Basketball Association, and a number of campaigns, events, and programs of NBA Cares. Indeed, all these topics are significant to the sport because of their economic, financial, or social effects on teams and their owners, coaches, players and officials, and on communities, fans, local governments, business partners and sponsors, the media, sports markets, and those groups involved with franchises in MLB, the NFL, NHL, and MLS.Thus, in part, this chapter identifies the NBA’s domestic affairs and explains their significance in advertising, marketing, and promoting the league’s brand especially within major metropolitan areas of the United States. From a worldwide perspective, the NBA seeks to improve its exposure, image and reputation, and thereby become increasingly popular internationally and more prominent as a league in foreign nations. To accomplish these goals, the NBA’s teams play exhibition games during preseasons and regular seasons within arenas located in large and mid-sized cities of countries in Asia and Eastern and Western Europe. Furthermore, the NBA plans, organizes, and funds Basketball without Borders camps, tours, and tournaments overseas for the benefit of kids, teenagers and their families, and for young people who enjoy sports and seek to become better athletes and excel in basketball. This chapter discusses these matters and NBA Global, which focuses on the league and its investments, relations, and relationships in Africa, China, France, Germany, the Philippines, and Spain. In sum, the NBA is a dedicated, elite, and experienced sports organization that after 60 years needs to expand its power, prestige, and wealth across America and into other nations of the world.To achieve more market


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share, I anticipate that Commissioner David Stern and his executive staff, and the owners of the league’s 30 franchises will make decisions in the best interests of fans while they increase revenues and the payrolls of coaches, players, and staff officials who deserve a fair share of the profits. If that occurs, the NBA will exist for another six or more decades.

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Appendix: Tables

Table A.2.1 American Basketball Association, by Teams, Selected Seasons Teams Anaheim Amigos Baltimore Claws Carolina Cougars Dallas/Texas Chaparrals Denver Rockets/Nuggets Houston Mavericks Indiana Pacers Kentucky Colonels Los Angeles Stars Memphis Pros/Tams/Sounds Miami Floridians Minnesota Muskies Minnesota Pipers New Jersey Americans New Orleans Buccaneers New York Nets Oakland Oaks Pittsburgh Condors

Seasons

Post-ABA

1967 1975 1969–1973 1967–1972 1967–1975 1967–1968 1967–1975 1967–1975 1968–1969 1970–1974 1968–1971 1967 1968 1967 1967–1969 1968–1975 1967–1968 1969–1971

moved to Los Angeles in 1968 disbanded in 1975 moved to St. Louis in 1974 moved to San Antonio in 1973 joined NBA in 1976 moved to Charlotte in 1969 joined NBA in 1976 folded in 1976 moved to Utah in 1970 moved to Baltimore in 1975 folded in 1972 moved to Miami in 1968 moved to Pittsburgh in 1969 moved to New York in 1968 moved to Memphis in 1970 joined NBA in 1976 moved to Washington in 1969 folded in 1972 (Continued )

225

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226 The National Basketball Association Table A.2.1 (Continued ) Teams

Seasons

Pittsburgh Pipers San Antonio Spurs San Diego Conquistadors/Sails St. Louis Spirits Utah Stars Virginia Squires Washington Capitols

1967 1973–1975 1972–1974 1974–1975 1970–1974 1970–1975 1969

Post-ABA moved to Minnesota in 1968 joined NBA in 1976 folded in 1975 folded in 1976 folded in 1975 folded in 1976 moved to Virginia in 1970

Note: To interpret the number of regular seasons per team, see Notes in Tables 2.1 and 2.2 of Chapter 2.The slash (/) indicates change in a team’s name. Some ABA teams played only a few games of a season and then folded such as the San Diego Sails and Utah Stars in 1975. The St. Louis Spirits were, alternatively, named the Spirits of St. Louis. Source: “Remember the ABA: Team Histories & Fan Memories” at http://www.remembertheaba.com [cited 2 August 2009]; Pay Dirt, 459–463; Mark Pollack, Sports Leagues and Teams: An Encyclopedia, 1871 through 1996 (Jefferson, NC: McFarland & Company, 1998), 192–197.

Table A.2.2 Performances of NBA Expansion Franchises, Selected Seasons, 1949–2008 Titles Year

Franchise

Seasons

Divisions

Conferences

Championships

1961

Chicago Packers/ Zephyrs Chicago Bulls San Diego Rockets Seattle Supersonics Milwaukee Bucks Phoenix Suns Buffalo Braves Cleveland Cavaliers Portland Trail Blazers New Orleans Jazz Dallas Mavericks Charlotte Hornets

2

0

0

0

43 4 42 41 41 8 39 39

7 0 6 13 6 0 2 4

6 0 3 2 2 0 1 3

6 0 1 1 0 0 0 1

5 29 15

0 2 0

0 1 0

0 0 0

1966 1967 1967 1968 1968 1970 1970 1970 1974 1980 1988

(Continued )

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Appendix: Tables 227 Table A.2.2 (Continued ) Titles Year

Franchise

1988 1989 1989

Miami Heat Orlando Magic Minnesota Timberwolves Toronto Raptors Vancouver Grizzlies Charlotte Bobcats

1995 1995 2004

Seasons

Divisions

Conferences

Championships

21 20 20

7 4 1

1 2 0

1 0 0

14 6 5

1 0 0

0 0 0

0 0 0

Note: After one season, the nickname of the Chicago Packers changed to Zephyrs.Titles were for these expansion teams only while they had existed at their original sites. Source: These teams’ websites at http://www.nba.com and http://en.wikipedia.org report their results for regular seasons and postseasons, and their type and number of titles. Also, see The World Almanac and Book of Facts (New York, NY: World Almanac Books, 1960–2008).

Table A.3.1 National Basketball Association, by Teams, Selected Seasons Teams Anderson Packers Baltimore Bullets I Baltimore Bullets II→Capital Bullets Boston Celtics Buffalo Braves→San Diego Clippers→Los Angeles Capital Bullets/Washington Bullets/Wizards Charlotte Bobcats Charlotte Hornets→New Orleans Chicago Bulls Chicago Packers/Zephyrs→Baltimore Bullets II Chicago Stags Cleveland Cavaliers Dallas Mavericks Denver Nuggets I Denver Nuggets II Fort Wayne Pistons→Detroit Indianapolis Olympians Indiana Pacers

Seasons 1949 1949–1954 1963–1972→1973 1949–2008 1970–1977→1978–1983 →1984–2008 1973/1974–1996/1997–2008 2004–2008 1988–2002→2003–2008 1966–2008 1961/1962→1963–1972 1949 1970–2008 1980–2008 1949 1976–2008 1949–1956→1957–2008 1949–1953 1976–2008 (Continued)

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228 The National Basketball Association Table A.3.1 (Continued ) Teams KC-Omaha Kings/KC Kings→Sacramento Miami Heat Milwaukee Bucks Minneapolis Lakers→Los Angeles Minnesota Timberwolves New Orleans Jazz→Utah New York Knickerbockers New York Nets/New Jersey Nets Orlando Magic Philadelphia Warriors→San Francisco →Golden State Phoenix Suns Portland Trail Blazers Rochester Royals→Cincinnati Royals →KC-Omaha Kings San Antonio Spurs San Diego Rockets→Houston Seattle Supersonics→Oklahoma City Thunder Sheboygan Redskins St. Louis Bombers St. Louis Hawks→Atlanta Syracuse Nationals→Philadelphia 76ers Toronto Raptors Tri-Cities Blackhawks→Milwaukee Hawks→St. Louis Vancouver Grizzlies→Memphis Grizzlies Washington Capitols Waterloo Hawks

Seasons 1972–1974/1975–1984 →1985–2008 1988–2008 1968–2008 1949–1959→1960–2008 1989–2008 1974–1978→1979–2008 1949–2008 1976/1977–2008 1989–2008 1949–1961→1962–1970 →1971–2008 1968–2008 1970–2008 1949–1956→1957–1971 →1972–1974 1976–2008 1967–1970→1971–2008 1967–2007→2008 1949 1949 1955–1967→1968–2008 1949–1962→1963–2008 1995–2008 1949–1950→1951–1954 →1955–1967 1995–2000→2001–2009 1949–1950 1949

Note: The first NBA season was 1949 (1949–1950) and not when the BAA organized in 1946. See Notes in Tables 2.1 and 2.2 of Chapter 2 for the definition of seasons.The NBA Anderson Packers, for example, folded after the 1949 (or before the 1950) regular season. The Baltimore Bullets I and Washington Capitols franchises each cancelled operations during their final regular season while in the league.An arrow (→) indicates the relocation of a team from one metropolitan or market area to another and their seasons at each place.A slash (/) denotes a change in a team’s nickname while at the same site.The roman numerals II and I represent different NBA franchises that had the same name.The Jazz moved from New Orleans, Louisiana to Salt Lake City, Utah in 1979. Source: James Quirk and Rodney D. Fort, Pay Dirt: The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992), 446–459; Frank P. Jozsa, Jr. and John J. Guthrie, Jr., Relocating Teams and Expanding Leagues in Professional Sports: How the Major Leagues Respond to Market Conditions (Westport, CT: Quorum Books, 1999); “NBA Team Roots” at http://nbahoopsonline.com [cited 31 July 2009].

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Appendix: Tables 229 Table A.3.2 NBA Teams’Area Population Ranks, Selected Seasons Seasons 1949

1959

1969

1979

1989

1999

2009

1 2 4 6 9 11 12 13 26 29 35 49 81 98 NR(3)

1 4 5 7 9 14 18 51

1 2 3 4 5 6 8 11 17 19 20 21 23 34

1[2] 2 3 4 5 6 7 9 10 12 13 15 17 20 22 24 25 26 30 32 37

1[2] 2[2] 3 4 5 6 7 8 9 10 11 12 13 14 15 19 21 22 24 26 28 30 31 33 37

1[2] 2[2] 3 4 5 6 7 8 9 10 11 12 13 14 15 16 19 23 25 27 28 29 30 34 36 NR(2)

1[2] 2[2] 3 4 5 6 7 8 9 10 11 12 13 16 21 23 25 26 27 28 33 34 39 41 44 46 49 NR(1)

Note: The bracket [ ] indicates that two NBA teams existed in the New York–New Jersey area in 1979, 1989, 1999 and 2009, and two in the Los Angeles area in 1989, 1999, and 2009. NR( ) is the number of areas of teams not ranked in that NBA season as reported in an edition of The World Almanac and Book of Facts. These clubs were, in 1949, Anderson in Indiana, Sheboygan in Wisconsin, and Waterloo in Iowa. Since Toronto and Vancouver are located within provinces and not areas of Canada, the population of Toronto is unranked here in the 1999 and 2009 NBA seasons, nor is the population of Vancouver in 1999.The ranks listed in 2009 are the population estimates of metropolitan areas as of July 1, 2008. Source: “NBA Teams” at http://www.basketball-reference.com [cited 18 August 2009]; “Population Estimates” at http://www.census.gov [cited 21 September 2009]; The World Almanac and Book of Facts (New York, NY: World Almanac Books, 1949–2008).

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230 The National Basketball Association Table A.3.3 NBA Attendance, Selected Seasons, 1949–2008 Attendance Season

Teams

Games

Total

Per Game

17 8 8 9 14 18 22 23 27 27 29 30 30

578 288 300 360 574 738 902 943 1,107 1,107 1,189 1,230 1,230

360 513 1,285 1,890 4,309 6,859 9,907 10,506 17,323 18,516 20,051 21,302 21,549

624 1,782 4,283 5,251 7,507 9,295 10,983 11,141 15,649 16,726 16,864 17,319 17,520

1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2008

Note: Games is the total number of games played by all NBA teams during that respective season. Attendance Per Game is the total attendance divided by the total number of games. Total attendance is in thousands while attendance per game is in hundreds. For example, a group of 17 NBA clubs played 578 total games during the 1949 (1949–1950) regular season before 360,000 spectators or 624 of them at each game. Source:“Sports Business Data” at http://www.rodneyfort.com [cited 10 August 2009]; and Rick Roso, “NBA Ticket Sales and Attendance: 2008–2009 Was a Great Year” at http://www. ticketnews.com [cited 10 August 2009].

Table A.4.1 Characteristics of NBA Franchise Ownership, Ranked by Value, 2008 Characteristics Franchise New York Knicks Los Angeles Lakers Chicago Bulls Detroit Pistons Cleveland Cavaliers Houston Rockets Dallas Mavericks Phoenix Suns

Owner Cablevision Systems Jerry Buss Jerry Reinsdorf William Davidson Daniel Gilbert Leslie Alexander Mark Cuban Robert Sarver

Year Purchased

Cost

2008 Value

1997 1979 1985 1974 2005 1993 2000 2004

300 20 16 8 375 85 280 404

613 584 504 480 477 469 466 452 (Continued )

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Appendix: Tables 231 Table A.4.1 (Continued ) Characteristics Franchise Boston Celtics San Antonio Spurs Toronto Raptors Miami Heat Philadelphia 76ers Utah Jazz Washington Wizards Sacramento Kings Orlando Magic Golden State Warriors Denver Nuggets Portland Trail Blazers Atlanta Hawks Indiana Pacers Minnesota Timber. OC Thunder Los Angeles Clippers New Jersey Nets Memphis Grizzlies New Orleans Hornets Charlotte Bobcats Milwaukee Bucks

Owner

Year Purchased

Cost

2008 Value

Wycliffe Grousbeck Peter Holt Ontario Teachers’ Pension Plan Mickey Arison Comcast Spectacor Larry Miller Abe Pollin Gavin and Joseph Maloof Richard DeVos Christopher Cohan Stanley Kroenke Paul Allen Michael Gearon, Jr. Herbert Simon Glen Taylor Clay Bennett Donald Sterling Bruce Ratner Michael Heisley George Shinn Robert Johnson Herbert Kohl

2002 1996 1998

360 76 125

447 415 400

1988 1996 1986 1964 1998

33 125 24 1 156

393 360 358 353 350

1991 1995 2000 1988 2004 1983 1995 2006 1981 2004 2000 1987 2003 1985

85 119 202 70 208 11 89 325 13 300 160 33 300 19

349 335 329 307 306 303 301 300 297 295 294 285 284 278

Note: The current arena deal without a deduction for debt determined the value of each team in 2008.The names listed in column two are, for some teams, the majority owner since syndicates own many of these franchises. Cost and 2008 Value are each in millions of dollars. George Shinn purchased the Charlotte Hornets in 1987 for $33 million. Five years after the Hornets moved to New Orleans, the franchise had an estimated market value of $248 million and then $285 million in 2008.To interpret the table’s data, Cablevision Systems acquired an NBA franchise nicknamed the New York Knicks in 1997 for $300 million. In 2008, its estimated market value was $613 million.After the recent death of Pistons owner William Davidson, his daughter Karen replaced him as owner of the franchise.Timber. is an abbreviation for Timberwolves. Source: “NBA Team Valuations” at http://www.forbes.com [cited 3 August 2009]; “NBA Owners” at http://www.hoopshype.htm [cited 10 August 2009]; Pay Dirt, 446–459.

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232 The National Basketball Association Table A.4.2 Five Best and Worst Owners, by NBA Team, 2008 Owner

Team

W–L%

Playoffs

Championships

Best Jerry Buss Peter Holt Mark Cuban Les Alexander Dan Gilbert

Los Angeles Lakers San Antonio Spurs Dallas Mavericks Houston Rockets Cleveland Cavaliers

66 67 68 56 64

28 15 9 11 4

8 4 0 2 0

Worst Donald Sterling Cablevision Systems Michael Heisley Christopher Cohan Robert Johnson

Los Angeles Clippers New York Knicks Memphis Grizzlies Golden State Warriors Charlotte Bobcats

34 43 38 40 41

4 7 3 3 0

0 0 0 0 0

Note:W–L% is the winning percentage of each club while performing for these owners. Playoffs and Championships are the numbers of them. James Dolan is the owner of Cablevision Systems, and thus of the New York Knicks. Source:“SI’s Best & Worst Owners” at http://www.si.com [cited 16 October 2009].

Table A.4.3 NBA Team Finances, Selected Years

Revenue Team Atlanta Hawks Boston Celtics Charlotte Bobcats Chicago Bulls Cleveland Cavaliers Dallas Mavericks Denver Nuggets Detroit Pistons Golden State Warriors Houston Rockets Indiana Pacers Los Angeles Clippers Los Angeles Lakers

Operating Income

Value

1999

2008

1999

2008

1999

2008

29 41 NA 67 38 26 24 51 32 44 34 23 59

102 149 95 165 159 153 112 160 112 116 101 99 191

−19 2 NA 20 0 −15 −10 −2 −8 −4 −19 −15 −1

7 20 −5 55 13 −14 −26 40 14 31 −6 11 48

150 187 NA 307 170 141 124 228 140 168 178 103 282

306 447 284 504 477 466 329 480 335 469 303 297 584

(Continued )

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Appendix: Tables 233 Table A.4.3 (Continued ) Operating Income

Revenue Team Memphis Grizzlies Miami Heat Milwaukee Bucks Minnesota Timberwolves New Jersey Nets New Orleans Hornets New York Knicks Oklahoma City Thunder Orlando Magic Philadelphia 76ers Phoenix Suns Portland Trail Blazers Sacramento Kings San Antonio Spurs Toronto Raptors Utah Jazz Washington Wizards

Value

1999

2008

1999

2008

1999

2008

NA 33 26 42 39 NA 93 NA 38 56 58 57 34 42 34 48 49

95 131 94 100 98 95 208 82 100 116 148 114 117 138 138 119 115

NA −21 −15 4 −9 NA 4 NA −9 2 6 −15 −12 −7 −8 −1 −5

−3 −1 5 −6 −1 3 30 −9 6 0 29 −1 7 19 28 9 15

NA 162 111 146 166 NA 334 NA 159 231 238 257 151 169 138 215 209

294 393 278 301 295 285 613 300 349 360 452 307 350 415 400 358 353

Note: NA means not available because the NBA franchise did not exist at that location in 1999. Revenue is net of stadium revenues used for debt payments. Operating Income is earnings before interest, taxes, depreciation, and amortization.Value was determined based on the current (2008) stadium deal without any deductions for debt.Valuations appear in millions of dollars. Source:“NBA Team Valuations” at http://www.forbes.com [cited 3 August 2009].

Table A.4.4 NBA Average Ticket Price, by Team, Selected Years Average Ticket Price Team Atlanta Hawks Boston Celtics Charlotte Bobcats Charlotte Hornets

1991 1993 1995 1997 1999 2001 2003 2005 2007 2008 20 24 —

24 31 —

23 40 —

25 41 —

45 44 —

42 50 —

37 57 —

41 55 36

38 65 29

36 68 33

22

22

25

28

32

34

—

—

—

—

(Continued )

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234 The National Basketball Association Table A.4.4 (Continued) Average Ticket Price Team Chicago Bulls Cleveland Cavaliers Dallas Mavericks Denver Nuggets Detroit Pistons GS Warriors Houston Rockets Indiana Pacers LA Clippers LA Lakers Memphis Grizzlies Miami Heat Milwaukee Bucks Minnesota Timber. New Jersey Nets New Orleans Hornets New York Knicks OC Thunder Orlando Magic Philadelphia 76ers Phoenix Suns Portland Trail Blazers

1991 1993 1995 1997 1999 2001 2003 2005 2007 2008 29 21

36 26

36 30

45 32

52 39

53 40

50 40

52 42

63 56

64 55

19

22

28

32

40

58

53

53

60

62

17

21

26

23

38

38

32

36

44

47

27 22 22

29 26 27

31 32 42

37 32 46

40 48 62

31 42 65

33 26 59

36 23 55

47 31 41

47 39 43

19 20 47 —

20 22 32 —

31 26 33 —

39 26 41 —

48 43 81 —

52 42 89 47

42 43 75 38

45 46 79 35

42 57 89 36

41 54 93 24

18 18

24 21

30 24

36 29

46 30

59 36

46 39

50 42

58 47

58 47

17

20

26

30

39

39

37

40

39

36

21

29

32

41

59

50

54

55

60

54

—

—

—

—

—

—

33

28

24

25

30

39

40

47

86

89

64

70

70

70

— 15

— 31

— 37

— 43

— 44

— 51

— 35

— 37

— 38

47 40

19

22

31

35

44

47

42

44

43

43

21 24

36 27

37 42

38 51

45 52

50 44

44 44

51 42

58 47

64 61

(Continued )

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Appendix: Tables 235 Table A.4.4 (Continued) Average Ticket Price Team Sacramento Kings San Antonio Spurs Seattle Supersonics Toronto Raptors Utah Jazz Vancouver Grizzlies Washington Wizards Average

1991 1993 1995 1997 1999 2001 2003 2005 2007 2008 19

22

26

34

44

61

63

59

59

59

26

29

35

31

38

40

41

45

51

56

19

27

33

45

64

42

34

32

35

—

—

—

26

28

42

48

40

40

55

45

22 —

28 —

31 28

40 29

54 34

48 —

39 —

39 —

41 —

43 —

19

24

29

51

59

52

46

46

30

29

22

27

31

36

48

50

44

45

48

49

Note:The 1991–1992 NBA season is 1991, and so forth.Ticket prices are in dollars.A dash (—) indicates that no NBA team existed at the site during that season. GS is Golden State, LA is Los Angeles, Timber. is Timberwolves, and OC is Oklahoma City. The Charlotte Bobcats was an expansion team in 2004 and so were the Toronto Raptors and Vancouver Grizzlies in 1995.The Hornets moved from Charlotte to New Orleans, the Grizzlies from Vancouver to Memphis, and the Supersonics from Seattle to Oklahoma City. Source: “Sports Business Data” at http://www.rodneyfort.com [cited 10 August 2009]; and “Ticket Prices: 2007–2008 NBA Average” at http://www.newsok.com [cited 11 August 2009].

Table A.5.1 NBA Arenas, Ranked by Category, 2005 Category Arena (City)

Seat

Parking

Fans

Entertainment

Concessions

Total

Pepsi Center (Denver) Conseco Fieldhouse (Indianapolis) Wachovia Center (Philadelphia) U.S. Airways Center (Phoenix)

4.7

3.6

4.3

3.4

3.9

4.16

4.6

3.3

5.0

3.3

3.8

4.14

4.7

3.3

5.0

3.2

3.6

4.14

4.3

4.4

3.8

4.0

3.9

4.11 (Continued )

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236 The National Basketball Association Table A.5.1 (Continued ) Category Arena (City)

Seat

Parking

Fans

Entertainment

Concessions

Total

Palace of Auburn Hills (Detroit) New Orleans Arena (New Orleans) Phillips Arena (Atlanta) Arco Arena (Sacramento) American Airlines Arena (Miami) Arena in Oakland (Oakland) Quicken Loans Arena (Cleveland) Toyota Center (Houston) Key Arena (Seattle) Charlotte Bobcats Arena (Charlotte) Rose Garden (Portland) AT&T Center (San Antonio) Staples Center (Los Angeles Lakers) Staples Center (Los Angeles Clippers) Target Center (Minneapolis) Delta Center (Salt Lake) FedEx Forum (Memphis)

4.2

2.9

5.5

3.4

4.0

4.05

4.9

3.4

3.3

3.3

3.6

3.98

4.3

3.8

3.0

3.6

4.2

3.90

3.6

3.6

5.8

3.3

3.1

3.79

3.8

2.9

4.3

4.2

3.7

3.77

4.2

3.4

3.8

3.6

2.8

3.72

4.1

3.6

3.8

3.1

3.5

3.72

4.2

3.3

3.8

3.3

2.9

3.67

4.6 4.2

3.1 3.5

3.3 2.8

2.8 3.6

3.0 3.4

3.65 3.65

4.1

3.3

3.0

3.6

3.4

3.62

3.7

2.6

4.0

3.7

4.0

3.62

3.7

3.4

3.8

4.0

2.9

3.57

4.3

3.4

2.8

2.9

3.0

3.54

3.9

3.9

2.5

3.2

3.3

3.51

2.9

3.9

4.0

3.5

4.0

3.46

4.0

2.9

2.8

3.1

3.4

3.42 (Continued )

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Appendix: Tables 237 Table A.5.1 (Continued ) Category Arena (City)

Seat

Parking

Fans

Entertainment

Concessions

Total

United Center (Chicago) TD Waterhouse Center (Orlando) Bradley Center (Milwaukee) Madison Square Garden (New York) Air Canada Centre (Toronto) American Airlines Center (Dallas) TD Banknorth Garden (Boston) Verizon Center (Washington) Continental Airlines Arena (New Jersey)

3.2

3.1

3.8

3.8

3.4

3.37

3.0

4.3

3.0

3.4

3.5

3.33

3.4

3.4

2.8

3.3

3.4

3.28

3.2

2.8

4.0

3.4

3.2

3.28

2.9

3.5

3.8

3.2

3.6

3.28

2.9

3.4

3.3

3.8

3.3

3.24

2.4

2.6

5.5

2.7

3.5

3.11

2.8

3.0

3.0

2.9

3.1

2.94

2.4

3.3

2.5

3.3

3.3

2.82

Note: Since 2005, a few arenas have become obsolete and thus, have been replaced and/or renamed. These venues include the Oracle Arena for the Warriors in Oakland, California; Izod Center for the Nets in East Rutherford, New Jersey; Amway Arena for the Magic in Orlando, Florida; Energy Solutions Arena for the Jazz in Salt Lake City, Utah; Ford Center for the Thunder in Oklahoma City, Oklahoma; and Time Warner Cable Arena for the Bobcats in Charlotte.The Seattle Supersonics team moved from the Key Arena in 2008 to the Ford Center in Oklahoma City.The criteria in each category rated as follows: 6 (wow), 5 (superior), 4 (above average), 3 (average), 2 (below average), and 1 (inferior).The criteria within Seat, for example, consisted of arena seats’ cost, location and value, and their comfort.Weights were, respectively, 40 percent for Seat and 15 percent for each of the other four categories. Source: Greg Boeck, “NBA Arenas: Fantastic or Not?” at http://www.usatoday.com [cited 30 October 2009]; and Kevin Ding, “NBA Arenas: The Good, the Bad and the Ugly” at http:// www.ocregister.com [cited 10 October 2009].

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Sigo,Shelley.“Florida:No Magic Petition for Hotelier.” Bond Buyer (6 December 2007): 9. Sigo, Shelley.“Florida’s Priority Shift.” Bond Buyer (19 April 2007): 1, 8. Sigo, Shelley. “Orlando Gets 33 Responses to RFP for Entertainment Venues.” Bond Buyer (5 September 2007): 4. Sigo, Shelley.“Orlando, Orange County Hotelier Seeks Vote for Arts, Sports Centers.” Bond Buyer (22 August 2007): 3. Sigo, Shelley. “Orlando’s $772 Million Development Plan.” Bond Buyer (26 October 2006): 1, 40. Sigo, Shelley.“Tourist Tax Bump.” Bond Buyer (20 July 2006): 35. Skolnick, Ethan J. “Global Warming: International Players Make Mark on NBA.” Fort Lauderdale Sun-Sentinel (9 June 2006): 1. Smith, Jennette.“Palace Sports Enjoys Fruits of Playoff Berths in 2 Leagues.” Crain’s Detroit Business (7 April 2003): 6. Song,Wang.“The NBA’s ‘China Derby.’” China Today (May 2008): 54–56. “Sonics’Bid to Leave Seattle Gets League Nod.”Wall Street Journal (21 April 2008): A10. “Sonics the Most Likely to Move.” Charlotte Observer (19 February 2006): 14C. Sorensen, Tom. “Shinn ‘Full of Life’ Battling Serious Illness.” Charlotte Observer (8 November 2009): 1C, 5C. Souccar, Miriam Kreinin and Aaron Elstein. “WNBA Courts All-Star to Lead League Toward Profitability.” Crain’s New York Business (8 November 2004): 37. Spagat, Elliot.“Dallas Mavericks Owner Bets on HDTV.” Wall Street Journal (7 March 2002): B5–B6. Speizer, Irwin. “Shinn Given City a Surprise Boost.” Business North Carolina (December 2002): 10. Stacy, Mitch. “Witness: Strip Club Owner Paid for Sex for NBA Stars.” Charlotte Observer (5 June 2001): 4A. Stevens, Suzanne.“Who Got Game?” Oregon Business Magazine (May 2000): 39. Stiroh, Kevin J. “Playing for Keeps: Pay and Performance in the NBA.” Economic Inquiry (January 2007): 145–161. “Summer Surprises.” Sports Illustrated (25 July 2005): 84. “Suns’ Nash to Return to Birthplace.” Winnipeg Free Press (12 April 2006): C13. Sutter, Marty.“NBA Slam Dunks Spanish-Lingo Pact.” Daily Variety Gotham (20 August 2002): 2, 10. Taylor, Beck A. and Justin G. Trogdon. “Losing to Win: Tournament Incentives in the National Basketball Association.” Journal of Labor Economics (2002): 23–40. Thamel, Pete and Thayer Evans.“N.B.A. and N.C.A.A. to Run Youth Systems.” New York Times (8 April 2008): 2. “The Buzzing Sound.” New Orleans CityBusiness (21 January 2002): 26. Thompson, Adam. “Bid for NBA’s Grizzlies Gets Push as the Minority Owners Bow Out.” Wall Street Journal (4 December 2006): B2. Thompson, Adam. “NBA to Draft Chen for Lead China Post.” Wall Street Journal (19 September 2007): B11.


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250 The National Basketball Association Thompson, Adam. “Taking Hoops into Overtime.” Wall Street Journal (26 October 2009): A17. Thompson, Adam and Jennifer S. Forsyth.“An Unlikely Mogul Attempts to Crash the NBA’s Exclusive Owner’s Club.” Wall Street Journal (27 November 2006): B1, B9. Thompson, Adam et al. “NBA Uses Local Allure to Push Planned Leagues in China.” Wall Street Journal (11 January 2008): B1–B2. Thomsen, Ian.“FIBA Not Thrilled About NBA’s Plans.” Sports Illustrated (25 February 2002): 75. Thomsen, Ian. “Hot Italian Coach Gets a Summer Job.” Sports Illustrated (19 May 2003): 74. Thomsen, Ian. “Minor League Might Have Major Role.” Sports Illustrated (4 April 2005): 34. Thomsen, Ian.“The Defense Never Rests.” Sports Illustrated (9 June 2008): 40. Thomsen, Ian.“Who’s Got Next?” Sports Illustrated (28 January 2008): 38–44. “3 N.O. Sellouts Should Mean Playoff Payoff.” New Orleans CityBusiness (20 February 2006): 14. “Time to Play Defense.” Amusement Business (December 2004): 4. “To Know List: Big and Full.” Sporting News (30 April 2007): 9. Tsumura, Howard.“Vancouver.” Sporting News (30 April 2001): 52. Valle, Kirsten. “Bobcats Get Good Bounce.” Charlotte Observer (29 October 2009): 10A–11A. Vrooman, John. “Theory of the Perfect Game: Competitive Balance in Monopoly Sports Leagues.” Review of Industrial Organization (February 2009): 5–44. Waddell, Ray.“Alltel Arena Battles Early Problems as Faulty Beam Forces Cancellation.” Amusement Business (25 October 1999): 17. Walker, Don.“Brief:Yi Makes Plea, Donations for Relief.” Milwaukee Journal Sentinel (17 May 2008): 1. Walker, Don. “Yi, Yao on China’s Plate: Millions Expected to Tune in on Friday.” Milwaukee Journal Sentinel (8 November 2007): 1. Walker, Sam. “Building a New Arena? A Winning Team Helps.” Wall Street Journal (25 June 1999): B1. Walker, Sam.“Shaq, Jack and You.” Wall Street Journal (18 January 2002):W1,W7. Watts, Jim.“Governors Back Arena Tax.” Bond Buyer (4 March 2008): 9. Watts, Jim.“Oklahoma: OKC, Supersonics Reach Pact.” Bond Buyer (1 April 2008): 9. Watts, Jim.“Oklahoma: OKC Voters Back Arena Tax.” Bond Buyer (11 March 2008): 9. Watts, Jim.“Oklahoma:The NBA Is on Its Way.” Bond Buyer (8 July 2008): 8. Whitefield, Mimi. “Basketball Executives Work to Maintain Sport’s Popularity Worldwide.” Miami Herald (23 March 2000): 1. Williams, Nick.“Priority on Global Outreach Expands NBA’s Appeal.” Tampa Tribune (10 June 2009): 1. Wilson, Jen.“AEG Partners With NBA China.” Billboard (25 October 2008): 19. “WNBA Partners With Hershey, SI for Women.” Amusement Business (26 June 2000): 4.


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“WNBA Tips Off With Fan Ad.” Crain’s New York Business (29 May 2000): 4. Xiao, Li.“Full Court Press.” Beijing Review (25 December 2008): 22–23. “Yao Vs.Yi Duel Reinforces NBA’s Global Brand.” Toronto Star (11 November 2007): 1. Yost, Mark. “Building Teams, Brick by Brick.” Wall Street Journal (19–20 December 2009):W14. Yunjun, Liu.“Market Watch.” Beijing Review (24 January 2008): 42–43. Zeller, Gregory. “In a League of Their Own.” Long Island Business News (21–27 December 2007): 7A, 34A. Zhang, James J., Daniel Connaughton and Carrianne E. Vaughn.“The Role of Special Programmes and Services for Season Ticket Holders in Predicting Game Consumption.” International Journal of Sports Marketing & Sponsorship (November 2004): 99–116.

BOOKS Ballard, Chris. The Art of a Beautiful Game: The Thinking Fan’s Tour of the NBA (New York, NY: Simon & Schuster, 2009). Banks, Kerry. The Unofficial Guide to Basketball’s Nastiest and Most Unusual Records (Vancouver, Canada: Greystone Books, 2005). Bird, Larry, Earvin Johnson, Jr. and Jackie MacMullen. When the Game Was Ours (New York, NY: Houghton Mifflin Harcourt, 2009). Bjarkman, Peter C. The Encyclopedia of Pro Basketball Team Histories (New York, NY: Carroll & Graf, 1994). Brush, Daniel J., David Horne and March C.B. Maxwell. National Basketball Association: An Interactive Guide to the World of Sports (El Dorado Hills, CA: Savas Beatie Publishing, 2009). De Medeiros, Michael. The NBA (New York, NY:Weigl Publishers, 2007). Dickey, Glenn. The History of Professional Basketball Since 1896 (New York, NY: Stein and Day, 1982). Feinstein, John and Red Auerbach. Let Me Tell You a Story (Boston, MA: Back Bay Books, 2004). Halberstam, David. The Breaks of the Game (New York, NY: Hyperion, 2009). Hollander, Zander (ed.). The Modern Encyclopedia of Basketball (Old Tappan, NJ: Four Winds Press, 1973). Hubbard, Jan. The Official NBA Encyclopedia (New York, NY: Doubleday, 2000). Jozsa, Frank P., Jr. American Sports Empire: How the Leagues Breed Success (Westport, CT: Praeger Publishers, 2003). Jozsa, Frank P., Jr. Big Sports, Big Business: A Century of League Expansions, Mergers, and Reorganizations (Westport, CT: Praeger Publishers, 2006). Jozsa, Frank P., Jr. Global Sports: Cultures, Markets and Organizations (Singapore: World Scientific Publishing Company, 2009). Jozsa, Frank P., Jr. Sports Capitalism: The Foreign Business of American Professional Leagues (Aldershot, England:Ashgate Publishing Limited, 2004).


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252 The National Basketball Association Jozsa, Frank P., Jr. and John J. Guthrie, Jr. Relocating Teams and Expanding Leagues in Professional Sports: How the Major Leagues Respond to Market Conditions (Westport, CT: Quorum Books, 1999). Kirchberg, Connie. Hoop Lore: A History of the National Basketball Association (Jefferson, NC: McFarland & Company, 2007). Koppett, Leonard. Total Basketball: The Ultimate Basketball Encyclopedia (Wilmington, DE: Sport Classic Books, 2004). Koppett, Leonard. 24 Seconds to Shoot (Kingston, NY:Total Sports Illustrated Classics, 1999). LaFeber, Walter. Michael Jordan and the New Global Capitalism (New York, NY, London, England:W.W. Norton & Company, 1999). Larmer, Brook. Operation Yao Ming: The Chinese Sports Empire, American Big Business, and the Making of an NBA Superstar (New York, NY: Gotham Books, 2005). Martin, Clare. Official NBA Trivia: The Ultimate Team-by-Team Challenge for Hoop Fans (New York, NH: Harper Collins, 1999). Naismith, James. Basketball: Its Origins and Development, 10th ed. (New York, NY: Bison Books, 1996). Nelson, Murray R. The National Basketball League:A History, 1935–1949 (Jefferson, NC: McFarland & Company, 2009). Noll, Roger G. (ed.). Government and the Sports Business: Studies in the Regulation of Economic Activity (Washington, DC: The Brookings Institution, 1974). Peterson, Robert W. Cages to Jump Shots: Pro Basketball’s Early Years (New York, NY: Oxford University Press, 1990). Peterson, Robert W. Cages to Jump Shots: Pro Basketball’s Early Years (Lincoln, NB: University of Nebraska Press, 2002). Pluto,Terry. Loose Balls:The Short, Wild Life of the American Basketball Association (New York, NY: Simon & Schuster, 2007). Podnicks, Andrew and Sheila Wawanash (eds.). Kings of the Ice: A History of World Hockey (Richmond Hill, Ontario, Canada: NDE Publishing, 2002). Pollak, Mark. Sports Leagues and Teams:An Encyclopedia, 1871 to 1996 (Jefferson, NC: McFarland & Company, 1997). Quirk, James and Rodney D. Fort. Pay Dirt:The Business of Professional Team Sports (Princeton, NJ: Princeton University Press, 1992). Radnedge, Keir. The Ultimate Encyclopedia of Soccer: The Definitive Illustrated Guide to World Soccer (London, England: Carlton Books, 2004). Rosen, Charles. The First Tip-Off: The Incredible Story of the Birth of the NBA (New York, NY: McGraw-Hill, 2008). Russell, Bill and Alan Steinberg. Red and Me: My Coach, My Lifelong Friend (New York, NY: Harper, 2009). Ryan, Bob. The Pro Game: The World of Professional Basketball (New York, NY: McGraw-Hill, 1975).


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Shropshire, Kenneth L. The Sports Franchise Game: Cities in Pursuit of Sports Franchises, Events, Stadiums, and Arenas (Philadelphia, PA: University of Pennsylvania Press, 1995). Simmons, Bill. The Book of Basketball: The NBA According to the Sports Guy (New York, NY: Ballantine, 2009). Smith, Ron, Ira Winderman and Mary Schmitt Boyer. The Complete Encyclopedia of Basketball (London, England: Carlton, 2001). Sports Illustrated:The Basketball Book (New York, NY:Time Warner, Inc., 2007). Stewart, Wayne. A Little Giant Book: Basketball Facts (New York, NY: Sterling Publishing, Inc., 2007). Strasen, Marty. The Best Book of Basketball Facts and Stats (Tonawanda, NY: Firefly Books, 2004). Taylor, John. The Rivalry: Bill Russell, Wilt Chamberlain, and the Golden Age of Basketball (New York, NY: Ballantine Books, 2006). The World Almanac and Book of Facts (New York, NY: World Almanac Books, 1930–2008). Webb, Bernice Larson. The Basketball Man: James Naismith (Lawrence, KS: University of Kansas Press, 1973). Wolff, Alexander. Big Game, Small World: A Basketball Adventure (New York, NY: Warner Books, 2002). Wright, Kyle. The NBA From Top to Bottom: A History of the NBA, From the No. 1 Team Through No. 1,153 (Bloomington, IN: iUniverse, Inc., 2007).

DISSERTATIONS Brandt,Aaron Lee.“The NBA is Dead.” Masters Dissertation, University of Iowa, 2008. Dick, Ronald. “Marketing Techniques Used By National Broadcasting Association Franchises to Increase Home Game Attendance.” Doctoral Dissertation, Temple University, 2000. Geno, Dennis R., Jr. “Predictors of Player Success in the National Basketball Association.” Masters Dissertation, Central Michigan University, 1999. Hubbard, John. “The Globalization of the NBA.” Masters Dissertation, Hollins University, 2006. Jozsa, Frank P., Jr. “An Economic Analysis of Franchise Relocation and League Expansion in Professional Team Sports, 1950–1975.” Doctoral Dissertation, Georgia State University, 1977. Lachowetz, Anthony J. “Corporate Selling Activities and the Determinants of Sponsorship Renewal in the National Basketball Association.” Doctoral Dissertation, University of Massachusetts at Amherst, 2001. LaCroix, Stephen R.“An Investigation of the Involvement of Corporate Sponsors With the Individual Franchises of the National Basketball Association.” Masters Dissertation,Western Illinois University, 1991.


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254 The National Basketball Association Rascher, Daniel A. “Organization and Outcome: A Study of Professional Sports Leagues.” Doctoral Dissertation, University of California, Berkeley, 1997. Sarmento, Mario R. “The NBA on Network Television: A Historical Analysis.” Masters Dissertation, University of Florida, 1998. Sinclair, Gary D. “The National Basketball Association in Black and White: An Economic Analysis of Consumer Discrimination and Professional Basketball.” Doctoral Dissertation, University of Utah, 2003. Suttle, Richard Scott. “Home Court Advantage in Professional Basketball.” Masters Dissertation, University of North Carolina at Chapel Hill, 1990.

MEDIA GUIDES Official Major League Baseball Fact Book 2005 Edition (St. Louis, MO: Sporting News, 2005). Official NBA Guide: 2008–2009 Edition (Chesterfield, MO: Sporting News Books, 2009). Official 2008 National Football League Record & Fact Book (New York, NY: Time Inc. Home Entertainment, 2008). Sports Business Resource Guide & Fact Book 2006 (Charlotte, NC: SportsBusiness Journal, 2006).

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258 The National Basketball Association “The Philippines is the NBA’s Next Frontier.” http://www.dimemagazine.com [cited 3 December 2009]. Thomsen,Ian. “NBA Mulling Idea of Five-Team Expansion in Europe.” http://www.si.com [cited 3 August 2009]. Thomsen, Ian. “Weekly Countdown: A Woman’s Place Could Soon be in the NBA.” http://www.si.com [cited 5 December 2009]. Thomsen, Ian.“Weekly Countdown: Stern Open to Legalized Betting, Rule Changes.” http://www.si.com [cited 13 December 2009]. “Ticket Prices: 2007–2008 NBA Average.” http://www.newsok.com [cited 11 August 2009]. “2008 Major League Soccer Season.” http://en.wikipedia.org [cited 12 August 2009]. “2010 NBA Economics.” http://www.dailysportspages.com [cited 3 August 2009]. “Turnkey Team Brand Index.” http://www.turnkeyse.com [cited 8 November 2009]. “Viva Las Vegas and the NBA.” http://www.sportsbusinessnews.com [cited 24 April 2006]. Wang, Tony. “Are NFL Stadiums’ Naming Rights Worth It?” http://open.salon.com [cited 9 November 2009]. Washburn, Gary. “NBA Owners Cool to Expansion.” http://www.seattlepi.com [cited 3 August 2009]. “What’s in a Name?” http://www.forbes.com [cited 14 August 2009]. White, Joseph. “Washington Wizards Owner Abe Pollin Dies at 85.” http://news. yahoo.com [cited 25 November 2009]. “Women’s National Basketball Association.” http://en.wikipedia.org [cited 23 November 2009]. “Women’s National Basketball Association.” http://www.wnba.com [cited 23 November 2009]. Ziller, Tom. “Abe Pollin Dies at 85.” http://nba.fanhouse.com [cited 25 November 2009].

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Index

Arco Arena see also Sacramento Kings 88, 153, 155, 157, 159, 161, 167, 169, 170, 173 Atlanta Hawks see also Phillips Arena and St. Louis Hawks 32, 42, 48, 67, 69, 79, 80, 83, 85, 94, 104, 111, 117, 118, 124, 126, 129, 138, 146, 153, 167, 192, 215, 220 AT&T Center see also San Antonio Spurs 153, 154, 158, 159, 161, 166, 168, 173, 174, 208 Auerbach, Red 14, 66, 101 Average Ticket Prices (ATPs) see also Fan Cost Index (FCI) 16, 132, 134, 135, 141–145, 147

ABA-NBA merger 33, 36 Abdul-Jabbar, Kareem 219 Africa 55, 206, 210–214, 222, 223 Air Canada Centre see also Toronto Raptors 45, 123, 153, 154, 158, 168, 171, 175, 176 Allen, Paul 32 American Airlines Center see also Dallas Mavericks 153, 154, 158, 162, 168, 169, 171, 177 American Basketball Association (ABA) 8, 12, 13, 21, 23, 33–38, 40, 41, 49–52, 57, 62, 70, 81, 84, 102, 181, 188 American Basketball League (ABL) 2–4, 8, 13, 22 American Hockey League (AHL) 4, 76, 150, 162, 165 Amway Arena see also Orlando Magic 153, 155–157, 167, 172, 173, 176 antitrust legislation 9

Baltimore Bullets see also Capital Bullets and Chicago Zephyrs 6, 7, 23, 67, 69, 77, 82, 118, 119, 190–192

259

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260 The National Basketball Association Basketball Association of America (BAA) 2, 4–8, 13, 14, 20, 23, 30, 57, 59, 62, 72–74, 76, 77, 117, 190, 191 Basketball without Borders 16, 202, 203, 206, 208–213, 223 Bjarkman, Peter C. 10 Boston Celtics see also TD Banknorth Garden 7, 14, 21, 30, 31, 35, 44, 45, 51, 62, 66, 75, 79, 81, 82, 84, 85, 97, 100–102, 109, 111, 116, 120, 122, 124, 130, 138, 153, 168, 191, 192, 194, 196, 223 Bradley Center see also Milwaukee Bucks 27, 153, 155–157, 161–163, 166, 174, 176 Buffalo Braves see also San Diego Clippers 23, 29, 37, 67, 69, 85, 86, 97 California, Los Angeles 21, 95, 152, 197 Canada 15, 29, 37, 40, 45–47, 49, 54, 61, 65, 95, 98, 104, 108, 123, 146, 147, 151, 153, 154, 158, 168, 171, 175–177, 179, 181, 183, 184, 186, 189, 204–206, 214 Capital Bullets see also Baltimore Bullets 62, 67, 69, 82, 83, 93, 94 Chamberlain,Wilt 12, 76, 78 Championship Series 16, 35, 38, 43, 84, 86, 88, 95, 190–193, 196, 201, 202, 204, 223 Charlotte Bobcats see also Time Warner Cable Arena 39, 47, 49, 52, 54, 57, 91, 101, 111, 118, 123, 124, 126, 137–139, 144, 146, 147, 152, 153, 158, 168, 173, 192, 203, 208 Charlotte Coliseum see also Charlotte Hornets 40, 47, 90, 158, 160, 161, 200 Charlotte Hornets see also New Orleans Hornets and Shinn, George

39, 40, 47–49, 68, 70, 90, 103, 138, 217 Chicago Bulls see also United Center 23, 24, 27, 28, 36, 51, 52, 54, 57, 86, 98,101, 111, 124, 138, 142, 147, 153, 167, 191, 192, 217, 221 Chicago Packers see also Chicago Zephyrs 22, 23, 33, 37, 57, 68, 70, 77 Chicago Zephyrs see also Baltimore Bullets and Chicago Packers 23, 67, 69, 70, 77 China, Beijing 207 Chinese national team 195 Cincinnati Royals see also Kansas City–Omaha Kings and Rochester Royals 27, 67, 69, 73, 81 Cleveland Cavaliers see also Quicken Loans Arena 23, 30, 36, 52, 58, 88, 98, 111, 124, 138, 146, 147, 153, 167, 191, 192, 196 Colangelo, Jerry 28 Collective Bargaining Agreement (CBA) 9, 198, 216 Conseco Fieldhouse see also Indiana Pacers 153, 157, 159, 161, 167, 173, 175, 176 Cuban, Mark see also Dallas Mavericks 39, 100, 119 Dallas Mavericks see also American Airlines Center and Cuban, Mark 25, 35, 37–39, 42, 48, 49, 51, 52, 57, 58, 62, 89, 98, 100, 111, 119, 124, 126, 127, 129, 138, 153, 162, 168, 191, 192, 194, 203, 215, 218 Davidson,William N. see also Detroit Pistons 73, 118 Delta Center see also Utah Jazz 167, 173, 175 Denver Nuggets see also Pepsi Center 5, 32, 36, 44, 50, 52, 54, 86, 92, 98,

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Index 261 111, 124, 138, 146, 153, 167, 192, 196, 203, 215 Detroit Pistons see also Fort Wayne Pistons and The Palace of Auburn Hills 36, 45, 51, 67, 72, 93, 94, 111, 118, 124, 129, 138, 146, 153, 191 Duncan,Tim 37, 145 economists 11, 141, 155 Energy Solutions Arena see also Utah Jazz 153, 155, 157, 159, 161, 162, 166, 168, 170, 173, 175, 176 England, London 10, 55, 108, 209 Entertainment Sports Programming Network (ESPN) 28, 52, 164, 168, 180, 198, 202, 207 Executive/Senior Vice Presidents (E/SVPs) 110, 113–116, 123, 131 Fan Cost Index (FCI) see also Average Ticket Prices (ATPs) 9, 16, 132, 134, 135, 138, 139, 141–145, 147, 156 Federation of International Basketball Association (FIBA) 209–212, 219, 221, 222 Forbes 48, 132, 134, 153, 156, 164, 168 Ford Center see also Oklahoma City Thunder 92, 153–156, 158, 161, 163, 166, 170, 177 Fort, Rodney D. 10, 11, 20, 60, 68, 122, 139, 149, 190, 191 Fort Wayne Pistons see also Detroit Pistons and Zollner, Fred 7, 67, 69, 70, 72, 78, 191 France, Paris 55, 56, 58, 181, 216, 217 Gasol, Pau 104, 208, 220, 221 General Motors Place see also Vancouver Grizzlies 46, 89, 171 Germany, Berlin 55

Golden State Warriors see also Oracle Arena 67, 69, 81, 87, 111, 124, 138, 147, 153, 156, 162, 191, 217, 220 Hall of Fame 48, 74, 75, 78, 80, 83, 101, 189 Hispanic 119, 209 Houston Rockets see also San Diego Rockets and Toyota Center 25, 37, 43, 46, 51, 67, 69, 80, 89, 94, 103, 111, 123, 124, 128, 138, 147, 153, 168, 191, 193, 215 Indiana Pacers see also Conseco Fieldhouse and Market Square Arena 35, 36, 50, 52, 62, 98, 102, 111, 124, 126, 138, 153, 167, 191, 192 Italy, Rome 209 Izod Center see also New Jersey Nets 84, 153, 155, 157, 162, 166, 168, 170, 174–176 Jackson, Phil 14, 24, 50 James, LeBron 31, 145 Japan,Tokyo 181, 205, 207 Johnson, Magic 33 Jordan, Michael 24, 48, 50, 86, 101, 129, 142, 145 Jozsa, Frank P., Jr. 15, 20, 22, 34, 60, 107, 122, 139, 149, 190 Kansas City–Omaha Kings see also Cincinnati Royals and Sacramento Kings 67–69, 81, 82, 93 Kennedy,Walter 6 Kentucky Colonels 29, 35 Kentucky, Louisville 34, 54, 58, 90, 184, 185 Key Arena see also Seattle Supersonics 26, 52, 53, 91, 92, 156, 161, 166, 174

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262 The National Basketball Association Kiel Auditorium 71, 79 Kirchberg, Connie 13, 20, 66, 107, 190 Koppett, Leonard 10, 20 Los Angeles Clippers see also San Diego Clippers and Sterling, Donald 67, 69, 86, 87, 93, 111, 116, 122–124, 129, 138, 147, 153, 167, 168, 196, 215 Los Angeles Lakers see also Minneapolis Lakers and Staples Center 14, 27, 28, 32, 42, 67, 69, 74, 75, 79, 81, 83, 84, 87, 88, 94, 97, 104, 105, 109, 111, 116, 124, 126, 129, 138, 147, 153, 167, 168, 174, 191–193, 208, 212, 216, 221, 223 Louisiana Superdome see also New Orleans Jazz 32, 85, 86, 91 Madison Square Garden (MSG) see also New York Knickerbockers 12, 110, 120, 144, 152, 153, 155–158, 162, 166, 173, 175, 176, 208 Maravich, Pete 32, 85 Market Square Arena see also Indiana Pacers 36, 161 Memphis Grizzlies see also Vancouver Grizzlies 68, 70, 88, 89, 104, 111, 122, 124, 137, 138, 153, 168, 192, 194, 196, 208, 220, 221 Mexico, Mexico City 52, 205, 210 Miami Heat 38, 39, 41, 42, 48, 49, 52, 57, 83, 84, 98, 111, 124, 129, 138, 146, 147, 153, 167, 174, 191, 203, 215 Mikan, George 74 Milwaukee Braves 71 Milwaukee Bucks see also Bradley Center 23, 26, 27, 33, 52, 83, 98, 111, 116, 124, 126, 138, 147, 153, 191, 196, 208

Milwaukee Hawks see also St. Louis Hawks and Tri-Cities Blackhawks 62, 66, 67, 69, 71, 117 Ming,Yao 25, 80, 103, 215 Minneapolis Lakers see also Los Angeles Lakers 5, 7, 20, 21, 62, 67, 69, 74, 190–192 Minnesota Timberwolves see also Target Center 39, 43, 44, 48, 49, 52, 57, 98, 111, 124, 128, 146, 153, 158, 196 Missouri, Kansas City 95 Missouri, St. Louis 21, 53, 95 Most Valuable Player 86, 199, 200, 208, 217, 221 Naismith, James 1, 2, 13 naming rights 9, 146, 151, 154, 155, 163–168, 170, 171, 186 National Basket Ball League (NBBL) 2, 3 National Basketball League (NBL) 2–8, 12, 13, 19, 20, 30, 57, 59, 62, 66, 72–74, 77, 78, 81, 190 NBA Board of Governors 28, 56, 121, 197 NBA Cares (NBAC) 16, 202–204, 210, 223, NBA Development League (NBDL) 193, 194, 196, 219 NBA Global 16, 213, 223 Nelson, Murray R. 3, 6, 19, 20, 62 net cash flows 132 Nevada, Las Vegas 87, 194 New Jersey Nets see also Izod Center and New York Nets 35, 45, 50, 52–54, 62, 67, 69, 84, 94, 111, 118, 120, 124, 128, 138, 145, 153, 167, 191, 194, 219 New Jersey, Newark 53 New Orleans Arena 91, 153, 155, 158, 160, 161, 166, 170, 172, 176

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Index 263 New Orleans Hornets see also Charlotte Hornets and Shinn, George 25, 37, 68, 70, 90, 93, 111, 119, 124, 129, 137, 138, 153, 192 New Orleans Jazz see also Louisiana Superdome and Utah Jazz 23, 32, 33, 37, 67, 69, 85 New York Knickerbockers see also Madison Square Garden (MSG) 7, 24, 53, 62, 83, 98, 191, 192, 223 New York Nets see also New Jersey Nets 35, 52, 62, 67, 69, 70, 84 Noll, Roger G. 10, 11, 22, 60, 122, 149 North Carolina, Charlotte 16, 41, 103, 171, 197

118, 125, 128, 139, 147, 153, 168, 191, 192, 194, 208 Philadelphia Warriors see also San Francisco Warriors 7, 14, 67, 69, 76, 190, 191 Phillips Arena see also Atlanta Hawks 153, 157, 159, 161, 167, 174, 176 Phoenix Suns 23, 28, 32, 52, 62, 81, 87, 88, 98, 112, 118, 125, 126, 129, 139, 153, 167, 174, 191, 196 Podoloff, Maurice 4 Portland Trail Blazers see also Rose Garden 23, 31, 36, 52, 57, 81, 86, 98, 112, 123, 125, 129, 139, 153, 191, 196, 221

The Official NBA Encyclopedia 12, 13 Oklahoma City Thunder see also Ford Center and Seattle Supersonics 26, 52, 68, 70, 91, 92, 118, 137, 153, 156, 158, 160, 196, 203 Olajuwon, Hakeem 80, 214 O’Neal, Shaquille 42, 43 operating income 16, 132–134, 145, 147 Oracle Arena see also Golden State Warriors 81, 153–157, 162, 167, 177 Orlando Magic see also Amway Arena 39, 42–44, 48, 49, 52, 83, 98, 112, 123, 125, 128, 129, 139, 153, 156, 167, 191, 196, 203, 221

Quicken Loans Arena see also Cleveland Cavaliers 31, 145, 152, 153, 157, 159, 161, 167, 176, 208 Quirk, James 10, 11, 20, 60, 68, 122, 139, 149, 190, 191

The Palace of Auburn Hills see also Detroit Pistons 73, 153, 155, 157, 159, 161, 163, 166, 173, 174, 176 Pepsi Center see also Denver Nuggets 153, 157, 167, 172, 175, 177, 208 Peterson, Robert W. 12, 20, 66, 190 Philadelphia 76ers see also Syracuse Nationals and Wachovia Center 51, 67, 69, 77–79, 81, 84, 94, 112,

recession 4, 30, 134–136, 142, 198 Robertson, Oscar 27, 82 Rochester Royals see also Cincinnati Royals 5, 7, 20, 67, 69, 73, 74, 191 Rose Garden see also Portland Trail Blazers 153, 157, 161, 162, 166, 175, 176 Rosen, Charles 13, 14, 20, 131 Sacramento Kings see also Arco Arena and Kansas City–Omaha Kings 54, 68, 70, 81, 87, 88, 94, 112, 125, 128, 139, 147, 153, 167, 192, 208 San Antonio Spurs see also AT&T Center 36, 50, 52, 62, 84, 89, 98, 109, 112, 123, 125, 126, 128, 139, 153, 167, 191, 192, 208, 217 San Diego Clippers see also Buffalo Braves and Los Angeles Clippers 30, 62, 67, 69, 85, 86, 97

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264 The National Basketball Association San Diego Rockets see also Houston Rockets 23, 24, 37, 57, 67, 69, 80 San Francisco Warriors see also Philadelphia Warriors 28, 67, 69, 76, 78, 81, 156, 191 St. Louis Hawks see also Atlanta Hawks and Milwaukee Hawks 21, 67, 69, 71, 79, 117, 191 Seattle Supersonics see also Key Arena and Oklahoma City Thunder 23, 26, 51, 52, 68, 70, 81, 83, 91, 112, 118, 122, 123, 125, 126, 139, 191, 212 Selig, Bud 136 Shinn, George see also Charlotte Hornets and New Orleans Hornets 40, 90, 119, 201 SkyDome see also Toronto Raptors 45, 170 Smith, Ron 10 South Africa, Johannesburg 210, 213, 214 Spain, Madrid 55, 207, 209 Sponsors 1, 4, 9, 48, 55, 59, 81, 86, 91, 110, 123, 127, 130, 134, 145, 150, 151, 154, 163–166, 169–171, 182, 186, 189, 204, 209, 212, 215, 220, 223 Sports Business Resource Guide & Fact Book 110, 112, 115, 122, 125, 130, 164, 166, 168, 200 Sports Illustrated 20, 90, 119, 120, 144, 193, 195 Staples Center see also Los Angeles Lakers 75, 87, 105, 133, 144, 152, 153, 155, 157, 158, 167, 168, 174, 175, 177, 208 Sterling, Donald see also Los Angeles Clippers 87, 119, 120, 123 Stern, David 30, 39, 40, 41, 54, 56, 99, 104, 131, 134, 193, 204, 211, 212, 216, 219, 224

Summer League (NBASL) 16, 185, 195, 196, 204, 223 Syracuse Nationals see also Philadelphia 76ers 5, 67, 69, 72, 77, 190, 191 Taiwan,Taipei 207 Target Center see also Minnesota Timberwolves 43, 44, 153, 155, 157, 159, 160, 167, 170, 173, 174 TD Banknorth Garden see also Boston Celtics 102, 144, 153, 154, 157, 161, 168, 172–174 Team Marketing Report (TMR) 134, 135, 137, 141 Tennessee, Memphis 16, 47, 95, 104, 152 Texas, San Antonio 16, 152 Time Warner Cable Arena see also Charlotte Bobcats 47, 48, 91, 129, 152–154, 158, 166, 168, 173 Toronto Raptors see also Air Canada Centre and SkyDome 39, 44, 46, 49, 51, 57, 65, 112, 118, 123, 125, 126, 137, 139, 153, 168, 208, 221 Toyota Center see also Houston Rockets 25, 80, 153, 158, 162, 163, 168, 175, 177 Tri-Cities Blackhawks see also Milwaukee Hawks 6, 66–70, 96, 101, 117 United Center see also Chicago Bulls 144, 145, 152, 153, 156, 157, 163, 167, 171, 177 University of North Carolina 24, 29, 45, 47 USA Today 172, 173, 176 Utah Jazz see also Delta Center; Energy Solutions Arena; New Orleans Jazz 36, 44, 51, 67, 69, 85, 86, 92–94,

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Index 265 112, 125, 128, 129, 139, 146, 153, 167, 191, 196 Vancouver Grizzlies see also General Motors Place and Memphis Grizzlies 39, 46, 48, 49, 57, 62, 65, 68, 70, 88, 137, 139 Verizon Center see also Washington Wizards 151, 153, 155, 157, 159, 160, 163, 166, 168, 172, 174–176 Vice President (VP) 16, 45, 99, 110–116, 123, 126–128, 130, 131, 146, 188, 216 Virginia, Norfolk 54 Wachovia Center see also Philadelphia 76ers 153, 157, 168, 171–173, 175, 177 Washington Capitols 7, 14, 62, 74, 101, 190, 191

Washington, Seattle 26, 52 Washington Wizards see also Verizon Center 83, 94, 112, 118, 125, 129, 139, 151, 153, 167, 194, 196, 221 Western Europe 4, 181, 189, 219, 221–223 Women’s National Basketball Association (WNBA) 8, 150–152, 155, 162, 165, 197–204, 206, 213, 217, 221, 223 World Basketball League (WBL) 8 World Series 71, 189, 190 Wright, Kyle 10 Young Men’s Christian Association (YMCA) 1, 2 Zollner, Fred see also Fort Wayne Pistons 72, 73

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