Bill Simmons on Small Markets - Kings

[Gary]

Maloofs only own half the team.

 

[Arena Skeptic]

Maloofs only own half the team.

Yikes. That makes it even worse. $293/2 =... Let's just call it $150 to make it easier

$227M in debt on a $150M asset. Time to abandon, you'd think.

 

[Circa_1985_Fan]

Yikes. That makes it even worse. $293/2 =... Let's just call it $150 to make it easier

$227M in debt on a $150M asset. Time to abandon, you'd think.

'NO NO NO, we're not selling!! Now go back where you came from and stay out of our business!!'

 

[Tetsujin]

'NO NO NO, we're not selling!! Now go back where you came from and stay out of our business!!'

Pretty sure Burkle is happy sipping mohitos on billionaire island

 

[The Hammer]

'NO NO NO, we're not selling!! Now go back where you came from and stay out of our business!!'

Just thought of this quote in light of recent contemplations by myself and others on the board that it's not technically their own business, but a franchise, which has much different rules. Specifically, who ultimately has the power.

If anyone here has ever owned or operated a franchise, they will know exactly what I'm talking about. I managed a GNC for a couple years. You've basically got to do everything according to rules and codes and they can shut you down at almost any time if you break even a small one.

It technically is the NBA's business. Of course they'll look the other way if you continue to act in the greater interest anyway.

To take it a step further, it's another reason why owning a sports franchise should NOT be considered by the owner as a direct (let alone primary) stream of income, but should be leveraged in other ways, i.e. status and exposure to make deals or bolster image to a population (Paul Allen in the northwest with Seahawks and Blazers, our very own Ron Burkle with the Penguins).

Or, purely as a toy.

When teams are run strictly for profit motive, that's when you end up with the Clippers.

 

[Circa_1985_Fan]

Pretty sure Burkle is happy sipping mohitos on billionaire island

...with KJ and Stern on speed dial if the brothers Maloof go belly up.

 

[rainmaker]

I think it's pretty clear the NBA is more nervous about the Maloofs finances than they are about whether or not Sac is a viable market. If we get this arena, the Maloofs are either staying put, or selling. I wonder how involved Burkle will be with an arena. Maybe someone can answer this, but is it possible to tie the Maloofs into a contract with a new arena, where if they don't make timely payments, they give up ownership, similar to what would have happened in Anaheim? Is there any way Burkle could get involved to the point that he could take over ownership if the Maloofs were late on a payment?

 

[Glenn]

I think it's pretty clear the NBA is more nervous about the Maloofs finances than they are about whether or not Sac is a viable market. If we get this arena, the Maloofs are either staying put, or selling. I wonder how involved Burkle will be with an arena. Maybe someone can answer this, but is it possible to tie the Maloofs into a contract with a new arena, where if they don't make timely payments, they give up ownership, similar to what would have happened in Anaheim? Is there any way Burkle could get involved to the point that he could take over ownership if the Maloofs were late on a payment?

It's almost as if the NBA is trying to determine if Sacramento can prop up the Maloofs.

I suppose any agreement is OK if the league approves it. Let's see: new arena, Burkle is owner, Adleman is back to coach a team with AK47 added to the mix and revenue sharing is in place. Sounds fine to me.

 

[whozit]

I think it's pretty clear the NBA is more nervous about the Maloofs finances than they are about whether or not Sac is a viable market. If we get this arena, the Maloofs are either staying put, or selling. I wonder how involved Burkle will be with an arena. Maybe someone can answer this, but is it possible to tie the Maloofs into a contract with a new arena, where if they don't make timely payments, they give up ownership, similar to what would have happened in Anaheim? Is there any way Burkle could get involved to the point that he could take over ownership if the Maloofs were late on a payment?

I was under the impression that the Maloofs and Burkle know each other. Both Burkle and KJ have been very diplomatic in terms of the team being sold. Burkle, at least publicly, seemed to make clear that it wouldn't be a hostile takeover.

 

[swisshh]

I sent Simmons an email a day after his previous Kings article. I imagine that quite a few did in the following weeks. Emails and the scene of the final game probably made him reconsider his stance, and the new article reads like it was in draft phase before the Burkle/KJ move. I bet there will be a third article if the stay in Sacramento becomes official, likely focused on what the hell the Maloofs are going to do then.

 

[Trueblood]

I have to disagree with a lot of what Simmons wrote. While I like a guy who sticks up for the NBA, it seems like he sometimes gets so caught up in making humorous statements that it comes at the expense of writing a well informed article.

First of all, he and many writers are wrong about the free agent system. In his article, Simmons wrote "...same for LeBron leaving Cleveland. The current free-agency system doesn't give smaller markets any advantage to help them keep their best players. Superstars such as Chris Paul ultimately will play wherever they want."

Wrong. The current system helps anybody, small market or large, in keeping free agents. It's the same way it's been for a long time. The team holding the player's bird rights gets to tack on 12.5% increases as opposed to less than 10% for teams on the outside and they can tack on a year. They have, will and always have the right to outbid the rest. If players like Lebron want to take less than the max, that's their prerogative but it's not the system's fault.

And that's assuming that outside teams even have enough cap space to entice players to take a comparable contract in the first place. Take away the South Beach, NYC and Chicago cap space and Lebron would be perfectly happy playing in Cleveland. More often than not, desirable markets don't have cap space and the players stay put. Cleveland was just unfortunate in that their FA came available when everyone had cap money. Plus, that doesn't even take into consideration that Cleveland DID keep Lebron for 7 years in the first place. The rookie scale keeps him from holding out and then restricted free agency more or less forces him into a 2nd contract.

What's worse is that he went on to talk about how South Beach is more desirable than Sacramento but that just contradicts what he says about the system not working. It's not the system but players having agendas that supercede the system. It's kind of hard for the league to legislate and force a player to take the max.

He also goes on to make fun of Sterling's antics later in the article. I agree with that. I hate Sterling but then he goes on to talk about what would happen if Sterling had tried to do what the Maloofs did when they attempted to go to Anaheim. He wrote "if Donald Sterling had tried it the league would have thrown up a bigger roadblock than the one Harvey Keitel assembled for Thelma and Louise."

Again, what is it? Does the league unfairly protect Sterling or are they putting up roadblocks against him? He contradicts himself on that one. FWIW, the league would love for Sterling to move to Anaheim so that they would avoid the headache of someone like the Maloofs attempting to make socal a 3 team market.

He talks about how small market teams don't have a shot unless they have strong front offices like OKC, Portland and San Antonio. Again, that seems to go for everyone. Chicago was horrible with Krause post Jordan but got better when Paxson took over. The Clippers are in a big market but always suck worse than small market teams all over the place and the Knicks still haven't won a playoff game in over a decade. He answers his question right there. It has nothing to do with market size but front office capability.

Simmons needs to stop overanalyzing things and stick with getting right to the point. This article was all over the place. And the league isn't going to buy the Kings. They'd love nothing more than for the Maloofs to sell to Burkle but know that they can't force it. With Shinn, he wanted to sell so they had the perfect opportunity to take control. And they didn't even want to do that. They just did it to keep New Orleans in the game.

 

[Glenn]

It all has to do with money. The bigger markets have in essence unlimited money to play with while smaller markets have to fuss over their salaries in order to make a profit.

 

[Larry David]

It technically is the NBA's business. Of course they'll look the other way if you continue to act in the greater interest anyway.

To take it a step further, it's another reason why owning a sports franchise should NOT be considered by the owner as a direct (let alone primary) stream of income, but should be leveraged in other ways, i.e. status and exposure to make deals or bolster image to a population (Paul Allen in the northwest with Seahawks and Blazers, our very own Ron Burkle with the Penguins).

Or, purely as a toy.

When teams are run strictly for profit motive, that's when you end up with the Clippers.

At this point the kings are the only business the maloofs have that can turn a yearly profit. It's the reason the arena mess went from unacceptable to we will take a bad deal in la to turn a profit and it's the basis for / impacts a lot of the teams moves which has impacted the length and quality of the rebuild

 

[pdxKingsFan]

Wrong. The current system helps anybody, small market or large, in keeping free agents. It's the same way it's been for a long time. The team holding the player's bird rights gets to tack on 12.5% increases as opposed to less than 10% for teams on the outside and they can tack on a year. They have, will and always have the right to outbid the rest. If players like Lebron want to take less than the max, that's their prerogative but it's not the system's fault.

Simmons most clearly addresses this when talking about how Florida's status as a no-tax state makes it and Texas more popular free agent destinations because those tax differences offset the annual raise difference.

 

[Trueblood]

Simmons most clearly addresses this when talking about how Florida's status as a no-tax state makes it and Texas more popular free agent destinations because those tax differences offset the annual raise difference.

But even then, they still have to have cap space. The Texas teams haven't had space in a while and Orlando will be capped out for a long time. There's still a cap to abide to no matter how much they want to pay.

 

[Trueblood]

The league can do a lot more to help smaller markets keep their free agents. Franchise tags to begin with. Revenue sharing and a hard cap would help too. Lack of at least a franchise tag and revenue sharing is a problem with the NBA system. I don't think he's wrong with that point.

True but keep in mind that they've already implemented a new revenue sharing plan that they can't unveil until the cba is ratified. They've been working on this but couldn't do anything until the old deal was up, whenever that will be.

 

[pdxKingsFan]

But even then, they still have to have cap space. The Texas teams haven't had space in a while and Orlando will be capped out for a long time. There's still a cap to abide to no matter how much they want to pay.

That would probably matter except that players just threaten to leave for nothing and somehow manage to talk their soon to be ex-team into a lopsided sign and trade. Which is the worst part of the whole thing because what was originally supposed to help small town teams keep players instead winds up being a double whammy except in the rare instance the star is a flop or the team actually nets something of value in the S&T.

 

[Section 101]

That would probably matter except that players just threaten to leave for nothing and somehow manage to talk their soon to be ex-team into a lopsided sign and trade. Which is the worst part of the whole thing because what was originally supposed to help small town teams keep players instead winds up being a double whammy except in the rare instance the star is a flop or the team actually nets something of value in the S&T.

This. Just make bird rights only apply to players you draft or whoever signs their first contract for players traded. Once you sign with another team or get traded those rights disappear. Eliminate sign and trades on bird rights players.

 

[LPKingsFan]

I really hesitate to write this for fear of hijacking this thread and if I do I'm sorry, but I'm awfully curious.

On the 18th I wrote Simmons a letter responding to his "My feelings on the Kings move in four paragraphs" during his NBA post-season run down article.

Here it is (wrapped in spoilers, because it's rather long) ... do you guys think it actually worked?

Spoiler

"I am incensed by your ambivalence toward the Kings' move. Mayor Johnson pulled off a miracle at the Board of Governors meeting, so we now have two weeks to save our team and you are not helping. I have to get through to you somehow because for whatever reason people listen to you. You have a sway with public opinion and if you tell your cronies "it sucks, but whatever" we're screwed.

I don't have your appealing frat boy style or your panache. And this is far too long to fit in your "mail bag" and probably even too long for you to bother to read.

All I have is a passion to save my team and if I have to write to you until my fingers bleed, so be it. I am specifically responding to your pithy four paragraph explanation of your feelings on the Kings move:

1) The Sonics' move was a disgrace and a tragedy. You're right, there is no comparison. As such, we serve no purpose by using it as a benchmark or comparing it to the Kings' situation. If the NBA successfully desensitized you from all future awful antics so that only those which are greater than or equal to a cartoonishly villainous plot raise a red flag with you and your fellow journalists, then it might be the greatest business decision the league ever made.

The only true connection worthy of noting between the Seattle and Sacramento situations is that the man at the center of the Sonics move is now in charge of determining the "fairness" of the Kings move. How is the irony of Clay Bennett leading the relocation committee not even registering with you? Also, one of the biggest reported victims of the Donaghy scandal is now at risk of losing the franchise. Consider that as well.

2) I sent you a variation of this when you were doing cartwheels about the prospect of the Kings moving back to Kansas City, but it obviously didn't have an impact on you. You seem as committed as ever to the "they've moved before, it's only fair" lunacy.

Regardless, here is a list of the teams in the 3 major US sports leagues that are in a city other than the one they started in and thus, according to your logic, open to relocation without justified complaint from the locals.
NBA
Los Angeles Lakers
Los Angeles Clippers
Utah Jazz
San Antonio Spurs
Houston Rockets
Golden State Warriors
Detroit Pistons
Philadelphia 76ers
Memphis Grizzles
Sacramento Kings
Oklahoma City Thunder
New Orleans Hornets
Atlanta Hawks
Washington Wizards

NFL
Chicago Bears
Kansas City Chiefs
Washington Redskins
St. Louis Rams
San Diego Chargers
Indianapolis Colts
Baltimore Ravens
Detroit Lions
Tennessee Titans
Arizona Cardinals

MLB
New York Yankees
San Francisco Giants
Los Angeles Dodgers
Oakland Athletics
Atlanta Braves
Minnesota Twins
Texas Rangers
Milwaukee Brewers
Washington Nationals

I know a lot of Chargers fans and if you tried to pull that crap of "the Chargers are from LA, it's only fair if they move back" you're liable to be castrated.

And before you counter with "some of those moves were ages ago," the Kings moved to Sacramento more than a quarter century ago. There are people who have been born, grown-up, graduated college, bought a home and been foreclosed on all during the Sacramento Kings era. On a personal note, I was 3.

3) You're assuming the Sacramento market isn't viable because why - it's a cowtown with poor access to corporate sponsors and a barn for an arena?

One: That "cowtown" is a top 20 TV market (the fine market of Seattle is 15) putting it directly in the middle of the NBA franchises.

Two: In under a week Mayor Johnson was able to round-up $9 million of previously untapped corporate sponsorship (showing that the Maloofs either failed at this for 12 years or simply never made the attempt).

Three: Nobody who is serious disputes that a new arena is desperately needed and the blame that there isn't one falls mostly on Sacramento because of a fractured municipality, a weak-mayor style government and little coordination/cooperation between the city and outlying communities. But the city now has a former NBA all-star as Mayor whose main platform during the election was keeping the Kings by building a new arena (and who flat out nailed his presentation to the Board of Governors), a billionaire in Ron Burkle teamed with local hero Chris Webber willing to buy the team and committed to keep it in Sacramento and a partnership with ICON who together saved the Pittsburgh Penguins (24 TV market BTW, which is, if my math is right, a smaller market than 20) and a suddenly motivated government, populous and business community.

4) Defensible? Have you not followed the story at all? The team is in such an awful position because the Maloofs are poor businessmen and ran it into the ground. After Webber blew out his knee, the Maloofs responded by putting together, season after season, a product of boring and uninspired burnt-out vets, late lottery rookies and MLE undersized Power Forwards led by a carousel of inexperienced and inexpensive coaches in an attempt to simultaneously "stay competitive" and cut costs while charging playoff team prices for tickets driving away and alienating fans. And that's not even mentioning their numerous questionable marketing ploys (gold uniforms).

It's the same plot line as Major League except the owners aren't sinister schemers, they're simply inept and painted themselves into a fiscal corner so the only way to stay solvent is to move to the #2 TV market and become Donald Sterling 2.0.

All of their businesses are hemorrhaging money - they lost majority ownership of the Palms through an ill-advised expansion, folded the Monarchs, got screwed in the Madoff scandal, sold their dad's beer distribution company for quick cash, have taken out loans from everyone willing to give them one (they even have to take out a previously undisclosed personal loan from Samueli just to move) - these are pieces of evidence proving the Maloofs are poor businessmen, not that Sacramento is a nonviable market.

And all this, as previously mentioned, with a multi-billionaire with a history of saving struggling small market franchises waiting in the wings. Interestingly, you say Sacramento simply drew the short straw with owners, but several paragraphs earlier in the same article you have this:
.
• Screwed over the best Canadian player ever (Steve Nash) by allowing Robert Sarver to buy the Suns because he was worth hundreds of millions "on paper" (so what if he didn't have any cash?), causing Nash to miss the Finals because his owner cheaped out from 2005-10.

Which could easily be converted to this, should the NBA approve the move:

- Screwed over fans who produced season long sellouts for 19 of their 26 years by allowing the Maloof Brothers to continue owning the Kings, despite an offer by multi-billionaire Ron Burkle to buy the team and keep it in Sacramento, because the Maloofs were worth hundreds of millions "on paper" (so what if they didn't have any cash?) causing the Kings to move to Anaheim so the Maloofs could get bailed out and eventually bought out by Ducks Owner Henry Samueli anyway.

The Maloofs are attempting to leverage all their other failing businesses by turning the Kings into a purely for-profit venture in Anaheim (again, like Sterling). As you've mentioned, they could have moved the team to a city with a modern arena and a rabid fan base hungry for basketball (Kansas City, Louisville, San Jose) or been viewed as heroes and moved the team to Seattle. But that's not what they're looking for - they are simply trying to keep their heads above water and at this point, Anaheim's potential TV contract and Samueli's personal fortune are their only life boats.

And what's worse, the Maloofs only own 53% of the Kings and the minority owners don't want to move. But the Maloofs stubbornly, selfishly refuse to sell. Even though it's clear they don't know what they're doing, even though their in debt up to their eyeball, they won't sell because their dad once sold the Rockets and said it was his biggest regret.

I too was once a Maloof apologist because I was convinced this was purely the city's inability to get a new arena. But just look at their antics at the Board of Governors meeting. They could care less if a legit arena plan backed by billionaires and a politically determined mayor is on the table. Especially with a new CBA in the works that could potentially provide more revenue for small-market teams. Instead, they acted like spoiled children who didn't get their way declaring "Sacramento will never get another team". They're desperate and drowning in debt because of their own doing and Kings fans are the ones about to pay the price.

I understand your lack of compassion because you'll never have to face what we're going through. No one will ever be able to claim a Celtics or Red Sox owner is losing money and being forced to move the team because Boston is nonviable as a market. And the reason is, because they'll never be able to hide behind that excuse. In bigger cities, if an owner proves to be inept, they sell the team. But for Sacramento, the onus is placed on the city because that's what everyone, like you, simply assumes is the problem.

This will be a defining moment for the NBA. Will they support struggling owners amassing mountains of debt and set a precedent for an exodus to big market money as an escape, or will they support a small market city that has everything going for it except a new arena?

This will also be Sacramento's defining moment. Will the city continue to be seen as a small-time, sleepy government cow-town or while it finally break out of its malaise and become a serious, big time city?

I hope you'll start recognizing it as such."

Bravo!

 

[The Hammer]

It all has to do with money. The bigger markets have in essence unlimited money to play with while smaller markets have to fuss over their salaries in order to make a profit.

All depends on the owner. Bigger markets tend to garner deeper pocket owners, and that's the main difference. The future of the NBA, I would say, and this is likely because of the next CBA, is in "emerging" markets. Mid/small markets are the new large markets, and precisely because of a rising tide that is forcing out small time owners in favor of mega rich owners, new arenas, and owning a team as a status symbol. In the recent past, this was the case in large markets, but that was initially because of the large tv/media markets = teams large value. Team values have increased so much, that small time owners are either cashing out or being forced out, in favor of mega rich people that have the capacity to not need something that takes up 150-500 million of their net worth to generate a significant positive cash flow. But rather benefits them in other ways. It is a strange world we live in, but this is the current reality.

 

[The Hammer]

Just went to the Simmons article again, and then to the youtube video of G and J he's got linked. Yesterday it was at like 6k views. Now it's up to 50k or so, and all the comments are like "Simmons sent me here. This made me cry. I'm a Boston fan. Screw the Maloofs. Go Kings." Repeat LA, repeat, Chicago, repeat Seattle, repeat Cleveland, repeat Miami....repeat ORANGE COUNTY...

 

[Glenn]

All depends on the owner. Bigger markets tend to garner deeper pocket owners, and that's the main difference. The future of the NBA, I would say, and this is likely because of the next CBA, is in "emerging" markets. Mid/small markets are the new large markets, and precisely because of a rising tide that is forcing out small time owners in favor of mega rich owners, new arenas, and owning a team as a status symbol. In the recent past, this was the case in large markets, but that was initially because of the large tv/media markets = teams large value. Team values have increased so much, that small time owners are either cashing out or being forced out, in favor of mega rich people that have the capacity to not need something that takes up 150-500 million of their net worth to generate a significant positive cash flow. But rather benefits them in other ways. It is a strange world we live in, but this is the current reality.

Well of course if an owner has so much money that his/her team is a toy to play with it makes no difference the size of the market. It is the lucky small/medium market team that has such an owner. As a general principle, the large markets have the advantage especially with a soft cap as there is now. There really is no limit as to what a team can spend if they are willing to pay the luxury tax.

Staples pulls in roughly $2 mil per game for the Lakers and that is just in ticket sales. That pays for the players with a whole bencj left over. That also is not counting money made from playoffs. There must be some hard stats as to how much a person spends on food and drink but the ticket sales are hard cash. If I could leverage my net worth to buy the Lakers, I would make money. Not so with the Kings. The Knicks are the poster child of what the size of a market can do. I don't recall exactly what their salaries are this year for their players but a few years ago it was over $90 mil. The team still sucked. I'll bet they made money.

The Kings depend on the luck of the draft, tight budgeting (who REALLY wants to lose money) and a unique free agent or two as players aren't lining up to come here. The extra benefits (advertising and the like) of living in LA and New York is a strong magnet.

This new CBA better be tough. I think the fact that the Hornets are still partially owned ny the NBA shows that potential owners are not exactly all that plentiful. The economy is shifting. Even the mega rich are feeling the pinch.

 

[kennadog]

The NBA is supposedly getting lots of offers for the Hornets. The NBA just hasn't been selling for whatever reason.

I believe the NBA wants the team to stay New Orleans, so buyers would have to agree to that.

 

[Kingster]

I think it's pretty clear the NBA is more nervous about the Maloofs finances than they are about whether or not Sac is a viable market. If we get this arena, the Maloofs are either staying put, or selling. I wonder how involved Burkle will be with an arena. Maybe someone can answer this, but is it possible to tie the Maloofs into a contract with a new arena, where if they don't make timely payments, they give up ownership, similar to what would have happened in Anaheim? Is there any way Burkle could get involved to the point that he could take over ownership if the Maloofs were late on a payment?

I don't think the NBA would have any choice at that point. They would have to take back the franchise. Then the NBA could sell the franchise to Burkle. Or maybe they just force the sale directly to Burkle.

There's been a lot of chatter about the NBA looking into Mayor Johnson's claims about there being $10 mill in corporate money out there for the Kings. But I haven't heard the same chatter about them investigating the Maloofs finances. I heard a little of that about a week or so ago, but nothing since. I would think the NBA accountants are looking their financial statements over very carefully.

 

[Superman]

This. Just make bird rights only apply to players you draft or whoever signs their first contract for players traded. Once you sign with another team or get traded those rights disappear. Eliminate sign and trades on bird rights players.

That kills the team with Bird rights. The Cavs were able to salvage a couple of draft picks out of LeBron James, even though he was willing to sign a shorter, cheaper contract with Miami. Bird rights didn't hold him hostage; they helped the Cavs. Same thing for the Raptors. You can fix the Carmelo issue without neutering Bird rights.

 

[Trueblood]

The NBA is supposedly getting lots of offers for the Hornets. The NBA just hasn't been selling for whatever reason.

It could also mean that a high sale price puts the owners at a disadvantage at the bargaining table. If the Hornets can fetch over $400 million then they won't have as much leverage against the players since that makes the economic landscape look less bleak then what they are trying to lead us to believe.

 

[Trueblood]

At the end of the day, the most important thing to have on your side is a solid front office and ownership team. Small market Portland, OKC, Orlando and SA have it and they thrive on the court. Memphis and New Orleans are developing it. Wallace seems to be improving. Demps looks solid in the Big Easy.

OTOH, King ownership has gotten cheap and it shows as they've lost a lot as of late. But so have a lot of large markets. The Clippers, the Bulls for the first 6 years post MJ, the Knicks, Nets and Golden State are all examples of franchises with thriving fan bases in large markets who have struggled mightily this past decade. A lot more losing than winning, that's for sure.

The constant in all of this isn't the size of the market but rather the competence of the respective front offices. And whatever holes exist right now are most certain to be closed or have already been shut and will be implemented as soon as the cba is ratified.