Want To Keep Your NBA Team? Better Fix Up That Arena

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The New York Sun

Summer vacation is nearly over for NBA Commissioner David Stern in terms of on-court action, but Stern is facing more than a few concerns as training camp approaches. There are a number of franchises — including Seattle, Portland, New Orleans, Oklahoma City, Sacramento, Brooklyn, and Orlando — that are still looking to resolve or negotiate arena deals. But finding a solution that will satisfy owners, customers, fans, and local politicians alike will not be easy.

Given the contentious state of things, Stern may need to start by mending fences in Sacramento. The Sacramento Kings’ ownership, led by the Maloof brothers, has for years been asking for a new arena to house both their Kings and WNBA Monarchs franchises. The group finally worked out a financial agreement with Sacramento politicians, slated to be voted upon by the city’s residents November 7. But last Wednesday, Joe Maloof walked away from the agreement after differences with officials over the number of available parking spaces for the building and plans for housing, hotels, and retail establishments on the site.

Sacramento officials want to keep the Kings in town, but it is possible that the Maloofs have other ideas. The brothers, who count the Palms resort in Las Vegas among their holdings, have lobbied Stern and the NBA’s front office to hold the 2007 NBA All-Star Game in Sin City.

Las Vegas Mayor Oscar Goodman has been after a major league team, whether baseball, basketball, football, or hockey, for years. The odds of Vegas landing a team are not very high because casino owners generally don’t want competition from other entertainment outlets. They want their customers firmly planted in their hotels and casinos, but it is conceivable that Vegas could land a team if a hotel and casino operator also happens to be a sports club owner, as is the Maloof family. Yet, while it is one of the fastest growing areas in America, Las Vegas offers too many negatives when it comes to Stern’s guidelines for a successful franchise, and gambling isn’t one of them.

Stern will tell you that a successful franchise needs government support, as well as a strong media presence, television deal, and corporations who will buy pricey seats and club suites. Goodman badly wants a team but isn’t certain just how a basketball or hockey arena, for example, would be funded. In the absence of any surrounding secondary cities to support a lucrative deal between a club and a sports network, Las Vegas makes for a terrible cable TV market. With those prospects, how much corporate support would there really be for any major league franchise? Without all three, Las Vegas is doomed as a major league sports city.

Stern’s problems don’t end in California’s state capital. He has two major headaches in the Pacific Northwest. A former owner of the Seattle SuperSonics, Howard Schultz, lobbied city officials for a new arena to replace the Sonics venue that was renovated in the mid-1990s. The founder and chairman of the global Starbucks chain was flatly turned down and sold the team this year to Oklahoma City businessman Clay Bennett.The Sonics–Seattle lease runs out after the 2010 season.

And here is where it gets interesting.

A former minority owner of the San Antonio Spurs, Bennett has been trying for a while to land an NBA franchise in Oklahoma City, where at his invitation, the New Orleans Hornets found a temporary home after the devastation of Hurricane Katrina. Oklahoma City’s business community did a great job of supporting the Louisiana team. But George Shinn and the NBA claim that the Hornets will return to New Orleans in time for the 2007–08 season.

If Shinn makes good on his promise, would Bennett — finding his efforts to get a new building in the Seattle area stymied — break his lease and exercise an option to move to Oklahoma City as soon as the Hornets leave? Or will Shinn find himself itching to go back to Oklahoma City after one year in a stillrecovering city whose business community didn’t really support the Hornets pre-Katrina? Or will he have to find another piece of real estate for his Hornets?

And if Bennett turns his back on Washington, will Portland Trail Blazers owner Paul Allen break his lease at Portland’s Rose Garden arena and head up I-5 to Seattle where his existing businesses includes the NFL’s Seattle Seahawks?

Allen has not only watched his Ogden arena company go bankrupt, but was forced to hand over to Rose Garden creditors, the high-end revenue sources that normally go to the team. Allen claimed he was losing hundreds of millions of dollars and threatened to leave the city unless Portland officials bail him out.

The NBA failed to find a buyer for the Trail Blazers and the Rose Garden this spring and, in early August, Allen announced he was not selling after all. Instead, Allen is trying to work with the creditors to resolve the situation. But the economic situation remains the same. The beleaguered owner is not reaping the valuable revenue that other NBA owners enjoy in their arenas.

In Orlando, Magic owner Richard DeVos has pursued a new arena for several years. In 1994, just five years after the Orlando Arena opened, the Orlando Magic president, Pat Williams, began sounding the alarm about how the arena was too small and antiquated. Twelve years later, the arena still lacks the high-end seating typical of NBA buildings and doesn’t offer the “fan amenities” like restaurants and other attractions that newer buildings have.

While there is a proposal on the table in Orlando to fix up the Citrus Bowl stadium, develop a new downtown performing arts center, and build a new arena, the Magic ownership wants a $385 million downtown facility but has not agreed, as of yet, to pick up any of the tab. Stern has promised Orlando officials that the city would get an NBA All-Star Game if a downtown arena were built, but Orlando may pass on building downtown altogether. Orange County, it seems, may be interested in moving the Magic closer to the county’s convention center, which would come at a significantly lower price tag without being too far from downtown Orlando or Universal Studios. The Magic ownership has a year-to-year lease with Orlando for the use of the city-owned arena and the franchise can be moved at any time.

Meanwhile in Brooklyn, Nets owner Bruce Ratner is still trying to win community support for his arena and mixed-use residential/commercial neighborhood plan. Ratner had hoped to move his Nets out of New Jersey by 2008, but that’s not happening. Ratner will probably be in New Jersey through 2010, maybe longer, or could wind up in the New Jersey Devils’ Newark Arena should the Brooklyn plan fizzle out.

There is no shortage of cities that would welcome DeVos, the Maloofs, Bennett, Shinn, or Allen: The owners of the San Jose Sharks have asked San Jose officials to renovate the 13-year-old arena and make it NBA friendly; Kansas City will open a new arena in 2007; Louisville has flirted with the idea of building a new arena for years and failed in its efforts to land Leslie Alexander’s Houston Rockets, Shinn’s Hornets, and Michael Heisley’s Vancouver Grizzlies.The Anaheim Ducks owner, Henry Samueli, who operates Anaheim’s city-owned arena, also is interested in scoring an NBA team.

But here are a few words of caution for cities that want to keep or are looking for NBA franchises: Be careful of what you are getting into when you build or renovate a home court, because after a dozen or so years, as Stern pointed out in Seattle last spring, the building will be obsolete.

The New York Sun

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