BY Art Thiel 06:12PM 05/29/2013

Thiel: Too bad expansion wasn’t the first choice

By Feb. 1, Stern will be gone and NBA will be near new TV riches. Pending an EIS battle, that improves Chris Hansen’s chances for an expansion team. Forget relocation. Please.

Spurned by the NBA, Chris Hansen has to turn his attention to the arena project. / City of Seattle

Asked what he knew of NBA commissioner-elect Adam Silver, Chris Hansen said, “He’s a rational, sensible guy.” If true, whew. That puts him well ahead of his predecessor, David “I have a game to get to in Oklahoma City” Stern, for whom vindictiveness is a life force.

Yes, I know: Hansen encouraged his Seattle audience listening on KJR radio Tuesday to get over the anger they felt toward Stern and the NBA for rejecting his bid to buy the Sacramento Kings and make them the Sonics. That’s fine. Good of Hansen to help with the group therapy, and better that Hansen himself take the high road. He has no choice, really.

But the issue is not anger. The issue is fair dealing. Seattle was never going to get a fair deal from Stern. He said so Nov. 8 2007, in Phoenix when he said of the the Clay Bennett-owned Sonics: “If the team moves, there’s not going to be another team there, not in any conceivable future plan that I could envision. There’s no way the league would ever return to the city.”

Well, the Sonics left, and so far Stern has been right. But his tyranny ends next Feb. 1, when Silver takes over. Only then will there be a chance to see if Silver is, as Hansen believes, rational and sensible, ushering in a different kind of leadership.

By Feb. 1, other things will have changed too, regarding Seattle’s chances for another pro basketball team.

The proposed arena’s environmental impact statement will have been released, and opponents of the SoDo location will likely be months into their lawsuits. The NBA will be several months into a negotiation with its network partners, and will be close to a new deal well before the current contracts’ expiration after the 2015-16 season. And most of the NBA’s money-losing teams will be a year closer to break-even as the effects of the 2012 collective bargaining agreement take hold.

The upshot is the chances — should Hansen prevail with the EIS — will have increased to have an expansion team granted to Seattle, while the chances of a relocating a team will be reduced to near zero.

For Seattle, an outcome of expansion will be much better than had Hansen and partner Steve Ballmer succeeded in poaching the Kings. Yes, gratification for Sonics fans will have been delayed, but the ugliness recently visited upon the two sports markets and the NBA will not have to be revisited, and Seattle can engage with a fresh team without blood on its hands.

Hansen’s interview with KJR revealed he really didn’t have the ruthlessness to be  predatory — his word — in extracting the Kings. Ballmer probably didn’t blink, but Hansen confessed that the conflict between the cities “made me sick to my stomach,” and caused him to ask himself, “How did I get myself in this position?”

In hindsight, an unpleasant fight was a guaranteed minimum, and a bad outcome was virtually forecasted six years in advance by Stern. Hansen and Ballmer didn’t see it coming.

From the moment the Sonics left in July 2008, the central question about the return of the NBA was: Did Seattle have the chops to poach a team like Oklahoma City’s Clay Bennett? Remember, the NBA at the time was financially faltering and would have been wiser to contract than expand.

Disregarding Bennett’s two dissembling years as owner in Seattle, he and Hansen had the same ultimate agenda: To take a team from another market. The hard-core Sonics fans didn’t care, but if one can judge civic attitude from a public vote, hard-core fans are in the minority. The I-91 vote in November 2006, which required a pro sports team leasing KeyArena to return a small profit, won by a citywide plurality of 74-26.

That vote offers a clue that there’s a majority of people in town who didn’t care about, or actively opposed, the Sonics and/or pro sports. That’s certainly how Stern took it. It’s how Hansen took it too, because he created an arena deal that put the risk heavily on the private side instead of the public side. Hansen knew he had to win over the don’t-cares, and their electeds, with a good deal for taxpayers.

For the don’t-cares who couldn’t avoid news of the daily drama of the Seattle-Sacramento fight, the pursuit of the Kings produced a contemptible visual: Billionaires throwing their own ridiculous sums and some tax money, as well as civic disparagements, at each other in a fight over a luxury item, an argle-bargle that looked even sillier in an economy that remains in the dumpster for many.

In short, the episode didn’t win over any of the undecideds.

It’s hard to fault Hansen’s business strategy; the Kings were the only available established team. There wouldn’t be a better chance in the foreseeable, nor was expansion on the agenda of league coming out of a nasty lockout. The unintended consequences proved tawdry.

But the outcome at least provided something Hansen could use: Time.

Asked about expansion vs. relocation Tuesday, Hansen said, “I don’t want to estimate that. We’ll know more in a year which direction has a higher degree of likelihood. In a new TV contract (a proposed inclusion of Seattle in the NBA) would add value.

“But I wasn’t in the room (at the owners meeting) for any discussion of expansion. You’re better off asking an owner.”

Regarding relocation, time will change nothing regarding the league’s reluctance to engage in it, and the CBA has made the need to move less attractive. Regarding expansion, time gives the owners a chance to calculate the pending TV riches in relation to sharing them with a 31st (and perhaps 32nd) partner paying a $600 million or more entry fee — the new threshold Hansen established in his desperation.

It’s possible that in a year or two or three, when the NBA says it will expand, Silver could induce other cities to bid, again introducing competition. But the prize will be for something new, not pre-owned by people disinclined to surrender a one-of-a-kind object of passion.

Any such competition is unlikely to induce in a worldly hedge fund manager a stomach ache.


YourThoughts

  • Tom G.

    Maybe I’m a little over-optimistic, Art. But what I took away from Hansen’s interview on KJR is he sounded 95% sure he was getting a team in Seattle in the very NEAR future.

    Could be the Milwaukee Bucks if their arena plans fail spectacularly early next year and they truly become a dying franchise like the Montreal Expos were (although Herb Kohl may rather see the Bucks get contracted because of the promises he’s made), but expansion would definitely make the most sense for Hansen’s group.

    And there are plenty of arguments that FAVOR expansion too. For instance, the NBA needs more teams west of the Mississippi, there isn’t a huge difference between 1/30 or 1/31 of the TV pie (especially if the pie is getting bigger) and it’s not as if a Seattle expansion team would be a DRAIN on the rest of the NBA like Charlotte’s expansion team (Bobcats) is because all the writing on the wall suggests Seattle would be AT LEAST a small “giver” in revenue sharing instead of a “taker”.

    So hopefully the NBA will come to their senses sometime next year about expansion (if the Bucks aren’t available) and we can see some Sonics basketball in 2014 or 2015.

    • art thiel

      Anything is possible, but Kohl is so committed to keeping the Bucks in Milwaukee that if he or his estate sell the team, he will stipulate to taking less money to keep the team local.

      Actually, adding one team means a 3 percent loss for each club. As with most businesses, three percent is a big deal on an annual operations basis .The one-time payment of an expansion fee will need to cover most of that loss over the length of the TV deal.

      • Tom G.

        If you do the math a certain way, you’re right, it is sacrificing 3% for each owner ($30 million/year vs. $31 million/year for each owner).

        But if the NBA is going to increase their TV cash in a relatively short amount of time by a good amount, it’s going to mean the NBA has room to grow anyways from where it is NOW.

        And even if the TV contract never increased, you’re only talking about subtracting $1 million or so from each club’s TV share and you’d be adding a team (Seattle) that wouldn’t be a long term DRAIN on the league like Charlotte is.

  • jafabian

    If the NBA wouldn’t allow the Kings to relocate on the premise that they don’t like moving established teams (despite moving the Warriors and Nets in the past year alone) I don’t see the league letting teams like the Bucks, Hawks or Bobcats relocating either. The best bet for the Hansen group is probably expansion and they’ll have to be prepared to shell out probably up to a billion dollars for that to help offset the loss of revenue by teams for allowing another team into their fraternity. Also think at least one other city will have to have an expansion team come in at the same time. The NBA would want 32 teams, not 31.

    I’m still not sure exactly why the owners are allowing Sterno to name his own successor? This has too much Fay Vincent potential to me. I’d think the owners would want to pick their own candidate rather then letting the Emperor putting his young apprentice in Adam Silver take over. Surprised no owners have voice displeasure over this.

    • art thiel

      Silver is a longtime figure in the NBA who was groomed as a successor and built good relationships with influential owners. It’s like that in most corporations. The owners voted on his succession.

      The Nets move and the Warriors proposed move are considered within the same market, although different cities. NJ was unwilling to upgrade its arena.

  • Kafkaeske

    “The I-91 vote in November 2006, which required a pro sports team leasing KeyArena to return a small profit, won by a citywide plurality of 74-26. That vote offers a clue that there’s a majority of people in town who didn’t care about, or actively opposed, the Sonics and/or pro sports.”
    Not really. There are some sports fans — people who would really like to have an NBA team — who are nonetheless opposed to spending public money to build arenas. Pro sports are good for the community, but they are also profitable. They can pay their own way like any other business.

    • art thiel

      Kafka, your accurate description is yet another subset of voters who have reasons to resist the demands of pro sports. People who live in the sports bubble — as with people who live in the left-wing bubble, right-wing bubble or the “Hoarders” TV bubble — often are hard-pressed to understand how many other rational viewpoints are out there.

      Turns out the I-91 supporters were large in number and won the argument — and helped lose the Sonics. Principles are hard.

  • John H.

    Art, I wanted to know who were the 8 owners that voted to relocate the Kings to Seattle? I know that Portland was one and I’m assuming that Dallas is another, but I don’t know for sure.