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Art Garcia

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David Stern says there is no timetable for the NBA to sell the Hornets.
Chris Graythen/NBAE via Getty Images

Is buying the Hornets a smart business move for the NBA?


Posted Dec 7 2010 1:28AM

Is it possible that the Hornets' standing in New Orleans is on firmer ground without local ownership? Can the league and the 29 other owners that will hold an equal share in the Hornets insure that they're keeping the franchise's best interests at heart?

That's the message NBA commissioner David Stern delivered during Monday's landmark announcement. The league has agreed to buy 100 percent of the Hornets from troubled majority owner George Shinn and one-time franchise savior Gary Chouest, opening a new business venture for the NBA in an uncertain economic time.

"It's a very smart move by the league," Dallas Mavericks owner Mark Cuban told NBA.com.

The dot.com billionaire knows a thing or two about investments, and this deal sets up a potential financial windfall for Cuban and his fellow owners. And not just when the Hornets are eventually sold.

The league agreed to spend somewhere in excess of $300 million -- Stern said it was essentially the same purchase price Chouest originally brokered with Shinn before that deal fell apart -- to take over the Hornets until a new buyer is found. The league isn't in any hurry to do so, while it surveys the market and clears up a few other pressing matters.

Chief among them are the ongoing labor talks. The possibility of a lockout looms after this season, as does the prospects of a revamped economic system titled heavily towards the owners. Though little has been decided on that front, with the league and the union in the midst of negotiating, the outcome will greatly impact the future of the Hornets.

The owners are pushing for a deal that reverses the hundreds of millions of dollars in losses they're claiming under the current collecting bargaining agreement. Should they succeed in getting an owner-friendly deal that in some revenue models essentially guarantees a profit of at least $10 million annually for each team, franchise values would shoot through the arena roof.

The Hornets would, of course, be part of that cash flow. Couple that with an enhanced lease arrangement at New Orleans Arena and additional government partnership at the local and statewide level in Louisiana, and the Hornets are suddenly a shiny new ring for would-be buyers, foreign and domestic, to ogle.

"We think it's a very good investment for the league," Stern said.

Asked if the league expected to make a profit on the Hornets whenever the ownership situation is permanently resolved, Stern said simply and emphatically: "Yes."

"We expect the collective bargaining to conclude successfully and improve the financial condition of all of our teams, including New Orleans," he added. " We expect revenue sharing to be more robust than it currently is. And so we're not in any particular hurry."

The league wants time to assess the situation on the ground in New Orleans, the commissioner explained. Study the team's business arrangements, talk to those decision makers in government office and understand the challenges ahead. Stern reiterated on several occasions Monday that until that process is done, the league won't actively solicit potential buyers.

Without a timetable in place, the league could conceivably own the Hornets for several years. A similar situation took place with Major League Baseball, which bought that Montreal Expos for $120 million in 2002 and sold the relocated Washington Nationals for $450 million four years later.

Is that the fate awaiting the Hornets? If so, it would appear to bode well, at least in the short term, for New Orleans keeping its professional basketball team. Cities such as Anaheim, Seattle and Kansas City have been mentioned prominently as potential franchise relocation sites -- not just for the Hornets -- but Stern's drive to make it work in New Orleans is well documented.

"I supported the move to New Orleans," he reminded of the original relocation from Charlotte. "I supported the return to New Orleans. I championed the first game, major league sports event, that was played in New Orleans, post-Katrina, and we awarded the All-Star game to New Orleans when there was a suggestion that that was a futile act.

"So we have shown confidence on every occasion in the city of New Orleans."

Buying the Hornets may be the ultimate show of confidence. Financially and otherwise.

Art Garcia has covered the NBA since 1999. You can e-mail him here and follow him on twitter.

The views on this page do not necessarily reflect the views of the NBA, its clubs or Turner Broadcasting.

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