A LOOK AT EXPANSION IN THE NBA : $32.5-Million Price Tag Doesn’t Scare Off Prospective Buyers

As with most things, the cost of expansion teams in the National Basketball Assn. has gone up.

In 1970, when the NBA added teams in Buffalo--that team is now the Clippers--Cleveland and Portland, the franchise fee was $3.15 million. In 1974 it cost the New Orleans--now Utah--Jazz $6.15 million to join the NBA.

The Dallas Mavericks, the newest NBA expansion team, paid $12 million to join the league in 1980. Last year, Fortune magazine estimated that the team was worth $36 million.

And the purchase price for buying new franchises was set at $32.5 million by the league’s expansion committee two weeks ago. That’s up $7.5 million from the rumored purchase price of $25 million, which was mentioned just six months ago.

“The price was based on a number of factors,” said Bill Jemas, assistant general counsel for the NBA. “We looked at recent franchise sales and we compared the potential income for a new franchise to expenses. We wanted to get a number that the team could afford to live under.”

The price hasn’t driven away any of the groups seeking franchises in Charlotte, N.C.; Minneapolis, Miami and Orlando, Fla.

“It didn’t scare me,” said George Shinn, a millionaire businessman and the would-be majority owner of the proposed team in Charlotte, N.C. “Someone offered $35 million for the New Jersey Nets, and they’re not even a winning team.

“When the Boston Celtics sold 40% of their stock, the team was valued at $100 million.”

Said Pat Williams, general manager of the group trying to bring a team to Orlando: “It’s a big number. But we’re too far into it to quit. We’ve made a commitment.”

The NBA Board of Governors, composed of one representative from each of the league’s 23 teams, will meet Wednesday in New York to vote on an expansion proposal to add three teams from 1988-90. A three-quarters vote--18 yes votes--is required for approval of a new team.

Earlier this month, the NBA’s expansion committee recommended that the league add three teams: Charlotte for the 1988-89 season, Minneapolis for 1989-90 and either Miami or Orlando for 1988-89 or 1989-90. The league will remain at 23 teams next season.

The six-man expansion committee also recommended that the league wait until the annual Board of Governors meeting next October to decide between Miami and Orlando, saying further study is needed.

“It was like setting off a civil war in Florida when they said they would wait six months to decide between Orlando and Miami,” Williams said. “We hope that they will make a decision on whether it will be Orlando or Miami on Wednesday. The thought of this going on for six more months is incredible.”

A spokesman for the Miami group said there would be no statement from them until after Wednesday’s NBA meeting.

There has been a rumor recently, however, that both Florida cities will be accommodated. That development would have the San Antonio Spurs moving to Miami, and Orlando getting the expansion franchise.

The NBA’s expansion committee recommended that the league hold expansion drafts in 1988 and 1989 to stock the new teams. Each existing team will be allowed to protect eight players. The new teams also will draft behind the seven lottery teams in the regular NBA draft.

The governors, however, have the power to change or disregard the recommendations of the expansion committee.

For example, when the Mavericks were formed seven years ago, the league announced that each team would be able to protect seven players in the dispersal draft, but later changed it to eight. And Dallas, which was originally to have drafted first, was given the 11th pick.

“I’m nervous,” Shinn said. “I’m not going to celebrate until after next Wednesday. The owners (governors) are wealthy businessman who have been successful because they make their own decisions. They’ll look at the expansion committee report, but you don’t tell them what to do.”

The expansion committee, which visited all of the cities seeking new teams, was headed by Richard Bloch, owner of the Phoenix Suns. Also on the committee were Norm Sonju, general manager of the Mavericks; Herb Simon, co-owner of the Indiana Pacers; Charlie Thomas, owner of the Houston Rockets, and Alan Cohen, vice chairman of the Boston Celtics.

The Mavericks would appear to be the perfect model for the new expansion teams.

The Mavericks have gone from winning just 15 games in their first season to having the second-best record in the Western Conference this season behind the Lakers.

They have been successful at the gate, as well, having been the runner-up in league attendance to the Detroit Pistons for the last two seasons.

A look at the four groups bidding for franchises:

CHARLOTTE SPIRIT

North Carolina is crazy about college basketball and the Atlantic Coast Conference.

But is it big enough to support pro and college basketball?

Although the population of Charlotte is just 400,000, team organizers say that there are 1 million residents in the metropolitan area and 5.5 million people within a two-hour drive of the arena.

“We’re the Spud Webb of the NBA,” said Shinn. “Because we’re smaller, we have to be better.”

Small apparently is relative, though. “We’re the largest metropolitan area in the country without a pro sports team,” Shinn added.

A $47.5-million arena seating 23,000 is scheduled to be completed in September of 1988. The arena is located between two major highways.

The Spirit got a deal it couldn’t refuse from the city of Charlotte--a five-year lease under which the team will pay just $1 a game in rent. That works out to $41 a year. The lease has a five-year option.

The organizers have sold 13,637 season tickets, including 5,000 after the NBA expansion committee’s announcement that Charlotte was its first choice. The ticket applications were accompanied by non-refundable deposits of $50 to $250.

Shinn, who owns auto dealerships, a book publishing company and is also involved in real estate, decided to go after a pro basketball expansion team when he failed in a bid to bring a United States Football League team to Charlotte. He once considered buying the Los Angeles Express.

His partners include Cy Bahakel, owner of 20 TV and radio stations, and Ricky Hendrick, a wealthy car dealer who is also a sponsor of NASCAR racing.

The games will be carried on TV and radio stations owned by Bahakel.

MINNESOTA TIMBER WOLVES

Minneapolis, which has been without a team since the Lakers left 27 years ago, is finally going to get a replacement.

Newspaper headline writers are going to hate this team. Try fitting Timber Wolves into a one- or two-column headline.

The nickname was selected in voting by city counsels throughout the state from a list of 6,000 possible nicknames submitted. The runner-up was Polars.

Obviously, the Lakers, would have been the logical choice for a team from the state with 10,000 lakes but Jerry Buss wouldn’t give it up.

The owners of the proposed Minnesota team are Marv Wolfenson and Harvey Ratner, millionaire business partners from the Twin Cities. They started in real estate but have expanded to other fields and now own 11 health clubs.

Wolfenson and Ratner almost brought the Utah Jazz to Minnesota last year. And they were among the investors in the old Minneapolis Lakers.

The team will play its games at the Metrodome, the downtown Minneapolis home of the Minnesota Twins, Vikings and University of Minnesota football team.

The Metrodome has been the site of NCAA basketball regional tournament games and it will also be the site of the Final Four in 1991.

The drawback for basketball, though, is that it takes two days to convert the dome from football or baseball to basketball.

The organizers plan to eventually build a $15.4-million, 18,000-seat arena in downtown Minneapolis--over a health club. That arena is still in the planning stages, though, and isn’t expected to be completed until late 1989 or early 1990.

Moreover, officials of arenas in suburban Bloomington, home of the local pro hockey and indoor soccer teams, and St. Paul, home of the state high school basketball and ice hockey tournaments, are opposing the new arena, saying that it will hurt their businesses.

The Timber Wolves have already received 9,000 season ticket applications, each accompanied by a $50 deposit. The team will be added to the Midwest Division in the Western Conference.

ORLANDO MAGIC

After spending 12 years as general manager of the Philadelphia 76ers, Pat Williams wanted a new challenge.

So he quit his job with the 76ers, sold his house and moved his wife and six children to Orlando last summer to head the drive for an expansion team.

“It seemed like the ultimate challenge to go into a community and start from scratch,” Williams said. “I knew this type of opportunity wouldn’t come along again. I still don’t regret it.”

The first task was picking a name for the new team. Magic was chosen from among 4,300 entries in a contest sponsored by a newspaper.

“We thought it was the best way to describe Orlando,” Williams said. “When people think of Orlando, they think of Mickey Mouse (Walt Disney World) Shamu the Killer Whale (Sea World) and spring training.

“After we picked the name we called Magic Johnson and he said that he was highly flattered that they’d named a team after him.”

A 15,500-seat arena is under construction in Orlando and is scheduled for completion in August of 1988. Williams recently presented NBA Commissioner David Stern the first seat cushion for the arena.

After receiving 14,785 ticket applications, the Magic stopped taking applications, Williams said.

“I think this is going to be another Portland, Phoenix or Salt Lake City-type of team,” he said. “It will be a Florida (state) team. I see a great future for the NBA here. We’re the 27th-largest TV market in the country and in 10 years we’ll be 18th or 19th.”

The team is backed by a group of Florida businessmen with a net worth of $500 million. It includes real estate developers Jim and Bob Hewitt and Bill du Pont, a member of the Du Pont family.

FLORIDA HEAT

A $50-million, 15,000-seat arena is being built in downtown Miami and is expected to be completed next April.

Cost of the building is being shared by the city and a private group.

The owners of the proposed team are Ted Arison, owner of a cruise line; Zev Bufman, a millionaire theatrical promoter; Billy Cunningham, former coach of the Philadelphia 76ers, and Lewis Schaffel, former general manager of the New Jersey Nets.

The team has received 8,300 season ticket orders.