NBA: A Season Begins : Price of a Starting NBA Franchise Is Up to $32.5 Million
When the Chicago Bulls entered the National Basketball Assn. in 1966 as the first expansion team of the modern era, the team paid a $1.2-million franchise fee.
Their payroll was $180,000 for 12 players, which is what Michael Jordan probably makes for a 1-minute TV commercial.
The Seattle SuperSonics and San Diego Rockets paid $1.75 million to join the NBA the following year, and it cost the Milwaukee Bucks and Phoenix Suns $2 million to get into the league in 1968.
In the next wave of expansion, the Portland Trailblazers, Cleveland Cavaliers and Buffalo Braves, who eventually became the Clippers, joined the NBA for franchise fees of $3.7 million in 1970. And the New Orleans Jazz, who later moved to Salt Lake City, paid a $6-million franchise fee in 1974.
Times have changed--drastically.
The Charlotte (N.C.) Hornets and Miami Heat, who started their inaugural seasons last weekend, paid $32.5-million franchise fees, up $20.5 million from 1980, when the Dallas Mavericks joined the NBA.
The NBA will add two more teams at that price next year, the Minnesota Timberwolves and the Orlando (Fla.) Magic.
And some NBA executives think the expansionists got a bargain.
“We overpaid at $12 million and they underpaid at $32.5 million,” said General Manager Norm Sonju of the Dallas Mavericks, a member of the NBA’s expansion committee. “When we came into the league, teams were being sold for under $12 million and today teams are being sold for a lot more than $32.5 million.”
The financial projections for the Hornets and Heat are much brighter than their outlooks on the court, where they’re expected to lose a lot. San Diego won only 15 of 82 games in its inaugural 1967-68 season and Cleveland duplicated the effort in 1970-71. The Bulls hold the NBA record for most victories by an expansion team, 33 games in 1966-67.
“I predict that the Hornets are going to gross more than the Lakers (who made $13 million last season in leading the NBA),” said owner Jim Fitzgerald of the Golden State Warriors, who has studied the Hornets’ income and expenses. “They’re going to lead the league (in gross revenue).”
Said NBA Commissioner David Stern of the expansion teams: “They’re going to wow our league. They’re going to lose a lot of games, but they’re going to be an unqualified financial success. We know what their lease obligations are, we know what their ticket sales are and we know what their payroll is.”
Both the Hornets and the Heat have strong financial backing. The Hornets are owned by a partnership headed by George Shinn, who made $50-$80 million through a chain of business schools.
Carl Scheer, who spent 10 years as general manager of the Denver Nuggets and also served 2 years as head of the Clippers, was hired to run the front office. He tapped Dick Harter as the team’s coach. Harter, a former coach at Oregon and Penn State, served his pro basketball apprenticeship as an assistant at Detroit and Indiana.
“Our goal is to get better every day,” Scheer said. “We know that it’s going to take time to get it done. We feel good about getting started but the harsh reality is that it’s going to be extremely difficult.”
The Heat has a 3-man ownership group that includes Billy Cunningham, who starred for the Philadelphia 76ers and coached them to the 1983 NBA championship. Cunningham’s financial backers are Ted Arison, a multimillionaire cruise-ship owner, and Zev Bufman, one of America’s top theatrical promoters. Singer Julio Iglesias is a limited partner.
The Heat tapped Lewis Schaffel, former general manager of the New Jersey Nets, to run the front office. A former player agent, Schaffel has been involved in the NBA for 10 seasons, working for the New Orleans Jazz and the Atlanta Hawks.
The Heat also has a rookie coach in Ron Rothstein. A former assistant at Atlanta and Detroit, Rothstein was credited with molding the Pistons into one of the NBA’s top defensive teams.
“Our goal the first season will be to improve every time we step on the court and to develop young players,” Rothstein told the Associated Press. “The most important thing to keep in mind when starting an expansion team is to be patient.”
The NBA required expansion applicants to sell more than 10,000 season tickets, and Charlotte and Miami easily surpassed the requirement.
Charlotte has flipped over the Hornets. Team caps have been sold out and the 25 phone lines at the team offices are constantly busy. Even Scheer couldn’t get through the switchboard when he was on the road recently.
“It’s been a great love affair with the fans,” said Scheer.
More than 8,000 fans attended a free team workout at the Coliseum last weekend and the Hornets have sold 15,000 season tickets at the 23,500-seat Charlotte Coliseum, which opened last summer.
They drew 23,388 fans for last Friday night’s season opener against the Cleveland Cavaliers, and have sold 12 sky boxes.
Eight 10-seat sky boxes on 5-year leases went for $45,000 this season, $50,000 for the second and third seasons, and $55,000 for the last 2 years. Four 18-seat sky boxes went for $85,000 the first year, $90,000 the second and third, and $95,000 the fourth and fifth seasons.
Charlotte got a sweetheart lease on the new $47.5-million, state-of-the-art arena. The Hornets pay just $1 a game to lease the arena and $1 a year to lease their practice facility from the city of Charlotte.
The Hornets added $5 million in improvements to the Coliseum, including a $3.8-million scoreboard that features four wide-screen TVs, suite boxes and locker room improvements.
The Hornets, however, will face some severe obstacles. Charlotte, which has a population of 470,000, is one of the NBA’s smallest cities. Team officials point out, however, that there are 3 million people in a the surrounding seven counties and and 5 million within a 100-mile radius.
Charlotte also is in the heart of Atlantic Coast Conference country, where you can’t get a ticket for college basketball games at North Carolina, Duke or North Carolina State.
The Hornets are optimistic that they can compete against the college teams, but it’s unclear how they’ll fare in the waning days of winter, when they’re losing games and the college teams are playing in the National Collegiate Athletic Assn. tournament
A local psychic predicted doom for the Hornets, telling the Charlotte Observer that the Coliseum was built on the site of a sacred Indian burial ground and anything associated with the Coliseum was doomed.
Coincidentally or not,a printing warehouse containing 5,000 Hornet press guides burned to the ground recently, and the team’s scoreboard crashed into the court at the Coliseum shortly before the arena’s grand opening last summer. It, however, was replaced at no cost to the team.
Miami, which also figures to do well at the gate, has sold 12,008 season tickets at the new $52.5-million Miami Arena, which seats 15,008. The Heat has sold out 8 games.
But the heat may be on the Heat after the honeymoon wears off. NBA observers question the Heat’s chances for survival in a market where there’s a large Latin population that presumably doesn’t care about basketball and a sizeable percentage of senior citizens on fixed incomes who don’t have money to spend on basketball tickets.
Team officials, however, point out that 30% of the Heat’s season ticket sales were made to Latins. The Heat also figures to receive strong coverage from Miami’s two Spanish-language newspapers, and a Spanish-language radio station will broadcast all 82 games.
“They did a good job of convincing us that the Cuban population of Miami is hard-working, industrious and good sports fans.” Sonju said.
Although the Hornets and Heat are using different strategies to reach respectability, they share the same model for success--the Dallas Mavericks. Born in 1980, the Mavericks reached the playoffs in their fourth season and have moved on to the NBA elite. They came within a game of reaching the NBA finals last season, losing to the Lakers in the Western Conference playoffs.
The Mavericks built through the draft, trading journeyman veterans for draft picks. They were helped because of the ineptitude of the Cleveland Cavaliers, who wasted their draft picks for washed up players.
“Cleveland didn’t just call us, they called all the other teams in the league too,” said Sonju. “But we were able to make deals right away because our plan was to trade any Homo sapiens we had on our roster for future draft picks.’
Said Scheer: “Certainly we’d like to duplicate Dallas’ success. They were the last expansion team and now they’re an elite team. But remember, they had the Cleveland Cavaliers and Ted Septien, who gave them first-round draft picks for nothing. We don’t have that luxury.”
The Mavericks, however, didn’t have the luxury of unrestricted free agency. And the new teams could become contenders faster that the Mavericks by signing free agents.
The Hornets are apparently going the free-agent route in an effort to become an instant success. They signed Laker forward Kurt Rambis to a multi-year deal and also picked up swing man Kelly Tripucka, a 2-time all-star who was run out of Utah by Coach Frank Layden.
They acquired veteran guard Robert Reid from the Houston Rockets and selected mini-guard Tyrone (Mugsy) Bogues in the expansion draft from the Washington Bullets. Bogues, a first-round draft pick last season, had a disappointing rookie season.
Charlotte used its first-round pick to draft guard Rex Chapman, who left Kentucky after his sophomore season.
Only time will tell if a team with two former Clippers, Earl Cureton and Tim Kempton, can become a success, however.
The Heat is taking a more patient approach than the Hornets and is building through the draft
Miami had two first-round picks this season, drafting Syracuse center Rony Seikaly and guard Kevin Edwards of DePaul. The Heat also picked up forward Billy Thompson from the Lakers and guard Dwayne (Pearl) Washington from the New Jersey Nets in the expansion draft.
The Heat also is stockpiling draft picks. They got a 1990 or ’91 second-round pick from the Lakers for not taking Kareem Abdul-Jabbar in the expansion draft and acquired a 1989 second-round pick from Boston for agreeing not to take All-Star guard Dennis Johnson. After selecting forward Fred Roberts from the Celtics, they traded him to Milwaukee for a 1989 second-round pick.
The Heat signed just one free agent, swing man Pat Cummings of the New York Knicks, who reportedly got a deal worth $500,000 a season.
THE NBA’S NEWEST MEMBERS CHARLOTTE HORNETS Home Court: Charlotte Coliseum (23,500, built in 1988) Majority Owner and President: George Shinn General Manager / VP: CarlScheer Coach: Dick Harter MIAMI HEAT Home Court: Miami Area (15,362, vuilr in 1988 General Limited Partners: Ted Arison, Zev Buffman, Bill Cunningham Managing General Partner: Lewis Schaffel Coach: Ron Rothstein