Heisley May Find Pond Big Enough for Two Tenants

If Michael Heisley prefers to move the Vancouver Grizzlies into an arena without an NHL team, and if the Mighty Ducks play in the Arrowhead Pond, why did Heisley visit Anaheim this week?

According to sources, the NBA team’s owner has said Anaheim remains an intriguing option for two reasons: The Clippers make money, and the potential of some sort of partnership with Disney.

While the Ducks’ lease with the Pond would divert revenue from Grizzly games into Disney’s pocket, an arrangement Heisley said Tuesday was “definitely a negative,” the lease is not believed to be an insurmountable financial hurdle.

If the Grizzlies move into the Pond, Disney stands to control an estimated $5 million to $7 million from premium seating, advertising and naming rights. Disney has offered to share that revenue with the Grizzlies--how much is uncertain--but analysts said the Grizzlies could probably make up that money in a deal with far higher stakes.

The city of Anaheim has offered to provide a training facility for the Grizzlies, worth about $8 million in free land and construction costs. Ogden Corp., operator of the Pond, is trying to decide how to pay for some or all of the $16 million that could be necessary for the Grizzlies to buy out their lease at the GM Place arena in Vancouver.

In the other four cities in the Grizzly sweepstakes--Louisville, New Orleans, Memphis and Las Vegas--Heisley could control an arena and all the money it generates. But Heisley is considering whether the wealth and sheer size of the Southern California market could help overcome the “negative” of the Ducks’ lease.

While the Grizzlies would be the second team in the Pond, the Clippers are the third team in Staples Center, where the Kings and Lakers generate the most money. Although the Lakers made $50 million in ticket revenue last season and the Clippers made $15 million, the Clippers nonetheless turned an $11.5 million profit, according to Forbes magazine.

And, although Heisley said Tuesday he had not discussed buying the Ducks, sources said he expressed interest in pursuing joint marketing ventures with Disney and did not rule out a future bid to buy the hockey team.

As Heisley last month prepared to seek NBA permission to explore a move, he bemoaned his status as a secondary tenant to the NHL’s Canucks at GM Place and told the Vancouver Sun, “We cannot put this team in an arena with another hockey team unless the guy that owns the hockey team owns the basketball team.”

So long as he does not own the Ducks, Heisley would have to share revenue with Disney, but Pond executives presumably tried to sell him on the idea he could make more money here anyway.

Could he? Bill Hines, chairman of the New Orleans regional economic development group MetroVision, told the New Orleans Times-Picayune that the new arena there could sell its 44 suites for $70,000 to $90,000 each per year, and its 2,800 club seats for $3,500 to $4,000 each per year. The price would cover all events in the arena, not just NBA games. The total potential revenue, estimated at $14 million per year, might all flow to the Grizzlies.

Two analysts contacted Thursday suggested the Pond could add a $70,000 annual premium to the prices of its 82 luxury suites and a $4,500 premium to the annual prices of its 1,716 club seats, generating as much as $13.5 million per year on the sale of those seats for NBA games alone.

The Pond already charges $99,000 to $151,000 per year for luxury suites and $6,900 to $9,500 for club seats. The potential revenue from those seats for all events, including NHL and NBA games as well as concerts and shows: $37.8 million.

Even if Heisley could not immediately negotiate his way into a share of that money, revenue from broadcast outlets and additional advertising would more than make up for whatever money Disney is not willing to share.

Heisley said Tuesday that he believes the Grizzlies would make more money in broadcast revenues in Anaheim than in any of the other cities he is considering. The Grizzlies could earn about $6.5 million per year in local broadcast revenue in Anaheim and about $2.5 million in Louisville or New Orleans, said Hadrian Shaw of Paul Kagan Associates, a sports media research firm in Carmel.

The Pond also has offered new interior and exterior advertising space to the Grizzlies. That could be worth $3 million to $5 million per year to the team, according to an executive from another NBA arena.

If Heisley opts for Anaheim, the City Council would have to approve the offer to build a training facility for the Grizzlies. Councilman Tom Tait said Thursday he is excited about the possibility of NBA basketball coming to town but said he would not necessarily vote to pay for the Grizzlies’ practice site.

“I’m not interested in subsidies,” he said. “There would have to be some sort of financial or community benefit so it’s in the best interests of Anaheim.”

Mayor Tom Daly has said the Grizzlies would be asked to make the facility available for community use when the team is not practicing.

Meanwhile, Heisley spoke Thursday with Las Vegas Mayor Oscar Goodman. The city could provide land for a new arena, Goodman said, but would not pay for its construction.

“That is something Mr. Heisley is going to have to worry about,” Goodman said.

The city and the casino industry may be willing to remove the Grizzlies’ games from sports books, but the league remains insistent that no team will play in Las Vegas unless all NBA games are removed.

“They’re not going to hear that answer. The industry will not take the NBA off the boards,” Goodman said.