The Hornets began playing at the New Orleans Arena after moving to New Orleans in 2002. (Photo... [+]
National Basketball Association commissioner David Stern should take a bow today after it was announced that the league is selling the New Orleans Hornets to Tom Benson, who already owns the Saints, the National Football League team that plays in the same city as the basketball team.
Benson is paying $338 million for the team the league purchased 15 months ago for $318 million from George Shinn. As part of that deal the league borrowed $70 million from Shinn at 3% interest. The NBA has also pumped working capital into the team, which has been losing money, and has forgiven a $3.9 million relocation fee owed by the Hornets for moving from Charlotte. According to a person familiar with the deal and the Hornet's finances, but who was not authorized to discuss the sale, the league's owners will break even on the transaction.
So not only was Stern able to orchestrate a deal that will keep the team in New Orleans, but his bosses get their money back.
It appears the primary reason Benson is paying $53 million more than we valued the Hornets in January is a new lease for New Orleans Arena offered by the state that will provide about $50 million of public money to upgrade the building. In return the Hornets, whose current lease expires after the 2014 season, must stay in the arena through 2024.
The team ranked 26th in attendance last season even though they made the playoffs. After the Hornets traded All-Star Chris Paul to the Los Angeles Clippers in December they turned into one of the worst teams in the league. The Hornets currently rank 25th in attendance, averaging less than 15,000 per game.
Stern will only remain a hero if fans start to show up to see the Hornets and corporate sponsors, which are not exactly in great supply in New Orleans, believe their advertisements will be seen. For that to happen Benson will have to pump some money into the team before the arena improvements are made.
If Benson doesn't do his part, Stern will not be asked to make a curtain call.
