Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Sunday, April 21, 2013

Again, why doesn't the NBA just add another team for Seattle, rather than taking one from Sacramento

For a long time ("Baseball, hotdogs, Congress, and misplaced priorities" from 2006) I have argued that there should be Congressional hearings on how professional sports leagues play cities off each other to get the best deals for teams in terms of funding for stadiums, arenas, and other infrastructure.

The competition between Seattle, which lost its SuperSonics to Oklahoma City a few years ago, in large part because the citizens would not vote in favor of public funding for a new arena, and Sacramento which still has the Kings basketball team, majority owned by a financially-pressed family with limited ties to the area, is another example of why such hearings (and ideally, strictures on the use of public monies for such ventures) are in order.

The Maloofs want to sell the team, and are happy with it being relocated.  Obviously, the politicos and stakeholders in Sacramento want to keep the team, because in their eyes, it makes them "major league" (being the state capital isn't enough).

And a rich guy who grew up in Seattle would like to buy the Kings and move them to Seattle--this after the City of Sacramento developed an alternative for the Maloofs, with a new arena and a goodly deal of public funding.

After the Maloofs seemingly agreed and then backed away from the agreement with the City of Sacramento, the Seattle-focused group stepped in and the Kings team owners welcomed them with open arms.

The City of Sacramento then organized a competitive group-offer ("Sacramento, Seattle 'in the same ballpark' on Kings bids, Stern says" from the Sacramento Bee) and the two offers are competing for selection by the NBA Board of Governors.

In a blog entry in early March ("Seattle vs. Sacramento and professional basketball: why can't the NBA just expand?"), I argued that the NBA should just expand, that they shouldn't be pitting two cities against each other for one team.  The Sacramento Bee ran an editorial ("NBA should look to expand, think global" this weekend, arguing the same point.

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At 3:13 PM, Anonymous Alex B. said...

Why should the NBA expand? They don't want to dilute their product. They're not like Target or Wal-Mart, there are some serious reasons not to expand. Their product is not infinitely replicable, it is based on a limited pool of sufficiently talented basketball players.

You can easily make the case that another basketball league should challenge the NBA, but the start-up costs for such a league would be very high, and the track record for such start-ups in North American professional sports is limited.

But there is no mechanism (and shouldn't be one) to force the NBA to expand.

At 8:35 PM, Blogger Richard Layman said...

How many more teams would dilute the product? Clearly if there is enough money in both Sacramento and Seattle for a team, there is potential supply for at least one more.

The same issue is present in LA wrt football (not that I care in either instance). Why not just add a team? The odd number of teams in either case could probably be accommodated.

At 9:46 PM, Anonymous Alex B. said...

Why would the current NBA owners dilute their own product, and the value of their own existing franchises?

You say there is enough money in both places, I don't think that's true - because you're not defining 'enough' the same way the NBA would.

Sacramento is a marginal market for the NBA, in all likelihood. Unlike the NFL, the other sports leagues do depend on the ability of their teams to generate revenue locally.

Don't get me wrong, I don't disagree with the idea that Sacramento can support a professional sports team of some kind. I'm just at a loss for why you would suggest that the NBA should be forced to accept a low-performing franchise.

In many ways, the promotion/relegation method of organizing sports franchises in Europe is a superior principle and solves a lot of these problems, but the geography of the US is a huge reason why that paradigm never evolved here and why it remains problematic.

At 3:25 PM, Blogger Richard Layman said...

well, there are a couple ways to look at it. One is in terms of marginal contribution to revenue. Not all teams and markets contribute equally, but in classic microeconomics, as long as contribution is greater than zero, you would still invest/expand.

There is no question that Seattle is a better market than Sacramento.

But another element is whether or not communities will contribute and how much to stadiums and arenas.

At 11:39 PM, Anonymous Alex B. said...

But the NBA is invested in being the best professional basketball league in the world. There's a limit to the size of such a league, and they're likely already at it in terms of the raw number of teams. Given the financial needs to support a team at that high level and the kind of market required to locally support a team, you're looking at a fairly limited number of markets, as well as a fairly limited number of total franchises in the top tier.

There's also the matter of competing for scarce entertainment dollars. Here the NBA has had some pretty good success in establishing teams in 'mid major' markets in cities without any/many other professional sports (Sacramento, Salt Lake City, Oklahoma City, Portland, San Antonio are examples), a potentially lucrative way to corner a market in a medium sized city - so long as the team is successful enough to keep the interest of fans.

Sacramento has been terrible for quite some time. And it's too bad, since they were robbed by the refs in the playoffs about a decade ago. Point being, in those smaller markets, the margin for error is smaller.

At 11:44 AM, Blogger Richard Layman said...

Good points. And if the mid market teams are less well positioned in terms of ownership and financing, then they have like you say, much less room for error.

And of course, if the teams are important to the cities, they have no recourse, no way to influence the way the team is managed.

cf. the Marlins (in a different field) and Jeffrey Loria.

At 10:42 AM, Anonymous Alex B. said...

Richard, thought you might like to see this - it looks like the NBA will not approve the move to Seattle, despite the Seattle group offering a higher bid. Why?

Basically, the Sacramento group had a lower bid on the team but also a political deal to get a new, publicly funded arena built. The NBA doesn't want to upset the applecart of publicly-funded facilities, so Seattle's superior bid (larger market, better offer, and mostly-privately-finaced arena) likely goes unaccepted.


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