Thursday, December 10, 2009
Reality Check
Posted by Chris Herrington on Thu, Dec 10, 2009 at 1:52 PM
The Grizzlies are coming off their best win in years, but some new material out from Forbes and CBSSports.com puts the team's current economic standing relative to the league in perspective.
In Forbes' annual ranking of NBA franchise values, the Grizzlies come in 29th, ahead of only the Milwaukee Bucks. Forbes projects the franchise's value as declining 13% in the past year, to an estimated value of $257 million.
Part of their conclusion:
The Grizzlies are hurting after winning only 28% of their games over the past three seasons. As a result the team's ticket prices are lowest in the league and attendance was second lowest in the NBA last year. Add the two together and the Grizzlies generated only $322,000 in gate receipts per game last season, one-sixth what the world champion Lakers pulled in per night.
Meanwhile, CBSSports.com's Ken Berger has gotten records of real, current numbers on actual paid attendance in the NBA so far this season. This information, relative to the Grizzlies, contains both positives and negatives.
On the downside, Berger reports that the Grizzlies real paid per-game attendance so far this season is last in the league at 6,879.
The sliver of good news? That number is actually up 6.8 percent over the attendance at this time last season, which looks more positive in the context of a current 3.7 percent league-wide decrease in real paid attendance through the first-quarter.
In short: The Grizzlies are still at the bottom of the league in true attendance, but are creeping up while attendance as a whole is declining. If the team can build on its recent good play and emerge as a legitimately competitive team for the first time in nearly four years, then there would seem to be a good chance that the current 6.8 percent attendance uptick will continue to increase.
Finally, Forbes has an extensive sidebar on the problems in Memphis, explicitly related to majority owner Michael Heisley's stewardship of the team, with both Heisley and minority owner Staley Cates quoted:
Heisley then irked his minority owners by announcing he was going to sell his stake for $360 million to a group led by former Duke University players Christian Laettner and Brian Davis. The deal never got far beyond that announcement. Junior partners say it was a bogus attempt to drive up the team value for any counterbids. "Everyone knew they didn't have the money to close," says Cates.Heisley laughs out loud at the suggestion that it was anything but a good faith negotiation and adds that he'd rather see his Memphis partners own the team. "If they want the team they can step up and say what they'll pay," he says.
...
So the owners are left to grouse about what might have been. Cates says Memphis can support an NBA championship team just as well as San Antonio does. The cities are similar in size and income, and both have only one major league sports team. "They just do things right, and we don't," he says.
You can read the full piece here.
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If it's true that Heisley actually made money last year, it is interesting that the value of the team dropped.
I guess I just don't quite understand the valuation process, and I too was under the understanding that with FedEx Forum sales, the team broke even last year. Also in the CA article, there was something about Heisley being ranking in the Top 10 of NBA owners, but I couldn't find that in this article.
They have this thing called "goodsearch" and wouldn't you know, it works! LOL.
Anyways, I found the reference that the CA was pointing to, but his was from 12/2008.
Details:
No. 10: Michael Heisley
Memphis Grizzlies
All figures are from 2003 to present
Valuation Growth: 29.5% (19th)
Revenue Growth: 50.8% (5th)
Total Operating Profits: -$72.2 million (22nd)
On-Court Performance Rank: 16th (0.459 winning pct., three playoff appearances)
Market Size: 1.1 million (23rd)
Median Income: $40,201 (21st)
Heisley, who has made attempts to sell the team, has made steady progress growing the Grizzlies' business despite playing in one of the league's smallest and poorest markets. He's argued for a revenue-sharing system to help bolster small-market clubs, though his pitch has mostly fallen on deaf ears so far.
Link:
http://www.forbes.com/2008/12/03/nba-houst…
Somehow I don't remember hearing a whole lot about this at the time.
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