Highly Motivated Seller Seeks Buyer of NBA Franchise

Desperate times ahead in the NBA off the court and today’s news that Bob Johnson is looking to sell the Charlotte Bobcats is certainly a tipping point. 

For Sale

For Sale

I’m sure that it sounded like a great idea for Johnson to invest $300 million in an expansion NBA franchise back in 2002, but let’s be real.  Johnson is (or at least was) a billionaire and the founder of BET is no dummy.  The Bobcats are hemorrhaging money with no relief in site. 

NBA Commissioner David Stern can spin the ongoing financial aid offered to multiple NBA teams any way that he likes, but the reality is that this is just the beginning.  Johnson is actually probably one of the more astute owners in the league with plans to get out now and cut his losses before the bottom falls out.

And the bottom will fall out.  The league has survived despite some of the worst franchise management possible.  But the glory days are most definitely over.

Check out the quotes from Sal Galatioto, president of New York-based Galatioto Sports Partners, who confirmed to the Charlotte News & Observer yesterday that he is representing Johnson in a potential sale.

The Observer references Galatioto’s interview with The Wall Street Journal from November in which he discussed the challenges facing any potential sellers of major-league franchises:

“Part of the problem is how difficult and expensive it is to get financing,” Galatioto told the Journal. “If you are a seller, is this the time to bring your team to the market? When the cost of credit is up, the price of the team goes down. It’s like a house and a mortgage. The more you are paying on the mortgage, the less you can pay for the house.”

Asked in that same Journal interview what he’d advise a potential team-seller, Galatioto replied: “I wouldn’t advise a seller to go into the market right now and sell.”

If Johnson is that desperate to sell now, what does that tell you?  The NBA might get a feel-good story out of this if minority partner (and NBA Hall of Famer) Michael Jordan can round up enough investors to help him gain majority ownership, but that will be nothing more than a PR stunt. 

We could be about to enter the apocalypse of the NBA.  Billionaire owners have accepted the losses in the past while their other business interests soared.  But this is obviously a new day. 

And if there aren’t enough interested buyers, what becomes of some of these franchises?  Will we see teams fold?  Will the NBA league offices take over operation of a team in the not-so-distant future?  Possibilities (if not probabilities) to watch for. 

In the meantime, expect the free flow of money to overpaid, average ballplayers to disappear immediately.  The superstars will always get their cash but there is very little likelihood that the gravy train can continue for the rest of the league.  This offseason should be very telling as teams maneuver to get as much salary off their books as possible while making long-term personnel decisions based more on finances than wins and losses.

In the meantime, if you’ve got about $350 million or so to spend, there’s a franchise in Charlotte that has your name on it.  Well, actually, it’s Bob Johnson’s name, but feel free to get as “creative” as he did when you take it over. 

Or wait a few years and you might get a chance at another team in bankruptcy court.  You make the call.

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~ by acm213 on May 22, 2009.

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