Phoenix and Sacramento. Two cities with professional sports teams in similarly dire situations, but two problem franchises with likely different futures--why is that the case? Does it really mean one league, the NHL, supports failing franchises while the other league, the NBA, does not? No. Both leagues have taken over the operation of financially strapped organizations, most recently the NHL with the Coyotes and the NBA with the Hornets of New Orleans. One must look elsewhere for the distinction in the two cases.
In the simplest terms, one city, Phoenix, is a major market ("major" based upon population, indigenous wealth, and media attractiveness); the other, Sacramento, is not. Therefore, one league will bend over backwards to grab its heels and walk a tightrope to keep the team in a major market region. The other league will become heels and look the other way while the team moves from a small market region to a mega-market area, all the while saying the right things about the tragedy for its local fan base. Of course, owners will vote to approve or disapprove the franchise moves. They have similar agendas: the bottom line.
Slightly more complex is another distinction between the Coyotes and the Kings: the actual ownership issue. With the Coyotes, the NHL owns and operates the team at present. They have been courted for some time by an ownership group in Winnipeg, from where the Coyotes originated as the Jets, and an ownership group in Chicago. The Winnipegans would move the team back to Canada; the Chicagoans would keep the team in the Phoenix area (actually the suburb of Glendale). The NHL would like to sell the team to a financially viable group from anywhere. The NHL was behind the initial exodus of struggling teams from Canada to the southern United States over ten years ago. The league would not like to retreat from its pro-American media policy.
Meanwhile, the Kings currently have private ownership, ownership whose financial empire has endured hard times of late. They need and demand a better bottom line from the region: that means better financing of a city loan, financing of a better arena, and better perks and incentives to stay. The city has not been accommodating up to this time: California has suffered heavily from the recession, and givebacks are political liabilities.
While a move to San Jose or San Diego would be more logical in California, neither region has an individual stepping forward to help facilitate a Kings franchise move. Anaheim does. Better yet, the individual already runs a sports franchise (the Ducks of the NHL) and operates a much nicer arena (the Honda Center) than the Kings have. Better yet, the individual is willing to take an ownership stake in the team. Better yet, the city of Anaheim has authorized a $75 million payout to the team to facilitate the move south. Some of that would pay for arena modifications and improvements for basketball; some of it would help pay off the $70 million loan the Kings owe the city of Sacramento.
I repeat, the Phoenix Coyotes have the support of the NHL to stay in Phoenix, while the Sacramento Kings do not have such support from the NBA to stay in Sacramento. David Stern, NBA commissioner, can say he hopes the Kings stay in Sacramento, but he is also disgusted by the region's reluctance to provide more incentives to the ownership. Meanwhile, the NHL truly wants the Coyotes to stay in the West. The NHL wants the Coyotes to stay in the USA and not return to Winnipeg.
The NHL wants more television exposure and with that, greater advertising revenue. They want more from NBC and ESPN. NBC and ESPN want the NHL in all major American markets before they even consider expanding their coverage of games. The NHL also prefers better home-market cable television deals. Such deals result from larger markets. Phoenix is a top 10 market in the United States; Winnipeg is barely a top 10 market in Canada. Finally, the NHL prefers the Coyotes continue playing in a half-filled beautiful modern stadium, Jobing.com Arena, instead of a 75% full antiquated smaller arena in Winnipeg.
The story is different with the Sacramento Kings. Sacramento is a small market with a relatively small local media revenue stream. More than once, the city and the county have failed to approve of a viable plan for a new bigger and better arena. Power Balance (formerly Arco) Arena is only about 17 years old, but it was built with no frills (wooden floors, really) and not enough luxury suites.
Team-wise, the Coyotes made the NHL playoffs this year, although they have a tough task in facing the Red Wings in the first round. They lost the first game last night, 4-2. The Kings have had brief winning streaks breaking up longer losing steaks, and they will not be in the NBA playoffs. The young, rebuilding Kings made a big comeback from a 20-point deficit last night to force overtime on future neighbors, the Los Angeles Lakers, in probably their last home game at Power Balance Arena, before falling, 116-108.
The Coyotes have been losing approximately $40 million per season, and had three different ownerships before the league finally stepped in and took over in 2009. Even the legendary Wayne Gretzky couldn't turn around the balance sheet. However, the Coyotes do have a great stadium in Jobing.com Arena in suburban Glendale.
The Kings have been losing money, too, although even ballpark figures are closely guarded. They have also had three ownerships since arriving in Sacramento. Everybody wants to criticize current owners Joe and Gavin Maloof, but they are only responding to what the league has forced them to do. If the NBA had a revenue sharing plan like the NFL's, the Kings would not have suffered recent annual losses. The Kings would have been able to afford more free agents and retain more stars. The Kings would have been winning more and continuing the Divac-Webber-Bibbey glory years. However, full revenue sharing is not the NBA model. Instead, the NBA follows Major League Baseball's disparity model, where the rich get richer and the rest struggle to remain competitive and solvent.
The NBA loves major markets. The NBA loves free agents moving to those same major markets. Winning teams in cities like New York, Chicago, and Los Angeles generate more buzz. More buzz generates more popularity. More popularity generates more media coverage with better ratings. Better ratings generate better media deals and more advertising. Better media deals and more advertising generate more capital.
Apart from freak situations like San Antonio and Oklahoma City, most small market teams serve as feeders/minor league teams for the major market teams. For example, look at the Utah Jazz. Last year, the small market team had two all-stars and a Hall of Fame coach. Now, all three are gone and the team's winning ways are history.
Last summer, Carlos Boozer became a free agent and signed with Chicago. This season, Deron Williams grew more belligerent, argued with the coach more frequently, and basically forced the coach to quit. Hall of Famer Jerry Sloan quit at midseason because the team's ownership had to pander to and side with the franchise player in the conflict in hopes of keeping him when his free agency commenced (yeah, right).
As a result of Sloan's forced resignation, Utah fans voiced their disapproval of Williams. To eliminate the public relations nightmare, the ownership then had to eliminate Williams in a lopsided trade (which is what Williams wanted all along). Deron Williams is now in the New York media market with the New Jersey (soon to be Brooklyn) Nets. He will get more exposure, more endorsements, and more nightlife in the nation's largest media market. As in baseball, the NBA system is rigged against small market teams.
Sacramento is a small market, and the Kings' likely destination, Anaheim, is part of the huge Los Angeles market. Contrary to what Commish Stern may say, the NBA prefers saturating a mega-media market with three teams (Lakers - Clippers - Kings) instead of supporting a small-market city to retain one team, especially when that city does not build a new state-of-the-art arena or provide other revenue sources to team owners (can you spell "parking rights"?)
With the Lakers leaving Fox Sports West next season, the Kings have a built-in huge home cable network they can plug into. The Kings (soon to be called the Royals once again as befits their Rochester/Cincinnati heritage) will have Riverside, San Bernardino, San Diego, and Orange Counties as a fan base.
Additionally, the Kings will play in a much nicer arena at Honda Center, an arena with more luxury boxes. The area has a much larger and more lucrative corporate base that will buy more of those suites.
Phoenix already has a pleasant local television and radio package, befitting the sixth largest metro area in the USA. Winnipeg would not have numbers to match in that department, but they would have an ultra-wealthy new owner and a larger crowd for every home game. Canada should have more NHL franchises, but the NHL leadership, including commissioner Gary Bettman, still wants more teams in the United States. They still think it helps ratings and pleases the larger television networks. Never mind that ice hockey is Canada's national sport and enthusiasm is contagious.
One final note of distinction: in Arizona, the Coyotes have the support of the state governor and U.S. senator John McCain. The great war hero McCain says government givebacks and other fiscal incentives to lure or keep sports teams and other businesses is a necessary evil in today's world. That is how regions lure corporations and sports franchises to their neighborhoods. That is how cities keep baseball teams in town for preseason exhibition baseball. That is how some countries like Ireland lure corporations like Cisco to their locales. Don't be so quick to blame the ownership. Some owners and CEO's are mercenary out of necessity, under pressure from creditors and shareholders.
In Sacramento, no governor or U. S. senator could be bothered with the Kings threat to relocate. First, the team would be staying in California. Second, none of them are avid sports fans like McCain. Third, they act from political expedience, not from the heart. While the Maloofs will be presenting their case for relocation to the NBA Board of Governors in New York today and Friday, only the Sacramento mayor, former NBA star Kevin Johnson, will be presenting the case for retention of the Kings. He will do this while admitting there is no new definitive stadium plan and no taxpayer and bond bailout plan in place to counter gains the Kings will make from a move to Anaheim.
What's the point of building a new arena in Sacramento when there isn't the clientele to fill more luxury suites? What's the point of building a larger arena when they can't fill the old one now? What's the point of building a larger arena when the NBA's anti-revenue-sharing policy and Kings' financially imperiled ownership prohibits them from acquiring great free agents who can put more fannies in the seats?
Sacramento's arena, Power Balance, isn't that old, but it does lack state of the art amenities. It isn't cool, and for the team owners who can also claim Las Vegas's Palms Hotel in their holdings, it really isn't cool.
Of course, the unexpected could still happen. The Coyotes could wind up moving back to Canada this summer and the Kings could wind up staying in Sacramento. After all, miracles do occur. Then again, it is likelier that the only miracles involving these teams in the near future will be the Coyotes beating the Red Wings in their opening playoff series and the Kings getting the first draft choice in the lottery.
David Stern has a press conference scheduled for tomorrow in New York, presumably with something to say about the future of the Kings. Senator McCain has forced fly-in-the-ointment third party the Goldwater Institute to sit down with the governor, NHL representatives, city of Glendale officials, and representatives of the Chicago ownership group in the near future to discuss the fate of the Coyotes. Good luck, teams. More importantly, good luck fan bases.
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