The commish wants to reduce player’s costs, possibly contract teams.
Is there a benefit to contraction?
Actually, yes. There are perceived benefits from reducing the number of teams in the League, starting with a bigger slice of the pie for all remaining franchises.
“These owners want a guaranteed profit,” Boland said. “Having fewer people cutting up the pie makes the franchises more valuable.” The more successful franchises could view a smaller overall amount of money as more appealing if they were able to take a larger cut of it. It has to bother some of them that inferior franchises — on and off the court — can possibly benefit financially from their success.
Feldman noted that the resulting player reassignment from eliminating two or four teams could result in more “Miami Heat” teams across the League. Imagine players like Tyreke Evans, Gerald Wallace, Chris Paul and Rudy Gay moving to new teams as part of a contraction plan.
Oh yes, there is a reason players from the Kings, Bobcats, Hornets and Grizzlies can be seen as four potential contracted teams.
The Kings don’t play in a terrible TV market (It’s the 19th largest out of the 28 NBA markets), but they’re in a tough arena situation. There doesn’t seem to be any concrete plan to replace the antiquated ARCO Arena. The Kings averaged 13,254 fans per game last season, the second-worst number of all teams. Given the perilous economic situation in California, and specifically Sacramento, where the unemployment rate in August was 12.8 percent, it doesn’t seem likely that the city’s residents will fill up ARCO to watch a below-average team, much less help fund the construction of a new arena. Especially when the team’s owners, the Maloofs, are billionaires who publicly revel in their excessive Las Vegas lifestyle.
The Grizzlies have been a moribund NBA franchise since their inception in Vancouver in 1995. Despite finishing with a decent 40-42 record with a promising young group of players revolved around Gay, O.J. Mayo and Marc Gasol (recouped in the Pau trade), the Griz still drew only 13,485 people per game. That was the third-worst rate in the NBA last season. Memphis may just not be interested in having an NBA team. There certainly aren’t many corporate partner opportunities in the traditionally poor city outside of FedEx. To top it off, Memphis is the second-worst TV market in the League. The worst? You guessed it — New Orleans.
Fielding a team in a city which has been hit so hard by environmental disasters the last five years is a wonderful story. The NBA — and NFL — deserve credit for trying to make its New Orleans-based franchise succeed. But the Hornets are one Chris Paul temper tantrum away from becoming irrelevant. Majority owner George Shinn’s plan to sell his 75 percent stake in the club to minority owner Gary Chouest, who owns 25 percent of the team, is still unresolved with no completion in sight.
We’re left with the Bobcats, the franchise bought for $275 million in February, not including assumption of debt, by Michael 
Jordan. They seem safe on the surface. After all, they made the playoffs last season and are owned by the League’s most famous player. Yet Boland views Charlotte as a combustible situation for the NBA.
“They’re always a question,” Boland said. Charlotte is a big-time banking community, so when the banking industry thrived during much of the 2000s, so did Charlotte. But since the latest recession, the banking industry has been going through rough times, meaning the Bobcats have lost many possibilities for corporate partners and paying customers. Then there’s the issue of competition.
“You are competing into the teeth of North Carolina, Duke, North Carolina State and Wake Forest,” Boland emphasized. “A lot of people with money in Charlotte already are paying to have college tickets.”
It makes it difficult for the Bobcats to gain a strong foothold in a market which embraced the Hornets in the late ’80s and ’90s because that was their expansion team. The Hornets were genuinely theirs — not a makeup squad which the Bobcats became after the Hornets moved to New Orleans — during a team when the NBA expanded rapidly. Perhaps too rapidly, said Boland.
Six teams were added to the League from 1988-95. Owners of the existing teams loved it at the time because that meant they reaped expansion fees. Yet now it’s a drag on a League which has the vision of expanding one day overseas. Europe has been seen as a clear expansion goal for Stern for a number of years. Boland said contraction could precipitate that move. “Maybe the first step to possible European expansion is paring down the number of teams domestically.”
An obvious retort to that point is to ask why the League wouldn’t simply relocate existing teams to Europe. Boland and Feldman noted that keeping poor ownership in place wouldn’t solve the problem, no matter where the team played. Furthermore, there might be legal road blocks to uprooting a franchise.
Teams are bound by their arena leases. A city could choose to legally prevent a franchise from relocating if the city helped fund the arena in which the team plays. Plus, the corporation that owns the arena could also sue the team for breaking its lease agreement. “Contraction may be legally easier than relocation right now,” Boland said.
Contraction not only could remove teams which perform poorly on the court. It could be a means to separate bad team owners from their place in the League. It could also solve problematic lease agreements, with the League resolving any financial and legal disputes with arenas and cities as a result from contraction. Removing teams in those situations could also open the door to eventual expansion in more favorable domestic or international markets. Think of it as the NBA biting a bullet to take care of their problem areas with a look toward getting a re-start of sorts in different markets.
Stern and the League won’t stick to their demands to the point they would risk locking out the players after the collective bargaining agreement (CBA) expires, right?
This is obviously the question nobody has an answer for. Contraction, for one, could be nothing more than a threat. Stern has put Billy Hunter, Executive Director of the NBA Player’s Association, in a situation where he could stop contraction but sign off on some sort of cut to player’s costs. In that respect, Hunter could make an argument that even though he gave up player costs, to a degree, he also saved the jobs that the League had threatened to eliminate.
“Stern is clearly dictating where the concern and terms of the deal will be,” Boland said.
Since Stern and many folks on the League and player’s side have already experienced the 1998-99 owner’s lockout, it would stand to reason they’d think twice before stepping into that minefield again.
“Given the saturation of the marketplace with all the different sports you can watch on television, there’s an incredible risk that if your sport goes away for any period of time, your fans might not comeback,” Feldman said.
With the NFL also on the verge of a work stoppage, the NBA has a possible opportunity to significantly add to their fan base in the next two or three years. That is, if they can work out some of the serious issues outlined by Stern last week.
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