Inside the New Orleans Hornets’ Financial Troubles

by December 08, 2010

by Marcel Mutoni / @marcel_mutoni

The New Orleans Hornets may technically be property of the NBA now, but the League’s ultimate goal is to find a suitable buyer for the franchise, and soon. It will not be an easy task.

Saddled with a struggling local economy, leading to poor attendance, the Hornets are not in a good place financially. In fact, that may be putting it very lightly, according to documents obtained and published by Deadspin.

Below is a quick summary of the grim findings; make sure to read the entire thing for a clearer picture of the team’s cash woes:

Two things jump out, at least to this layman’s eyes: the team’s operating income, which in 2008 was a $6.4 million loss and in 2009 was a $5.9 million gain (slide 10), though that latter figures includes $3.4 million in revenue assistance from the NBA (slide 27); and the team’s net cash in operating activities, which represents the “measurement of money [owner George Shinn] is being asked to take out of his pocket to keep operations going,” according to sports economist Andrew Zimbalist. In 2008, that amount was $7.4 million; in 2009, $1.4 million (slide 12). Zimbalist points out that “things got much more problematic for the franchise” the following year.

Also of note: As of June 30, 2009, the partners’ deficit totaled $83 million (slide 13). The team’s share of national broadcast rights payments was $26 million in 2008 and $28 million in 2009 (slide 27). And in 2008, the Hornets were told they had received revenue-sharing money in error for the 2005-06 season — $2.8 million, by the looks of it (slide 27). The money was paid back in 2009.

The League says there’s no rush to sell the team, but looking at the finances, it’s not exactly an asset that moneyed buyers will be rushing out to bid on.

On the bright side: the New Orleans Hornets are good this year; shockingly good. Assuming they make it into the postseason, that valuable source of income should help the franchise’s bottom line, perhaps making it look good enough for a prospective buyer.