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Monday, September 8, 2014

Atlanta Hawks Owner Tries To Cash In On Fear of Racism

Maybe the way to get the best deal for an asset you want to dump is to be caught in a politically incorrect remark or e-mail, so some rich idiot who craves the adulation of the politically correct opinion leaders can get his fifteen minutes of so-called popularity.

The Atlanta Hawks' owner has self-reported an arguably racist e-mail as a claimed pretext for selling the team.

This is pure hogwash. No one worth his salt sells a valuable multi-million dollar asset because of threats or because of a racist comment.

Do you really believe that the owner woke up one day and realized, by George, I am a racist, I am no longer fit to be a sports team owner where a majority of the players are African-American?

No, the owner might sell an asset sensing its value might fall. There are a variety of factors that could be at work. Some of those factors probably led to the study that gave rise to the e-mail being cited as the excuse to sell. 

On the surface, the Hawks franchise has historically performed well at the box office, especially when compared to its crowds 20-30 years ago. See these stats through 2010 (not official) showing Hawks' crowds being on average their historical best ever in the last decade, despite the team's won-loss record not being too impressive and only one 50-win season in the last 15 years. Since the 2009-10 season when the team averaged 16,545 per home game (and won 53 games), average crowds have dropped by nearly 15 percent, but the team has also been mired in mediocrity. Despite making seven straight playoff appearances, crowds have declined. For the last season (2013-14) the Hawks were third from the bottom in average per game home attendance at 14,339. The prior two seasons, average per game attendance was slightly above 15,000 per game.  But attendance ranking among teams should mean nothing, not when there are disparities in the size of buildings, and further when the majority of team revenues come from national television contracts and licensing and sponsorships, even sales of luxury box seats, but not from actual grandstand ticket sales.

Ever think the Atlanta market itself might be the problem? Atlanta recently lost its pro hockey team, the Thrashers, which shared Philips Arena with the Hawks.

Or maybe Occam's Razor should be the guide. That is the principle that holds that the simplest explanation is probably the most accurate.

Yes, let's look at recent history as a guide. What about that buffoon out in Los Angeles, who owned the other NBA team in that metropolitan area?

A while back I speculated that the Los Angeles Clippers owner Donald Sterling was just using racism as a cover to boost the sale price of his somewhat underperforming basketball team by inducing someone to overpay in the chase for the approval of the politically correct applause corner. I thought then -- and do so now -- that Sterling executed a brilliant strategy. The team was sold --- for $2 billion. (Think there won't be buyer's remorse once the PC crowd's amen corner quiets down and moves to its next victim?)

Compare with the New Jersey Nets -- an even worse comparable, since they were in a horrible arena and generated little support, true passengers on the NBA bus, or fleas on the league dog -- who were bought for $300 million just five years ago and moved out of the Meadowlands swamp to a brand new arena in downtown Brooklyn.

What would the Nets be worth today?

Heck, hockey's New York Islanders -- another team with arena and revenue issues -- just were sold for nearly $500 million.

In short, I think this was all a ploy.

After all, the goal is to get the highest price. This is not a realm for the politically correct. It is a realm of the bottom line.

From this angle, this looks like an owner who may suspect that he has maximized the team's value as a financial enterprise, and is looking to cash out. Using the politically correct hysteria to induce a sale is just really good business sense. Bruce Levenson is not a candidate for sainthood. He just wants the best deal to get out. It is that simple.

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