Indianapolis, Kansas City, and the changing arena economy

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What do you look at to tell if a team is doing well? Attendance, right? After all, the way to tell how good a team is if they have fans coming to games.  Low attendance means you’re not making money. Sure, the Clippers are the exception, but it’s L.A. Everything’s overpriced. But attendance is still the real determining factor in success.

Right?

In the words of Dwight Schrute, “False.”

The real key to a franchise’s success is a more complicated algorithm that factors in sponsorships, partnerships, and attendance. But the attendance piece isn’t built on sheer numbers, but in quality.

The Dallas Morning News’ Mark Francescutti has an excellent article today outlining the success teams are having by doing something counter-intuitive. Slashing prices. The Mavs are obviously the centerpiece, with this money quote from Mark Cuban:

“Bottom line is that the upper bowl is becoming a smaller and smaller
part of our total revenue,” owner Mark Cuban
wrote in an e-mail to The Associated Press. “So we would rather
have a full house than make a couple dollars more. More fans means a
better home-court advantage, it means a better fan experience, which in
turn means more sales.”

The reason that the Mavs can make those kind of cuts is because the modern arena economy is now dependent on corporate suites and club seating. By focusing on those tickets, it allows the teams to fill out the big house.

This is why so many owners are requesting new arenas (outside of sheer greed). The modern economy has shifted to a sleeker, more efficient model and many older arenas are simply not fitted to that model.

Which brings us to the case of Indianapolis versus Kansas City. We told you yesterday about the Pacers potentially being sold for dirt cheap (that’s right, $230 million is cheap in what we’re talking about). One of the reasons a potential owner may want to relocate the team is because of the way the arena is configured.

Conseco Fieldhouse has 69 luxury suites. To put that in perspective, American Airlines Center in Dallas has 144 suites. Geez. Even smaller markets like the Rose Garden in Portland has 70 suites. Arco Arenas is severely behind with only 30 suites, one of the reason a new arena is a major issue in Sacramento. The Toyota Center in Houston has 80 suites.

Now, market size is going to be a huge factor, but so is how new the arena is, as well as what kind of club level seats are available. Kansas City has been a place discussed as a potential arena location for years, because they have a brand new arena, the Sprint Center, with no tenant. Huge building, no tenant. The arena also features 72 suites and a higher capacity for club seats than Conseco. So you’d have a similar overhead structure in a cheap city, with a building that maximizes profit, if you can fill it.

The arena itself is beautiful. When I spoke with Hornets’ guard Chris Paul at a preseason game in KC, he remarked that he “couldn’t believe how nice the arena was.” Everyone that attends an event there is stunned it’s so nice and even more amazed it has not regular tenant, outside of whatever Miley Cyrus/Jonas Brothers/Nickelback merchandise-fest is in town.

The public funding issue is going to be a problem anywhere in this country during the recession, but somewhere like Indiana with traditional Midwestern values is going to be even less likely to pony up for some new owner to build an arena he can charge more for to see a team that won’t be good for some time.

The Pacers are an institution. But this situation become representative of the changes going on in modern arena structuring.

UPDATE: Some interesting numbers on a few other arenas. The new Amway Center for the Magic will only feature 56 suites with 10 specialty suites. Similarly Charlotte features 67 suites, but does feature another 60 “lodge boxes.”

Additionally, a commenter points out that Conseco features two hosptiality suites, making for a total of 71 suites in Conseco to 72 at Sprint Center. It’s easy to argue that moving from Indiana to KC would be a lateral move, and a costly one at that.

Hawks hire Travis Schlenk as general manager

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The Hawks picked Warriors assistant general manager Travis Schlenk as their next general manager. All that was left was negotiating terms.

That’s done.

Hawks:

The Atlanta Hawks today announced the hiring of Travis Schlenk as General Manager and Head of Basketball Operations. He will start leading Hawks basketball operations on June 1.

Schlenk worked his way up the latter and helped the Warriors become the envy of every other NBA team. He deserves this opportunity.

But the job won’t be easy.

The Hawks are stuck between two directions. On one side, they have veterans Paul Millsap (a 32-year-old pending unrestricted free agent whom the owner has basically promised a huge contract) and Dwight Howard (who sounds unhappy). On the other side, they have a youth movement featuring Dennis Schroder and Taurean Prince. Tim Hardaway Jr., who bridges the age groups, is about to enter a potentially tricky restricted free agency.

Keeping the core together offers the upside of a playoff-series victory or two annually, modest outcomes for the cost. But a fragile Atlanta fan base might not tolerate a rebuild.

Schlenk works for owner Tony Ressler, and Ressler sounds committed to maintaining the status quo by keeping Millsap. It’s now Schlenk’s job to execute that vision or convince his boss to approve a different direction.

Potential none-and-done first-rounder Hamidou Diallo returning to Kentucky

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The more I’ve looked into the 2017 NBA draft, the less impressed I’ve become. There are a few bright spots in the first round relative to an average draft – No. 2, 5ish-10ish, 17ish-22ish – but I’m not convinced this is the generationally strong draft it has been touted as.

In the absence of prospects who offer secure promise, why not turn to upside? Hamidou Diallo offered plenty and was increasingly viewed as a first-rounder.

Yet, he’ll return to Kentucky for his freshman season.

Diallo:

A highly ranked recruit, Diallo began last school year at a prep school then enrolled at Kentucky for the spring semester. He practiced with the Wildcats, but never played.

Then, he went to the combine and posted excellent measurables: 6-foot-5, 6-foot-11 wingspan, 44.5-inch vertical and strong agility and sprint scores. Just 18, Diallo might have been the second-youngest player drafted this year (behind only Ike Anigbogu).

It wouldn’t have taken long – likely somewhere in the middle of the first round – for a team to bite on all that potential.

Instead, Diallo returns to Kentucky and must now show his ability to actually produce in basketball games. If he does, there’s no limit on how high he goes in the 2018 NBA draft. If he doesn’t, he’ll regret missing the opportunity to get drafted before his game got picked apart.

Report: Bulls expect Dwyane Wade to opt in

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Dwyane Wade said he wants to see the Bulls’ plan for Jimmy Butler and the rest of the roster before deciding on a $23.8 million player option for next season.

K.C. Johnson of the Chicago Tribune:

I can tell you is most everyone associated with the Bulls believes Wade will pick up the option and remain in Chicago for a second season. More surprising things have happened in league history, though. So stay tuned.

This could be a tell that Wade will opt in. The Bulls could obviously be positioned to base their prediction on inside information into Wade’s thinking.

This could a tell the Bulls won’t trade Butler. If they know they’ll keep Butler, they can extrapolate what that’d mean for Wade.

Or the Bulls, like so many of us, just assume a 35-year-old Wade won’t turn down so much guaranteed money at this stage of his career.

PBT Extra: Why Derrick Rose more likely to be Spur than Chris Paul next season

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San Antonio heads into this summer looking to answer the question: What do we need to do to challenge the Golden State Warriors? Well, besides keeping Kawhi Leonard healthy.

They need to get more athletic, particularly along the front line, and they need a secondary shot creator and playmaker, that’s all at the top of the list.

One rumor that keeps gaining traction, Chris Paul to the Spurs. In this PBT Extra, I get into why that move is unlikely, and why a one-year contract with Derrick Rose is more probable. Basically, if you want to see a significant roster shift in San Antonio, wait until the summer of 2018.