Tag: Gary Chouest

Detroit Pistons v New Orleans Hornets

Gary Chouest wants to keep Hornets in New Orleans, so long as he doesn’t have to buy team

Leave a comment

Gary Chouest was oh, so close to buying the New Orleans Hornets. He already had 25 percent and was going to buy out the rest from George Shinn. Then he got a better look at the $83 million in debt they had, or his business supplying vessels to the off-shore gulf oil industry took a big hit after the BP oil spill, or whatever the reason he decided to pull back.

When he stepped away from buying the Hornets the league had to step in and take over the team, purchasing all of it from George Shinn. The league is also buying Chouest’s minority share.

But don’t thing that Chouest wants the team out of town. That’s not what he told the Associated Press. He said his goal is to keep the team in the city and didn’t rule out some level of future interest.

“As far as my future involvement, the purpose hasn’t changed as to why I invested from Day 1,” Chouest said. “The same situation still exists and the same reasoning for continuing to support the team still exists.”

Just to be clear, he wants all the perks of the Hornets in New Orleans, he just doesn’t want to be the one who has to pay for it. How very American.

Chouest would not comment on why his negotiations to buy the team fell apart.

David Stern has said the goal with the Hornets is to find an owner who wants to buy the team — at a nice little markup over what the league paid — and keep the team in New Orleans. How they accomplish that remains to be seen as the Hornets have some serious financial issues.

More bad financial news about Hornets, like every day that ends in “Y”

Detroit Pistons v New Orleans Hornets
Leave a comment

This is starting to remind me of the bank bailouts, where once the government decided to help them out the depth of the morass just kept becoming clearer.

The Hornets lost $18.24 million dollars in 2009-10, according to Jonathan Abrams at the New York Times Off The Dribble blog. And the numbers after this season should be even worse (which is a little sad because the team is better this season, last season if nobody wanted to watch them it was understandable).

That is just operating losses, we’re not figuring in the long-term debt, which at last count was about $83 million.

It was those losses that had George Shinn trying to sell the team and that forced the league to step in and buy the franchise when a deal with Gary Chouest fell through.

David Stern and Jac Sperling — Sterns appointed man to run the team — have both said they want to take their time, do it right and find a local owner if at all possible. But once the other 29 owners start having to write checks that cover those operating losses you can count on there being pressure to speed up the process.

The Hornets are deep in debt – congrats on the purchase David Stern

1 Comment

You knew if the New Orleans Hornets were making money George Shinn would not have been trying to sell the team (he would have done a Donald Sterling and run a team poorly for profit as long as he could).

But the leaked financials of the New Orleans Hornets painted a bleak picture, team where the owner is paying out of his pocket every year and drowning in debt like a college kid with credit cards. Fantastic new purchase, David Stern. (Note: Deadspin posted these first and broke the story, although I first saw a hard copy of them from Larry Coon of ESPN.)

Basically, the Hornets turned a modest profit between June 2008-2009 ($5.9 million) and lost money the year before ($6.4 million), but meanwhile they are up to their eyeballs in debt — $83 million as of June 2009. It had long been rumored that taking over all that debt was one of the concerns Gary Chouest had with the purchase of the team.

What’s more, as Deadspin points out, that in the two years of KPMG-audited numbers George Shinn had to reach into his pockets for about $8.8 million to keep the team operating.

Stern has said there is no timetable for the sale of the franchise and they want to work hard to find local owners. But now the other 29 NBA owners run that team and if they are going to be asked to reach into their pockets for the Hornets you can bet they will push for a faster sale. Whether the team stays in New Orleans or not.

This story just promises to get more and more ugly.

David Stern’s New Orleans public relations problem

Image (1) davidstern-ap.jpg for post 2338
1 Comment

CNBC’s sports business reporter Daren Rovell has posted laundry list of why it is a bad idea for the NBA to have taken over ownership of the New Orleans Hornets.

David Stern says they plan to make a profit, but Rovell notes that right now the value of franchises is not rising and the lockout would make that worse.

Rovell notes that other leagues that have bought teams have lost money on the transaction. (Except for Major League Baseball, which bought the Montreal Expos with the express intent of auctioning them off to an owner who would move them. However the NBA says the goal is to keep the Hornets in New Orleans.) Right now there are no potential owners from New Orleans, or George Shinn would have sold to them.

If the Hornets have to be sold out of town, Stern has a problem on his hands.

The last point is the public relations disaster that this could create. If George Shinn and Gary Chouest couldn’t make it in New Orleans, fine. They’d say that and leave. Now it’s the NBA’s business to put this team in the best position it can and if they leave New Orleans it will be the league’s fault, not Shinn or Chouest’s fault, that they left.

Stern may go with the Seattle playbook here. Push for the state to help with arena and make financial concessions to keep the team and ask for the moon, When that doesn’t come through — it shouldn’t, Louisiana has more important things to spend money on — he can say there was not enough cooperation and there was no choice but to sell out of town.

But Seattle remains a PR disaster for the league, and now pulling out of New Orleans would be worse. So Stern is stuck trying to find someone to buy the team and keep them in one of the smallest and most economically depressed markets in the league. Good luck.

The NBA may buy the Hornets. Yes, the situation is that bad.

1 Comment

Okay, so a lot’s happened in the last 24 hours (most of which actually happened last week, but we’ll get to that) with the ownership situation in New Orleans. The world is much different than it was two days ago. In short, the NBA is closing in on the purchase of the New Orleans Hornets by the league itself.

Apparently, in a Sports Illustrated story by Ian Thomsen last week, a reference was made to league considering purchasing the Hornets in an effort to stabilize the ownership situation with George Shinn wanting out-out-out and negotiations with Gary Chouest stalling. This slipped by most of us because, really, who reads things you have to hold anymore, besides your grandmother? (All kidding aside, the fact that this slipped by is pretty staggering).

Marc Stein of ESPN followed up last night and reported that the league is indeed in consideration of acquiring the Hornets in a situation similar to that of what MLB did with the Expos. Immediately following that, the Times Picayune reported that Gary Chouest was dropping out of negotiations for majority ownership. This morning, John Reid at that established publication reports that Chouest was concerned about the impending work stoppage as well as his ability to devote the necessary time to the franchise.

(Pant, pant. Okay, here we go again.)

This morning, NBA FanHouse’s Sam Amick reports that not only is the league considering it, they are well on their way towards moving to acquire the team, and have even selected personnel to run the team in the interim while it works to find stable ownership. The league obviously is not looking to hold the team long-term, but is looking to find ownership which will keep the team in New Orleans and avoid a very dicey PR situation with the second team moving in three years and less than a half decade after Katrina and all its horror.

And all of this is after it was revealed that the team would have an opt-out from its lease if attendance measures didn’t dramatically recover which would drop the Hornets penalties for bolting New Orleans to a mere $10 million.

The league exploring this drastic of a solution leads to the question of whether they’re concerned that current majority owner George Shinn, desperate to dump his ownership, might sell the team to someone who may not be committed to keeping the team in the Crescent City. Alternatively, it may simply be a sign of the times that there’s not another viable option the league is willing to wait on. This will be the fourth team in the past year to change ownership, which is, you know, kind of a lot.

The league also will want to resolve the situation quickly, since having control of the ownership is A. a drain on resources and B. is likely to have complications with the CBA negotiations coming this summer, particularly with the Hornets being a small-market team which is a major issue in negotiations. It’s also a very controlling move by the league, which has not been hands-on with ownership situations (as opposed to players issues which they have been very hands-on with). The league did not intercede with the Dolan-Thomas disaster in New York, nor with the Cohan issues in Golden State. We’re looking at a situation without precedent in basketball, and one which could have far-reaching implications for how how the league handles such matters in the future, the CBA negotiations, and most importantly, the future of professional basketball in New Orleans.

Commissioner David Stern already came under enough fire for his involvement with the Clay-Bennett-backed move of the Sonics to OKC where he was seen as more of a willing accomplice than an outright actor. But if the league is unable to find a local ownership group to satisfy the league’s requirements and a stronger offer is brought from a group in a prospective NBA city (like Kansas City, Anaheim, Las Vegas, or Seattle), it could be seen as a deliberate effort by the league to get out of what some consider to be an impossible market in New Orleans, despite what Hornets president Hugh Weber says is a situation that can work. Take a second and realize that should the NBA relocate the Hornets to Seattle it would be viewed as a good thing by many of the big-market-leaning press and a rectification of past sins by the league in moving the Sonics to begin with. And it would likely mean the outright dissolution of the Hornets franchise itself (as a reversion back to the Sonics would be nearly a lock).

This is all very unlikely, as the league’s first and foremost effort will be to find local ownership committed to New Orleans. But with an arena many consider to be far below NBA standards, in a market far below what most consider NBA standards, and with a fanbase showing a lack of support far below NBA standards, this could drag on, locking the NBA in a quagmire of their own.

This is a whole new ballgame.