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.

The strangest All-NBA ballot

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Remember those odd All-NBA votes? Dwyane Wade, Luke Doncic, Danilo Gallinari and Andre Drummond on the second team, Marvin Bagley III on the third team.

One voter – Kennegh Lau of BesTV, a Chinese outlet – is responsible all those. His ballot:

First team

G: Stephen Curry (Warriors)

G: James Harden (Rockets)

F: Giannis Antetokounmpo (Bucks)

F: Kevin Durant (Warriors)

C: Joel Embiid (76ers)

Second team

G: Klay Thompson, Klay (Warriors)

G: Dwyane Wade (Heat)

F: Danilo Gallinari, Danilo (Clippers)

F: Luka Doncic, Luka (Mavericks)

C: Andre Drummond, Andre (Pistons)

Third team

G: Damian Lillard (Trail Blazers)

G: Donovan Mitchell (Jazz)

F: Marvin Bagley III (Kings)

F: Pascal Siakam (Raptors)

C: Rudy Gobert (Jazz)

A couple other standout All-NBA votes: Michelle Beadle of ESPN voted Eric Gordon third team at guard ahead of Kemba Walker, Bradley Beal, Klay Thompson, etc. Richard Walker of the Gaston Gazette voted Domantas Sabonis third-team forward ahead of LeBron James (who played more minutes than Sabonis!).

There are outlier votes for every award. You can dig through all the results here. Massimo Lopes Pegna of La Gazzetta Dello Sport (an Italian newspaper) apparently submitted his All-NBA team as his All-Defensive team (though it doesn’t exactly match his actual All-NBA team). Beyond that, these votes aren’t necessarily wrong. The consensus isn’t always right.

But All-NBA voting has taken heightened importance with its super-max connection. Hundreds of millions of dollars are at stake. Ballots like Lau’s will increase scrutiny on the system.

That’s an overreaction. There are 100 voters so no single ballot carries too much importance. Again, it’s OK for someone to stray from the consensus.

It’d still be good to reconsider the salary incentives of All-NBA, though. The players who had the best regular seasons – my All-NBA criterion – aren’t necessarily the ones who deserve the highest salaries in years to come. It’s a flawed link, and that goes far beyond Lau’s ballot.

Magic Johnson ready to welcome D’Angelo Russell back to Lakers

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In 2017, then-Lakers president Magic Johnson traded D'Angelo Russell to the Nets and delivered a biting sendoff: “What I needed was a leader.”

Russell wasn’t ready to run a team on the court. His work ethic and maturity off it left plenty to be desired. Most infamously, he alienated his teammates by recording and posting a video of Nick Young discussing sleeping with women other than his fiancé.

But Russell went to Brooklyn and became an All-Star.

So, with rumors swirling about Russell returning to Los Angeles in free agency, Johnson is changing his tune.

Johnson, via Bill Oram of The Athletic:

“Now he’s ready,” Johnson said. “He’s much more mature. I said the only thing, he was immature back then. He could always score, but the guys would never play with him because of what he did (with the Young video). But now all those guys are gone and he’s on another level now.”

This is peak Johnson – talking about players on other teams (no longer tampering), spinning the story to make himself look good and directing the Lakers’ roster without having to take responsibility for it.

There is truth to what Johnson is saying here. Russell is more mature now. It would have been difficult to keep him in a locker room with teammates who didn’t trust him.

But Johnson is also the one who moved Russell rather than betting on his talent. With the right nurturing, Russell could have become a star in Los Angeles in the first place. The Lakers wouldn’t have to use all their cap room to sign him now. They could have already had him.

It’s a little disingenuous for Johnson to present this as him being right all along.

Magic GM John Hammond: ‘We have no idea’ when Markelle Fultz will play

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Markelle Fultz has played just 33 games, the most recent one in November, since the 76ers drafted him No. 1 overall in 2017. Philadelphia traded him to the Magic in February, and he didn’t play at all for Orlando last season.

When will Fultz return?

Magic general manager John Hammond on 96.9 The Game:

He will not play in summer league with us. We didn’t think there was any way that he was going to do that. We didn’t plan on him doing that. So, probably not the place for him right now.

But overall, I can just say that he’s doing well.

He’s working extremely hard. He’s in good shape. His weight is good. His overall body-fat percentage is very good. So, if you look at him, you say, “Wow, he looks great.” So, it’s just a matter of him just continuing to get more comfortable, continuing for him to get himself in a position where he’s ready to step on the floor and help us.

And look, we have no idea when that’s going to be. We’re hoping much, much sooner than later. But once again, we’re trying to do this the best we can, and that’s have that word of patience.

We want to have patience with him and get him ready and put him on the court when he can be most productive.

Patience is probably the right approach, because I don’t know an alternative. But I’m also not sure where patience gets anyone.

Fultz’s issues run so deep. It doesn’t appear time is solving anything. Does Fultz have a long-term injury that’s actually healing? Does he have a mental block that’s actually being addressed? It’d be nice to see some signs of progress.

Unfortunately, that won’t happen in summer league. The next opportunity for Fultz to publicly display his ability will likely be training camp.

But the way this has gone, I have no expectations of Fultz being ready for that, either.

Bradley Beal: Wizards told me they won’t trade me

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The Wizards don’t have a long-term general manager.

They do have a plan for Bradley Beal.

Washington coach Scott Brooks, acting general manager Tommy Sheppard and owner Ted Leonsis have each conveyed it to the star guard.

Ben Golliver of The Washington Post:

Beal said that Leonsis, Sheppard and Coach Scott Brooks have each independently told him in recent weeks that he would not be moved.

“They’ve been very transparent and that’s been great,” Beal said. “They’re not keeping me in the dark about anything, even about the trade rumors. . . . It’s great having that peace of mind.”

Leonsis is the most important deliverer of that news. He’s the only one guaranteed to last into a new front-office regime.

But Leonsis also said last January the Wizards wouldn’t trade Otto Porter. They dealt him to the Bulls a week later.

These declarations are obviously non-binding, and Leonsis doesn’t have a great track record of sticking by his word. The owner might say John Wall aggravating his injury changed Washington’s outlook. But that’s the point. Situations change.

What happens if the Wizards are one of the NBA’s worst teams next season? That’s quite possible given their roster/cap outlook entering free agency. Would they keep Beal through a year of his prime even if playoff-bound teams are making lucrative trade offers?

And what if Beal reaches the final season of his contract? Would Washington keep him and just hope for the best in unrestricted free agency?

How long does this no-trade pledge last?

The Wizards reportedly plan to offer Beal the largest extension possible this summer. That’d be worth $111,786,897 over three years.

That’s also way less than he could get by playing out the final two years of his contract and hitting 2021 free agency. Especially if he makes an All-NBA team in 2020-21, which would make him super-max eligible. Or he could make an All-NBA team next season that would make him eligible for a super-max extension, which would be worth the same as a new super-max contract as a free agent.

Beal’s projected max contracts:

  • Extension in 2019: $111,786,897 over three years ($35,134,668 per year)
  • Super-max extension in 2020: $250 million over five years ($50 million per year)
  • Re-sign regular-max in 2021: $214 million over five years ($43 million per year)
  • Re-sign super-max in 2021: $250 million over five years ($50 million per year)
  • Leave in 2021: $159 million over four years ($40 million per year)

So, Beal will likely reject an extension this summer and wait until he makes an All-NBA team or his contract expires, whichever comes first. That’d at least be the financially prudent path.

In the meantime, he can know the Wizards say they won’t trade him – however far that assurance goes.