Pistons may sell for well below market value

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Thumbnail image for pistons_logo.pngLocation, location, location. Oh, and timing.

Golden State just sold for well above its value as estimated by Forbes, in part because the San Francisco Bay Area is one of the wealthiest areas of the nation.

The Detroit Pistons are estimated to be worth $479 million and have turned more than $40 million in profit the last three seasons. It as well run a franchise as there is in the NBA, with a fantastic brand name.

Yet the sale price may be $100 million or more below that estimated value, according to a report in Forbes today.

But location and timing are critical factors to consider.  As it relates to location, the Detroit MSA faced a 15.4 unemployment rate as of June 2010 compared to the national 9.5 rate.  This would cause any potential investor to seriously question whether fans would continue to support the team at the level of avidity they have historically, especially given that the team is in major rebuilding mode and not likely to challenge the current Beasts of the East (Orlando, Boston, Miami) anytime soon.

Furthermore, in light of the climate of ‘guilt’ that surrounds corporate spending on sports sponsorships (especially in a city whose main industry has been the beneficiary of significant TARP money), a prospective buyer would be justifiably anxious over the likelihood of short term corporate support (e.g. buying luxury suites, paying for facility signage, etc…).

Karen Davidson also owns the Palace at Auburn Hills, where the Pistons play. The team and the building may be sold as a package.

Still buyers are leery. Any investor coming is has to be wary of the almost-certain lockout coming next fall — you will be getting no income from the team next fall (and have reduced expenses, but still). The economics of the NBA may be friendlier to owners on the other side of that lockout, but the down time has to be taken into consideration.

Still, Bill Davidson bought the Pistons in 1974 for $8 million (Forbes says that counting for inflation that is $28 million in today’s market). Even if the team only sells for $350 million that is a tidy little profit.

Report: Nets debating whether or not to sign Kyrie Irving without Kevin Durant

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The Nets want to sign Kevin Durant and Kyrie Irving.

Brooklyn appears set to get Irving. Durant a much bigger unknown.

Brian Lewis of the New York Post:

The question is if they can’t land Durant, do they still want Irving?

It also has become an internal debate the Nets are having right now.

The Post has confirmed Brooklyn might have qualms about signing the enigmatic Irving if he isn’t bringing the injured Durant with him.

Irving brings chemistry concerns, to be sure. He’s mercurial, and his season with the Celtics raises legitimate questions about him leading a team.

But Irving is a major talent upgrade. To win at the highest levels, teams must assemble a lot of talent and hope for the best.

I’d also caution Brooklyn against assuming re-signing D'Angelo Russell would mean the team maintains its current culture. The Nets can’t freeze time. Situations change. People change. There’s no guarantee Russell on a lucrative contract and his teammates jell as well as contract-year Russell and his teammates did.

Keeping Russell might look like the safe route, but nothing is assured.

The other huge issue: Durant might not know where he’ll sign when Irving is ready to commit. The Nets could have to decide on Irving before knowing whether Durant will accompany him. At that point, would Brooklyn really spurn Irving and a chance at getting both stars? I can’t see that.

Really, with so much talk of Irving joining the Nets, I thought we’d already crossed that threshold.

Report: Bucks trading Tony Snell, No. 30 pick to Pistons

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For a team only lukewarm on paying the luxury tax, the Bucks are in a payroll crunch. Khris Middleton, Brook Lopez, Malcolm Brogdon and Nikola Mirotic will be free agents this summer.

That’s why Milwaukee was trying to unload Tony Snell or Ersan Ilyasova.

But if they re-sign their key free agents to multi-year deals, the Bucks could face more payroll/tax concerns in 2020-21.

That’s why Milwaukee is willing to deal Snell and its first-round pick for Jon Leuer‘s burdensome contract – which carries a slightly lower salary than Snell’s next season ($9,508,043 vs. $11,592,857) and, more importantly, ends one year before Snell’s ($12,378,571 player option for 2020-21),

Adrian Wojnarowski of ESPN:

This trade lowers Milwaukee’s team salary by about $4 million next season and $14 million the following season.

The Bucks could stretch Leuer and reduce team salary by an extra $6,338,695 next season. But that’d also lock in a cap hit of $3,169,348 each of the next three years.

Milwaukee can make that decision later in the summer. It’ll depend what other free agents – especially Lopez, who has only Non-Bird Rights (technically a form of Bird Rights – command. Clearing extra money this offseason could be useful in multiple scenarios.

If Lopez signs for the non-taxpayer mid-level exception (which projects to start at about $9 million), the Bucks could maintain Bird Rights for Middleton, Brogdon and Mirotic then exceed the cap to re-sign those three. But Milwaukee would be hard-capped at a projected $138 million. Stretching Leuer could help the Bucks stay under that line.

If re-signing Lopez requires more than the mid-level exception, Milwaukee could open about $14 million in cap space by waiving George Hill and renouncing all its free agents besides Middleton and Brogdon. Stretching Leuer would open even more cap room to spend on Lopez.

If Lopez leaves, the same math applies to an outside free agent who could get the mid-level exception or cap room.

This extra maneuverability comes at a cost, though a reasonable one.

Snell, who fell from the Bucks’ rotation, could be the Pistons’ starting small forward next season. Detroit was desperate for wing depth. Though Snell isn’t the biggest wing, he adds size to a group comprised of Luke Kennard, Bruce Brown and Langston Galloway.

The No. 30 pick is a helpful piece to the Pistons, who also have the No. 15 pick in tomorrow’s draft. But this is a weak-looking draft that thins considerably before the end of the first round.

Milwaukee also had to take Leuer, who has been ineffective for years.

Detroit gets helps now with Snell and potentially later with the No. 30 pick. In between, that extra year of Snell’s contract looks burdensome.

The Bucks are just happy to have it not be theirs.

Report: Anthony Davis, Damian Lillard, Klay Thompson to star in ‘Space Jam 2’

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LeBron James‘ first three picks in the All-Star draft reserve round: Anthony Davis, Klay Thompson, Damian Lillard.

Like many things LeBron does, that sparked theories about him recruiting stars to the Lakers. Casting for ‘Space Jam 2’ is another generator of recruiting speculation.

So, the overlap here will surely only intensify conspiracy theories.

Shams Charania of The Athletic:

Davis – who tipped his involvement in the film while still with the Pelicans – is already headed to the Lakers.

But Lillard is reportedly set to sign a super-max extension with the Trail Blazers, and Klay Thompson will reportedly re-sign with the Warriors.

Still, if Lillard and Thompson get a taste of Hollywood and enjoy it…

Report: Lakers didn’t negotiate Anthony Davis trade date with Pelicans for initial agreement

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With the Lakers’ trade for Anthony Davis, timing is everything.

The Lakers and Pelicans are reportedly set to complete the deal July 6. By making the trade then rather than July 30, the earliest the No. 4 pick could be traded as a signed player, the Lakers lose significant cap space.

With the later trade, the Lakers could use about $33 million of cap room then execute the deal with Davis getting his full $4,063,953 trade bonus.

With the earlier trade and Davis reportedly intent on receiving his full trade bonus, the Lakers project to have just $24 million of cap room.

That $9 million difference keeps the Lakers from getting a max free agent or reduces their spending power for role players.

Maybe the Lakers completely understood the ramifications of finalizing the trade July 6. It takes two teams to agree, and perhaps New Orleans – which would have faced complications flipping the No. 4 pick, not gotten him into summer league and had cap space tied up through July – refused to do the trade later.

But it sure doesn’t sound as if the Lakers knew what they were doing.

Ramona Shelburne on ESPN2:

If this was really their plan, they want to have a third star, this should have been central to the conversations with the Pelicans. And my understanding is that it was not, that it went all the way down the road and it was more, it has been described to me as, the Lakers called back – after everything had been discussed – about this.

It’s not necessarily too late for the Lakers to use max cap space and get Davis. They’re reportedly scrambling to include Moritz Wagner, Isaac Bonga and Jemerrio Jones in the trade.

But Wagner, Bonga and Jones have either positive or negative value. If they have positive value, the Lakers are surrendering even more in this trade. If they have negative value, the Lakers must surrender even more value – in the form of sweeteners – in the trade.

This could all be worth it. A team with LeBron James, Anthony Davis and a third star will be a championship contender next season. That matters most.

But if the Lakers handled this better, they could be in a stronger position to build around their stars. Though stars matter most, supporting casts also factor.

Or maybe New Orleans would have refused if the Lakers requested a July 30 trade date during initial negotiations. We’ll never know. But considering their massive haul, I suspect the Pelicans would have acquiesced if Los Angeles pushed. Perhaps, it would have taken a small additional asset going from the Lakers to New Orleans. But I can’t imagine it requiring more than that.

Now, by waiting until after to agreeing to terms with New Orleans, the Lakers have lost so much leverage. Their desperation shows, and preying teams – Pelicans or otherwise – will look to take advantage.