Turns out Gary Chouest, the former minority owner of the New Orleans Hornets whose interest in buying a majority stake from George Shinn fell through last week, isn’t alone in taking a powder.
Mike Ilitch, who has been looking into a purchase of the Detroit Pistons, did the same thing. And for a reason not all that dissimilar to what Chouest seems to be doing.
Obviously, the sides couldn’t agree on a purchase price. But according to a report today on forbes.com, they couldn’t agree because Ilitch determined the financial status of the Pistons and Palace Sports & Entertainment was inflated.
Forbes has valued the Pistons at $479 million, fourth-highest in the NBA. However, ever since Davidson told the Free Press in May that PS&E officially was for sale, analysts have expected the selling price to be significantly lower because of Michigan’s difficult economy.
Mike Ozanian, who covers the business of sports for Forbes, wrote that “after agreeing to a price in excess of $400 million … Ilitch discovered the revenues presented in the prospectus were inflated.” He cited an unnamed source familiar with the negotiations.
Ozanian also wrote in his short SportsMoney blog: “Ilitch, one of the great gentleman owners in sports, got (ticked), lowered his offer price, and the deal quickly blew up.”
Without question, the Obama offshore drilling moratorium has affected Chouest’s financial ability to make the investment in the Hornets. But the Pistons episode shows that the league’s finances are a real problem for any prospective owner and the Hornets aren’t alone in their troubles.
The NBA is a VERY high-dollar league. Ticket prices are high and player salaries – driven by the small rosters – are exhorbitant. And when our economy is at a standstill, luxuries like the NBA get hit VERY hard.
It’s ironic that our president, who likes to invite NBA players to play basketball with him all the time, is busy attempting to savage the high-income Americans whose disposable income is essential to keep the league afloat through regulation and rhetoric – even if he so grudgingly gave in on increasing their taxes.
But we’re covered with ironies these days, aren’t we?