George Shinn flaking on investors?

[metro]

Most of you who follow the Hornets and George Shinn would probably agree he is flip-floppy on issues. Mainly for PR sake. I found the following two articles interesting over the last few days:

http://newsok.com/article/1799104/

http://newsok.com/article/1797798/



Does he have a handshake deal with the OKC investors or not?? Make up your mind George. He's definitely not a man of his word.

[venture]

Handshake deal? How about something in writing...thats seems to be the only thing that will hold up. Unfortunately, if he tries to bust the NOLA contracts...then what is on paper doesn't matter anyway.

Either way the best part of this, a group in OKC is more than willing to invest in a major league team - that will be looked upon very well by Stern and other big wigs. However, the best for OKC would be to get rid of Shinn either with or without the Hornets.

[BDP]

Yeah, handshake deals mean nothing. It's like being engaged to be engaged. It just means the major deal points have been discussed and deemed agreeable. Both parties will surly continue talks with other prospects and would be expected to.

[Midtowner]

Folks, don't expect any kind of deal to come to fruition with the Hornets. My suspicion is that Shinn is simply going to use the OKC situation to improve the deal that he gets in New Orleans. That he "likes" Oklahoma City has nothing to do with it. If he really liked OKC, he could live here and commute via private jet to N.O. if he wanted. This is all about the profitability of the team.

That is not to say that given a level playing field that OKC wouldn't blow N.O. away in terms of profitability (and of course, that's an optimistic but reasonable speculation on my part). The playing field, however, is absolutely not level. New Orleans has a lot on Oklahoma City by way of their contract rights. Can contracts be broken? Yep, but the damages arising from such a breach could be very expensive. Enough so that they could tip the scales back in N.O.'s favor in terms of profitability. The second factor out there (more of a concern of the league, I think)is the P.R. 'hell to pay' that accompanies any team relocation. It might appear that the league is kicking N.O. while they are down. I do think that by the end of next year, the usefulness of the application of such a line to N.O.'s situation will be somewhat mitigated, but it'll still be viable in my estimation -- at least enough to motivate the league to return the team to N.O.

All that said, I'm pretty sure barring a miracle that the Hornets will return to New Orleans.

My biggest fear is that instead of us getting a new team that we become a city used as a scare tactic for teams currently in other markets to increase their bargaining power. The threat of a move to a more viable and more friendly market can be tremendous leverage. Don't be surprised if the league considers such a 'use' for this city as opposed to actually putting a team here.

All that said, if the league expands, I'm fairly certain that at this point, local investors have seen that a new NBA could bring in tremendous profit. There should be little difficulty in assembling an investors group for an NBA team. That has been one of our major hurdles thus far in attracting professional leagues to town. If nothing else, the Hornets organization has helped us over that hurdle.

[metro]

Midtowner, you make some good points but according to some insiders, I think OKC might have a better shot than your giving credit for. Additionally you might have proven your point by Shinn living here and flying to N.O. via private jet. We already know he bought a house in Nichols Hills but what you probably don't know is a few weeks ago he bought a house in Gaillardia.

[Midtowner]

The houses don't really prove much. He could be hedging his bets. If I had the cash reserves that he does, I'd do the same thing. If he stays, he will have bought the properties at a lower price than he would 1-2 yeras from now. If he leaves, he can flip the properties at a decent profit.

According to the County Clerk's site, Shinn bought his property in Nichols Hills from a Sandra Glasson. It was deeded to him on October 20th, 2005. That's old news.

There's no record of either George or his wife purchasing anything in Gallardia unless Gallardia is in Candian County (and I'm pretty sure it's not).

It could be that the contract on the Gallardia house is pending and it hasn't been deeded over yet, but usually these things don't take "weeks" for cash paying customers.

[BDP]

My suspicion is that Shinn is simply going to use the OKC situation to improve the deal that he gets in New Orleans.

Nothing wrong with that, especially since it's clear that a move back to New Orleans will be dictated by the NBA, not due to some desire by Shinn. He knows he might have to go back and he is in debt. If he could wipe out that dept and stay in OKC tomorrow, he would. But no one knows, so he's going to try and get his money back in any market he's allowed to. He doesn't know for sure what market that is, so he's got to set it up in both.

and of course, that's an optimistic but reasonable speculation on my part

With revenues in OKC projected at about twice that per game as in New Orleans, that's also realistic. Now, no one knows what the details of a long term deal in OKC would be, but one would have to screw it up badly to not use that extra cash to profct as much or more in OKC as in NO.

Can contracts be broken? Yep, but the damages arising from such a breach could be very expensive.

Not really. The added revenue from 1 game in OKC over NO would pay the monthly payment on a 30 year note of 50 million (the 2012 buyout) at 6.25%. The X factor is the other 3 years, which would be the actual "breach". I doubt there would be any breach though. If the Hornets don't go back, it will be becuase of a very real and sound economic reason, easily recognized by all parties. I definately think there'd be a negotiated settlment before any real litigated breach happened.

Add in that the NO lease is very generous. New Orleans pays for this generosity through its hotel tax, which has taken a hit and is largely committed to the Saints. New Orleans, in addition to coming up with cash for recovery, has to find this money elsewhere. Will their be political support for this action? Who knows?...

The second factor out there (more of a concern of the league, I think)is the P.R. 'hell to pay' that accompanies any team relocation. It might appear that the league is kicking N.O. while they are down.

Right, but if they do go back too early, they are stuck. They know this and this is what the NBA all-star game is for. Even if they Hornets leave NO, the NBA hasn't committed a full pull-out. If the team is dying in NO, that same PR pressure will still be there and do they want to face that spiral? Do they want to bury a team and a market, while only accomplishing the delay the same bad PR? Even if it mitigates the bad PR, is the price of killing a team worth it?

The answer is no. That is why they will go back if and when New Orleans can both support the team with revenues and the city can meet the generous stipulations of the lease.

My biggest fear is that instead of us getting a new team that we become a city used as a scare tactic for teams currently in other markets to increase their bargaining power.

My biggest fear is the NHL, but you have a legitimate concern. My feeling is that Stern and the NBA are going to try and get any potential seller to sell to OKC or stay put. Does he have final say in such a situation? Not really, I do think it is specific owners that will try and use us, but at this point I do feel the league is on our side. But that is how it always happens. A market stands as the X factor in negotiations for a while and then they get a team, eventually. We have to remeber that OKC didn't even have a seat of this table until 6 months ago and it was brokered as much by an unfortunate act of God as by any efforts OKC has made over the last 10 years.

All that said, if the league expands,...

I don't see the league expanding and I hope it doesn't. I think that the possibility of getting a current team in the next 10 years is very good. There are always Seattles, Portlands, and Orlandos, who, yes, use OKCs, KCs, and LVs, as leverage, but a real opportunity will arise. Can you really see all these current NBA teams staying put for 10 years? I can’t.

The Hornets are still the best bet, because they are proven here and OKCs time is now. If 3 years go by without a team, will OKC still be as attractive compared to KC and Las Vegas? I don't know. In any event, it 100% depends on the viability of New Orleans to support the team and fulfill its end of the lease if they go back. Beyond that, the Hornets could afford a settlement if they came to OKC and there are some here that could even finance it if they wanted.

[HOT ROD]

very good points!

[NOLAHornet]

Shinn is fooling you guys. He already has investors from New Orleans in line to put money down on the team. Maybe he's trying to line up some investors for you for a new team. Regardless, the Hornets are returning to their hometown.

[HOT ROD]

Shinn is fooling you guys. He already has investors from New Orleans in line to put money down on the team. Maybe he's trying to line up some investors for you for a new team.

Perhaps? Or maybe Shinn is fooling you guys in NOLA?

It could be possible, because OKC already has the finances in place to buy the team. .. This has already been announced and is well known.

Im not necessarily saying you're wrong, ... but OKC does have funding in place (also-like you said NOLA somehow does; but has never been announced formally; unlike OKC's formal announcement), so your case is not very valid.

Time will tell!!

[Patrick]

I think Shinn has been extremely good about pleasing both the folks in NOLA and the folks in OKC. I think we all know where Shinn would like to stay, but there are some hurdles for him to cross first. Each day that goes by without a practice facility being built in New Orleans, only helps our cause!

[CuatrodeMayo]

Charotte already has a team.

[SoonerDave]

Here's my pointeless two-cents on it.

Shinn is a businessman, and he wants to make money wherever he can. He knows he can make money in OKC, and he knows he probably can't in NO. David Stern says "we have a lease with NO, and we won't break it," allowing everyone in NO to believe they'll come back.

This gives everyone in play a variety of options.

1. Stern can ultimately backpedal on the lease because of a variety of "force majeure (sp)" reasons that imply New Orleans constructively backed out on their lease, so there's no lease for the Hornets or the NBA to break.

2. If Stern plays hardball with Shinn and says "you're going to go back," even if it means losing money, Shinn can say "Fine, I'll just sell the team," and he'll line up some poor suckers in NO to take the financial hit. Either way, Shinn is NOT going to take the financial hit.

3. The groundwork is already laid for the Hornets to back out of New Orleans by virtue of the practice facility situation; don't think for a second Shinn's lawyers aren't going over their contracts with a fine-toothed comb to find the slightest mechanism that would give them a plausible legal out *that makes it appear New Orleans has broken their end of the deal*, and they've found it.

4. Even if everyone packs their bags and goes back to a happy, perfect New Orleans in a year (yeah, right, tell me another one), keep in mind that several OKC leaders have been putting in a *bunch* of "face time" with leaders in Seattle about the Sonics. That's a franchise hanging by a thread, and it's also our failsafe if the Hornets leave - however, the earliest they would be out, I think, is 2008, maybe 2009.

How will it all play out? Who knows. I don't think anyone knows for sure. I think Shinn wants to stay here because he's making all kinds of money, and he won't if he goes back. Stern wants to save NBA face, Shinn wants to make $$$. Those are almost completely contradictory goals.

If you've seen any up-close photos of the New Orleans area, however, you'll realize just how ludicrous the whole notion of sending an NBA team back there really is. The city is perhaps 3/8 its original population, and we've yet to see if the Superdome can *really* again handle crowds for Saints (lack of) football. That makes baskeball look like an awfully small, less-relevant blip on their overall radar.

My instinct is that Stern will want to save face and force the Hornets back to NO, meaning Shinn will sell out to whatever investors are foolish enough to jump in and throw away their money...and OKC will be without a team for probably two or three years minimum. I hope I'm wrong.

-SoonerDave