Will Karen Davidson decide to sell the Pistons? If so, how much money would she want? Could anyone out there afford to pay it?
Free Press reporter Shawn Windsor went looking for answers, and that meant a long phone conversation with Kurt Badenhausen, a Forbes senior editor and resident NBA expert. He oversees Forbes' annual rankings of NBA team valuations.
Last month, Forbes put the Pistons' worth at $479 million, unchanged from 2008 and fourth-highest in the 30-team NBA. They trail only the Los Angeles Lakers ($607 million), New York Knicks ($596 million) and Chicago Bulls ($511 million).
Davidson, 61, said this past week that she might sell the team she inherited March 13 when her husband, Bill, died at 86.
Here are highlights of Windsor's interview with Badenhausen:
QUESTION: How difficult is it to come up with a price for an NBA franchise?
ANSWER: Look at what's been going on in Atlanta, where some of the owners tried to buy out one of the owners. They haven't been able to settle for three-four years. They can't seem to agree on a price.
Q: Of course, the Hawks-Thrashers fiasco is an extreme example, full of litigation and bad blood. But what about here in Detroit? How tough will it be to figure out a price?
A: The Pistons are certainly going through a difficult time right now. Last season, they had trouble drawing fans. This season, attendance has dropped off a cliff even though ticket prices have been slashed. They have sponsorship issues. There are also a bunch of NBA teams on the market. The Bobcats, the Warriors, the Grizzlies are all looking for investors.
Q: So what do the Pistons have going for them?
A: They have a pretty good thing going with their arena. And even though there are several teams on the market, the Pistons are the only upper-echelon franchise out there right now. The Pistons are in an interesting situation. It's hard in the NBA to draw a lot of fans to see a team that is not winning. But, historically, the Pistons have been able to do it.
Q: Whoever buys the Pistons will likely get either the Palace or the rights to operate it, and thus its revenue, during games. What else does a prospective buyer inherit?
A: An outstanding cable TV deal that has helped keep things propped up. The Tigers and Pistons signed a 10-year deal worth $1 billion with Fox Sports Net. That is a massive number. The cable company overpaid because it was concerned that the teams were going to start their own regional sports network. That deal puts them right up there with the two big cheeses -- the Knicks and the Lakers. Last season was the first season the deal kicked in.
Q: Can you disclose how much each team gets in the deal?
A: We can't. But we can say that the Tigers -- because they have more games -- get more money than the Pistons.
Q: A deal like that coupled with the very tenable arena situation should attract investors, right?
A: Though there is some uncertainty with the Pistons going forward, for a new owner coming in, there are a lot of positives.
Q: What about the interconnectedness of the Pistons to the umbrella group -- Palace Sports & Entertainment -- that owns or operates the Palace, DTE Energy Music Theatre and Meadow Brook Music Festival? Does that make a potential sale more difficult?
A: Every team transaction has little things that need to be worked out. The key is that you have to either own or operate the arena. The teams that do that are the ones that we evaluate highly, like the Pistons.
Q: Let's talk specifically about the economy here in Michigan.
A: The economic situation in Detroit right now is going to be a big red flag for any potential owner. It could certainly hurt the price. Ticket revenues are going to continue to be down significantly. The league is projecting a 5-6% drop in ticket revenue this season. In Detroit, that drop may be 20%.
Q: With that disparity in mind, why would a potential owner want to keep the Pistons in the worst economy in the U.S.?
A: I don't think there is any scenario where someone would come in and move the Pistons. Even in a bad economy, Detroit is much stronger than most other places in the NBA. The Pistons have been extremely successful. They have made a lot of money over the years. When it's all said and done, Karen Davidson is going to paying a big capital gains bill. Mr. Davidson paid only $8 million. I think the team will sell for at least $400 million.
Q: If that is true, then a lot of basketball fans in the area will sleep a little easier.
A: I just can't see the NBA, under any circumstances, allowing the team to be taken from Detroit. It's is one of the league's premier organizations. And, remember, it just takes one person to come in and do this. In the long-term, this franchise is still one of the healthiest.
Contact SHAWN WINDSOR: 313-222-6487 or
swindsor@freepress.com.