seren wrote:My understanding, and I might be wrong on this, is they are not shopping these guys to get rid of all of them. Rather looking for moving one max contract to go under the tax. Memphis is a small market team. They don't have a sizeable TV contract, average ticket sold goes for 25 dollars. They simply don't have the revenues to sustain a luxury tax team.
That's pretty much the gist of it and the plan previous owner Michael Heisley suggested last year a few months before he sold the team. The Grizzlies have the 5th highest payroll in the league while they used to rank in the bottom 5 in attendance (it's better now with +2,000 tickets sold per game but that's not enough) and are one of the least valuable franchise in the NBA (29th last year according to Forbes team valuations). The Grizzlies have the lowest average ticket price in the league ($39.50 compared to an average of $101) and are the only franchise to offer a $5 ticket to convince fans to the Fedex Forum arena. As a result, they had the worst operating income last year (an operations deficit of $24.8 million vs $2.6 million the previous year). Offering a contract extension to Z-Bo, Gasol and Gay has put the team in a difficult situation considering the size and structure of the market.
That's why Oracle CEO Larry Ellison was interested in buying the team but only if he could move it to Cali. Heisley, who was 75, wanted to sell but he also wanted to keep the team in Memphis. The Grizzlies' lease at the FedExForum and huge potential penalties generated (in case the team is moved) make a potential relocation difficult and near impossible (the NBA Board of Governors would need to approve the move anyway). A recent economic study implied the total economic impact of the team was $223 million and the team generated $5 million in local tax revenue on a yearly basis. Local taxes would increase if the team was moved. Considering Memphis needs the Grizzlies more than the team needs Memphis, there's a good chance the new ownership will probably try to renegotiate the current financial terms for the arena.
Before the season, the new ownership (Robert Pera, 34 and founder and CEO of Ubiquiti Networks is the new owner and one of the 10 youngest billionaires in the world) had one main goal : increase season-ticket sales by 3,000 in 2012-2013 and so far average attendance only rose to 16,471 (from 15,704 in 2011-2012). That's why they want to lower payroll and have some flexibility. Memphis can't afford three max (or near max) players with Gay, Z-Bo and Gasol. And they know you don't need 3 max contracts in order to win in the NBA. They have the example of the Clippers : a superstar (Chris Paul), a sidekick (Griffin) and a bunch of good role players on short term contracts and who can easily be replaced. The Clippers have lots of flexibility and friendly contracts. That's basically the previous Lakers model under Jerry West.
I don't think they want to jettison Gay or Z-Bo, they're only trying to find a way to replace either player with a cheaper player. They know that player won't be as good as the one they will trade away (wether it's Zbo or Gay) but they think they can remain a playoff team and maybe a contender if they trade Gay for the right player(s) or the right package. After they traded Melo, the Nuggets remained a playoff team, the Hawks traded Joe Johnson and they're still a playoff team. The Grizzlies want to follow the same path, they don't want to rebuild, they just want to avoid the tax and have some cap flexibility going forward. The Grizzlies strength is at the 4/5 with Z-Bo and Gasol. I think they can afford to trade Gay. I think their idea is to replace Gay with two or three cheaper players who (together) can replace Gay's production at a lesser cost. Trading Gay will probably also mean they could afford to use the MLE next summer. The team would have more flexibility. They're just looking for the right deal before pulling the trigger.