COVID-19 impact on (Seattle) Expansion

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splifton
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COVID-19 impact on (Seattle) Expansion 

Post#1 » by splifton » Sat May 16, 2020 8:21 pm

The lasting impact of COVID-19 on league revenue is yet to be fully realized. The salary cap will almost certainly be reduced next season and beyond with players losing the opportunity for larger contracts as overall revenue diminishes.

Until a vaccine is created the arena experience will severely limit profitability and growth. The NBA generates most of its profits from its media rights packages (Turner, ABC/espn, and local tv) anyway. If this trend continues would not it make sense for the league to expand by 2 franchises NEXT season and renegotiate their media rights package (if possible)?

Hear me out:
IF the DELAYED 2020-21 season is played next spring without fans in the arena, then these two new franchises games would be televised from a remote location anyway. The Franchise Fees are expected to be at least 1.5 Billion dollars. As I understand it, these franchise fees do not impact overall cap revenue and would only be a one time injection of cash into the Owners pockets. This could add close to a hundred million to a struggling franchise Owner who's business may be impacted by COVID-19. The negative would be this would add two new teams to split the media rights package moving forward. The players association could take credit for adding 24 new players and countless g-league jobs.

I understand the tremendous timing constraints of accomplishing this task. However, COVID-19 has completely wiped out the traditional league schedules and next season draft could be delayed far into the fall/winter. Depending on when the league decides to begin the 2020-21 regular season and especially if the league decides to televise games without fans in attendance, this could potentially be accomplished before next summer.

Some Questions:
Do you believe the owners will utilize a potentially $1.5 billion dollar franchise fee (X 2) as a way to inject cash into struggling franchise owners pockets?
Do you believe the Players Union would potentially negotiate 24 new members taking a cut against the cap?
Does the rumored Force Majeure clause allow for a scenario where the League could renegotiate media rights (if it added 2 new franchises?
Would the players association be interested in adding 24 new players?
What would the salary cap impact of those jobs be on the G-league as well as the Association as a whole?
Would the league be interested in creating the content surrounding protecting players from expansion drafts and franchise construction debates?
Would there be an appetite to water down the talent while fans aren't able to attend in person?
GAMBLING MONEY---2 new teams to take a Rake.
How unrealistic or overly optimistic is my timeline?
What negatives have I left out?


The NBA is currently in uncharted territory. With all this uncertainty created by the COVID-19 pandemic The Association should use this golden opportunity to right the Seattle wrong, Create 2 new Franchises.

Resurrect the SEATLE SUPERSONICS!

Please be aware this tread is about EXPANSION and NOT RELOCATION. Seattle does not want to discuss your team moving.

Join me in this Fight!
-Splifton
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Re: COVID-19 impact on (Seattle) Expansion 

Post#2 » by DBoys » Sun May 17, 2020 4:40 am

"would not it make sense for the league to expand by 2 franchises NEXT season and renegotiate their media rights package (if possible)?"

I understand the wish.

But I think there isn't any real likelihood of new franchises being added right now.

Expansion is too complex of an issue for them to even think about it right now. Too many other priorities, emergencies, on their plate.

And frankly, that probably works both ways. What billionaire wants to commit to a billion dollar arena at this time, when no government would touch such a project with a ten foot pole, and it will sit empty for who knows how long with no use for such a building, and with no resolution really in sight - and then pay multiple billions for a franchise on top.

However, money does talk, and while I don't think the NBA's billionaire owners are in the soup line, maybe one of them would consider a sale? If an expansion, however, I don't think it's nearly as cheap as you have imagined, so that does up the possibility should someone want to put a fortune on the table. (I bet the price would be north of $4B just to join, with no discount for covid issues. Do you know someone with an extra $5-6B in his pocket, for arena and team, blowing a hole and needing to be spent?)
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Re: COVID-19 impact on (Seattle) Expansion 

Post#3 » by Smitty731 » Sun May 17, 2020 10:33 pm

Eric Pincus wrote about this idea pretty extensively for Bleacher Report. It was a very interesting read. I would say there is no chance for the 2020-21 season, but 2021-22 and beyond, it's on the table. The NBA has already said it's something that gets discussed regularly. Now, there might be a real reason to consider it.
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Re: COVID-19 impact on (Seattle) Expansion 

Post#4 » by Smitty731 » Sun May 17, 2020 10:39 pm

Also, force majeure doesn't allow for renegotiation of media deals. That clause is a CBA thing between the NBA and the NBPA.

If anything, I've been told the NBA could be in breach of contract with the TV networks if they enact force majeure and miss large chunks of games. It would again be another factor working against the league in this environment, where money is already an issue.
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Re: COVID-19 impact on (Seattle) Expansion 

Post#5 » by DBoys » Mon May 18, 2020 12:26 am

Smitty731 wrote:
If anything, I've been told the NBA could be in breach of contract with the TV networks if they enact force majeure and ....


Respectfully, the idea that there's no language in the TV contracts to cover the possibility of forced loss of games in the event of a major disaster beyond their control (which is what "force majeure" is about) seems really unlikely. These are really sharp people writing the contracts and covering all the bases. It seems more likely that the contracts would stay right in place, and they'd simply account for missed games by a pre-designated formula, such as reducing the pay $X for each missed regular season game, and $Y for a playoff game. I also suspect (because it's the norm) that ad sales and viewer numbers will impact the actual payout to some degree, rather than everything being on a fixed scale to the penny.
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Re: COVID-19 impact on (Seattle) Expansion 

Post#6 » by Smitty731 » Mon May 18, 2020 12:56 pm

DBoys wrote:
Smitty731 wrote:
If anything, I've been told the NBA could be in breach of contract with the TV networks if they enact force majeure and ....


Respectfully, the idea that there's no language in the TV contracts to cover the possibility of forced loss of games in the event of a major disaster beyond their control (which is what "force majeure" is about) seems really unlikely. These are really sharp people writing the contracts and covering all the bases. It seems more likely that the contracts would stay right in place, and they'd simply account for missed games by a pre-designated formula, such as reducing the pay $X for each missed regular season game, and $Y for a playoff game. I also suspect (because it's the norm) that ad sales and viewer numbers will impact the actual payout to some degree, rather than everything being on a fixed scale to the penny.


Everything has language around missed or cancellation of games, but on a small scale. Not multiple seasons worth of games. Just like the NBA CBA doesn't have a pandemic clause (outside of force majeure), few contracts include them. It's an ongoing issue right now for movie and television studios as well. Because production is shutdown, they are coming close to breach of contract on delivering to the broadcasters. It's been covered pretty widely.

Now, I think when you are talking billions of dollars, people find a cooperative spirit that maybe didn't exist before. The idea being half a watermelon is better than a whole grape.

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