NBA Sued For $1.25M For Not Paying Rent At New York City Flagship Store

[RealGM Wiretap]

The NBA's retail arm has been sued for its failure to comply with the terms and conditions of its lease at 545 Fifth Avenue in New York City.

NBA Media Venures, LLC is named as the defendant as it owes in excesses of $1.25 million in fixed rent ($625,000 per month) and additional rent based on an absolute and unconditional obligation to pay, without any abatement, deduction, counterclaim, offset or setoff for any reason whatsoever unless specified in the lease.

The lease does not include any force majeure clause.

Via Darren Heitner/FrntOfficeSport

[Dennis 37]

The 1% must have their money.

[ontnut]

The 1% must have their money.

How does the NBA not count as the 1%? How are they not paying their rent right now...don't tell me their coffers are empty.

[MadDogSHWA]

The 1% must have their money.

How does the NBA not count as the 1%? How are they not paying their rent right now...don't tell me their coffers are empty.

I agree 100% many of these NBA teams are literally toys of Billionaires.

The only explanation is that this is some cost-saving strategy probably relating to insurance.

[mulamutti]

The 1% must have their money.

How does the NBA not count as the 1%? How are they not paying their rent right now...don't tell me their coffers are empty.

I agree 100% many of these NBA teams are literally toys of Billionaires.

The only explanation is that this is some cost-saving strategy probably relating to insurance.

Its just a combination of several business strategies such as recovery maximization (from CARES act, FEMA and state and local COVID related funding sources), insurance payout maximization, deferring payments (return maximization) etc. in lay terms, minimize losses by any means possible.

I can imagine they have several complex contract obligations like venue payments, marketing, tv contracts etc. that will be dependent on games being played. Lot of these contract terms and obligations may be quite complex, hard to quantify and not even clear which party is holding the bill at the end.

[anatomicbomb]

How does the NBA not count as the 1%? How are they not paying their rent right now...don't tell me their coffers are empty.

I agree 100% many of these NBA teams are literally toys of Billionaires.

The only explanation is that this is some cost-saving strategy probably relating to insurance.

Its just a combination of several business strategies such as recovery maximization (from CARES act, FEMA and state and local COVID related funding sources), insurance payout maximization, deferring payments (return maximization) etc. in lay terms, minimize losses by any means possible.

I can imagine they have several complex contract obligations like venue payments, marketing, tv contracts etc. that will be dependent on games being played. Lot of these contract terms and obligations may be quite complex, hard to quantify and not even clear which party is holding the bill at the end.

Exactly. And in an evolving, unpredictable situation, I am seeing two major groups of corporations - those that moved quickly to offer something and generate PR, and those that sat quietly, waiting to see what happens.

I work in commercial real estate and there's a ton of tension in every direction. Every vendor and invoice is scrutinized, and many parties are opting not to pay as they wait for government relief, insurance decisions, compassion, or try to out-last their creditors. The AP teams that would be waiting for approval to remit payment would be totally hostage to the decisions of leadership, and it's not surprising that the NBA would wade into legal disputes in especially challenging markets - and perhaps there's no better example than New York.

The major property management companies seem to have not budged with regard to either accessing or cascading rent relief from government, so the NBA may be saying that they need to provide relief before the bill will be paid as the store could not possibly have been open. There will be legal precedents adjusted and created in the litigation to come all over the world, and the companies that can afford it will have roles in such determinations that go on to affect every business, no matter how large.

[ciueli]

Someone please explain how they make money paying $625,000 per month in rent on a single store.

[DoctorDunc]

The Vanity ownership model on break even cash flow for sports teams on escalating valuations is bust. That NYC store is just one example of many that we will see as the industry restructures.

[JN61]

Someone please explain how they make money paying $625,000 per month in rent on a single store.

Flagship stores like this arent expected to make profit in same way your typical store is. The image and visibility it creates is far more important than profit. It for sure runs on loss but its still worth it for the league in big picture.

[haste10176]

The 1% must have their money.

How does the NBA not count as the 1%? How are they not paying their rent right now...don't tell me their coffers are empty.

Every NBA player and every manager and every owner and every executive in the NBA are part of the 1%.. I imagine the owner of the store charging 625000 a month in rent is part of the 1%..

[Ccwatercraft]

that is shockingly overpriced.

I hope its a short term lease

[ontnut]

Someone please explain how they make money paying $625,000 per month in rent on a single store.

Flagship stores like this arent expected to make profit in same way your typical store is. The image and visibility it creates is far more important than profit. It for sure runs on loss but its still worth it for the league in big picture.

Consider the rent as part of a marketing and advertising strategy. How much would they have to pay to advertise on a scale like that in the middle of New York, 24/7? The sales help cover the cost of that advertisement, but yeah, the visibility to them is probably worth way more than the actual retail sales.

[Dennis 37]

Someone please explain how they make money paying $625,000 per month in rent on a single store.

Flagship stores like this aren't expected to make profit in same way your typical store is. The image and visibility it creates is far more important than profit. It for sure runs on loss but its still worth it for the league in big picture.

I didn't even know it existed, nor did I know any NBA stores were brick and mortar. I figured NBA gear could be bought at the retail stores in each arena, or online from the NBA store, and of course 3rd party retailers.

So much for all that money blown on image and visibility. If New York had a basketball team that would do far more for image and visibility than a store.

[anatomicbomb]

The 1% must have their money.

How does the NBA not count as the 1%? How are they not paying their rent right now...don't tell me their coffers are empty.

Every NBA player and every manager and every owner and every executive in the NBA are part of the 1%.. I imagine the owner of the store charging 625000 a month in rent is part of the 1%..

Yeah, it's a battle between huge corporations with big stakes in legal precedents established by the inevitable action that ensues during/after the pandemic. Contract law will be tested in a number of directions, and in major virus hotspots like NY, it seems reasonable to expect they'll be the centre of litigation, too. A lot will roll the dice on using their legal teams to fight/settle for reductions in payments or pursue full adjudication of the relevant clauses. Insurance is another field that will go through a lot of examination and change along these lines.