The Grizzlies have raised their game. Now Memphis fans have to raise their game.
That was the gist of a four-hour meeting Saturday of team owner Michael Heisley, his lawyer, team executives, and Memphis business and community leaders. The meeting was prompted by, among other things, recent reports that Oracle CEO Larry Ellison is interested in buying the team and possibly moving it to California. The newly created advisory board or local board of directors — the title is not yet clear — met in an office at FedExForum.
Kevin Kane, head of the Memphis Convention and Visitors Bureau, is chairman of the board. He said Heisley emphasized that he would like to see the team remain in Memphis indefinitely. But he said he is 75 years old and is going to sell the team eventually. He said the team loses money. His asking price is $350 million.
According to Forbes, the Grizzlies had an operating loss of $24.8 million last year, and the team valuation is $269 million, 29th in the 30-team NBA. The most valuable team ($900 million) is the Los Angeles Lakers, with a TV deal worth $200 million annually.
“There was no threat,” Kane said of the meeting. “Everybody knows Memphis is a vulnerable market.”
One illustration of the difference between small-market teams and major-market teams is ticket prices. Tickets for individual Grizzlies games for 2012-2013 are priced at $5 to $227. The New York Knicks, one of the NBA haves, sold out their season tickets this year before the games began. The cheapest ticket to a game this season is $10, the most expensive is $1,900.
Given the low per-capita income in Memphis, one of the goals of NBA NOW, the local group that brought the Grizzlies here, was keeping tickets affordable at all levels of the arena.
“The flip side of our relatively low average ticket price is that we probably have the most integrated crowd in the league,” Kane said.
The Grizzlies hope to duplicate the success of San Antonio and Oklahoma City as profitable winners and civic icons in cities with a single major-league team. Memphis got a taste of that last year when the Grizzlies lost in the seventh game of the second round of the NBA Playoffs.
“Memphis probably needs the Grizzlies more than the Grizzlies need Memphis,” Kane said. “The Grizzlies are a strategic asset for the region, like FedEx, AutoZone, MLGW, or the airport.”
The board has three goals: increase season ticket sales by 3,000 next year; advise the Grizzlies as to what local activities they should be more involved with; and be ready to present either a local ownership group or an out-of-town owner who would keep the team in Memphis.
In the financing projections for FedExForum, average attendance was pegged at 14,900. The team drew 16,862 fans per game in 2004-2005, the first year in the new arena, But in 2008 the Grizzlies were 29th in the league in attendance at 12,770. This year, the team is averaging 15,490 in announced attendance, which ranks 21st in the league. Under the new collective bargaining agreement, teams can earn $20 million a year in revenue sharing if they meet certain attendance goals.
Others at the meeting were Stan Meadows, Chris Wallace, and Greg Campbell representing Heisley and the Grizzlies and Memphians Pitt Hyde (a minority owner), Henry Turley, Bryan Jordan, Lawrence Plummer, Billy Orgel, Otis Sanford, Bob Henning, Duncan Williams, and Joe Hall, the head of a public relations firm in Nashville that worked with NBA NOW 11 years ago. Absent were Staley Cates, Willie Gregory, and Beverly Robertson.
“Season ticket sales are going to be dependent on local small- to medium-size companies,” Williams said. “Our New York Stock Exchange companies are doing what they need to do.”
Duncan Williams Inc., a financial firm, was involved in the underwriting for the FedExForum bonds and has eight season tickets in a club box, at courtside, and on the floor.
Board members asked if the Grizzlies can co-exist and prosper with the Memphis Tigers. Kane paraphrased Heisley as saying that John Calipari helped bring the team here and “you will never hear me say the University of Memphis is taking away from the Grizzlies.”
Board members noted that most of the players don’t live in Memphis in the offseason. They invoked the name of Shane Battier, the popular player who was not offered a new contract last year. Heisley reportedly said he is a Battier admirer and would gladly have him running one of his companies.
