David Stern on Revenue Sharing, Las Vegas, New Orleans, and More

David Stern was interviewed at some length in yesterday's Wall Street Journal (subscription) by Russell Adams and Adam Thompson. He talks about the league's success in China (where there could be an NBA-affiliated league one day), the lessons of the synthetic ball, how great Las Vegas would be for an NBA team if they'd just stop betting on NBA games, and more.

The part about the economic health of NBA teams--many of which reportedly lose money even as they gain value--is especially interesting. Stern seems to be saying two things: the small market owners who have been whining for revenue sharing have valid concerns and the NBA wants to address them. And at the same time he seems to be saying those same owners are a little nuts, because their investments are appreciating so much that they aren't really in a position to complain (and, presumably, could afford to spend more, against that equity, to make their more competitive). It also appears that he has some grim news for New Orleans fans:

WSJ: In September, eight NBA owners wrote you a letter in which they advocated more revenue to be transferred from large-market teams to small-market teams. What was your reaction?

Mr. Stern: Their concerns are valid and are being dealt with. We have additional revenue assistance based upon a committee's report. Our franchise valuations are going through the roof. So the capital markets don't agree with the very owners who are saying that. And by the way, those very owners don't agree with it either based upon what they either just paid for their franchises or they're trying to sell them for.

WSJ: It seems like the league's relationship with the players' union has gotten testier during the last few seasons. Is that the case?

Mr. Stern: Our relationship's pretty good with them. This became a great issue for them, the ball, so let them run with it. They were on weaker ground with "respect for the game" rules where we began enforcing a more stringent code to stop complaining to the referees. If you wanted to be Machiavellian, you could tie the two together. We don't want our players viewed as a bunch of complainers. It isn't good for their health or ours.

WSJ: How many NBA teams are profitable?

Mr. Stern: We have lots of teams that aren't profitable. And the last one just sold for $350 million. What a bunch of unsophisticated buyers, eh? [Laughter.] Isn't it share price, for shareholder value? We have 30 shares. In 1979, the Dallas Mavericks expansion club went for $12 million dollars and in 2003, the Charlotte Bobcats sold for $300 million cash. Of course then its owner promptly signed the [September] letter. Think about that. OK. Welcome to my world.

WSJ: Teams like New Orleans and Memphis have struggled to justify themselves as NBA cities. Do you think those teams will stay put?

Mr. Stern: If you ask me that as the mayor of Memphis, the answer is absolutely. You've committed to us, you built a building, the city is supporting us and we're going to support you, barring some event that we hope doesn't occur there. New Orleans is a bit more problematic. It's got five years to run out its lease. We're supporting it in sales ways so that we can make it into a commercial success. We've got our own people working with the team, but it's a tough place. We had an owner who says New Orleans it is. You can't even buy me out, I'm going there. And we had a group of his partners who said, 'OK, partner, New Orleans it is.' So New Orleans it was. So now we've got five years to go on a lease in New Orleans and we're going back to fulfill our obligations, hopefully be there forever.