This past week, the Portland City Council approved $120 million to pay for much-needed renovations to the Moda Center, home to the Portland Trail Blazers. Combined with already approved state and county funds, that totals $586 million for the renovations.
However, all the funding hinges on the Trail Blazers agreeing to a new lease that would keep the team in Portland through 2050. The Trail Blazers — particularly owner Tom Dundon — and the city disagree over some key terms of that lease and are entering negotiations. There is a deadline to sign that lease by the end of the year, or the state money ($365 million) goes away.
There are two ways this is likely to play out: Either, by Dec. 17 (a deciding City Council vote on the lease terms), the City of Portland and Dundon’s Trail Blazers will have agreed on a new lease that will keep the beloved franchise in Portland for another two decades; or we will know that Dundon bought the team with the intention of moving it, a script the Pacific Northwest has seen before.
What does Dundon want?
Notice that the Trail Blazers themselves are not on the list of groups contributing to the Moda Center refurbishment — Dundon said at a meeting in Portland he thought the team contributed enough by the taxes it pays in the state. That follows his pattern since buying the team.
Dundon has not made friends in Oregon since buying the Trail Blazers — and absolutely wasted the honeymoon period new owners usually get with fan bases. He has come off as entitled, a billionaire penny-pincher treating the team like a private equity asset, not acting as a steward of a brand and franchise important to the community.
There have been so many penny-pinching moves. There was the public relations mess of not bringing two-way players to a postseason game. There was the story of the team masseuse and other Portland personnel waiting for hours in a hotel lobby because he wouldn’t pay for late checkouts. There was the lowballing of coaching offers — something he denied but was discussed plenty around the league — that ultimately saw a successful coach in Tiago Splitter head to Chicago (while they found a good coach in Mica Nori, he had to sign an owner-friendly contract, essentially a one-year deal, that the coaches’ association decried). A lot of team staff was let go on the business side. Most recently, long-time and popular Trail Blazers television play-by-play voice Kevin Calabro walked after refusing a “subprime” offer, while analyst Michael Holton, studio hosts Neil Everett and Jamie Hudson, radio voice Travis Demers, and Tom Haberstroh, who brought a statistical take, were all let go.
Dundon and the Trail Blazers say the organization has been losing money, and argue this was cutting out fat and waste. The team says the primary reason it is losing money is an unfavorable lease deal. Dundon and the Trail Blazers argue that in negotiations with the city, they need to get the best deal possible to make the team profitable. To fans in Portland? It all reads as what people nationwide have come to despise about billionaires and private equity.
The City Council approved a term sheet with the money, and that’s what the negotiations over the coming months will be about. The city sees its term sheet as putting in protections for itself in this process, but Dundon has already dismissed the sheet out of hand.
What are the expected issues with the negotiation?
• It’s going to start with the $3 million annual rent charge.
• Taxes. The city gets a six percent tax on each ticket sold and every parking fee at the building. The team wants that number reduced.
• The city wants the Trail Blazers to agree to hire union workers for the renovations and construction process, as well as for concession workers and others on game night.
• The Trail Blazers want increased security in and around the arena on game night and for the city to pay for that.
The Trail Blazers see all of this as costing the team money.
Could Dundon move the team?
Never say never, but this would be an incredibly tough sell to the NBA league office and the 29 other owners. While the term sheet can be negotiated, local and state governments stepped up with money to do the renovations. That matters.
Also worth noting, one of the challenges with the Trail Blazers has been that they are isolated on the map, there is not another team in the Pacific Northwest, which makes travel much longer. That appears likely to change in the next few years if (really, when) an expansion team in Seattle is approved — the league doesn’t want to put a team in Portland and have them be the ones isolated.
Where would Dundon move the team? With expansion teams — paying massive franchise fees — targeted for Seattle and Las Vegas, the league is not going to let another team swoop in and take over those markets. Maybe he wants to move the team to Raleigh, North Carolina, where his NHL team, the Hurricanes, play. That, however, is about 170 miles from an existing NBA team in Charlotte, and you can bet that ownership group would push back about having another team in what they see as their market.
Also, NBA Commissioner Adam Silver, back when he was David Stern’s deputy, led the push to find an owner and keep the Kings in Sacramento. He didn’t let that team move to a bigger market in Seattle. Silver likes stability. Finally, make no mistake, moving the team out of Portland would be a public relations disaster for the league.
Never say never with the NBA, but Dundon finding the political will with the league and the other 29 owners to sign off on him moving the team is a long shot.
That is not going to make the negotiations over the next couple of months any easier. Expect both sides to try to negotiate through the public in the coming months, there will be contentious moments, but in the end, the money is on the table to get the upgrades done. A deal should be struck.
Unless Dundon never had any intention of striking a deal.
Read the full article here