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Buying Into A Failing League: How Atlanta Hawks' Sale Uncloaks Stakes Of NBA Lockout

Alex Meruelo has agreed to buy the Atlanta Hawks ... during the NBA lockout. Is he crazy? Plus: what to do about the sham FIBA Oceania region.

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On Sunday, the identity of the secret Atlanta Hawks bidder was revealed as California businessman Alex Meruelo, a 48-year-old whose made his mark with a Latino-focused pizza chain, a Spanish-language TV station and a casino in Reno. In other words, his history is a bit different than, say, that of Ted Turner.

Of course, the NBA lockout is still on. It's more "on" than ever: there has been one bargaining session in 38 days since the lockout began, and that simply preceded a federal lawsuit filed by the NBA which alleged bad faith. The NBA owners still claim they need a reworked system that ensures profitability; the NBA players are still unwilling to hand over a substantial portion of their future paychecks because some owners made bad decisions (either buying into the league or paying the wrong players).

Alex Meruelo's entrance will not help one little bit of this.

The terms of the Hawks purchase aren't yet known, but they will be soon. And I guarantee that the Atlanta Spirit group -- a sort of Four Horsemen partnership that owned the Hawks and recently relocated Thrashers and delivered to Atlanta sports pestilence and famine -- will turn at least a small profit on the sale. The Spirit (not this Spirit, FYI) paid about $200 million for the Hawks in 2004. There's also $120 million in debt on Philips Arena. Fans in Atlanta will go to fisticuffs if you allege that the Spirit is not the worst ownership group in sports. And these dudes, no doubt, turned a profit on a seven-year investment that included two playoff series wins.

The next question: why would someone like Alex Meruelo -- by all accounts a brilliant businessman -- buy into a locked-out, unprofitable league? Why do rich men continue to pay a premium to get into the NBA, even as the league tallies up its sixth (if not more) straight season of losses? SI's Chris Mannix provides a solid example of the usual response:

Why would a new owner (like Atlanta's Alex Meruelo) want to spend hundreds of millions to buy a team in a league losing money? Simple: Stern. It's undoubtedly been made clear that a new CBA will ensure profitability. Hence, a strong willingness to buy in now.

It's undoubtedly been made clear. No question. It has been made clear that the league is willing to at least threaten to lose a season to get ensured profitability. You can tell because of the 38-day-old lockout with one bargaining session followed by a lawsuit.

But isn't that an awful reason to buy in? Because you think management will crush labor and you'll be able to operate at a tidy profit. Isn't that going to make the players entrench even more? If I were a player, I'd be pretty pissed off that another millionaire is betting that I'll cave and consent to massive pay cuts to fund the interest he'll be paying on the franchise. I'd feel a lot like Anthony Tolliver does.

Why do people keep lining up to buy #NBA franchises (ATL), if they are losing so much money? #hmmm things CONTINUE not to add up. #NBPA

This is the seventh new ownership group in two years, and the New Orleans Hornets are still floating out there. There has been a ton of action, and there's still a legit two to three more teams that could be flipped at some point soon (including the Memphis Grizzlies and Sacramento Kings).

There's one response to the Tolliverian concern that I think does make sense, and it has nothing to do with wishin' and hopin' and prayin' for a favorable deal before the NBA expires in a puff of smoke. It flips the question: why are people lining up to sell their NBA franchises right now?

To be frank, a couple of the franchise changeovers lacked a choice: Abe Pollin and Bill Davidson passed away, and their families wanted to sell their respective teams (Washington Wizards, Detroit Pistons). But that doesn't explain why Bruce Ratner sold the New Jersey Nets (he was losing tons of money on the Nets and needed more investment money pumped into Atlantic Yards) or why Chris Cohan sold the Golden State Warriors (he is a merciful man who had sucked enough souls out of the Bay Area as to survive three more centuries) or why Robert Johnson sold the Charlotte Bobcats (he couldn't afford to lose more money) or why George Shinn sold the Hornets (he couldn't afford to lose more money) or why Comcast sold the Philadelphia 76ers (it wasn't making any money) and why the Spirit is selling the Hawks (can't afford to lose more money).

For the most part, NBA owners are selling their franchises because they can't afford to lose money any more. This is usually a good thing; the popular axiom in Sacramento the last year or so has been that if you can't afford to lose money on your pro sports team, you can't afford to own a pro sports team. The fact that there are willing buyers -- otherwise brilliant, wealthy men -- bolsters that theory. This should be more like a video game than an investment opportunity, if fans and players were to get their ways.

But the NBA is trying to make itself over as a legit, sustainable business, and that has required some folks who can't handle losing money on an investment to get out of the business, and it now requires some tamping down on expenses, the largest of which is player salary, to ensure that the people getting into the business now don't find themselves in the same situation in seven or eight years. That's how you get a locked-out league with huge owner turnover: enough rich men are deciding that they've had enough of the business, and a new crop is lining up to take a turn. Their long-term survival in the NBA depends on ... yes, Stern crushing the union. Good luck, dudes.



This is a plea I make every two years.

As is the case with soccer, for international basketball competition, the world is divided into distinct regions, each of which qualify teams to the FIBA World Championship and Olympics. There's the Americas region -- Canada to Chile and everything in between. There's Europe. There's Africa. There's Asia (which includes some of the Middle East). And then there's Oceania.

Oceania certainly has enough nations to put together a tournament. But the region is so full of microstates that don't play basketball that, as it turns out, most years only two nations -- Australia and New Zealand -- compete. Oceania has two berths to the World Championship, held every four years. Obviously, Australia and New Zealand earn those berths every time, simply by existing. The Olympics include one automatic berth for the Oceania champ. Australia has earned that berth in each of the last 10 Olympic games, spanning some 40 years.

There are also three wild card spots for the Olympics to round out the 12-team field. New Zealand has earned one of the wild card spots exactly twice ... ever. So the second best team in Oceania is almost never good enough to earn a wild card berth to the Olympics. This team basically gets an automatic berth to the World Championships, and is the only team Australia has to beat to make the Olympics.

Australia's a fair team; the Boomers have finished fourth three times since 1988. But given the limited Olympic field -- the I.O.C. refuses to expand to 16 teams, as FIBA has requested -- Australia only has to beat New Zealand to make it. Meanwhile, teams in Europe or the Americas who could actually do some damage in the Olympics stay at home.

The solution is easy: combine Oceania with Asia (which has one automatic berth for the Olympics), and add a fourth wild card berth. The wild card qualifying tournament is held a month before the Olympic tournament; it allows teams to accurately represent how they'll play in the Games, given the fluctuating nature of rosters due to injury and league responsibilities. Meanwhile, Australia would give China and Iran (the current Asian powers) some great run in the FIBA Asia/Oceania Championships. Instead of three automatic Asian berth to the World Championships and two for Oceania, combine them and offer four. If New Zealand can't beat the Jordans, Lebanons and Qatars of the world, they don't belong at the World Championships.

And no, I do not hate New Zealand. Forgive me, Bret and Jemaine.


The Hook is a daily NBA column written by Tom Ziller that runs on Monday through Friday. See the archives.