If I were Jerry Reinsdorf (a double duty fanpost)

by Sports2 on Aug 5, 2009 10:22 PM CDT

Not in Reinsdorf's position with my desire to win basketball games, but in Reinsdorf's position with his prioritization of cost, flexibility, loyalty and winning, I'd be thinking hard about what the new CBA is gonna look like.

I've been mulling over what the likely effects are of the CBA negotiations coming down the pike. Everything I read seems to indicate the owners are going to push hard for a smaller cap, a hard cap, shorter contracts and probably smaller contracts. I've seen lots of folks that suggest the new CBA will benefit the owners. I've seen no one suggest the new CBA will benefit the players (versus the current situation).

These facts might make a cautious owner with an eye on the bottom line not want to sign any contracts next summer (under the current CBA) - during the "2010 bonanza" - because they could be especially overpriced under the new CBA.

For that matter, it might also behoove them to make an Okafor for Chandler type trade with Luol Deng. The idea being that Deng's contract, while in line with what a player like Deng could expect under the current CBA and good economic times, is prohibitive and out of line with what you'll pay Deng under the upcoming CBA. Which would be another reason to trade him (in addition to the ones I wrote here, but didn't have the guts to post here after that trade Rose fanpost).

Anyway, since Jerry proclaimed Deng a future all-star, trading him is either exactly what he's thinking or the last thing he's thinking. I guess we'll see. Of course, Jerry's got a lot of other stuff on his mind at the moment. Continue reading after the jump to find out what's up with Jerry's latest adventure...

... turns out his bid to buy the NHL's Phoenix Coyotes is in a bit o' trouble.

Glendale and the NHL are desperately trying to salvage an offer for the Phoenix Coyotes that was put in jeopardy after confidential Bankruptcy Court files were leaked that showed the bidder wanted guarantees of millions of dollars from the city and an escape clause to move the team.

Chicago sports mogul Jerry Reinsdorf, who with other investors has offered $148 million for the professional hockey team, was outraged by the leak of court documents Friday and threatened to withdraw his offer. It left Glendale and NHL officials scrambling over the weekend to repair relations with one of the few potential buyers wanting to keep the Coyotes in the Valley

This went down on Monday. What's really interesting to me is there's another ownership group that has apparently bid significantly more, and plans to move the team to Ontario (where, you know, they actually like hockey).

Moyes' attorneys had indicated to Glendale before filing that they planned to submit the documents to the judge under seal.

Glendale and the NHL, however, painted it as a ploy by Moyes to undermine Reinsdorf's bid, which does not include money to repay $104 million Moyes said he loaned to the team.

Moyes prefers a $212.5 million offer from Canadian businessman Jim Balsillie that would move the team to Ontario and put some money back
in Moyes' pocket.

One document was removed from the Web site by the court clerk. Another document containing a brief summary of the sealed facts remains.

Glendale City Manager Ed Beasley asked Baum to hold in contempt Moyes' counsel at Phoenix-based Jennings, Strouss and Salmon.

So basically it seems to me that the Canadian guy is offering $60M more dollars, plus he's not asking for millions of dollars of subsidies from the city of Glendale, AZ, population 250,000, to support hockey in a place where no one gives a shit about it.

This seems to me like a pretty classic case of the local government throwing good money after bad. It's spent an ass-load to build a hockey arena, and there's just not much of a market for it in Phoenix. The team is pretty much bankrupt. Shouldn't they just let it go instead of wasting more money on it (Yeah, if the Coyotes leave, they don't get any money from leasing them the arena, but if that's offset by paying out millions in subsidies, they're pretty well screwed there anyway. From the documents, Reinsdorf's proposal mostly seems to center around getting more revenue from the city by imposing taxes on restaurants and hotels servicing Arizona Cardinals fans.

Anyway, it appears Jerry was dealt another blow today when the bankruptcy judge overseeing the case ruled bidders who intend to move the Coyotes can enter the auction for the team.

U.S. Bankruptcy Court Judge Redfield T. Baum ruled Wedneday that PSE Sports and Entertainment, led by Jim Balsillie, will take part in the highly anticipated Sept. 10 auction, along with other qualified bidders, looking to take over the Phoenix Coyotes.

That ruling is a blow to the city of Glendale and the National Hockey League, which have animatedly voiced disapproval of moving the team to Hamilton, Ontario, as proposed by Balsillie.

"From the time his bid was launched, Jim Balsillie has said that all he is asking for is a chance to bid for the Coyotes at auction through the bankruptcy court process on a level playing field and let the best bid win," Bill Walker, Balsillie’s spokesman, said in a statement. "That’s fair and transparent. It’s the best outcome for creditors and for the future of the franchise."

Attorney Gary Husk, who is representing the city of Glendale, said the west suburb is supportive of having a "Glendale-only option," so that "reduces the risk a little bit."

Glendale built Jobing.com Arena, where the Coyotes play.

Husk said the ruling expedites the process and will provide for a side-by-side comparison, but it isn’t detrimental to Glendale.

"The side-by-side analysis will be very positive to determine which bidder has the more favorable proposal, not only for the city of Glendale but for all the creditors."

National Hockey League owners on July 29 voted to back Jerry Reinsdorf’s $148 million bid to buy the Phoenix Coyotes hockey team from owner Jerry Moyes. Reinsdorf owns the Chicago White Sox and Bulls.

The Coyotes are in Chapter 11 bankruptcy reorganization and the NHL and Moyes are battling over who can buy the team. Moyes wants to sell the Coyotes to Research in Motion CEO Balsillie for $213 million.

Reinsdorf’s $148 million bid to buy the Phoenix Coyotes hockey team includes little or no cash from him or any of his investors. Instead it centers on assuming and reworking debt. His offer is a stark contrast with the $213 million all-cash bid tendered by Balsillie. Balsillie would use part of his personal fortune to buy the Coyotes.

In short, Jerry's business accumen basically amounts to getting an incedibly sweet deal from powerbrokers who are willing to ignore $60M in cash. Score!

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wow Sports2

this is an incredible post! I don’t even know where to begin or what to say. Can I just call JR a greedy bastard and call it a day?

left shark - "Kirk needs to go and join Ben Gordon and L Deng somewhere else trade Deng and Hinrich they no good"

by NormVanBeer on Aug 5, 2009 11:00 PM CDT reply actions

The Coyotes part

Which is 70% of the post is off topic, and I don’t care about hockey, not to mention, JR won, so that automatically makes me unhappy.

Things could be worse. We could have kept Boylan.

by stupidgenius on Aug 5, 2009 11:30 PM CDT reply actions

Off topic or not, excellent journalism.

I will comment when I get through the whole thing.

Rec’d

by Super-Structure on Aug 6, 2009 1:04 AM CDT reply actions

It's not at all off-topic

As fans of the Chicago Bulls, we spend a lot of time discussing and trying to understand how and why they make the decisions they make. The strategies the Bulls employ flow from Jerry Reinsdorf, at the top of management, on down. So if you want to understand the Bulls, you should understand Jerry Reinsdorf.

BullsTwo

by Sports2 on Aug 6, 2009 6:41 AM CDT reply actions 4 recs

All true

I actually do believe JR wants to win, but I also believe he wants to Profit. Profit comes before winning of course! But despite our recent changes in Washington, we’re still capitalists here in the Good Old USA, so I think there is nothing wrong with the owner wanting a profit. As a fan however, it makes me want to hold back support for them when they don’t sign guys like BG.

by 72-10 on Aug 6, 2009 8:29 AM CDT up reply actions 1 recs

I agree 100%

I love profit and the idea of profit. I don’t think the owner of any business should run his business at a continual loss.

That being said, there are lots of strategies for making a profit. Some of them involve making investments and building something people are willing to pay for. Another involves leveraging your past successes and getting handouts.

To actually go off topic for a minute, it’s not that we’re still capitalists in the US, it’s that we’re still human beings, who, no matter the circumstance, attempt to obtain the most for themselves they can. “Greed” isn’t a sympton of capitalism, it’s a symptom of human nature.

Having competition (i.e. capitalism, for lack of a better term), has the benefit of channeling some of that greed to beneficial ends. People can wildly profit by making something people are willing to pay for. But take away the “capitalism” part, and start handing out money to people who “deserve” it based on past success, and those folks are still gonna take the money.

The current auto industry bailout mess is a pretty good example of that. It once made incredible profits- literally enough to built cities – because it profitably built cars that people wanted to buy. Did you know that, if you add up all the money that’s been given to GM and Chrysler over the last several months, it amounts to close to $15,000 per car they’ve actually sold? In short, the true cost of those cars is absurd, and more than anyone would willingly pay for them. And also, so high, that we can never realistically expect that even if GM and Chrysler were to become profitable again, they could pay back the funds they’ve received.

But money is money to those who are receiving it. Never mind that Toyota, Ford and Honda are largely managing to receive money through the crazy and utterly risky strategy of trying to make cars for profitably less than the amount people are willing to buy them at (despite competition from guys getting $15k per car from the government).

To bring this back on topic, I point it out all of this stuff about the auto industry because in many ways it parallels the sports industry. Yes, owners should be profitable, but ultimately “profitability” from handouts can’t work forever, and is only “profitable” if you consciously ignore the costs borne by other parties.

BullsTwo

by Sports2 on Aug 6, 2009 9:10 AM CDT up reply actions 4 recs

Great analysis

And well articulated… I didn’t mean to get us off topic there! LOL… I just hate it when companies and wealthy well connected businessmen like JR use the force of government to line their pockets at taxpayer expense, and sometimes I read something like your above article and I get fired up about it. The auto bailout you gave is a prime example….

Actually I usually come to blogabull to get a reprieve from all the other BS going on in the real world (like bank or auto bailouts). It is much more fun to analyze the impact of Ben leaving, or the potential trades we could make in season! That said, I loved the piece. Nice bit of work…. and rec’d by the way.

by 72-10 on Aug 6, 2009 11:01 AM CDT up reply actions

As a taxpayer,

I know I’m getting screwed. BOHICA.

by Mike Mueller on Aug 10, 2009 9:11 AM CDT up reply actions

the government and Jerry Riensdorf

a gang of thieves, writ large!

Of course JR played similar games with Illinois politicians… obviously with better success given his teams got their new stadiums.

by 72-10 on Aug 6, 2009 8:20 AM CDT reply actions

Great post, great read.

Thanks for the update. I never understand keeping a failing team with low attendance in a small town that doesn’t care to support it. Especially with hockey, even if you win, if you’re in a town that has no hockey history, the team’s appeal wears off quickly after it’s inaugural year, and everything suffers. I lived in Tampa when the Lightning came, and it was fun at first- since there’s nothing to do in Tampa- but ultimately, people stopped caring rather quickly. You just forget they even exist. I don’t know one person growing up who played hockey, or really knew anything about hockey… The Lightning even won the Cup 5 yrs ago, and yet that still failed to get them any real attention from fans. On the other hand, now that the Rays are decent, they’re all the rage and there’s no sign of that fanfare ever shutting down…

Let the team move to Canada Jerry and focus on the damn Bulls.

by smash! on Aug 6, 2009 9:58 AM CDT reply actions

There are countervailing factors as well, however, especially with regard to max contracts.

As with the recently inked Roy deal, any max contract signed this year or next will likely be a relatively “cheap” max contract because of the lower cap numbers. Even if the new CBA lowers length and max raises, etc., I’m guessing that max contracts will still be proportionate to the cap somehow, and that after 2011-12, the cap should start going up again as the economy recovers. Whoever signs the max guys next summer will be getting a bargain when those contracts hit their later years.

I thought we fought in Iraq for freedom of speech

by arjoseph on Aug 6, 2009 3:32 PM CDT reply actions

I could be wrong, but I think only the first year of the contract is subject to the cap.

That is, Roy’s contract isn’t determined yet because it’s an extension and the new salary isn’t implemented until the 2010-2011 season. So his first year salary will be 25% of whatever the cap is for 2010-2011. In subsequent years, however, he’ll just get the standard 10.5% of his first year salary. That is, the later years don’t fluctuate with the cap.

So it’s true that Roy’s total contract is cheaper because he has the misfortune to have his extension take effect in a down cap year. Which is bizarre and lame.

However, this doesn’t apply to all maximum salary players. Players who are already on the max, or near max, are not limited to the maximum amount. They are allowed to sign for 105% of their previous salary even though it might be above the league maximum for the year.

For example, suppose the cap is $50M next year. The max for a player with Lebron’s years of experience will be 30% of $50M, or $15M. However, because Lebron’s salary this year is already $15.078M, he’ll be allowed to sign for 105% of that amount, which is $15.8M

Thus, for guys who currently have big contracts, their salaries could become a proportionately bigger chunk of the cap (this is why KG is grandfathered into an above max contract). Teams paying such players will almost certainly have to pay dearly in luxury tax to field a competitive team around them.

So while Brandon Roy will be a bargain, other guys won’t.

And Roy will only be a bargain if the cap actually goes up and the new CBA has rules conducive to it. The economy improving is one thing, but the CBA is something else entirely, and it seems quite possible, the way things are going, that guys who sign max contracts now will be “forever overpriced” instead of “forever bargains”

BullsTwo

by Sports2 on Aug 6, 2009 5:55 PM CDT up reply actions 3 recs

Certainly true.

I didn’t mean to imply otherwise, or to contradict the point of your post. I just wanted to throw out there the notion that the smaller cap will potentially mean a max guy could be a “bargain.” Without knowing the upcoming changes in the CBA, it’s impossible to know whether a guy signed to a max deal next year will be a bargain or overpriced relative to max guys five years from now, but I certainly think it’s possible.

I thought we fought in Iraq for freedom of speech

by arjoseph on Aug 7, 2009 12:53 PM CDT up reply actions

Recd

This puts it in a greater perspective, and the auto industry analysis is like the ice cream portion of the cake.

sports2 is one of the greatest…

Taxes us more, charge us higher prices for tickets, stay away from expensive competitive players fielding a team, and impose you favoritism and negative attitudes on our teams (we foot the bills) and player selection. In essense many teams are “publically owned” but the masses foot the bills and garner no profits.

GreenBay Packers are publically owned, what every that means?

"I tried being reasonable, I didn't like it."
"Go ahead, make my day"
"We boil at different degrees"
"A good man always knows his limitations"
"You've got to ask yourself one question: 'Do I feel lucky?' Well, do ya punk?"

by exult463 on Aug 6, 2009 5:23 PM CDT reply actions

That means that people can buy and sell stock

Many people who live in GB own stock in the team… which is likely why it hasn’t ever moved to another city. Shares of the team are so diluted, that no one person can control the organization…. IMHO all team sports should be setup this way.

BTW, the packers rebuild their stadium at the same time the Bears did… and it is better. Oh, and they used private money to build it rather that scam the taxpayers of Wisconsin.

by 72-10 on Aug 7, 2009 10:48 AM CDT up reply actions

that certainly adds perspective.

I’ve been working in Madison, Wisconsin for the last few months and this state is certain different from Illinois. As you eluded to IL politics, Gov B. was just part of an pre-existing long history of robbing IL taxes payers. IL general assembly, government, etc is so presumptous, whereas I’d notice a conscience with the way Wisconson is operated.

by exult463 on Aug 11, 2009 8:20 PM CDT up reply actions

And in return, the Mayor of Milwaukee gets beaten by some asswipe

I very much like the idea of publicly owned sports teams like the Packers. When you look at the kind of deal most everyone else gets, it seems like a no brainer for most folks.

BullsTwo

by Sports2 on Aug 17, 2009 8:18 PM CDT up reply actions

Back on the Bulls part of things

If I’m the Bulls, I’m looking for two types of players.
1. Players under contract for this year and next. Their contracts will expire as the new CBA takes effect. These guys will give the Bulls flexibility to go in a number of directions. If it’s sensible to re-sign them, do it. If not, the Bulls won’t be locked into them.

2. Players on rookie deals that don’t need to be renegotiated until the new CBA takes effect. This is everyone from the 07, 08, and 09 draft classes. And 06, sort of, if you consider forcing guys to play out the QO to be good practice.

Players I’m looking to avoid.
1. Guys who will be locked into long term deals under the old CBA (hence the need to trade Deng)
2. Guys who will be requiring new deals before the terms of the new CBA are decided (this is anyone who’s a FA next summer) unless it’s just a complete and utter no brainer – Wade, Bosh, Lebron.

BullsTwo

by Sports2 on Aug 7, 2009 8:40 AM CDT reply actions 2 recs

Great stuff. Bosh is not a no-brainer, in my opinion. Too frail. Hasn’t won jack with his team. (He’s never won a playoff series) We already have someone like that (Deng) Max contracts are only for guys who make it to the conference finals.

I heard that the chances of a lockout is 100% (Mike and Mike am1000)

Owners are going to shrink these giant contracts as much as possible. No more $7,8,9 million dollars per year without a single All-star appearance. I’m looking at you Kurt, Luol, and BG.

by Trey23 on Aug 7, 2009 7:23 PM CDT up reply actions

Is this reference to "Kurt" a joke or are there really people who post on a Chicago Bulls forum that can't get his name right after he's been a Bull for...six years?

I totally agree on Bosh not being a no-brainer. He is not a max contract guy, regardless of what he thinks. If he’s your highest paid player then you are not going anywhere. Unless of course Rose becomes a top 5 player in the league while still on his rookie contract (more unlikely than that 100% chance of a lockout claim by Mike/Mike, I’d say it’s 110% impossible).

I hate lockouts. That will piss me off beyond belief.

Unfortunately Kirk won’t be down to $7 mil/year until his final year…Deng’s contract never drops below $11, and I don’t think Ben’s does either. Whew, we’d be fucked if we had those 3 players under contract for the next 3-6 years on their respective contracts. Two of three may be manageable, though (I hope).

by Tyrus_Rodman on Aug 8, 2009 10:37 AM CDT up reply actions

Have you really missed Vinny calling Kirk "Kurt"?

Is this reference to “Kurt” a joke or are there really people who post on a Chicago Bulls forum that can’t get his name right after he’s been a Bull for…six years?

"Whoever was responsible for pulling that offer [to Ben Gordon] off the table...bring him before me and I'll punch him right in the face " - Frederick Pfeiffer

by Granny Waiters on Aug 8, 2009 6:11 PM CDT up reply actions

A running joke, even.

I support the Tornado Release [See: Joakim Noah]

by Prevenge on Aug 10, 2009 12:51 AM CDT up reply actions

You're really using a

ridiculous line like “Hasn’t won jack with his team. (He’s never won a playoff series)” as a justification for not wanting Bosh?

You realize that Rose hasn’t either, so I guess we should trade him for Robert Horry (after all, he’s won 7 championships!).

You would also have turned down the 5 time all-star 2002-2003 version of Kevin Garnett(2nd in mvp voting), since he had yet to get out of the first round?

It took Jordan till his fourth year. I wonder if there was someone idiot on the streets back then, saying they wouldn’t even pick him up as a free agent since he obviously wasn’t a winner.

by runningman on Aug 14, 2009 7:09 PM CDT up reply actions

So we're quite fortunate, I take it,

that we did NOT sign BG to a 5 year, $50+million contract. Well, I guess I have to agree. That would have been an albatros. Who knew that PaxGar was that much smarter than Dumars.

by hlac on Aug 9, 2009 10:33 PM CDT up reply actions

"max contracts are only for guys who make it to the conference finals"

so you wouldn’t give the max to Roy? Durant? CP3?

by Basketball Smurf on Aug 8, 2009 5:06 AM CDT reply actions

suppose to be a reply to trey23

by Basketball Smurf on Aug 8, 2009 5:07 AM CDT up reply actions

Those 3 are still with their team that drafted them. They would have to consider it to keep them, if another team was going to sign them. Signing someone away from another team is a bit different. You better be sure that he will get your team deep into the playoffs (Ben Wallace?) to collect the playoff revenue.

If you get 10 more home games in the playoffs? That’s an average of 3.3 million dollars extra per game. Think about that. $33 million dollars in additional revenue, maybe more. My assumption: 22,000 at average ticket price of $150 = $3.3 million per game. $200/ticket? We’re looking at $44 million. Add concession/parking and all that jazz. That’s how you make a profit. Get to the Finals.

CP3, yes if i need a point. Durant (empty #’s) NO. Roy (NO, has never won a playoff series). Those 3 are still very young, so its hard to tell if they are worth locking in for 5+ years. Will any of em get deep into the playoffs anytime soon?

by Trey23 on Aug 8, 2009 2:13 PM CDT up reply actions

sigh

Those 3 are still with their team that drafted them.

Yeah, so?

Signing someone away from another team is a bit different. You better be sure that he will get your team deep into the playoffs (Ben Wallace?) to collect the playoff revenue.

I agree that signing someone away from a team is different, because you have to overpay. But there is no way you can sign a guy and be assured that he will get you deep into the playoffs.

You have to build a team. You can’t sit around and wait for a player to get his team to the finals before you sign him to a big contract, or else, you won’t ever be able to get a big name player. Once a player gets his team to the finals, there is almost no chance that player is moving. Of all the all-star players to make it to the finals recently, only 2, Shaq and Billups, left their original teams. And that is clearly after they lost a step. Your ideas would result in a team never getting a top free agent because guys who lead their teams deep into the playoffs, rarely change teams.

If you get 10 more home games in the playoffs? That’s an average of 3.3 million dollars extra per game. Think about that. $33 million dollars in additional revenue, maybe more. My assumption: 22,000 at average ticket price of $150 = $3.3 million per game. $200/ticket? We’re looking at $44 million. Add concession/parking and all that jazz. That’s how you make a profit. Get to the Finals

The Bulls are the most profitable team in the league and they have only been out of the 1st round once in ten years. Teams can make a profit without getting to the finals.

CP3, yes if i need a point. Durant (empty #’s) NO. Roy (NO, has never won a playoff series).

So if you had a point guard, you would pass on Cp3? You wouldn’t give Durant a max contract until he lead his team to the finals, but than of course, he wouldn’t want to move anywhere. You wouldn’t give the 3rd best shooting guard in the league, who is only 24 or 25, a max contract even if he is the leader of your team and the cornerstone of your franchise? You would rather watch those guys play for other teams than risk that they won’t be good enough to single handedly take your team to the finals? You can’t ignore the teams these guys play for. CP3, Roy, Durant don’t have great teammates – Roy and Durant play for really young teams and both guys are still growing as players. You have to take a risk, and project what they will do.

Those 3 are still very young, so its hard to tell if they are worth locking in for 5+ years. Will any of em get deep into the playoffs anytime soon?

That is how the rookie contract system works though. You have to make a decision on players when they are very young. You have to be able to project what those players will do. Because I guarantee you, if the Blazers hadn’t agreed to give Roy a max contract, and if OKC doesn’t agree to give Durant a max contract, someone in the NBA will, and those teams will lose those players.

Say in 3 years, when Rose is up for his extensioin, he has made 2 or 3 all star appearances. He is arguably the 2nd best point guard in the NBA behind CP3. He is clearly the guy the entire franchise is being built around. He is young, healthy and revered by fans. But, he has never made it past the 2nd round. You aren’t going to give Rose a max contract? I think that is loony.

by Basketball Smurf on Aug 8, 2009 2:45 PM CDT up reply actions

However, the Lakers got Shaq in his prime as a free agent, after he played in the finals with Orlando.

Of all the all-star players to make it to the finals recently, only 2, Shaq and Billups, left their original teams. And that is clearly after they lost a step.

"Whoever was responsible for pulling that offer [to Ben Gordon] off the table...bring him before me and I'll punch him right in the face " - Frederick Pfeiffer

by Granny Waiters on Aug 8, 2009 6:13 PM CDT up reply actions

true

maybe we should wait a couple years, remaining a mediocre to bad team, and hope for Dwight Howard to declare that he wants to play in a bigger market and than hope that he chooses Chicago. seems reasonable

by Basketball Smurf on Aug 8, 2009 8:40 PM CDT up reply actions

All your points are valid

Of course Rose gets a max contract in your scenario. As does CP3, if i need a point, or if i can move my lesser pg.

Nowhere does it say in the rookie contract system that once your contract is up, and you have 1-2 all-star selections, that you deserve a max deal. If a team wants to overpay for Durants’ empty scoring #s, that’s fine. I’m not greatly impressed by Roy. He got clobbered by Houston in the first round.

But you’re right, you have to project what they will be able to do. And that is almost impossible. Once they get that 80 million guarantee, will they still push as hard as possible to win the Finals?

by Trey23 on Aug 9, 2009 5:19 PM CDT up reply actions