Today the National Basketball Association has a 2009-10 champion, but for the Atlanta Hawks the real battle has just begun.
The Atlanta Spirit, the group that controls the team, has put it on the block and, in recent days has started to solicit buyers for the franchise in a package with the Philips Arena where the team plays, according to sources with direct knowledge of the process.
The Spirit is also selling its Atlanta Thrashers franchise of the National Hockey League.
The Hawks posted an operating loss of roughly $20 million last year before servicing debt. The Philips Arena made $10 million.
That means the package together is losing money, and if one bought the Hawks and tried to move them out of Atlanta it would trip a clause in the financing deal that would accelerate the remaining debt payments owed on the 11-year-old arena.
So a buyer would likely need to keep them in town, sources said.
As for the Thrashers they are being sold separately and lost about $30 million in the last 12 month, according to figures compiled by the Spirit, the source said.
The owners have hired the Raine Group, a New York investment bank, to sell the teams, which both just completed winning seasons.
This dilemma is part of a deeper problem the NBA faces in that its teams posted an overall loss of $400 million, according to Commissioner David Stern.
At the same time, many of the team owners who were very rich have lost money in the recession and cannot afford to keep funding money-losing teams.
Owners too have a quickly depleting number of wealthy financiers to whom they can sell their teams.
For example, the money-losing New Jersey Nets searched 18 months for a buyer until they got lucky and found billionaire Russian Mikhail Prokhorov, the source said.
Another source in the sports business said, “There will be more foreclosures. In five years you’ll have a lot fewer teams and buildings will go dark.”
In other industries you would see mergers and cost cuts, but in sports salaries are fixed, the other source added.
The Atlanta Spirit could not be reached for comment.
In 2004, the group paid $250 million to buy the basketball and hockey teams, along with Phillips Arena, from Time Warner.