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April 15, 2011

Adam Silver

David Stern

COMMISSIONER DAVID STERN: Hi, everybody, thanks for coming. With respect to our meetings, we had a really long day yesterday. We started with the audit committee at nine o'clock and went through formal meetings that ended at 8:30 or thereabouts and then the dinner meeting that went to 10:30. The dinner meeting was not as intense as the other ten and a half hours -- 11 and a half hours.
We had really robust discussions on revenue sharing, where I think we are making great progress in terms of airing all of the issues for all of our teams, and our goal to have a significant revenue sharing policy in place when we conclude our collective bargaining negotiations is very much our target.
We had a long discussion about collective bargaining. It's many complex issues. And I think what I would say is that we received authorization to deliver in the next couple -- within next couple of weeks, a revised proposal to the Players Association, to the union.
And No. 3, we had a really long discussion about the Sacramento relocation application, and I think it's fair to say that there were good presentations made by both Anaheim groups and Sacramento groups.
And basically the newly-appointed chairman of the Relocation Committee, Clay Bennett, is going to lead some fact-finding efforts to determine whether certain of the representations that were made by the mayor of Sacramento about the availability of certain inducements to cause the team to stay are -- can be reduced to certainty, and also, whether certain of the issues raised by the incomplete documentation -- but in very good faith, with respect to Anaheim can be wrapped up, as well.
So while that goes on, and the Relocation Committee weighs this, will report back to the board; the board voted to extend until May 2 the formal date for the Kings to make an application to relocate.
Beyond that, we had reports on basketball, reports -- which is always fun (smiling).
This is, after all, a basketball league: Reports on officiating; report on ongoing efforts to tighten up our games with respect to making them a bit shorter, which we have begun by making sure our players resume play, and we have opened the subject for discussion; resume play after time-outs and overtime in a timely fashion, and we also began today to open the discussion on possibly cutting down on the number of time-outs.
And there was a very energetic discussion about that, as well. I think -- did I leave anything out? You know already about the random selections, the break draws, and we're really looking forward to an extraordinary playoff season. I think I wouldn't want to be any team in the West.
Yesterday we interviewed Tom Gores with respect to the Advisory Finance Committee. Had a terrific interview with him. Although the document is signed, the closing is scheduled for no later than June 30, but we received assurances from Tom and Karen Davidson that it would be closed by the end of May, because June is a -- a lot of decisions have to be made.
And you know, there has to be a formal vote, of course, but everything from the advisory finance committee was in a positive way.
And you know, there's a lot of good basketball before us, and you know, everyone -- the room was buzzing about the final days and how many match-ups were still to be determined, not only on the final day but like sometimes in the final minute, and it's pretty exciting.
And also, there was a report on New Orleans and our ongoing efforts to complete the season on budget, which we will, and about how we have reason to believe that there will be I think effective discussions with the city, the state, to assure an improved position for New Orleans as an NBA franchise, and an update on ongoing success of the season ticket drive and sponsorship drive for which we are extraordinarily grateful for the support of Mayor Landrieu, Governor Jindal, the New Orleans Business Council, the Louisiana Sports and Exposition Authority, and everyone jumping in to try to secure the future of the NBA and New Orleans.
It's a little early, but we are pleased with the preliminary results. That's it.

Q. In regards to the Kings relocation, with the new deadline of May 2, it would seem that the time is running out for them to make a move. Where are they going to play next season? Is there still time for them to physically move the franchise and start playing next season, or are they now forced to stay in Sacramento?
COMMISSIONER DAVID STERN: No, they are not forced to stay in Sacramento at all. After Hurricane Katrina, we moved the Hornets in the blink of an eyelash to start a season between the -- I don't know what the date was, but I guess it was mid-August, and when the exhibition season began, they were playing in a sold-out Oklahoma City. So it's not an issue at all.

Q. We had a chance to talk at that time Maloof brothers, they appear to be extremely frustrated right now with the process, there's been one relocation request extension and now another. Can you explain some of the questions that are outstanding, why this continues to draw out?
COMMISSIONER DAVID STERN: Well, I would say that the terms of the relocation to Anaheim were not fully understood by the committee; and having to do with the lease and various other issues that go to the arrangements between the Kings and Anaheim entities.
In addition, Mayor Johnson came in and said that there were lots of additional -- that there will be lots of additional dollars available that would improve the Kings performances, the Kings economic performance, in Sacramento, if they stay; and that the community had recently been mobilized, and was in a position to aid, I wouldn't say a return, but a keeping of them there for the coming season.
So the committee thought that it would be a good idea to do a little bit more fact-finding and determine how this will ultimately play out. There's no agenda here; just to make sure that something as important to all parties as the transfer of a team to another city and the attempts of that city to keep that team was fully understood, fully briefed.
And with respect to that, there will be visits with the mayor; with, I'm sure, members of the business community and the like. And you know, we are on a relatively tight schedule, but we are going to make it work.

Q. So the mayor dropped the Burkle bombshell today: He has a group that wants to either buy the Kings, or buy a team and move them to Sacramento; what do you think about the possibilities of those?
COMMISSIONER DAVID STERN: Right now, there's less -- that's not a high priority on our agenda, amongst the other things.
The other things were to find out what the mayor was referring to with respect to additional revenue opportunities that would allow the team to beater compete next year and be economically feasible.
I know Mr. Burkle. He's an owner in the NHL. His name has been involved in discussions for other franchises, and we know his good reputation in our industry, but that's not in our order of priorities. The sale of the team, or, indeed, the relocation of another team to Sacramento, those are not high agenda items.

Q. You mentioned the money that the mayor spoke of yesterday, $7 million in annual new sponsorships. Did that raise your eyebrows? Is that a big deal? Does that mean something about the viability of the Kings in Sacramento?
COMMISSIONER DAVID STERN: Actually, we thought it was 9 (laughter) and several million dollars in season tickets. And it didn't raise our eyebrows, but it was a very businesslike approach to the issue, which is how do we make this team financially viable in Sacramento.
And, you know, there were preliminary discussions by the mayor about the potential for buildings, a new building, and that's usually in light of the history in Sacramento; that's usually an eye-roller.
But it was a good presentation. And you know, I'd say that the Relocation Advisory Finance Committee are not as close to the situation as some of us in the league office in terms of trips there and attempts to get a building underway.
So it was just felt that this was a good presentation and we should delve a little bit more to understand what its ramifications are.

Q. Whose idea was this extension to May 2? Was it the NBA's idea? Was it the Maloofs suggestion? And what would you say is the chances that the team will stay in Sacramento? Is it 50/50 for Anaheim Sacramento?
COMMISSIONER DAVID STERN: I'm not going there other than to say it was a sort of jointly proposed to me by the Maloofs, Glen Taylor, the chairman of the board, and Clay Bennett, the chairman of the Relocation Committee. I understood my instructions and my job was to get it extended because they were the ones involved in the discussions.

Q. You mentioned the incomplete documentation of the Anaheim proposal. Can you be more specific or amplify?
COMMISSIONER DAVID STERN: Actually I'm not sure incomplete is entirely fair to Messrs. Samueli and Schulman.
It was a very good presentation by the mayor, by the city manager, by Messrs. Samueli and Schulman.
But the committee wanted more time to understand certain financing issues, certain television issues, certain issues regarding construction that would need committed to to enhance the fan experience and raise revenue expectations at the building; and, indeed, the entire issue of if the relocation were approved, what would be an appropriate relocation fee.
Now, all of those things could be considered and would be considered if the Kings made an application on Monday and we would go through that. But in light of the fact that we had earlier convened the Relocation Committee and had gotten involved here, I think that in the discussion that Glen Taylor and Clay Bennett and the Maloof family were having, it just seemed to be a good idea to put it off for a couple of weeks.
But there were not -- incomplete is not a way to describe the documentation. Incomplete is a better way to describe the understanding that our committee had about the points of a very, very complex deal that involves investments, loans, construction, and television arrangements, which were, in effect, sort of completed within the last few weeks and actually were being revised literally in the last few days.
So it was sort of like a time-out, this is difficult, let's take some time here to better understand it. This is very important. It's important to the Maloof family. It's important to Mr. Samueli and the people of Anaheim, and it's important to Mayor Johnson and the people of Sacramento. And so the committee wanted to do some work.

Q. Anything about the new proposal you are going to submit, who approves -- you said you get approval to submit it, and anything you can do to characterize how similar or different it might be from your original proposal of last January?
ADAM SILVER: The goal remains the same: To create a system in which all 30 teams can compete for a championship and if well managed have the opportunity to make a profit.
And in terms of your first question, there was a long discussion among the one-owner-per-team, the executive session of the NBA board; and full ownership authorized the Labor Relations Committee, which is chaired by Peter Holt of San Antonio, to make another proposal.

Q. The Players Association explained to me a proposal for where every year you stayed in college, you would have a year taken off your fixed scale rookie contract, so you could get to your lucrative second contract faster, as a reward for staying in college longer; have you considered that and what are your thoughts?
ADAM SILVER: That's not a proposal they have made to us, and so no, we haven't considered it.

Q. Do you have any thoughts about it now?
ADAM SILVER: Not off the top of my head.

Q. What is different in your new proposal?
ADAM SILVER: All I'll say is traditionally we don't want to negotiate obviously through you to the union, but there are other ways to reach the same goal, and that is a system in which all 30 teams can compete, and if they are well managed to, make a profit.
We have never suggested to the union that there's only one way to accomplish that end. And so, we have gone back to ownership.
As you know we have had several meetings over the course of the last two years, large meetings and small unions that included players and some with just staff and we have heard what they have said about certain issues. And so, we have gone back and said, are there other ways to approach this same goal.
But the goal has not changed and will not change from the team standpoint. We need a new system, and the current system is broken and is unsustainable.

Q. David, to follow up, I heard you on the Mike and Mike Show this morning, and thank you for going on yet another of our platforms, you said you had lost $370 million in one year and $340 million in another year --

Q. Wondering what you are projecting the bottom line number to be for the current season.
COMMISSIONER DAVID STERN: I would say it's hard to project exactly, but on an ongoing basis, I would say -- trying to do the bookkeeping here -- probably around $300 million.
COMMISSIONER DAVID STERN: Loss. Yeah, loss. So that's better than 340.

Q. For David or Adam, there was some positive news released by the league today in terms of attendance, up one percent on average, merchandise sales, some other figures, as well. What can you speak to in terms of the more important numbers, which are gate receipts and non-gate revenue, and how that is either projecting or if you have the figures already, how that's come out for this season.
ADAM SILVER: Well, the national television money is fixed; doesn't change as a result of ratings. But as you know we are enjoying a terrific season from a ratings standpoint on television, both nationally and locally.
In terms of gate, we are projecting to be up this year and that's where you get to the projections that David just gave, which are a loss of approximately $300 million this year, as compared to 340 the prior year.
So business has improved; nothing to be proud of, but we have reduced losses. But as we have said in the past, we don't believe within this current system we have the ability to move dramatically much more, because the cost of generating those additional revenues is so great that if we continue to pay 57 percent off the top to the Players Association, it would require such an enormous additional amount of revenue to reduce losses beyond where we are, we are only going to make very small incremental changes under a 57 percent gross system; 57 percent system that pays, of gross revenue paid to the players.

Q. What is your impressions of Tom Gores, not only from your meetings but overall star weekend and your impressions of the process? In L.A. you told us that you thought it would be closed by February and it took another two months.
COMMISSIONER DAVID STERN: I would say he's a really good negotiator. He's a really careful negotiator in terms of the determination of his team -- and its extensive, the team of negotiators and deal people and operational people to understand exactly what he's getting into.
And beyond that, he's really gung ho to make this thing into a winner and a community asset. And he's got huge Detroit connections and he's really very enthusiastic. So he's all-in and the owners appreciated that in terms of the visit that they had with him.

Q. I'm curious, how much does the time line for the CBA talks affect business as usual for some of these other topics? Is it hurrying things up? Is it allowing for maybe a more leisurely pace because there may be more downtime? Is the uncertainty of all this making business as usual difficult?
COMMISSIONER DAVID STERN: You want to flip a coin on that one?
ADAM SILVER: I'll start on just from a financial standpoint, I think that's why David hesitated on the projection for this season, because it's beginning to -- labor uncertainty is beginning to have an impact on our business as we are in discussions with sponsors and other partners about relationships for next year, and we can't assure them that we are going to have games. They, as you might imagine, begin to pull back some of their spending on the NBA.
So from that standpoint, from a financial standpoint, it's having a real impact already. I think also uncertainty in any business creates anxiety, not just among the players, but among all of our employees. We have thousands of people who work at the teams. We recognize there's thousands of people that will be impacted at NBA arenas and other ancillary businesses in our cities. It's bad for business.
COMMISSIONER DAVID STERN: Yeah, my hesitation was, interestingly, our fiscal year is September 30. If we don't have a new deal in place by the expiration of this one that, will have a negative impact on our numbers and the $300 million thereabouts loss will be larger, in my estimate.

Q. Is it disappointing to be discussing at the same time just the relocation of a team from Sacramento, a small market to a larger market, when a lot of this effort in your hopeful new Collective Bargaining Agreement is to stabilize small market franchises?
COMMISSIONER DAVID STERN: Yeah, you know, not really. I thought you were going to say, is it disappointing to be discussing all of these business issues at a time when we were going to the playoffs; and the answer to the question you didn't ask is, you bet.
Sacramento is a little different issue. There is no denying that the Power Balance Arena -- I almost slipped and called it Arco -- is an inadequate, on-its-last-legs facility, that has had much deferred maintenance and has been declared inadequate to host NCAA events and other events.
So this is really focused on the building and the sort of negotiations, if you would -- not negotiations; but the fact that new buildings have been turned down by the city council, the mayor -- not the current mayor -- California Expo voters; there's no shortage of people that have said no.
But I think Mayor Johnson is inspired to say, you know, when Arco shuts down, which is inevitable, one way or the other, a city in Sacramento, which he told us is a Top-20 city, it would be the only city in the group that doesn't have an entertainment and sports center.
So this is really very building-focused; it has been, rather than small market, large market. There are small market, large markets. But I think there is a general sense that that problem will be dealt within an effective way coming out of the conclusion of our collective bargaining negotiations, and that you know, there's plenty of interest in small-market teams. But you need to have a building in that market in order to play your games.

Q. You talk about the loss of $300 million. Is that spread across 20 teams, 25 teams? How many of your teams are actually profitable? And the other question, were your owners reporting to you that their season ticket renewals were down for next year in anticipation of potentially not having games?
COMMISSIONER DAVID STERN: The answer on renewals is no. There's lots of money being put up and lots of tickets being sold with cash proceeds that will have to be returned by us with interest, and so our teams are very effectively selling season tickets, and actually are ahead of last year's pace.
ADAM SILVER: Roughly 22 teams are projected to lose money this season; eight teams to be profitable.
COMMISSIONER DAVID STERN: And those are numbers to remind you that -- I don't know what the difference is between last year and this year in terms of those numbers, but the '09-'10 numbers have been delivered to the players, along --
COMMISSIONER DAVID STERN: Last year's. Along with the '08-'09 certified reports, annual reports by our teams, and again, the tax returns have been made available and will be made available, as well.

Q. What were some of the thoughts and opinions from the rest of the California owners, and your thoughts on a third NBA team in southern California?
COMMISSIONER DAVID STERN: I would just say that that's something that the committee would ultimately have to conclude upon study about whether that market could support a third team.
But my own sense is that that conclusion would likely be that it can support it. And other than that, I don't think it's appropriate for me to give out -- to try to either read minds or relate statements with respect to what people were thinking.

Q. I want to talk a little again about the local TV revenue sharing. You mentioned the issue in Sacramento is more about the building but conceivably if your new plan were to go into effect, would it go into effect as soon as next year and couldn't that small market sharing that would conceivably go to a Sacramento team help pave the way for a new arena?
COMMISSIONER DAVID STERN: I don't think pave -- you know, we have used a lot of asphalt in the last decade, and we have paved nothing (laughter). And it wasn't related to TV revenues. So I don't think that's the issue.
The issue first and foremost in Sacramento is whether there's the will and the ability to build a new arena for an NBA team and the other events, the circuses, the family events, the concerts, everything that comes from having an event and entertainment center.
I've learned a whole series of new words thanks to my Sacramento experience. I now know what an intermodal is, I think. It has something to do with transportation and hubs and stuff like that.
So the mayor's vision is for a downtown arena as part of a major redevelopment of 230 acres. You know, we don't know if that's real or a pie-in-the-sky. We don't know whether we can find that out in a couple of weeks, but we are going to knock ourselves out to do it.

Q. Curious as to how closely you guys are watching the NFL's labor issues, both from the two sides' perspective, and also maybe more specifically, the public's reaction to the potential of losing a sport; and to the extent to which you think that might affect your drive towards the new CBA?
ADAM SILVER: We watch it closely. Some of the legal issues are similar. Others are different. We also talk about it with our union on a regular basis, and they are watching it closely, as well. We both realize, one way or another, it will have an impact on us; not always clear.
Again, many of the issues are different, I mean, from past labor issues that have affected the NFL from being in court in Minnesota because of a prior antitrust decree, and so those issues are different. But the leagues talk to each other; the unions talk to each other. So, we'll see.
COMMISSIONER DAVID STERN: I tell you the one thing that we have a particular policy on, until change, is that you will be unlikely to hear authorized statements from NBA owners or team personnel about collective bargaining, because that does tend to inflame, rather than smooth.
And in difficult sometimes, we think the best thing to do is to have a single voice, have a single place where you can get together and talk with the other side, even though you may be of opposite views and everything; talking is good.
And I'll be talking to Billy and telling him that, you know, our labor relations committee has been given certain parameters. Peter Holt is going to be talking to the labor relations committee in the next week to come up with a revised propose all and then we'll be setting up a meeting consistent with the playoffs and other things that happen as this great playoff season begins and goes forward.
So thank you very much for being interested and enjoy the playoffs.

FastScripts Transcript by ASAP Sports

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