Finance

Memphis May Sue NBA Over Lost Games


The City of Memphis may seek payback as National Basketball Association Commissioner David Stern threatens to cancel more games in the standoff between NBA owners and players.

The Memphis City Council on Tuesday, Oct. 18, passed a resolution sponsored by Council Chairman Myron Lowery that instructs the council’s attorney, who also works on behalf of the City of Memphis, to “explore all options” for recovering money the city may have lost because of game cancellations. These may include a lawsuit by the city, a response that the council’s attorney believes would be the first of its kind by an NBA franchise community.

Stern has already canceled the NBA preseason and first two weeks of the regular season. He says he may cancel games through Christmas if a deal isn’t reached soon. That could disrupt the more than half-dozen revenue streams that help pay off the bonds, backed by the city, that financed Memphis’s $250 million NBA arena, FedExForum. The arena opened in 2004 as the home of the city’s pro basketball franchise, the Memphis Grizzlies.

A call to league offices for comment had not been returned as of publication time.

Can Federal Mediation Help?

League owners and players are discussing how to split revenue that totaled $4.3 billion last year. After 16 hours of talks on Tuesday in an attempt to reach a new collective bargaining agreement, players and owners were scheduled to resume negotiations that would be guided by a federal mediator at 10 a.m. Eastern Standard Time on Wednesday. “If this federal mediator is as legit as advertised, I will allow myself a chance to enjoy a small ray of optimism in this quagmire of circumstance,” Grizzlies forward Shane Battier tweeted on Tuesday.

The revenue streams that Memphis counts on to pay off the bonds include seat-rental fees, rebates of NBA-related sales taxes on items sold at the arena, car-rental taxes, and hotel and motel taxes—all of which would take a hit if no one comes to games. Allan Wade, the council’s attorney, told reporters on Tuesday night that he’s surprised other cities haven’t responded in similar fashion. “If it gets to be half a season, that’s a big problem,” Wade said. He will report back to the council in two weeks.

Public Financial Management, a firm that advises the Memphis-Shelby County Sports Authority, has estimated that a year-long lockout could leave the governments of Memphis and Shelby County (which encompasses Memphis) on the hook for a little more than $10 million by 2029. The sports authority is the local entity that authorized the bonds that helped fund development of FedExForum.

The bitter feud between players and NBA management has been particularly difficult for Memphis fans to watch. The perennially bottom-ranked Grizzlies made a dramatic playoff run last spring, beating the heavily favored San Antonio Spurs in their first-round series before falling to the Oklahoma City Thunder. The improvement in the team’s play so inspired fans that even when the Mississippi River rose to historic heights for several days—flooding portions of the city’s Downtown that included FedExForum—19,000 fans packed the stadium for a Grizzlies game.

An economic impact analysis prepared by consultancy Younger Associates said the NBA team feeds $223 million into the city each year and supports 1,534 area jobs.

Andy Meek is a senior reporter for the Memphis Daily News. Follow him on Twitter @AndyMeekTN.

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