When word leaked that Oracle co-founder Larry Ellison was in talks to purchase the Memphis Grizzlies, the immediate reaction was a positive one, considering that decade-long Grizzlies owner Michael Heisley has been sometimes hesitant to spend huge gobs of cash on his team; though he has gone into luxury tax territory a few times. Then the follow-up hit: Ellison is from Northern California, and after his attempts to buy the Golden State Warriors were outbid, he might be looking to take the Grizz to a waiting NBA-ready arena in San Jose. Uh oh.
Memphis residents needn't be worried, as it turns out. Ellison certainly has the cash in hand to buy the Grizzlies, but he'd have to toss out a whole lot more in order to purchase the team and move them to California, mainly because of rather strident lease laws the city of Memphis smartly put on the Grizzlies. Once you factor in the NBA's relocation fees, and the actual price of the team, it could cost Ellison up to $600 million to purchase and move the Grizz; and even with that there's no guarantee that a local court would allow the move, should Memphis put up a fight. All this is from a perfectly tuned piece written by the Memphis Commercial Appeal's Kyle Veazey:
Until 2021, the lease threatens court intervention should the owner want to break it.
The contract, which runs through 2029, says it can't be broken in the first 17 years of its existence, a clock that started when FedExForum was completed in the summer of 2004. It says that "...money damages may not be adequate or determinable" if the lease is broken in those 17 years and says the city and county could seek an injunction to have that enforced.
Essentially, it's sternly saying that it could ask a judge to make the team stay.
On top of this currently intractable lease, there is no guarantee that with all the stiff penalties, fees and fines that a potential buyer could write off, that the Grizzlies would still be in good legal standing to move.
Veazey also reminds that any move to San Jose would result in a payment to the Golden State Warriors, as well, for "breaking up their Bay Area monopoly." The MCA estimates this to be in the range of $100-150 million, a staggering mark that would cover two seasons' worth of player payroll for a luxury tax-paying team.
Ellison, as Oracle co-founder, is absolutely loaded. But if you'll recall the summer of 2011, when a group led by Joe Lacob ended up buying the Warriors, Ellison was outbid for the team playing in his backyard. He didn't want to go that extra step, pay that extra cash, in order to secure his own team. Faced with a massive rebuilding job ahead of him and the presence of Don Nelson as coach and ostensible GM, we can't blame him. Veazey even quotes Ellison from a New York Times piece in which he states that he's "not going to set the record for having spent the most money ever in the history of the NBA for a basketball team."
Strangely, and perhaps because the Grizzlies are Memphis' only major-league franchise, there is consistent concern amongst the fan base that these stipulations won't mean much if Heisley sells to a buyer with stated intent to move. Here's Tom Jones, a local government advisor, who helped put the deal together over a decade ago:
"You try to explain it and people give you the look like 'Yeah, right. Sure that's what it says,'" Jones said. "It has been one of the most durable myths of the whole thing, and I can't really say how."
Perhaps Ellison's inaction and the Grizzlies' permanence will lead to the end of that myth.
- Larry Ellison
- Memphis Grizzlies