Timberwolves' belt-tightening offers hint of NBA's CBA mind-set
Timberwolves owner Glen Taylor has been hit hard by financial downturn
Taylor recently announced Timberwolves would cut 95 percent of ticket prices
Timberwolves rank 27th in attendance in the NBA for 2008-09 season
"Glen Taylor likes businesses with problems." So began the magazine profile in September, part of Forbes' annual "400 Richest People in America" coverage, which does for the pinstriped-and-wing-tipped set each year what Sports Illustrated does for swimsuits. Somewhere, you can imagine a school librarian calling to cancel a subscription, fed up with callow young entrepreneurs ogling the firm, ripe ... bank accounts of the mega-rich.
Only now, maybe not so much. In just six months, Taylor -- the owner of the Minnesota Timberwolves and assorted companies in industries as unrelated as chicken farms and wedding-invitation printing plants -- has gotten poorer along with the rest of us. His net worth last fall, estimated by Forbes, was $3.3 billion. This week, the magazine's Web site pegs Taylor at $2.4 billion. That's a 27 percent drop, not unlike a lot of regular folks' retirement accounts and right in line with the 23 percent by which the fortunes of the world's billionaires allegedly shrank over the past 12 months.
Not to worry: Taylor still has his seven million chickens hard at work on his agribusiness production lines in Iowa and Minnesota, laying what gets sold as liquefied eggs to restaurants and food companies. He hasn't had to cut any grim deals with KFC or invite a few of his top producers home for (gulp) dinner. But he has laid off some human workers across his various enterprises. And the "business with problems" he's most intimately involved with now is one that, for so long, seemed recession-proof: The T'wolves.
"I'm very concerned for pro sports," Taylor said. "I could talk about banks or health care or the media business. I don't think pro sports is protected in any sense." Before revving into remarks that would veer into future NBA bargaining strategies with the players and earn him a swift rebuke from commissioner David Stern, Taylor announced his decision -- less revolutionary than necessary -- to cut ticket prices for the 2009-10 season.
A self-made mogul from Mankato, Minn., and currently chairman of the NBA Board of Governors, Taylor bought low and owns high, like so many franchise owners across the major North American sports leagues. He paid $88.5 million in 1995 for the sputtering Minnesota team, gambled a high draft pick on a kid named Kevin Garnett that same year and essentially triggered the NBA's costly labor lockout in '98-99 by signing Garnett, still largely unproven by age 21, to a stunning $126 million contract.
But Garnett proved to be the goods, leading the Wolves to eight consecutive playoff appearances. The team contributed to, and tagged along on, the league's popularity, prospered under Stern's masterful and steely marketing touch, and was rewarded with serious nine-figure appreciation: as recently as December, Taylor's franchise was valued by Forbes at an estimated $301 million.
Claiming that, though, and finding the next greater fool (as the investing theory goes) willing to fork over that price are two different things, as homeowners have learned across the land. Taylor didn't get where he's at by denial. He sees the empty blue and green seats at Target Center, more gaping than ever; the Wolves rank 27th in home attendance, averaging 14,099. That's a slide of 16 spots and 3,536 fans (20 percent) from five years ago, when the team went 58-24 and reached the Western Conference finals. Yet Minnesota's payroll tops $66 million, for a team on pace to win 24 times -- that's $2.75 million per victory, or the equivalent of shelling out $159 million to that '03-04 roster.
No wonder Taylor and his basketball guy, Kevin McHale, talked about the desire to reign in salaries -- and got muzzled by the commish for tipping the league's hand for the next round of collective bargaining.
"I still think there's a star element -- movie stars, singers, basketball players -- that's just part of this country," said the owner, who pegged his operating losses at $40 million over the past three seasons (signing Marko Jaric for $42 million and Troy Hudson for $37 million can do that). "Do I think the average of all the players will come down to a different level so people can afford to watch? I see that as a more likely possibility."
Ding-ding-ding! That's a hint of the NBA's strategy regarding the mid-level exception and veteran's minimum salaries. McHale then took aim at the size and length of guaranteed contracts, another likely battlefield.
"The guarantees now are way too long and [for] way too much money," McHale said, recalling talks he had with older Celtics legend Bob Cousy about the early days of the NBA Players Association. Back then, players fighting for medical coverage and pensions never imagined the era of six-year, $100 million deals. And when McHale arrived in 1980, the league still was saddled with real and perceived problems left over from drug scandals and mismanagement in the '70s.
"I remember when there was nobody in the stands," McHale said. "This generation of players doesn't know anything about that, but I think they'll find out. These guys make a lot of money and truly are blessed to play a game for a living. I don't think there will be a lot of sympathy from the fans."
Instead, and no doubt to build a little good will, the Wolves are showing some to the fans. On March 3, at the team's annual announcement of ticket prices for the upcoming season, Taylor handled what normally is a task delegated to an underling. Why the change? Instead of bumping up prices or even freezing them, the Wolves unveiled their plan to cut the cost of 95 percent of their season tickets for '09-10 -- most seats dropping between $4 to $15 per game -- if purchased by July 1. Seats in the lower bowl will cost about 11 percent less, and payments can be made without interest over nine months. There's a guarantee attached, too, for these uncertain times: If you lose your job by Jan. 1, 2010, you can seek refunds on any unused tickets.
Taylor calls it an "insurance program" for fans. Unfortunately, that coverage doesn't include team performance; hours after the Wolves announced their new plan, the club sleepwalked through a 118-94 drubbing by Golden State in a junior-varsity atmosphere at Target Center. Even next year, there will be no refunds for blowout losses or even lousy play.
But in terms of financials, Taylor is hoping that whatever his operation gives up in ticket dollars comes back, plus, in number of tickets sold. And "hope" is about all anyone is hanging his hat on these days, whether it's a trucker's cap, a Texas tycoon's Stetson or a baseball cap worn sideways.
"These are very difficult economic times," the Minnesota owner said. "We don't know what's going to happen over this next year in our country, no matter what anyone says."
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