Even before their arrival in Memphis the Grizzlies were a hot issue. The community was divided for and against their coming, primarily because of the perceived cost of paying for a new arena for the team. Now that they're here and have played half a season, let's take a look at how they're doing.
On The Court: B-/C+
Are we grading on a curve? Exactly how does a team with a 9-24 record (at the time of this writing) earn anything but an "F"? Three reasons: The rookies, the injuries, and the coach. The Grizzlies made NBA draft history by taking forward Pau Gasol third overall, making him the highest-picked European player ever. Three picks later the Grizzlies selected forward Shane Battier from national champion Duke. Both rookies have paid off handsomely, with Gasol being named the November Western Conference Rookie of the Month and Battier taking the same honor for December. Both should be viable candidates for Rookie of the Year honors.
But even with the hyper-development of the two youngsters, the squad has been decimated by critical injuries to its starting lineup, leaving little in the way of a solid rotation and less in the way of consistent offense and defense. Still, the squad has managed a sweep of the Eastern Conference Champion Philadelphia 76ers, an upset of the New York Knicks at Madison Square Garden, and -- most surprising of all -- upsets of Western Conference powerhouses the Sacramento Kings and the World Champion L.A. Lakers.
It wouldn't have happened without the coach, Sidney Lowe. He's masterfully integrated his young players with the remaining veterans, reined in point guard Jason Williams -- somewhat at least-- and otherwise jelled a squad pieced together over the summer and moved to a new city.
Others might not be as generous. Williams is one of them. After last Sunday's loss to the Seattle Sonics Williams told the media, "We're the worst team in the league. Print that, top headline, 'Grizzlies are the worst team in the league.'"
In the Stands: B-
One of the biggest rallying points of the so-called naysayers regarding the Griz was that no one would go to the games. Too many families made too little money to afford to go to NBA games, they said. Not enough families would be willing to shell out the dough for high-priced tickets to go see a losing team.
The naysayers may have something to talk about, but it hasn't been as bad as they might have hoped. The Grizzlies have averaged 14,819 per game, which is below the NBA average of 16,458, according to The Sports Business News.
Is being off a couple thousand people per game reason to worry? It might be, considering that the Grizzlies' attendance numbers have been boosted by recent visits from Allen Iverson, Michael Jordan, Kobe Bryant, and Shaquille O'Neal, all among the biggest stars in the league. Iverson and Jordan will not return to The Pyramid this season, barring a truly unlikely playoff scenario, i.e., the Grizzlies make the NBA finals. And while O'Neal and Bryant return in February, the Grizzlies have not yet shown they can pack The Pyramid on a consistent basis. And it's not the ticket prices; at $47.25 per game, Grizzlies tickets are in the middle of the pack compared to the rest of the league.
Mike Golub, Grizzlies senior vice president for business operations, says he is pleased with the turnout so far. "We're not yet a playoff team," he says. "We're not yet a .500 team. We're only going to get better. We've said all along that this is a building process and December is proof of that. We've had great opponents, but we've had good crowds for our other opponents as well."
Russ Granik, the NBA's deputy commissioner, says that early returns are not indicative of long-term success. "As a first season, I think they've done pretty well," Granik told the Flyer. "Go back and look at [the] Sacramento [Kings]. They're selling out games now. In the early part of life [of a franchise], it generally takes a while." Of course, the reverse can be true as well. In Charlotte, the Hornets once packed the house but now struggle and will probably relocate at the end of this season.
Financial Impact: Incomplete
(too early to tell)
One of the touchstones for the proponents of the NBA in Memphis was the windfall economic benefits that would happen as a direct result of having the team here. Players would buy houses, fans would eat and be merry downtown, and the whole city would get a grand whiff of new money in the form of visitors coming in to watch a game, stay at a hotel, eat barbecue, and visit Graceland.
An early estimate of the impact of an NBA team was collected by Steve Redding, research associate at the University of Memphis Regional Economic Development Center. Redding looked at TicketMaster ticket sales for a preseason game between the L.A. Lakers and the Washington Wizards that happened in October 2000, long before the Grizzlies were even on the horizon. The study showed that ticket-buyers came from across the region, with seven states represented strongly (Tennessee, Alabama, Arkansas, Illinois, Indiana, Montana, and Mississippi) and a smattering of ticket-holders from other states. Overall, the study showed that 38 percent of the ticket-buyers came from outside of Shelby County, and 20 percent came from farther than 75 miles.
The results may not directly correlate to the drawing power of the Grizzlies. Still, Larry Henson, vice president of Research and Information Technology for the Memphis Chamber of Commerce, says that the results are important. "If the actual numbers are following close to that study," Henson says, "you have to have some new money coming from the outside."
Kevin Kane, director of the Memphis Convention and Visitors Bureau says that while he doesn't have any hard numbers, he believes the impact to be significant as well. "It's hard to tell what incremental impact the Grizzlies will have," he says. "Generally, it's been a big positive on the county. It has helped us draw people into the Memphis region and stay the night. I ride on the trolley to all the games and I always have people saying they are here [from out of town] for the game."
Jeff Sanford, president of the Center City Commission, agrees with Kane. "I think it's too early to know the impact definitively," he says, "but it doesn't take a genius to figure that the Griz have 40 home games. Let's say, after it's all said and done, they average 15,000. That's 600,000 people in the area that wouldn't have been here otherwise. That bodes well for the Pinch and other areas."
Penny King, general manager of T.J. Mulligan's in the Pinch, says that Mulligan's has seen an increase in business on game nights. "It's extremely busy," she says. "People that wouldn't come down here, generally, do [for the games]." According to King, the turnout is exactly what the proponents of the NBA were hoping for: ticket-holders. "They come early," she says, "about two, two-and-a-half hours before game time. They all eat and have a few drinks."At tip-off the bar and restaurant clears. "We're fairly empty during the games," she says. King adds that she has to have extra servers on hand on game nights to handle the crowds.
That impact is not as apparent elsewhere downtown. Robin Fraizer, manager of Rum Boogie Café on Beale Street, says that she sees no significant change in business on Grizzlies game nights. "We're pretty busy every night," she says, adding that she makes no staff changes for home games.
Golub says that he has seen many businesses benefit from the Grizzlies. "We're getting feedback from area businesses," he says. "I think those businesses are seeing an impact." Golub notes that the businesses not only benefit from fans but also from visiting teams and the players themselves. "A lot of people are making a night of it," he says.
Golub also points out that the Grizzlies work directly with some area businesses for game promotions. "We did a promotion with Peabody Place," Golub says. "People who presented ticket stubs got cover charges waived and that sort of thing. The promotion was very successful." Golub also notes the team's deal with Taco Bell to hand out free food if the team scores 100 points as another successful promotion with local retailers.
Still, no hard data exist yet about the impact of the Grizzlies on downtown. Henson says that the chamber is working on plans for a follow-up study. "We've talked about doing what Charlotte did: a one-year and a five-year [economic impact] study," he says. "I hope we can do that." Redding says that while his group at the U of M has no plans for a similar follow-up on Grizzlies ticket-buyers, he believes it should be "done by someone."
The chamber is keeping an eye on another aspect of the team's existence here: the spending habits of the team's millionaire athletes, its executives, and other employees. "We sort of followed things, kind of checked off some things as they came to be," Henson says. "The charitable things happened. Most of [the team, executives, etc.] bought homes. Most of them bought terribly expensive vehicles." However, Henson admits not having any hard data on these numbers.
Perhaps just as important as whatever monetary boost the Griz have given the city is the psychological impact the team has had. Such things as community pride are even more difficult to quantify than financial impact, but according to some, a change has occurred.
"It's had more of a psychological impact on the whole downtown community than some have anticipated," Sanford says. "I can't tell you how many people have confided in me how interested they are in NBA basketball. I think people are realizing that the game is good entertainment."
King says that, at T.J. Mulligan's at least, the crowds seem happy. "They're really excited," she says of her pre-game patrons. "They're great people, and you see a lot who are season ticket holders and some who are new faces."
In the Community: A+
After the September 11th terrorist attacks, the NBA started "The Ball Is In OUR Court" project as part of the league's community investment initiatives. The phrase was appropriate for the Grizzlies long before September, however, especially in terms of the team's community investment. According to Jennifer Turner, coordinator for Grizzlies Community Investment, "the Grizzlies are in the community 30 to 40 times each month. Over 1,000 agencies in the Greater Memphis and Mid-South area have been touched."
Those 30 to 40 touches come in a variety of ways. Some initiatives are league-wide such as Read to Achieve (reading events sponsored by players and other Grizzlies talent), Junior NBA and Junior WNBA (recreational youth basketball leagues), Tickets for Kids (tickets for non-profit charities, schools, and youth organizations), and Hoops for the Hungry (food collections before games that are distributed to the Memphis Food Bank).
In addition, the organization has initiated a number of its own drives, including the Memphis Grizzlies Holiday Toy Drive (over 1,000 toys for the Toys for Tots program), Grizzlies Give Back (Grizzlies front-office staff working in the community), Grizzlies In-Kind Donations (supporting local nonprofits through donations for auctions), Grizzlies Basketball Camps and Coaching Clinics (youth camps and coaching camps), a coat drive, events for Black History month, player appearances and speaking engagements, and hospital visits. Some other Memphis organizations directly involved with the Grizzlies are the Make-A-Wish Foundation, Porter-Leath Children's Center, Habitat for Humanity, Yo! Memphis, and United Way of the Mid-South. And the Grizzlies are continuing to grow their commitments with pending partnerships with Junior Achievement, Big Brothers, Big Sisters, the Memphis Literacy Council, and the National Civil Rights Museum.
Many players have their own community programs. One example is the Grizzlies Tickets for Kids program, through which several players and other personnel (including Shane Battier, Sidney Lowe, Lorenzen Wright, Brevin Knight, Michael Dickerson, Pau Gasol, and owner Michael Heisley) donate game tickets for children. Another example is the Ike Austin Foundation (I.A.F.) run by center Ike Austin. The organization has donated meals, winter coats, athletic shoes, and even a playground to the needy. On Thanksgiving the I.A.F. teamed with Mayor Herenton and the city of Memphis to feed nearly 4,000 people. The funding of the organization comes directly from Austin's paycheck.
Mary Helen Randall, communications coordinator for Make-A-Wish in Memphis, says that the Grizzlies have already helped many area children. "[The Grizzlies] helped facilitate a wish granting three Mid-South kids a meeting with [L.A. Lakers guard] Kobe Bryant. The Grizzlies PR team helped us arrange the logistics of the meeting just prior to the Grizzlies taking on the Lakers. It was the first time Kobe has agreed to meet Wish Kids outside of Los Angeles."
And all this is in addition to the cornerstone of the Grizzlies' community investment, the Grizzlies Charitable Fund, which commits the corporation to year-round charitable works in the city. As its first major act, the Charitable Fund co-donated $2 million (with Youth Education through Sports) toward the $2.5 million Ball Road Athletic Complex, which will be built near Alcy-Samuels Park. The Charitable Fund is only a temporary organization that will give way to a permanent foundation when a board of directors is named.
Golub is hopeful on all fronts. "We have a long way to go, both on and off the court," he says. "We are very bullish. We feel at home here and we feel we're on the right road. We put things in this frame of mind: We're going to be here forever." n
Financing the Arena
An interview with Marlin Mosby.
by John Branston
Memphis Flyer: How solid is the financing plan for a $250 million arena?
Marlin Mosby: "I'm a lot more confident than I was when we originally did it," financial consultant Mosby of Public Financial Management said last week. Mosby has seen public finance from the inside and the outside. He was finance director for the city of Memphis in the 1970s under then-Mayor Wyeth Chandler. His optimism is based on average attendance at the Grizzlies' 17 home games through Sunday (14,819 tickets sold and given away) and his own personal experience. He has become an NBA fan and regularly drives in from his home in the suburbs for games. "I've got six season tickets that I figured I was going to have to give away and now everybody in the office wants them," he says.
What was the impact of 9/11 and the recession?
Mosby said the financial experts "have not revisited yet" the projections made last spring. They will begin doing that this week when fourth-quarter 2001 numbers should be available and the bond underwriters are hired.
One reason Mosby is confident sales-tax projections from the downtown Tourism Development Zone will pan out: They are based on the incremental increase over 2000, which was before the Peabody Place entertainment center opened. (AutoZone Park is also in the TDZ, but the sales-tax rebate there goes to the baseball park, says Shelby County mayoral assistant Tom Jones.) Basically, a low base year means a bigger increment.
Two areas of special interest: rental cars and hotel occupancy. A two percent surcharge on cars rented at the airport is supposed to finance $25 million bonds. Hotel/motel taxes and a portion of downtown retail sales taxes finance $45 million more. Figures from the Shelby County Trustee's office show county hotel/motel tax collections for October-December 2001 were down less than 1 percent from a year earlier. Local rental car numbers were not available, but national figures have been down 30 percent or more.
Will individuals be able to buy the arena bonds?
Probably yes. Mosby says "a fair amount" will likely be sold to non-institutional buyers. The arena bonds will be "high-quality credit" with a rating of "A at worst and AA- at best," Mosby said.
What kind of bonds are they talking about?
Mostly tax-free revenue bonds with a small percentage of taxable general-obligation bonds. The interest rate won't be known until the bonds are issued, which could be three months from now, Mosby said. Officials assumed a taxable rate of 7.5 percent and a non-taxable rate of around 5.5 percent. A total of $20 million of the bonds will be privately backed. By whom Mosby won't say.
How much will the underwriters make?
About .75 percent to 1.25 percent, Mosby said. That would translate to around $2 million on a $200 million bond issue. The underwriting firms will be chosen January 10th.
What about The Pyramid?
A plan to have the state take over $40 million in Pyramid debt failed. The city and county pay it. A report last fall of an imminent sponsorship of The Pyramid was premature.
What is the state's contribution?
Mainly the rebate of sales taxes. The projections also call for $20 million in other state support, but no funds have been specifically appropriated. City of Memphis CAO Rick Masson has said the state will probably contribute its $20 million in the form of infrastructure improvements.
What about attendance?
In a word, confusing. NBA teams report tickets sold and given away, not the turnstile count, which could also be misleading if it includes a lot of freebies. The Memphis ownership group looked closely at attendance last year in Vancouver, which supposedly averaged 13,000. One owner says privately, however, that it would be more accurate to say the team sold 5,000 tickets, gave away a few thousand more, and averaged under 10,000. In Memphis the Grizzlies are averaging 14,819 in attendance, compared to the reported NBA average of 16,458. They expect that to increase in a new building with a better team.
How do no-shows impact revenue for the arena?
Not a whole lot, Mosby says. "The primary revenue is ticket sales," he says. The projected average ticket price in 2003 is $49. Projected spending on concessions is less than $10 per customer, and parking is less than that. While they're sometimes hard to count, no-shows are an indication of apathy and a warning that the ticket-holders are not likely to renew their commitments. The financial projections are based on 14,900 average attendance measured in tickets sold. Local businesses have guaranteed that number for 15 years should fan interest wane.
Is there still a market for NBA franchises?
Yes. The Charlotte Hornets want to move because Charlotte won't build them a new arena and attendance has flagged. A home game last week reportedly drew 925 fans. The Hornets' owners have talked to officials in St. Louis and Louisville.