WNBA History: The 2002 Restructuring Agreement

Initially, the WNBA franchises were owned collectively by the 29 NBA clubs existing in 2002.  The individual franchises were not so much owned as they were operated by the brother NBA clubs. The WNBA started out with eight teams and began to add clubs:

1997 Charlotte Sting
1997 Cleveland Rockers
1997 Houston Comets
1997 Los Angeles Sparks
1997 New York Liberty
1997 Phoenix Mercury
1997 Sacramento Monarchs
1997 Utah Starzz

1998 Detroit Shock
1998 Washington Mystics

1999 Minnesota Lynx
1999 Orlando Miracle

2000 Indiana Fever
2000 Miami Sol
2000 Portland Fire
2000 Seattle Storm

At this time, the league still owned and operated all of these clubs.  In October 2002, the WNBA was restructured by the NBA.  This turned the ownership of these teams over to the NBA owners.  The advantage this gave the NBA owners (if any) was that now they could transfer the ownership of these franchises to those individuals who might not own a NBA team - the teams were now their property and could be sold like any other team.  Furthermore, teams could now be relocated to cities that didn't have an NBA partner.

The disadvantage was that the owners were now responsible for their losses.  Furthermore, the WNBA took advantage of the sponsorship that the league was able to obtain for it. The individual franchises would have to find their own sponsors now.  They would also have to pay the players' salaries themselves, something the NBA was previously doing.

There was pressure on the local NBA teams to make a decision as to who was to own the franchises. No official deadline was set although an unofficial deadline was near the beginning of the 2003 season when the schedules would have to be released.

This decision would change the fate of four clubs.

Utah:  In December, the Utah Starzz were relocated to San Antonio which had applied for a WNBA franchise.  Larry H. Miller, the owner of the Starzz, was fighting back tears according to the Deseret News.  But he couldn't make it work.  According to Miller, he had lost $1 million over each of the six years he had run the team - not a lot of money by NBA standards, a small amount which could have been written off his taxes but even so the Starzz were not profitable.  "How much money am I supposed to lose in a venture?" he asked.  An article in the Deseret News implied that he might have given it a go if not for the rise in marketing costs, most likely due to the sponsorship issue.

This left the new San Antonio ownership with its choice of teams - Miami, Orlando, and Utah.  It wanted Utah, the team that had made it to the Western Conference finals in 2002.  The Utah Starzz became the San Antonio Silver Stars, suffering two horrible seasons in San Antonio in its first three years but surviving none the less.

Orlando:  In October, the announcement was made that Orlando would move to a new city. "We were not able to make it work in Orlando," stated RDV sports chief operating officer John Weisbrod.  San Antonio had applied for a WNBA franchise and there was a thought that the Miracle could end up in Texas.  This was only two months after the senior vice president of RDV sports, Pat Williams, had alienated Miracle fans by sending a letter to the Orlando city council indicating his opposition to an ordinance being proposed that would limit discrimination against gays.

The fate of the Miracle was left up in the air for three months.  With several other franchises in jeopardy and a new collective bargaining agreement being negotiated between the league and the WNBA players, the WNBA finally decided to grant a franchise to the Mohegan Tribal Gaming Authority in Uncasville, Connecticut.  The Orlando Miracle would be known hereafter as the Connecticut Sun.

Miami:  Miami and Portland were the two teams with the least seniority - both came into the WNBA in 2000 - and had the least time to build any sort of fan base.  In late November, the Heat Group - now the owners of the Sol - stated that the closure was "forced" by the restructuring agreement.  "[The new] model will work well for the league with cities that have good corporate bases," Heat Group president of business operations Eric Woolworth said.  "The model, unfortunately in Miami, is not going to work."

According to Woolworth, Miami had a small corporate base as opposed to Los Angeles and Houston.  He also considered the South Florida market "saturated" with sports teams.  

Traci Cook, senior director of communications for the WNBA said, "When we took the vote in October we anticipated that the new structure would not work for certain NBA owners," Cook said. "In the long term it will put WNBA teams where they can be more successful."

This left the Sol to be run by the WNBA.  No new owner could be found, and the players were dispersed in the 2003 Dispersal Draft in April.

Portland:  Portland suffered the cruelest fate of all. The Trail Blazers were reluctant to assume control of the Fire and the Fire was left waiting for a decision from Paul Allen as to whether or not the Fire would survive another year.   Allen was suffering financial losses from other businesses he owned, including major losses from the Charter Communications cable television system.

It wasn't until December 31, 2002 that the Portland Trail Blazers organization decided that they would not take over the Portland Fire.  This made it very difficult for the WNBA to find a new owner for the Fire.  The Fire was folded and its players would be dispersed in 2003 with Miami's.

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By February 2003, the future was clear.  The coaching staffs of the folded teams began looking for work and the WNBA was down to 14 teams.  It has remained at something between 12 and 14 teams since the beginning of the 2003 season.

So was the WNBA Restructuring Agreement a success or a failure?  It could be that the best term to be used should not be success or failure but "necessity".  It was clear that the NBA couldn't keep paying the WNBA's bills forever and that the chicks (so to speak) had to be shoved out of the nest and left to fly or perish.

As seen above, the NBA knew that for some cities the new financial model would be a failure. It was clearly a failure in Miami.   Portland's circumstance seemed to depend on the owner of the Trail Blazers; Sacramento would suffer a similiar fate in 2009, where the announcement by the owners left the league little time to shop around the club.

However, the new financial agreement did not kill the league. Not only did it not kill the league, but the league has lasted longer with the new restructuring (nine years) than it did previously (six years).  The restructuring separated the wheat from the chaff in ownership - NBA owners who were committed (or semi-committed anyway) to owning a WNBA team stayed with it like Bill Davidson of the Shock. Unfortunately, dual ownership would be an unstable model as when an owner's property changed hands - with the death of Bill Davidson, in the Shock's case - the new owners had no qualms in divesting themselves of the less profitable WNBA franchise.

Today, the WNBA has fewer NBA owners that it has owners who do not own NBA franchises.  It is much more self-sufficient, although clearly the NBA helps it out in some way - but the individual NBA clubs are not required to support the WNBA.  My understanding is that any NBA assistance is provided by the NBA's general fund, and that the NBA provides media support and other assistance from its economics of scale.  (For example, the NBA can loan the WNBA graphic artists or commerical production assistance.)

Unfortunately, even with almost ten years behind us, the verdict is still out as to whether the new restructuring was successful.  Luckily as WNBA fans, we have the opportunity through our support to put our thumbs on the scales of justice.