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Sparks Watch Day 24: The Vetting Process

ESPN's Michelle Smith states that a Los Angeles-based group is interested in keeping the Sparks in LA. We look at the hypothetical process by which new owners join the WNBA.

Brett Davis-USA TODAY Sports

Owner Joe Lacob of the Golden State Warriors,gave an interview with Gary Radnich and Larry Krueger on KNBR radio. During this interview, he spoke about his interest in having a WNBA team in the San Francisco Bay Area. (I point you to the article by Albert Lee linked here.) With the Los Angeles Sparks ownership having walked away from the team, this led to the strong possibility of the Sparks playing in San Francisco next year.

However, Michelle Smith of ESPN states that a group of potential owners for the Los Angeles Sparks was put in touch with the WNBA through a contact with someone in the Los Angeles Lakers organization. She quotes Lacob as saying, "I don't know if we are going to get this team. If it stayed in LA, that's also fine. We will eventually do it and we would do it well."

Smith asked for two interviews with the WNBA on the subject that were turned down, and a league spokesman told her that there were no updates. The WNBA still has nothing to say - except to say that they have nothing to say.

So let's speculate on the process of owning a WNBA team. We'll assume that the process is somewhat like the NBA ownership process. So when a team expresses interest in owning a team, what has to happen?

Most likely, there is an official application for ownership. I've never been able to find any information on what these applications look like. It could be a 100-page document, or it could be something written on the back of a grocery receipt reading "I want to own the Sparks. Signed, Oprah Winfrey." But at some point, a paper trail has to be established in order for others to review information at the league offices - sooner or later, someone has to have a name and basic information to begin the vetting process.

The vetting process involves determining some basic information about the new owner or owners:

  • Who are they? Male or female? Single ownership or group ownership? What is their position in the community? What kind of experience do they have with basketball? Are they philanthropists, or businessmen?
  • Are there potential legal (criminal) issues that have to be addressed? Are the prospective owners under any sort of investigation of any type, business or personal? Have they ever been indicted for anything? Are there any legal issues of a business nature or a personal nature?
  • Do they have any outstanding tax issues? Are they being audited by the IRS? Have they been audited before, and what was the nature of that audit?
  • What are the major investments of the new owner? Are their sources of income from fields that are stable? Have their companies (if major investors) been around for a long time?
  • Does the new owner have any gaming or gambling connections? (This seems not to have hurt the owners of the Connecticut Sun.)
  • What is the total net worth of the new owner?
  • What sort of financing will be provided for purchasing the team? The WNBA likes to pretend that franchises cost $10 million, but I suspect that the WNBA will take an up-front payment of sufficient size with the rest to be provided later.

Generally, a sports league like the WNBA gives a time frame by which most or all of the above questions should be answered. When Force 10 Hoops bought the Seattle Storm they were given 45 days to get everything done and that included getting league approval and signing a contract with the WNBA.

In order to get league approval, the WNBA Board of Governors needs to sign off on the purchase. This nebulous group consists of all of the owners of all of the franchises of the WNBA - or at least, their representatives. They meet infrequently to decide on major rule changes and other matters that affect the league as a whole.

After that, the new ownership signs a contract that states they will satisfy the WNBA ownership obligations and they officially take control of the team.

Sounds simple, right? Before you conclude that such things are cut and dry, considering the following:

  • The Storm ownership group was given 45 days to get everything in order from top to bottom. A prospective Los Angeles group would be given considerably less time. If the WNBA wants to wait 45 days, that would take negotiations up to the beginning of March 2014. That's not feasible. The league needs to get arena space secured after a schedule is drawn up. Franchises need to make arrangements for travel, and the longer the wait the more expensive those arrangements become.
  • NBA teams are given much more time for vetting, given the financial obligations of owning an NBA team. Jimmy Smith wrote in 2010 about two NBA ownership transfers - the New Jersey Nets and the Charlotte Bobcats - taking 10 months to complete.
  • The shorter the vetting process, the weaker the process, the more chance that some sort of critical information can be overlooked. Before you think that the WNBA Board of Governors would never let a weakly-financed team enter the WNBA, it was the WNBA Board of Governors that approved Hilton Koch's application to buy the Houston Comets in 2007.
  • In mid-August of 2008, the under-financed Koch put the team up for sale, forcing the league to run the team until it was disbanded. The damage of losing the Comets was significant - the franchise won the first four WNBA championships and losing it damaged one of the most important assets of any league, namely, the continuity between the league's past and its present.

    Whatever the WNBA decides - to choose an ownership franchise in Los Angeles, to send the Sparks to San Francisco or to fold the franchise - it should remember that it needs to make sure that any new owners are not merely financially secure but emotionally secure.

    From a previous article:

    To be a successful sports owner, you don't just need money (and lots of it). You need a entire truckload of don't-give-a-damn. (And you'll use it quicker that you ever imagined.) A league can always screen for the guys who have the money but finding the owners with iron will is almost impossible to predict - nothing tests an owner mentally like owning a WNBA franchise. It's the same iron will a struggling actor needs when his family is calling him to come back home and get a real job.

    And from that previous link, I wrote that it would be far better for the WNBA to shut down the Sparks or relocate them than ever repeat the same kind of situation that happened in Houston and have the league separate itself from a failed franchise under a cloud of embarrassment. It has to be a tough decision, and President Laurel Richie will face a significant challenge in making it.