Rebound

The business side of the Bobcats gets a bounce from a season so lousy it set a league record.
By Spencer Campbell

The Charlotte Bobcats’ new coach is a no-name, a former assistant at St. John’s University in Queens, N.Y., touted for — if anything — his knack for developing talent. He’s wasting little time before burnishing that reputation. “Look at him,” Kyle Pagani says as silver-haired Mike Dunlap, eight days into the job, explains the finer points of free-throw shooting to 6-foot-9 Bismack Biyombo on a practice court at Time Warner Cable Arena. “He’s already working with the players.” Robert Shavitz agrees. “Yes! That’s what we needed.” Pagani and Shavitz had driven from Greensboro to attend a party celebrating the National Basketball Association draft, which begins in a few hours, and joined the crowd along a glass partition looking into the practice court, straining to get a glimpse of a future that, if not promising, at least promises to be different.

The roughly 4,000 fans attending the event, thrown by the Bobcats, have no reason to be optimistic. The team was awful last season. Many believe they were aiming for awful, building a lousy roster to get the first pick in the draft. If so, the Bobcats overachieved. Not only was it the worst team in the league but the worst in league history. Still, it didn’t win for losing. The draft has just one can’t-miss kid: Anthony “The Brow” Davis. In the National Football League, he would go to the team with the last-place record. That’s how the Carolina Panthers got Cameron Newton, the rookie quarterback who resuscitated their flagging franchise last year. The NBA is different. About a month before the draft, nonplayoff teams entered a lottery for positions. The worse their record, the more ping-pong balls they got. Charlotte had the best odds at Davis, but there was a 75% chance the team would go Browless. It did, drawing the second pick.

General Manager Rich Cho looked deflated when he heard the news, but he shouldn’t have been surprised. Fortune has forever frowned on the Bobcats. The NBA thrives on superstars, and the team has never had one despite a string of high draft picks, including a duo of Carolina Tar Heels off a national championship team. The franchise’s financials might be worse than its roster. Privately held Bobcats Sports and Entertainment Co. won’t open its books, but Forbes magazine reported that while revenue stayed steady, around $100 million, the team incurred increasing losses over four seasons, reaching $25.5 million in 2010-11.

Yet the front office is positively sanguine. “What people from a business perspective don’t always realize is that a challenging season leads to an exciting offseason,” says Pete Guelli, executive vice president of sales and marketing. “Our numbers are up in nearly every single business category.” The Bobcats are selling hope, and fans are buying — so far. But their faith is fragile.

“Rich Cho is doing a great job … ,” Pagani says, searching for the right word.
“ … branding,” Shavitz adds, helping out. “They’re almost in a hard position to fuck up.”
“Yeah, but if they draft another Carolina player, fans are going to go ape-shit.”

Bob Johnson probably thought he had a sure thing. After all, the NBA’s first expansion franchise in Charlotte, which began play in 1988-89, had led the league in attendance from 1989-90 to 1997-98. But the Hornets left for New Orleans in 2002 after voters refused to pay for a new arena. The City Council approved building what became Time Warner Cable Arena anyway. So when Johnson, founder of Washington, D.C.-based Black Entertainment Television, started the Bobcats in 2004, professional basketball was still a bitter pill for many Charlotteans. It didn’t help that the team failed to have a winning season during his reign or that he was an outsider, calling Washington, D.C., home. Johnson gave up in 2010, reportedly taking a $125 million loss on his $300 million expansion fee. He called the Queen City “arrogant” and “incestuous.” Fans weren’t sad to see him go.

His replacement was quite the rebound. Johnson sold the team to a group headed by Wilmington native Michael Jordan, who won UNC Chapel Hill a national title in 1982 before becoming arguably the greatest basketball player ever, leading the Chicago Bulls to six titles. “Owning this team is my No. 1 priority. Earning your trust is my first step,” Jordan, who had been a minority owner under Johnson, wrote in a letter to fans. The team made the playoffs that spring, though it was swept in the first round. The honeymoon was fleeting. Jordan roiled the roster the following season, trading Gerald Wallace, the lone all-star, and then top scorer Stephen Jackson. The front office had decided that, with them, the team could eke out playoff spots but never deliver a title. “The strategy was to, unfortunately, trade our best player to try and acquire young players and future assets via first-round picks,” says Fred Whitfield, the team’s president and chief operating officer. “We understood clearly what the direction was going to be, what the strategy was going to be.” With two top-10 picks in 2011, the Bobcats drafted Biyombo and Kemba Walker, point guard on the University of Connecticut team that won the national championship that year.

Heading into last season, the window to market the rookies was shut when owners locked out players over the league’s collective-bargaining agreement, slicing 16 games from the schedule. But benefits of the new deal, agreed upon last November, outweigh the loss for the Bobcats. Owners claim to have lost about $300 million a year under the previous CBA, but most of those hemorrhaging money were small-market franchises. According to Forbes’ estimates, the seven teams in the league’s five largest metros earned an average of $18.6 million in 2010-11. The seven in the smallest metros, including Charlotte, lost an average of $9 million. “If you look at what our market will bear from a price standpoint and look at what our most premium seat costs in our building — which is about $1,000 a seat per game — and you look at that same exact comparable seat in a large market, that’s gonna run you about three times more,” Whitfield says. The new CBA not only increases owners’ share of basketball-related income — tickets, TV, concessions, parking fees and stadiums ads — from about 43% to about 49%, it triples the money that goes into the league’s revenue-sharing pool, which could mean roughly $20 million annually for the Bobcats.

But it wouldn’t salvage Charlotte’s season. The roster, already short on talent and experience, was decimated by injuries and finished 7-59 — including 23-straight losses to end the year — to set an NBA record for worst winning percentage. Average home attendance was 14,757, about 77% of capacity, but the arena was rarely that full. Such a cataclysmic disaster led to finger pointing, most of it at Jordan, who, through a spokesman, declined to be interviewed for this story. Friend and former rival Charles Barkley blamed the franchise’s woes on the owner’s penchant for hiring yes men. Larry Brown, coach when Jordan bought the team and later fired, claimed his fellow Tar Heel alum had spied on him. Some considered Jordan a Johnson doppelganger. “Bob was an absentee owner. He never lived there, and he said some things he shouldn’t have said,” says a source who has worked with the organization. “Michael Jordan’s not there a lot of the time. In a small market like Charlotte, he needs to be knocking on doors all the time. Chicago, L.A., New York — you open the doors, you sell tickets. Not in Charlotte.”

But during the playoffs, when the Bobcats typically lie dormant, visitors flocked to the team’s website for news on the coaching search — the contract for Brown’s successor, Paul Silas, hadn’t been renewed — and videos of college stars working out for the Bobcats before the draft. A seven-win team had the third most-visited website in the NBA. “Those numbers don’t exist unless you have all these opportunities to take advantage of in the offseason,” Guelli says. “And that becomes a sales tool for you. So anybody that comes back to our site immediately gets our sales message.”

The team delivered that message with database marketing technology installed about three years ago. It gathers stats such as age and interests — not only from basketball customers but from the nearly 2 million people who pass through Time Warner Cable Arena, which the Bobcats manage for the city, each year for concerts, shows and conventions — to identify prospects. It then sends offers targeted specifically for each segment. If someone age 25-49 has recently attended a Coldplay show, the Bobcats figure he is looking for a night on the town and might promote postgame concerts. Roughly 10,000 registered for a contest to win a trip to the draft lottery. “Once we acquire that data, we’ll go back out and create a campaign to those people, a targeted offer,” Guelli says. “Campaigns like that cost you less but bring in more revenue.” They’ve also increased closing rates 20% to 30%.

But nothing would be as important as that draft pick. The day before it happens, Guelli says, “Even though we think we’re having a pretty successful offseason from a business standpoint, we still got a lot of fence-sitters, people who are considering renewing season tickets, companies who are considering sponsorships. They’ll be looking closely at the draft to see how we perform and, once we acquire that player, how we message it to the marketplace. How does he fit in? How does he participate in the community? What kind of person is he? A lot of people are waiting to see what happens.”

To Shavitz’s delight, the Bobcats don’t draft a Carolina player. They pick Michael Kidd-Gilchrist. There is a lot to like about the University of Kentucky product — though not a prolific scorer, he is a hard worker and terrific defender who helped lead the Wildcats to the national title last season. He seems sensitive and good-natured. When he was only 2, his father was shot to death. He watches The Lion King once a week in tribute — they used to view it together nearly every day. Even Jamie Moore of Charlotte, a Tar Heel fan who came to the draft party to see Carolina players get picked, is excited. “I didn’t go to many games last year. That’s going to change with Michael Kidd-Gilchrist.”

He will inevitably be compared with Newton. Both were high draft picks — Newton went No. 1 in 2011 — of Charlotte professional sports franchises. Both of their teams were the worst in their leagues the season before they arrived. Both are tasked with lifting their organizations from the basement. But Newton was more experienced when he arrived in the pro ranks, having appeared on the cover of Sports Illustrated multiple times and been involved in two high-profile scandals. He was nearly 22. Kidd-Gilchrist, who played most of his first and only season of college ball in the shadow of teammate Davis, turned 19 in September. Before the draft, Whitfield had tried to temper expectations: “We hope and expect that that player will be a part of our future. If we get lucky, and he happens to get rookie of the year like Cam Newton, certainly that’s a plus for us.” When someone said, “You’ve got to hope he turns into Cam Newton, though,” Whitfield just laughed.

Kidd-Gilchrist’s rawness is evident draft night. Asked if he is nervous to be the face of the franchise, he says, “No. Um, no,” and nothing else. Many of his answers are halting. After his conference call with reporters, a Bobcats official says, “So he’s not a conversationalist.” He will get in-house media training. If he needs more, the Bobcats will hire a consultant. Though he wasn’t the most marketable of prospects, only one player other than Davis — Duke shooting guard Austin Rivers, son of Boston Celtics coach Doc Rivers — would have triggered an instantaneous return at the ticket office, Guelli says. Rivers wasn’t rated high enough to go No. 2. “We’re as aggressive as we can be from a marketing standpoint,” Guelli says. “But ultimately the product is king in this business.” Newton’s popularity is based on his success, and Kidd-Gilchrist has Newtonian ambitions: “I definitely hope I can do something like that. I’m a winner, so I don’t see why not.”

For now, he is just a cog in the larger marketing machine. There are new uniforms that incorporate Carolina and Duke blues and shorten the name to “Cats,” finally eradicating Johnson’s ubiquitous “Bob,” a new coach who’s a shaper of young talent and buy-one-get-one-free season-ticket packages, among other deals. It’s difficult to determine what’s effective and what’s not with so many irons in the fire, but something is registering with fans. Based on the team’s terrible 2011-12 campaign, the league had projected about 52% of season-ticket holders would renew. Through mid-September, nearly 80% had. The Bobcats contend only about four or five teams typically are able to add more than 2,000 new season-ticket holders during an offseason. They are approaching that mark.

Though the record might resemble the Bobcats of old, the team believes those metrics suggest rebounding interest in a franchise that’s finally on the way up. “I think our new beginning started a little over two years ago when Michael bought the team,” Whitfield says, adding, “Our fans have been very patient with us.” But patience comes at a price. Job, after all, had plenty of it. Unlike long-suffering Bobcat ticket holders, his came free.