Four days ago, the New Orleans Hornets were bought by Tom Benson, the owner of the NFL New Orleans Saints, for a deal valued at a reported $338 million. The troubled basketball team has been in administration by the NBA for over a year now due to an unsustainable business model, and so this new deal seems to be bringing some new life back into a team that saw its star player, Chris Paul, leave for the L.A Clippers earlier this season.
The problem now becomes what Benson can due as owner to leverage his team back into playoff contention like last year, when the Hornets almost bested the Lakers. The financials do not bode well for Benson. Benson paid a 19% premium for a team that has run three years of consecutive losses. In addition, his current fortune, estimated at about $1.1 billion according to USA Today puts his investment into the Hornets at about 25% of net worth; even if he was able to finance a large portion of the deal with debt, a question remains whether Benson can shore up enough assets to purchase new talent to offset the loss of Paul. The Hornets sit at the bottom of the West Coast standings with only six games left in the regular season. With this year being a lost cause, Benson at least has time until next season to develop a plan of attack for the future. Don't count the Hornet outs in the next few years to come.
-Aureen Sarker (Photo Credit: Yahoo Sports)