CHARLOTTE, N.C. – Bob Johnson isn’t accustomed to losing money.
The billionaire founder of Black Entertainment Television is a successful businessman. He sold BET for $3 billion and has a hand in numerous profitable ventures, including real estate, financial services and video gaming machines.
But Johnson’s profit streak ended in 2003, when he paid the NBA $300 million for the expansion Charlotte Bobcats, becoming the first black majority owner of a major professional sports team.
As the Bobcats close their third season Wednesday, out of the playoffs once again, Johnson has lost millions. The team has struggled to win games and to attract fans and advertisers. Forbes magazine listed the Bobcats as the only NBA team to lose value in the past year.
Still, Johnson remains committed and – for the first time in his business life – prepared to lose more money.
“Anybody who has a team, just by the nature of owning a sports team, you lose money,” Johnson said in a recent interview with the Associated Press in his arena office. “Because if you take the same $300 million I gave to the NBA, I take that same $300 million and give it to my local hedge fund manager, I’m way ahead with the hedge fund guy.
“So, obviously you’re prepared to lose money when you buy a basketball team, and obviously I’ve fulfilled that requirement.”
But make no mistake, Johnson isn’t content to keep losing money. He has replaced his front office staff, brought in Michael Jordan to run the basketball operations and urged NBA commissioner David Stern to implement revenue sharing for small-market teams such as his.
“I take a long-term view of this investment, this opportunity to be a sports team owner in a city like Charlotte,” Johnson said. “To me, it’s a vibrant market in terms of the economic development that is taking place.”
Johnson has made a series of missteps.
He wasn’t prepared for the backlash from Charlotte fans over the Hornets’ ugly move to New Orleans following a failed referendum to build a new arena. When the team left in 2002, the NBA quickly brokered a $265 million arena deal with the city to bring in a new team. The thinking was the city’s anger was directed at Hornets owner George Shinn, not the NBA.
But the crowds have been slow to return in Charlotte, where the Hornets led the NBA in attendance for seven straight years. The Bobcats’ average of just over 15,000 fans a game this season ranks 27th out of 30 teams.
“I don’t think Bob anticipated it would be this hard. I think someone in the league sold him a bill of goods about how easy it was going to be,” said Felix Sabates, a NASCAR team owner and Bobcats minority investor. “I think the NBA, they were pretty anxious to put in a new franchise for $300 million. I don’t think the NBA did a very good job of researching the market before they came back in here.”
The Bobcats’ own mistakes made it worse. They were forced to drop ticket prices after fan backlash. A regional television sports network Johnson started folded after one year. And the team is still tied to a deal with Time Warner Cable that prevents satellite dish owners and some cable subscribers from seeing most of the team’s games.
The Bobcats also have been unable to secure a naming rights deal for the downtown arena.
Last summer, Johnson cleaned house. Team president Ed Tapscott resigned rather than accept a demotion, and other top executives were fired. Johnson also folded the WNBA’s Charlotte Sting to save money.
Perhaps Johnson’s biggest move was bringing in Jordan last summer. An icon who grew up in North Carolina and led the Tar Heels to the national championship before his NBA stardom, Jordan has the final say on all basketball decisions.
But more importantly, he was willing to put several million dollars into the franchise to become a part owner, despite the team’s red ink.
“We have to turn this franchise around, and to do that, sometimes you have to take a step back to take a step forward,” Jordan said. “As long as you get the ingredients right, I’m pretty sure that in the long run, our investment is protected.”
Jordan has urged Johnson to spend more money – the Bobcats have the lowest payroll in the league – and Johnson insists he will spend more to make the Bobcats a winner.
A big test comes this summer, when leading scorer Gerald Wallace can become a free agent and leading rebounder Emeka Okafor is eligible for a new contract. Big-name free agents such as Vince Carter also could be available.
While Johnson is confident the team will become profitable, he has signed a letter urging the NBA commissioner to consider revenue sharing, meaning big-market teams would help small-market clubs such as the Bobcats.
“All the owners want to be competitive,” Johnson said. “What you don’t want to see is a revolving door of owners who are saying, ‘Gee, I want to get in the league because I like the competitiveness of being an owner and the pride of being one of 30 owners of an NBA team, but I can’t be competitive because of the structure.’ “
Dallas Mavericks owner Mark Cuban believes Johnson is good for the NBA, and not just because he brings diversity.
“I don’t place any importance on the color of his skin. Bob is a smart businessman,” Cuban wrote in an e-mail. “I love how he has figured out the economics of the NBA and is taking a stand to make them better.”
Johnson vows the team will win over the city and he’ll be around to see it – even with estimates the team is worth less than Johnson paid for it.
“It’s sort of like when you own stock. The only time you care about the price is when you’re ready to sell it,” Johnson said. “If you’re not ready to sell it, you’re not worried about the value.”