In early December 2010, the NBA purchased the New Orleans Hornets from owners George Shinn and Gary Chouest for about $300 million, pending the anticipated approval by the league's board of governors. This is the first franchise owned and operated by the NBA. Though not common practice, leagues have stepped in to save fledging franchises (e.g., Major League Baseball's acquisition of the Montreal Expos to help find a stable ownership group).
Commissioner David Stern said the unprecedented move was made to stabilize the Hornets after a lengthy ownership transfer failed to be finalized and to absolve the franchise of significant debt problems that might hinder its overall value and salability. Though it may not be seeking to make a profit from the sale of the Hornets, the NBA might prevent the franchise from being sold at a discount, which was the case when Michael Jordan purchased the debt-laden Charlotte Bobcats, which was valued at $275 million—$25 million less than Robert L. Johnson paid for the club in 2002.
While Commissioner Stern has not speculated on the Hornets' long-term future in New Orleans, he has stated that the league's goal is to keep the team there. The possibility of an arena lease opt-out based on attendance made the Hornets future in New Orleans more uncertain; however, a successful campaign by state and local political leaders has helped boost the attendance at New Orleans Arena this season, thus ensuring that the attendance benchmark would be met. If the attendance benchmark was not reached, the Hornets would have been able to opt-out of their lease agreement upon payment to the State of Louisiana of a $10 million penalty.
While the Golden State Warriors sold for a record $450 million in 2010, and were recently valued by Forbes at $363 million, the Forbes's average valuation for an NBA franchise is $369 million. According to Forbes, the Hornets current valuation of $280 million, ranks 26th out of 30 NBA teams in terms of value, with the New York Knicks topping the list with a valuation of $655 million. While New York and Golden State are in larger markets than the Hornets, other factors impact its valuation. The franchise's instability, lack of consistent fan support, an unfavorable arena deal and lack of sustained success on the court all factor in and are inter-related: success on the court typically translates into increased fan support and civic pride, which can help keep a franchise from moving. These developments are important for sponsors and other corporate partners of the team, since their valuable agreements and licenses may be adversely affected if the franchise moves or suffers continued instability.