Will Clippers’ owner Steve Ballmer have the last laugh?

Article posted by Coliseum, March 12^th, 2020

Image: MSG

Steve Ballmer, the owner of the American professional basketball team based in Los Angeles, US – the Los Angeles Clippers – is reportedly in “advanced negotiations” with the Madison Square Garden Company (MSG) to purchase The Forum, a multipurpose venue located in Inglewood, California.

The Forum is north of the under-construction SoFi Stadium and the Hollywood Park Casino. It is near The Forum that the Clippers plans to build a new facility and hopes to begin work on the new arena by July next year.

The Forum sits on a 29-acre lot on 3900 West Manchester Blvd in California and is owned by MSG.

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The Clippers, which currently play at Staples Center in Downtown Los Angeles, have been planning for long to build a new 18,000-seat basketball arena in Inglewood. The team has been facing a lot of hurdles ever since it has chalked out plans to build a new arena. The biggest roadblock is in the form of MSG, who has opposed the development tooth and nail from the very beginning. The Forum is just a shouting distance away from where the Clippers intend to build their new facility and MSG has filed a torrent of lawsuits over the plans.

Clippers’ proposed arena will be a $1.1B mixed-use project, which will be anchored by an 18,500-seat basketball arena.

Crying foul

MSG has alleged that the city has flouted an agreement which the latter struck with the former as regards not to promote competition for The Forum in the sense that it went ahead and joined hands with the Clippers on the arena project.

MSG had entered into an agreement with the city to use the 22-acre vacant land, where the Clippers have proposed to build the venue, as overflow parking for The Forum. The Forum, which underwent a $100M facelift in 2014, does not host a sports team and is mostly known as an entertainment venue that holds concerts and boxing bouts.

MSG alleged that Inglewood Mayor, James T Butts Jr., tricked them into terminating its lease agreement, which paved the way for a development agreement between the city and the Clippers to build their mixed-use project.

MSG, whose Executive Chairman and Chief Executive Officer is embattled Knicks Governor James L Dolan, is crying foul and has charged the city with entering into a “back-room deal” with Ballmer. Murphy’s Bowl LLC, the entity owned by Ballmer to advance the Clippers project, intervened in the proceedings to represent the Clippers’ interests in their arena project.

MSG’s latest lawsuit was filed in January against California Governor Gavin Newsom and the State’s Joint Legislative Budget Committee. The suit claims that Assembly Bill 987, which was passed in 2018 to protect the arena project from extended legal action relating to environmental issues, violates the State Constitution.

Advantage Ballmer

After years of being embroiled in a legal battle, Ballmer might reportedly have the last laugh.

Chris Meany, the lead developer of the Clippers project, pooh-poohed the lawsuit as “Yet another meritless lawsuit by the Madison Square Garden Co. – the latest desperate attempt in an all-out legal onslaught to slow the development of the proposed Clippers’ arena in Inglewood.”

If Ballmer goes ahead with purchasing The Forum, it would clear the path for the Clippers to build their new arena.

The Clippers have neither confirmed nor denied the report as regards talks with MSG but a statement released by them goes as such, “The Clippers continue to pursue plans to build a state-of-the-art, 18,000-seat basketball arena and entertainment complex in Inglewood and are currently working with the city to successfully complete the comprehensive Environmental Impact Report.”

The statement further read, “We are examining every possible way to resolve our differences with Madison Square Garden Co. regarding our new arena.”

Media reports stated that the best option was to sell off the 17,500-capacity The Forum which would also help MSG and the Clippers to bury the hatchet.

MSG also owns the Madison Square Garden arena in New York, as well as the New York Knicks NBA team and the New York Rangers NHL ice hockey franchise.

The Clippers’ planned new arena would also be on the lines of the futuristic SoFi Stadium currently under construction in Inglewood. SoFi Stadium will serve as the home of the Rams and Chargers NFL teams.

The Clippers’ current lease to play at Staples Center will end in 2024. The team shares the arena with fellow NBA franchise the Los Angeles Lakers and the Los Angeles Kings NHL outfit, as well as Women’s NBA team – the Los Angeles Sparks.

Since 1999, the Clippers have been co-tenants of the Staples Center which also plays host to multiple concerts and major events like the Grammy Awards. The Clippers have long regarded themselves as a “third tenant” at Staples Center, where they receive a smaller share of proceeds from suites and club seats than the Lakers and Kings and a lesser say in scheduling — a situation that Ballmer has long desired to rectify with dreams of his team’s own facility.

Ballmer’s proposed Inglewood Basketball and Entertainment Center is currently undergoing the environmental review process. If built, the development will house the Clippers’ entire basketball operations. As per city documents, the current plan also features a 200K SF basketball arena, a 55K SF corporate office building, a 25K SF sports medicine clinic, 40K SF of retail, and community and youth-oriented space plus parking spot. It will also boast a landscaped area and outdoor plaza with basketball courts and community gathering spaces. Moreover, there is a proposal to build a hotel, parking and pedestrian bridge on a nearby plot.

Ballmer, who once served as the CEO of Microsoft and is deep-pocketed, will reportedly pick up the tab of the whole project on his own.

San Francisco-based developer Wilson Meany is slated to develop the project and American multinational engineering firm AECOM will build the basketball arena.

After MSG bought The Forum in 2012 and put in $100 million to redecorate it, it became primarily a music venue.

The Forum is not in a position to house an NBA or NHL team today. It does not enjoy luxury suites or club seats, which makes up a significant piece of revenue for teams. On the other hand, the Staples Center boasts 160 luxury suites and 2,500 club seats.

If Steve succeeds in his plan to buy The Forum it would translate into a new arena for the Clippers in Inglewood. But, the future of The Forum is shrouded in uncertainty because the question which arises is – would there be a need to keep The Forum with two modern venues (read one planned by Steve and the SoFi stadium) down the street? The SoFi Stadium is already booked with major musical acts ranging from Taylor Swift and Tim McGraw to Guns N Roses and Motley Crue.

“There’s obviously nostalgic value attached to The Forum for a lot of people in Southern California, but nostalgia alone doesn’t get it done anymore,” observed David Carter, Executive Director of the University of Southern California Sports Business Institute.

Ballmer wants to build a crème de la crème basketball arena for the Clippers. If that is the case, The Forum still has a chance to continue as a concert venue.

What will happen to the future of The Forum comes later. Right now, the most crucial part for Ballmer is to handle MSG and its attorneys who are definitely proving to be more than a handful for him.

The current owner of The Forum, MSG, which also owns the New York Knicks, has been locked in a protracted legal battle with the city of Inglewood and Ballmer for the better part of two years over the latter’s parcel, which is a stone’s throw away from The Forum.

However, after the most recent torrent of lawsuits, the two sides began engaging in substantive discussions to resolve the stalemate. Media reports stated that MSG is no longer putting up a stiff resistance against the potential sale of The Forum. Both sides have burnt huge holes in their pockets vis-à-vis litigation, with more actions to adjudicate. An agreement is quite likely.

The Forum will continue to operate until a Clippers arena is fully constructed, and possibly beyond.

Ballmer, who purchased the Clippers for $2 billion in 2014, has long cherished the idea to be the sole owner of a basketball complex, not an occupant in a multipurpose arena.

Ballmer, the wealthiest owner in the NBA, has long maintained that a state-of-the-art arena would provide a true home-court advantage for the Clippers. It would give the team more elbow room to explore technological innovations, from expanding broadband capacity to offering fans an augmented reality (AR) experience. The Clippers would also tap additional revenue streams such as concessions, and construct offices and a training center. The team doesn’t own its current practice facility in Playa Vista, California – the official headquarters of the Clippers.

An optimistic Ballmer sums up by saying, “The other side is just trying to slow us down a little bit. But it’s another thing where we’re grinders. We’re long-term players, and we’re grinders.”

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