Pistons might be tough sale

When Pistons owner Karen Davidson decides to sell the team, she doesn't have to be involved in any of the negotiations if she selects a broker to handle the transaction.

Two leading brokerage dealers are Goldman Sachs and Smith Barney of New York, who've brokered several professional sports deals.

Using a sports broker is one of three options she has when selling the team, according to experts in sports negotiations and brokerage firm representatives.

Here are the others:

• She can set a price and sell to the first firm that agrees to the price. (This is unlikely because of the current rocky economy.)

• She can find someone like St. Louis Blues managing partner Dave Checketts, who finds limited partners and agrees to run the team for a fee.

But an expert in sports franchises predicts Davidson will find it difficult to sell the Pistons in the current economic climate. He said the $479 million value Forbes magazine placed on the franchise is too high, and predicts it'll sell for $350 million.

"If the negotiating price is based on the Forbes value, there's not going to be many takers," said Detroit Mercy professor of economics Mike Bernacchi.

"People say Detroit is a great sports town, but that is way overvalued. It has to be a value based on what's happening now. I am sure the negotiations are going to be tough. The Pistons will want to sell based on what they were and what they've done. The buyer will want to buy it for where they are now and for where they are headed in the future."

Wayne State economics professor Stephen Spurr is more optimistic. He believes the state unemployment rate will decline soon and more people will attend Pistons games.

"This is not a permanent situation," Spurr said of the economy. "It's going to come back."

Spurr questions if the franchise is being run correctly since the death of Bill Davidson last year.

"If it's a situation where ownership doesn't have as much interest in the team, then it is definitely worthwhile to find a new buyer who can come in, negotiate contracts and be more involved with the team," he said. "As a casual observer and not as an expert, it seems as if the team is kind of drifting now."

Pistons value is declining

Bernacchi said the Pistons need a buyer who's youthful, aggressive and willing to take chances to stimulate a state fan base. Increasing the fan base will be tough with the Pistons' play in decline. They won the 2004 championship and advanced to six straight Eastern Conference finals from 2002-08.

But the core of those teams is slowly being disbanded, with only Tayshaun Prince and Richard Hamilton the primary holdovers. The Pistons are 15-26 this season and 11th in the Eastern Conference. They'd miss the playoffs if the regular season ended today.

Bernacchi predicts the Pistons' value will be considerably less next year because of several factors, one of which is the team's recent lackluster ticket sales. The Pistons' 259 straight sellout streak ended last season, and they are not expected to earn a profit this season.

There are factors around the NBA that also could devalue the Pistons.

Twelve franchises lost money last season, and two years ago, team owners in smaller markets complained to commissioner David Stern they couldn't be profitable unless all teams shared local television revenue.

According to Forbes, Grizzlies owner Michael Heisley saw the value of his team decline 13 percent to $257 million. Bobcats owner Bob Johnson has debts of $160 million and his team is worth $22 million less than the $300 million he paid for it six years ago.

It's even worse in New Jersey. Nets owner Bruce Ratner announced he was moving the team to Brooklyn after buying the team in 2004. That has yet to materialize, and the team now is giving away tickets. The value of the team has declined by $31 million and is expected to be sold to a Russian businessman.

The Pistons' value also might decline, but it'll be worth far more than the $8 million Bill Davidson paid in 1974. Still, sponsorship and attendance is declining.

Who could buy the team?

Red Wings and Tigers owner Mike Ilitch might not have the cash to purchase the Pistons, but one of his options is to buy The Palace and have his Olympia Entertainment run the Pistons for Karen Davidson.

There's been speculation Ilitch will sign a three-year lease to move the Wings to The Palace from Joe Louis Arena until a new downtown facility is built.

"You know the old saying, buy low and sell high?" Bernacchi asked. "The good news for whoever buys (the Pistons) is they can turn the franchise around quickly. The thing is the economy is moving in the right direction and the Pistons are moving in the wrong direction."

To buy the Pistons, an owner needs to come up with 30 percent of the sale price and pro sports leagues normally allow a line of credit of between $125 million and $150 million for assistance. So if the Pistons sold for $400 million, the primary owner would need to pony up $120 million cash. The line of credit could push that figure to $250 million, and the potential buyer would then need to find limited partners to make up the difference.

The NBA has to approve the financial agreement and conduct background checks. Plus, the new ownership group would need two-thirds approval from the league's Board of Governors.

The best option for Karen Davidson could be finding a broker, who would take most of the work out of her hands.

They'd come up with a list price, find potential buyers and do background checks on all of them. Davidson also could appoint a go-between, such as Palace president Tom Wilson, to transfer information back and forth. The brokerage normally takes one percent of the sale price as payment.

Another option is for someone like Wilson to find a group of investors to buy the team. He can deal directly with Davidson and there are no brokerage fees.

Change of scenery

There are a number of NBA teams on the market or considering moving to another city.

Detroit: Owner Karen Davidson said Wednesday she's exploring the possibility of selling the Pistons.

Charlotte: The Bobcats haven't been able to gain traction in the Charlotte market and owner Robert Johnson wants to sell, maybe to part-owner Michael Jordan.

Memphis: Owner Michael Heisley desperately wants to sell but might wait until 2012, when certain attendance and suite benchmarks won't be reached, and move to another city.

Washington: The late Abe Pollin's estate is being appraised, and Capitals owner Ted Leonsis is interested in the Wizards and the Verizon Center if the price is right.

New Jersey: A deal has been brokered to sell the Nets to Russian billionaire Mikhail Prokhorov, who wants to build an arena in Brooklyn, N.Y. We'll see.

Sacramento: The Maloof brothers want a new arena in downtown Sacramento. If not, could the Kings move to Las Vegas?

Golden State: Reports surfaced recently owner Chris Cohan is shopping the Warriors.