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Friday, January 12, 2001
Schultz has makings of a 'good owner'




Two years ago, Starbucks founder Howard Schultz was casually talking to NBA commissioner David Stern.

"I told him to tell me if the Sonics were ever up for sale to give me a call," Schultz said Friday. "I never expected him to call me back and say 'Are you ready?' "

Stern did exactly that this summer. After talking it over with Starbucks and his family, Schultz officially said "yes" to the question on Thursday.

Make no mistake about it, new Sonics owner Howard Schultz is an avid Supersonics fan and has a serious love of the sport. "I did something like this because I have unbridled passion and enthusiasm for the game," Schultz said.

And that's perhaps the most important ingredient in the makeup of a good owner.

Howard Schultz
Starbucks executive Howard Schultz hopes to have Seattle buzzing over the Sonics.

"If there are 10 parts to a good owner -- it's seven parts passion, two parts money and one part business acumen," said Dean Bonham, chairman of The Bonham Group, a sports consultancy firm. "Owners like Ted Leonsis (of the Washington Capitals) and (the Dallas Mavericks') Mark Cuban first bring a tremendous amount of passion and then comes the fine business sense."

Schultz, who has been the coffee company's CEO since 1987, also has the money part down pat. He reportedly holds 7.8 million shares of Starbucks stock -- which by close on Thursday was worth $345.7 million.

When he began his career at Starbucks in 1982 there were four shops, and it was his vision to expand throughout North America. Today, there are 2,559 stores and the Starbucks name is to coffee what Kleenex is to tissues.

Although most owners are retired and spend the majority of their time with the team as their investment, Bonham said Schultz being an active executive shouldn't be considered a hindrance.

"Tom Hicks has a very successful business as active owner of the Texas Rangers and Dallas Stars and George Steinbrenner used to be involved in other businesses while devoting time to the team." Bonham said.

Schultz actually gave up his CEO duties to Orin Smith last year and that is what enabled him to be part of the Sonics bid group. Schultz said that he will oversee Wally Walker, who will take over the day-to-day operations.

The $200 million price tag might seem low, considering the money-guzzling Vancouver Grizzlies sold for $160 million and the Dallas Mavericks sold for $250 million. But given that other teams are not currently on the market, the Sonics could have sold for more based on the low supply and the high demand.

"It's much like free agency in that the higher price will not necessarily go to the team that is the best, but the team that is available," said David Carter, principal of the Sports Business Group. "So if there were five NBA teams that were up for sale, the market would probably dictate a lower price."

As far as scarcity goes, only the NFL has a better owner retention rate than the NBA. Since January 1995, there have been four team sales in the NFL, while the Sonics sale marks the eighth deal in the same time period. Major League Baseball and the NHL have had nine and 12 sales, respectively, since January 1995.

The deal also includes the Seattle Storm of the WNBA, which at this point has yet to prove itself as a profitable business.

"It's like getting a nice car and then throwing in the floormats," Carter said. "From a financial standpoint (the inclusion of the Storm in the deal) is much less significant than getting a regional television deal done."
ALSO SEE
Starbucks executive set to buy Sonics for $200 million

Payton likes idea of coffee mogul in charge




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