pjbooks Chapter 261 The Fans' Carnival
Chapter 261 The Fans' Carnival
Chapter 261 The Fans' Carnival
January 25, 1997, 9:00 AM.
The autumn wind in New York was like a child who hadn't received any candy on Halloween, carrying a resentful chill as it crept into the cracks of Seventh Avenue. In stark contrast, inside the press conference room at Madison Square Garden, the heat was so intense it practically wrinkled the ties of the suited reporters.
Here, we are about to witness a deal in North American sports history that will fill history books with extra lines. When Ralph of Ernst Management Company, on behalf of Ernst, makes the final decision under the spotlight, a deal worth $7.45 million will be officially completed, like the final note being struck.
This contract not only represents a record for the largest team acquisition in North American sports history, but also means that the basketball icon, which is like a city symbol in the hearts of New Yorkers, will henceforth be taken care of by a new owner.
A closer look at the financial structure of this transaction reveals $4.2 million in cash, plus $3.25 million in debt assumption, with the Madison Square Garden property accounting for a staggering 60% of the total.
This figure far surpasses the $2.75 million that the Chicago Bulls were acquired in 1994, and even the $5 million sale price of the Los Angeles Dodgers baseball club at the beginning of the year seems insignificant in comparison.
Of course, what kept reporters' pens busy most in this high-profile deal was the promise made yesterday by Ralph on behalf of Ernst: to spend $3 million over the next two years to renovate Madison Square Garden.
"We will preserve the historical features of this building, after all, it is a symbol of New York basketball, but at the same time we will equip it with the most advanced audio-visual system and create a batch of eye-catching VIP boxes."
Ralf spoke eloquently to the sea of reporters below the stage, as if he already had a renovation plan for the new stadium in mind, which was obviously premeditated.
He then revealed more details he hadn't mentioned yesterday: "The new scoreboard will be three times larger than the current one, so even fans sitting in the last row will be able to see the numbers clearly."
"We also have VIP rooms. We will at least double the number from the current 89 rooms, and expect to have more than 190 rooms."
Furthermore, each VIP room is equipped with a private bar and customized catering services, ensuring guests receive the ultimate in treatment and fulfill all their desires.
"For VIP audiences who want to dance in their private rooms, there will be top-notch sound equipment, as well as facilities such as an arcade and indoor golf."
As soon as these words were spoken, a collective gasp rippled through the audience. One reporter even whispered to his colleague, "This isn't a stadium renovation; it's turning the stadium into a luxury club!"
Before this, there had never been a golf course where you could go clubbing and play golf.
While everyone was still marveling at the VIP suite's amenities, a reporter, unable to contain his curiosity, stood up as if holding a microphone and pressed, "So, what about the renovation costs? Are you planning to take out a loan, or will Mr. Ernst invest directly?"
Ralph glanced at him and, seeing that it was a pro-government media outlet, immediately understood what he wanted to ask.
He cleared his throat and answered calmly, "Mr. Garfield will cover 75% of the renovation costs, and the remaining 25% will come from the New York City government's sports venue subsidy fund."
This is part of New York City Mayor Giuliani's sports revitalization plan, which he has been promoting in recent years. He has been trying to boost New York's economy through the sports industry and has been actively encouraging New York teams to renovate and build larger stadiums.
This will not only create many jobs but also attract more New Yorkers to the stadium to watch games, boosting consumption in the surrounding restaurants, retail, and other sectors.
Prior to this, New York City had already subsidized other New York teams with over $1.1 million to build stadiums, but compared to Madison Square Garden, those subsidies pale in comparison. This time, the subsidy for Madison Square Garden will exceed $7500 million.
"Here, we must express our sincere gratitude to Mayor Giuliani and the New York City government for their strong support."
Ralph then reassured everyone, "Furthermore, we will not be using loans to cover the construction costs of this arena. The reason for this is to ensure that the Knicks do not have too much debt, which could negatively impact the team's future operations."
Everyone knows that the Knicks' core is real estate, but the entire arena was still filled with enthusiastic cheers, as if a flame of passion had been ignited.
Whether they were local New York reporters or Knicks die-hard fans who had been invited, everyone was incredibly excited.
This acquisition of the Knicks was itself a highly leveraged acquisition, with loans accounting for 80% of the total amount.
However, these fans can understand, knowing that most team acquisitions nowadays are done this way, and it's considered standard practice in the industry.
Although the New York Knicks increased their leverage a bit more than the average team, the interest rate was still reasonable and within an acceptable range.
If the Knicks renovate the arena and take out another loan, their debt will skyrocket, and they probably won't be able to afford to invest heavily in the team or bring in good players for the next few years.
Now that Ernst has covered the bulk of the cost, the remaining loan is negligible for the entire Madison Garden Company.
Of course, there were also some difficult reporters. A sharp question from a Chicago reporter caused an uproar: "Mr. Ralph, will the Knicks' high debt affect the team's recruitment?"
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"Although you said the renovation of Madison Square Garden would no longer be financed with loans, the real estate and other fixed assets, as well as the team, belong to two different subsidiaries; they are all under the same company. Aren't you avoiding the main issue and misrepresenting the facts?"
Ralph remained calm. He glanced at the Chicago reporter, then smiled confidently and replied slowly, "It seems I forgot to mention something earlier. From now on, the team's fixed assets and intangible assets will be integrated and will no longer be managed separately by two separate subsidiaries."
After saying that, he pointed to the reporter who asked the question, his tone relaxed, "So, your question isn't a question at all."
"The renovation of Madison Square Garden is a valuable investment in itself. We have done internal calculations and we estimate that after the renovation, the stadium's average revenue per game will increase from the current $120 million to $200 million."
"Furthermore, according to our estimates, the revenue from the stadium renovation, combined with the revenue from naming rights, will generate at least $8000 million in additional revenue for Madison Square Garden annually. This amount will not only be enough to cover debt interest but will also provide the Knicks with sufficient funds to steadily invest in team operations."
But the Chicago reporter clearly wasn't going to let it go so easily. He immediately followed up with an even more pointed question: "We all know that the Knicks' average ticket price last year was $58, which was the highest among all NBA teams, even higher than the ticket price of the Chicago Bulls, a dynasty team."
"Now that the stadium is being renovated, the fees for VIP boxes and regular tickets will definitely increase. Doesn't this mean you only care about the feelings of the wealthy and abandon ordinary fans?"
The atmosphere instantly tensed up again. A flash of fierceness crossed Ralph's eyes, but he quickly regained his smile, though his tone carried a touch of New York arrogance: "Buddy, don't forget, this is New York, one of the highest-income regions in the world. Please don't try to apply your rural, backwater mentality to New York's problems; it's not even on the same level."
As soon as he said that, the audience erupted in thunderous laughter.
Like top cities in all countries, New Yorkers have an unconscious sense of superiority over outsiders.
To New Yorkers, people from other American cities are not much different from people from the countryside.
The Chicago reporter blushed, but Ralph ignored him and gestured to other reporters who were asking questions.
Besides major topics like trade amounts and stadium renovations, what fans are most concerned about is the future of team management and players.
The 1996-97 Knicks had just experienced a heartbreaking Eastern Conference semifinal series. Leading the Heat 3-1 and seemingly poised to advance, they suffered a devastating defeat due to a player brawl that resulted in the suspension of several key players, ultimately costing them the chance to go further.
This team, featuring Ewing, Allan Houston, and Larry Johnson, is still considered by fans and media as one of the strong contenders to challenge the Bulls dynasty.
However, everyone knows that the current Knicks team is still somewhat inferior to the Bulls.
In particular, with the team's players aging more and more, how to solve this problem and how to build a team that truly has the strength to compete for the championship are also issues of concern to everyone.
Will there be any changes in management?
Will the team make any additions to its roster?
Will the key players be traded?
With each new emperor comes a new court, and no one can fathom what the new boss, Ernst, is really thinking.
When pressed by reporters about the management and players' future, Ralf was quite candid. He shrugged and said, "I really don't know about that. As you know, I'm just a gofer. Theoretically speaking, this team has nothing to do with our company now."
This remark made many people in the audience laugh, and the atmosphere at the scene eased considerably.
Ralph added, "However, I can tell you something: Mr. Garfield is setting up a professional sports company, which will definitely improve and adjust the team in a more professional and reasonable way."
After a few seconds of pause, he dropped another bombshell that sent the crowd into a frenzy: "But he did mention to me that he hopes the Knicks can win the championship within three years of him taking over, or at least make it to the Finals."
The reporters in the audience immediately erupted in excitement, their pens flying across the paper, all eager to record this major news as soon as possible.
As soon as the press conference ended, Ralph's remarks at the conference seemed to sprout wings and quickly made headlines in major media outlets.
Knicks fans were ecstatic upon hearing the news. Many felt that Ernst's arrival might be the Knicks' hope for building a dynasty, and everyone began to look forward to a bright future for the team.
What these fans don't know is that the owner, whom they have high hopes for and regard as the founder of the Knicks' rise, is secretly undermining the Knicks' foundation.