July 9 (Bloomberg) -- The New York Knicks’ two-year plan to clear salary space in time to woo free agent LeBron James ended in failure after the two-time Most Valuable Player opted to play for the Miami Heat.
James said in a national telecast on ESPN last night that he’ll join Dwyane Wade and Chris Bosh in Florida next season after seven years with the Cleveland Cavaliers.
“If he really wanted a challenge, he should have come to New York,” said Patrick Cumisky, 36, a teacher from Ossining, New York. “Biggest stage, biggest challenge. It’s been sickening, the LeBronathon.”
In April 2008, New York brought in Donnie Walsh as its top executive with a mandate to create enough salary-cap space this offseason to lure a free-agent All-Star such as James or Wade.
The Knicks traded Jordan Hill, Jared Jeffries and Nate Robinson last season, a year after shipping off Tim Thomas, Anthony Roberson and Jerome James. That freed up enough money to sign James and another top-level player. They’ll have additional cap space next year after Eddy Curry’s contract expires.
Yesterday, forward David Lee left the Knicks for the Golden State Warriors in return for Anthony Randolph, Ronny Turiaf, Kelenna Azubuike and others, ESPN reported.
So far, the biggest arrival for the Knicks is Amar’e Stoudemire, who signed for the National Basketball Association team today.
“We are disappointed that LeBron James did not pick the New York Knicks, but we respect his decision,” Walsh said.
The Knicks last won a championship 37 years ago and have missed the playoffs the past six years. Last season, they finished 11th in the Eastern Conference, 32 games behind the Cavaliers with a 29-53 record. They haven’t had a winning season since 2000-01, when they went 48-34 and lost in the first round of the playoffs.
Had James also decided to move to New York, it would be “similar in impact to when Babe Ruth was traded to the Yankees -- the beginning of a championship era in a year or two,” William Sutton, professor in the University of Central Florida’s DeVos Sport Business Management Graduate Program, said in an e-mail.
“The Knicks would become the hottest ticket in town and sponsors and other premium buyers would scramble to secure space in the soon-to-be-renovated MSG,” Sutton said. “The secondary ticket market would be the very definition of a bull market.”
$500 Million Refit
Madison Square Garden is undergoing a more than $500 million facelift. The lower bowl is scheduled to be renovated prior to the 2011-12 NBA season and the upper bowl a year later.
The sports bar Stout, less than a block from the arena, emptied out minutes after James’s decision was made public.
“It’s a shocking day, very, very shocking,” said Michael Bermudez, a 21-year-old New Yorker and lifelong Knicks’ fan. “There would have been a big parade in New York; blue and orange everywhere.”
James was “precisely what the Knicks needed -- an emerging global icon that could help the franchise reclaim its once lofty status,” David Carter, executive director of the Los Angeles-based Sports Business Group, said in an e-mail.
“I was hoping for an upset,” said Alan Lindo, a 28-year-old from Union, New Jersey. “The fact that I bought my season tickets already, that’s the part that kicks me.”
Guille Mendoza, a 24-year-old disc jockey from the Queens borough of New York, was optimistic that the Knicks can add marquee names.
“We still have money to sign somebody else,” he said. “I don’t think all three egos in Miami will help win a championship.”
Madison Square Garden lost $90.2 million in market value yesterday after gaining $98.5 million two days ago on speculation James would choose the Knicks.
Shares in the company fell 5.5 percent to $20.38 in New York. The odds that James would sign with the Knicks sank to 11 percent yesterday from more than 50 percent the day before, according to trading on the prediction market run by Dublin-based Intrade. The Heat was at 68 percent.
Madison Square Garden will have a profit this year of 75 cents a share excluding some items, according to the average of two estimates in a Bloomberg survey. That compares with earnings of 37 cents on the same basis for 2009.
“It’s a disappointment for the company, but earnings will probably still go up regardless of not having LeBron,” said Chris Marangi, an analyst with Gabelli & Co. in Rye, New York who has a “buy” rating on the stock.
To contact the reporters on this story: Nancy Kercheval in Washington at email@example.com; Mason Levinson in New York at firstname.lastname@example.org; Barry Rothbard in New York at email@example.com.
To contact the editor responsible for this story: Michael Sillup at firstname.lastname@example.org