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NBA AM: It Gets Worse For The Hawks

As if the story couldn’t get any worse for the Atlanta Hawks, GM Danny Ferry may be in on the way out… The NBA nears new TV rights deal, and a huge change in the salary cap.

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Further Down The Rabbit Hole:  Yesterday in this space we delved into the situation in Atlanta, however with most news stories, as this has evolved a lot of new details have surfaced and more heads may roll in Atlanta as a result.

Majority owner Bruce Levenson has said he will sell his share of the team after an internal memo with serious racial overtones surfaced as part of an internal investigation requested by one of the minority Hawks owners after General Manager Danny Ferry made some racial comments on an ownership call to discuss free agency.

It’s now clear the comments were in regards former free agent Luol Deng. During a June call with owners, Ferry is alleged to have read aloud from an independent report saying Deng “has a little African in him. Not in a bad way, but he’s like a guy who would have a nice store out front but sell you counterfeit stuff out of the back.”

Hawks co-owners Michael Gearon Jr. drafted a letter to his partners in June immediately following the call, expressing grave concern over the glib and insulting comments from Ferry and went on to say that he felt like “Ferry completed the racial slur by describing the player (and impliedly, all persons of African descent) as a two-faced liar and cheat.”

Gearon admitted to having the call recorded for note taking purposes for those ownership members unable to attend, and expressed outrage over how Ferry communicated to the group. Gearon explained in his letter that his group had consulted with two prominent attorneys, including a former judge on the legal impact of the comments. Gearon said after consulting with attorneys he felt Ferry’s comments were more damaging than those of ousted Clippers owner Donald Sterling:

“We believe these comments by Ferry were far worse than Sterling’s because they were not from a private personal conversation – they were in a business environment on a business matter in front of a dozen or more people. If Ferry would make such a slur in a semi-public forum, we can only imagine what he has said in smaller groups or to individuals. We also note that the racial diversity of our management team has changed for the worse since Ferry took over. The media (and any savvy lawyer) would have a field day with that fact.

If Ferry’s comments are ever made public, and it’s a safe bet to say they will someday, it could be fatal to the franchise. All of our partners have worked and spent a lot of money not just to make the Hawks winners, but to make our city and region proud of the organization. As lifelong Atlantans with a public track record of diversity and inclusion, we are especially fearful of the unfair consequences when we eventually get thrown under the bus with Ferry.

We are calling on you, as majority owner and NBA Governor, to take swift and severe action against Ferry. Our advisors tell us there is no other choice but to ask for Ferry’s resignation, and if he refuses, to terminate him for cause under his employment agreement.”

This request was made in June by Gearon Jr. and his partners, and clearly was not taken seriously given that it’s been roughly 89 days and no public action has taken place.

With Gearon’s letter and the full narrative of the situation public, it will be interesting to see what comes next.

The NBA was made aware of Levenson’s e-mail in July; it’s safe to say they were also made aware of Danny Ferry’s comments which prompted the investigation that uncovered Levenson’s e-mail. However, the NBA has not levied any fines or punishments against Levenson, the Hawks or Ferry, despite harsh and immediate action against the ousted Sterling.

The Hawks have said Ferry has been disciplined but have not released what that disciplinary action was.

It will be interesting to see how the NBA responds with so much more detail out in the open.

Levenson has turned over control of the team to Co-owner and CEO Steve Koonin, as the NBA assists the current owners in finding a buyer for Levenson’s shares.

Here is the full text of Gearons letter, as first reported by WSB Channel 2:

To: Bruce Levenson

From: SSG Group, LLC

Date: June 12, 2014

Re: Danny Ferry

As you know, last Friday there was a conference call attended by numerous persons including Hawks management and ownership. We believe that you and Ed Peskowitz were on the call, but we are not sure whether you were listening the whole time. During the call, which was recorded so that notes could be made for our partners unable to participate live, our GM Danny Ferry discussed player personnel issues at some length. With respect to one potential free agent, a highly-regarded African-American player and humanitarian, Ferry talked about the player’s good points, and then went on to describe his negatives, stating that “he has a little African in him. Not in a bad way, but he’s like a guy who would have a nice store out front but sell you counterfeit stuff out of the back.” Ferry completed the racial slur by describing the player (and impliedly, all persons of African descent) as a two-faced liar and cheat.

We are appalled that anyone would make such a racist slur under any circumstance, much less the GM of an NBA franchise on a major conference call. One of us can be heard on the tape reacting with astonishment. Our franchise has had a long history of racial diversity and inclusion that reflect the makeup of our great city. Ferry’s comments were so far out of bounds that we are concerned that he has put the entire franchise in jeopardy.

As a minority partner with no effective say in decision-making, we were somewhat at a loss what to do next. So we consulted this week with two attorneys, one a very well-known and highly respected African-American former judge in Atlanta, and the other a highly regarded employment discrimination lawyer. They confirmed our fears and then some. The former judge put it pretty succinctly, saying that any African-American who heard the comments would interpret them as meaning “all blacks are two-faced liars and cheats.” The employment attorney opined that we as a team face significant exposure, possibly in the courts, but certainly in the court of public opinion, and, as we all know, within the league. She described the possible fallout as “devastating.” We agree.

Bruce, we are all too familiar with the current environment in the NBA and in the country generally from the fallout of Donald Sterling’s offensive comments. You have been on national television condemning Sterling and preaching zero tolerance of racial prejudice. We believe these comments by Ferry were far worse than Sterling’s because they were not from a private personal conversation – they were in a business environment on a business matter in front of a dozen or more people. If Ferry would make such a slur in a semi-public forum, we can only imagine what he has said in smaller groups or to individuals. We also note that the racial diversity of our management team has changed for the worse since Ferry took over. The media (and any savvy lawyer) would have a field day with that fact.

If Ferry’s comments are ever made public, and it’s a safe bet to say they will someday, it could be fatal to the franchise. All of our partners have worked and spent a lot of money not just to make the Hawks winners, but to make our city and region proud of the organization. As lifelong Atlantans with a public track record of diversity and inclusion, we are especially fearful of the unfair consequences when we eventually get thrown under the bus with Ferry.

We are calling on you, as majority owner and NBA Governor, to take swift and severe action against Ferry. Our advisors tell us there is no other choice but to ask for Ferry’s resignation, and if he refuses, to terminate him for cause under his employment agreement.

J. Michael Gearon, Jr.

IN RELATED: Read the E-Mail that started it all from Hawks owner Bruce Levenson

Ferry for his part released a statement his morning via the Hawks, which is as follows:

“In regards to the insensitive remarks that were used during our due diligence process, I was repeating comments that were gathered from numerous sources during background conversations and scouting about different players.   I repeated those comments during a telephone conversation reviewing the draft and free agency process.  Those words do not reflect my views, or words that I would use to describe an individual and I certainly regret it. I apologize to those I offended and to Luol, who I reached out to Monday morning.

In terms of the email that Bruce sent, the situation is disturbing and disappointing on many levels and I understand Bruce’s words were offensive.

I am committed to learning from this and deeply regret this situation. I fully understand we have work to do in order to help us create a better organization; one that our players and fans will be proud of, on and off the court, and that is where my focus is moving forward.”

The New TV Deal:  Yesterday John Lombardo & John Ourand of the Sports Business Journal reported that the NBA and its current broadcast partners were nearing a new multi-billion digital rights deal that could be completed before the start of the regular season.

According to the report, progress has picked up on negotiations with both ESPN and Turner Sports which could yield new six-to-eight year deals, and clock in a combined annual rights fee that averages more than $2 billion per season, a sizable increase from the current deal which brings less than $1 billion annually now.

Some of the details are starting to filter out, and one of which is material as it seems ESPN is trying to block the NBA from spinning up a third slate of games, which many believed was going to land at FoxSports 1. ESPN may have sweetened their offer to keep the NBA away from upstart competitors in the cable space such as FoxSports and NBC Sports, which are clamoring for sports rights and content. The NBA and its current partners have an exclusive negotiating window, blocking others from being at the table.

IN RELATED: The 2014-2015 NBA regular season schedule

It’s been believed for some time that the NBA would be seeing a massive increase in their media rights with some players opting for shorter contracts in efforts to capitalize on what’s expected to be a massive increase in the salary cap in July of 2016.

Current cap projections pegs the salary cap next season to grow from the current $63 million tier it’s at this season, to $66 million next season and jump to as high as $77 to $80 million in the first year of the new TV deal in 2016.

There has been some talk that the payouts on the new media right deal might be slighted more tiered to offset a massive change in the cap landscape. With the likelihood of another labor fight in the NBA in the summer of 2017, the NBA does have to play this carefully as pushing too much of that money to the backend of the deal could make the labor discussions that much harder.

Equally, given that some franchises are still borderline profitable, getting that new cash infusion will be welcomed.

All signs point to a new TV deal soon, and it seems NBA games for the most part are staying where they are on your programming dial.

More Previews Drop:  In case you have missed the here are the 2014-2015 Season Previews for the Milwaukee Bucks, the Philadelphia 76ers, the Orlando Magic and the Utah Jazz. We will be dropping two previews each day all the way up to the start of NBA Training Camps, so stay tuned.

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Steve Kyler is the Editor and Publisher of Basketball Insiders and has covered the NBA and basketball for the last 17 seasons.

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