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NBA EUROPE LIVE TOUR MEDIA CONFERENCE

March 27, 2008

THE MODERATOR: I'd like to welcome everyone to the NBA Conference call to announce the NBA Europe Live presented by EA SPORTSTM. Joining us is NBA Commissioner David Stern and EA SPORTSTM president, Peter Moore.
We'll start with opening comments from Commissioner Stern and Mr. Moore, and then we'll open up the call for questions from the media.
COMMISSIONER DAVID STERN: Thank you. This is my great pleasure, first of all, to thank all of who you have taken the time to join us on this conference call, and two, to announce officially that the four NBA teams will tour Europe in October for the third consecutive year as part of 2008 NBA Europe Live presented by our extraordinary partner, EA SPORTSTM.
We will be playing games in Paris, London, Berlin and Barcelona. We will be playing the New Jersey Nets against the Miami Heat in Paris; the Nets again against the Heat in London. In Paris it will be played at the Palais Omnisport Paris Bercy; in London at the O2 Arena. And the Washington Wizards will play the Hornets in Berlin at 02 World and again in Barcelona at the Palau Sant Jordi, which we have also been to many times.
This is going to be a very exciting tour for us because it's the third year that we'll be doing this with our partners from EA SPORTSTM. It brings our total to 48 games over the years playing in Europe, and we now will have ultimately played games in 18 European cities.
We are pleased to do this again in partnership with our friends in the Euro League as we intend to expand the base of fans of basketball throughout Europe, and none of this would be possible without the cooperation and support of the leading video game company in the world, EA SPORTSTM, and it is my great pleasure to introduce Peter Moore, the president of EA SPORTSTM, to make a few comments. Peter?
PETER MOORE: Thank you, David, and thanks again to the folks on the call. As David said, we are in our third year of being the presenting sponsor for this great initiative, and I couldn't be more delighted to work with the NBA. It's a great opportunity for us at EA Sports to help the NBA expand its global footprint and allow the fans of Europe to access to the game of basketball. It's the perfect launch of our vehicle as one of the most important video game practices in the world. We believe this creates an authentic platform for fans of all ages across Europe to enjoy live and real basketball experiences on this very great stage. Obviously David outlined the arenas and what a phenomenal event this will be. Tens of million of fans that like sports video games, gives fans a common culture that transcends language, geography as well as political borders. We are committed, as is the NBA, to globalizing our business. We have enjoyed success with brands like FIFA that globalize our business, but must also continue to globalize our brand with a franchise like NBA Live. This helps us to evangelize one of the world's greatest sports and provide the perfect platform to help us grow in Europe and we couldn't be any happier. Back to you, Commissioner.
COMMISSIONER DAVID STERN: And back to you, Matt. Let me say that first our partnership with the Euroleague, but particularly, our partnership with Electronic Arts, because for us, as the world becomes increasingly digital and as we see our young fans becoming deeply engaged with video games, the partnership with EA takes on an even more importance for us as they seek to achieve increased business and penetration with their leading products in Europe.

Q. The main changes people will see are no training camps, and also that you're not playing Euroleague teams this time. Can you talk about why you made those alterations to the format?
COMMISSIONER DAVID STERN: Well, the training camps, as I mentioned in last year's tour really did not add as much as we thought they would add, other than expense. Our teams were quite concerned about getting in enough training and frankly we just didn't think they were interfacing with the media and the public enough. And so we decided to cut it back to the games themselves, which seem to be the main attraction.
With respect to the Euroleague, you know, we are continually talking to Euroleague about what will be the best format for any particular year. My expectation is that this is just this year, and that when we sit down and talk about what the best way will be for next year, you know, I think we will be playing teams from the Euroleague as part of a mix.
But I think it's fair to say that the various promoters who are putting on the games thought that this year at this time, the most profitable for them would be the NBA teams playing each other and so we acceded to that general direction.

Q. I know the leagues have had some initial discusses with authorities in London about a future All-Star Game, part of the Olympic proposition, do you see that right now?
COMMISSIONER DAVID STERN: I'd like to know who in my organization has been having those discussions and I hope they tell me about it, as well, so I don't know that that's happened.
But I can say that it certainly is subject for discussion. The one thing I can say to you is that a couple of players have said to me, "What do you think, can we do an All-Star Game in Europe?"
And I say, "Anything is possible." And I say that here, anything is possible. But right now, there are no plans currently to expand to play an All-Star Game in Europe. Although I wouldn't rule out the possibility.

Q. Why didn't you select any NBA teams like the Lakers or Portland, or why didn't you play against Spanish teams?
COMMISSIONER DAVID STERN: Well, on the Spanish team, I think we mentioned it, the question is, what our hosts in the Palau Sant Jordi wanted, and I think the best thing here was to continue to follow the lead of our hosts who suggested that it should be NBA team against NBA team.
I must tell you that we believe these games represent us moving past the point of simply having a player from the country in which we are playing. I think that when we bring the New Orleans Hornets who are currently sitting atop our league in first or second place on a daily basis, we are bringing an exciting team. And with Washington, which is also a playoff team, we are bringing a team with Gilbert Arenas coming back, as well; that's going to wow the fans.
So for us, we want to move beyond having to have a particular player from a particular country in a particular game. We think the appeal of our sport is much broader.

Q. I'd like to know, the fact that there will be one game in Paris is a sign towards an NBA franchise here in France and Paris.
COMMISSIONER DAVID STERN: Well, I think it's fair to say that Paris is a very important market for us and the Bercy has been a terrific stand by for us. I think that the arenas of the future are going to follow more closely the model of O2 in London and O2 World in Berlin, which are going to be able to accommodate suites and club suites and restaurants and a much broader list of amenities so the fans can really do more than European fans are used to doing in arenas and can improve the economic model.
But we expect that Paris eventually will be very much a part of any NBA expansion, if, indeed, there is one into Europe.

Q. You are coming to France for the second time, but do you think that Bercy is still adapted to NBA criteria, and do you think in the future, you can commit in France without new arenas?
COMMISSIONER DAVID STERN: Well, we believe that there will be plans eventually, perhaps sooner than later, for new arenas. We have actually been to Paris more than twice, living Donald's championship has been played in Paris before, and Bercy is one of the best-managed buildings in Europe; indeed, in the world, and until there is a more modern building there, Bercy is going to be the building of choice.
But I would think the citizens of Paris will ultimately conclude that a state-of-the-art, world-class building, similar to O2 and O2 World is something that Parisians deserve.

Q. I think I'm right in saying you're English --
PETER MOORE: Thank you.

Q. There's been a lot of talk about European expansion and having four or five teams based in Europe; and EA being one of the most important sponsors in marketing, and knowing a lot about English sport, would you see that being a viable concern in lop done?
PETER MOORE: A couple of things, the globalization of ports is critical. Even though I'm from Liverpool, I'm a huge Boston Red Sox fan and I'm stupid enough to get up at 3 o'clock in the morning to watch games in Tokyo. But I think it's indicative of where sports is going, particularly sports that have such a -- when you think of basketball, it's an incredibly easy game to watch and understand, for anybody, regardless of whether they have ever bounced a ball or not.
You know, I was over there during the NFL expansion attempt at Wembley, and while I love football, American football, it's a little more challenging to be able to globalize the NFL when you think how difficult it would be for people in London to actually play the game or to understand the rules.
But when I think of basketball, I put it right there with soccer as pick up and play, you just need a ball, you need somewhere to be able to get your friends together and play. I think the globalization has become critical for us.
When I think what that means locally to sports, I think basketball has the best opportunity of all sports that have their basis in the United States to be able to globalize its business. You see what the Commissioner has done over his tenure in places like China; the Asian expansion of basketball has been phenomenal. Certainly in southern Europe, I think basketball has had a stronghold for many, many years; and it's 20 years ago I watched Real Madrid and Barcelona play at a very high level.
So we need it to happen for our business. The NBA certainly needs it to do business, and David talked eloquently about digitization, and that becomes critically important, and anybody with a broadband connection can start to experience sports in their own living room and interact with it. I think this is a wonderful development for sport and we could not be prouder to stand alongside the NBA doing it.
I think when you think of whether you could put something in the O2 Arena there, I love the idea, which I missed badly having been in the U.S. for so many decades of European football. I'm from Liverpool, so I'm a big Liverpool fan and it's always exciting when Liverpool plays Manchester United on a Saturday, unlike the last game this weekend.
But how exciting are the European nights when a team comes to Anfield or Trafford. It's that one element missing in American sport, that true international club competition that goes through the season and that really raises the level of excitement. And you know, could you imagine the Miami Heat coming over to play the London, whomever, on a Wednesday night in a critical playoff game. And you know, the Commissioner will shout at me for, this but it's not different flying from Miami to London than it is Miami to Seattle to play the Sonics.
And the globalization of sport and what that does for the fan base and the way it brings people together, it's just a wonderful thing. And I'm a guy that in the 70s was there when Munich would come to Anfield and I can still remember the excitement of those evenings. There's no reason why basketball cannot replicate that in today's age.
COMMISSIONER DAVID STERN: I am not going to yell at Peter; I want to make that clear, first of all.
Second of all, what I want to say is I agree with him. The ease of travel, you know, from Boston to Paris, as opposed to from Boston to Portland, I think Paris is closer. And the reality is, that this whole digital world of ours, which now sees NBA.com on some months getting more visits from outside the United States than from within; when you move to the online gaming which EA is pioneering, you're going to see a much broader community.
And when you combine that with the kinds of buildings that O2 represents, a new standard in European designs, I think that citizens in all leading cities in Europe are going to say: If London can have such an arena, why can't we.

Q. I wanted to follow up the earlier question on Spanish players. You've spoken before about the impact of European players on the NBA. Could you say something about the wonderful stints Pau Gasol had with the Lakers before his injury and the impact he's had on the NBA generally given that Barcelona is one of the key venues of this tour?
COMMISSIONER DAVID STERN: Well, I think that he represents for us as we I guess await his brother, you know, the elite athlete playing basketball at the highest possible level. The Spanish team are world champions. They are led by Pau, but they start five NBA players. The Argentineans are the reigning -- you'll correct me if I'm wrong, are the reigning Olympic champions, and in the upcoming Olympics, they are going to start five players who are NBA players. And actually if France had made the cut, which they didn't, they would be starting five NBA players also.
So for us, Pau represents, in effect, the new breed of international player who not only plays the game, but plays it at the highest all-star level that it could be played.

Q. Obviously you're announcing with this call the European tour, but I understand that you guys are also in talks with another tour of China which would be about the same time in October, and I was wondering if the controversy going on over there surrounding the Olympics is in any way going to affect your decision to go over there or not?
COMMISSIONER DAVID STERN: At the present time the answer to that is it will not. We believe, however, naively, that belief may be executed that sports has something enormous to offer the world. Just as the visit of the Philharmonic around the world has been widely heralded, we think that sports brings people potentially closer together.
And we also believe that the Olympics is a sporting event, and indeed, has a history in ancient times of being a time when war stopped so that people could play together. Even though we are sometimes viewed as the hardened professionals, I must tell you that our view tends to be considerably softer as it relates to the potential for sports to bring people together rather than separate them.
And so as a result, we are working on a post-Olympic Chinese tour that I don't believe is finalized yet, but it is our hope that it will be soon.

Q. I have a question concerning the German market in general. You just mentioned the state-of-the-art venue in Berlin, but how do you see the situation concerning the inceptions of the NBA in Germany in general with the low ratings and difficult negotiations concerning TV rights?
COMMISSIONER DAVID STERN: It isn't the only market in which we have difficult negotiations. We consider ourselves very much a start-up. We recognize that football is the leading sport in Europe. It's what those Americans and some Englishmen like Peter call soccer, but I know it's called football.
I have had the pleasure of being in Berlin, actually, years ago we had Detlef Schrempf and the Indiana Pacers playing, I guess it was the Seattle Supersonics, and that was a long time ago, and we were well-received then.
But we know that we have to develop a fan base, and that's going to take time. And we are not in a hurry. We understand that the viewership of our games is not anywhere near other sports, but we are comfortable that more and more German youngsters are bouncing the ball, as opposed to kicking it, and that will eventually, eventually give us more Dirk Nowitzkis, which is a spectacular addition to our league.
So we are in this for the long run. China which is largely focused as the largest market for us outside the U.S. is a place where we first invited the Chinese national team to be our guests in 1985.
So we have a long time frame and we believe -- that's why in terms of talk about having NBA teams in Europe, we recognize it's a long-term approach, which first needs the buildings that O2 Arena and O2 World represent and then needs us to develop and grow the fan affinity for our sport and then requires us to do an economic mod that he will would satisfy a prospective investor that that is something could work.
We believe this is something that's possible for it to happen over a period of time and we are just not going to set deadlines for it to happen. It's great, and Berlin and its citizens are going to be wowed by the O2 World arena. We have consulted on it. We have approved it for NBA-style play and we think it's a great thing that EA, good is making investment in Berlin as they have already made in London.

Q. I guess if you're a Liverpool fan you probably saw Javier Mascherano screaming at the referee, and so a question to Commissioner Stern regarding referees in the game. There's a very big debate going on in England, can you explain how it works in basketball and the NBA, in terms of the respect for the officials and what penalties can be expected if players don't show the necessary respect?
COMMISSIONER DAVID STERN: Our officials are authorized to assess a technical foul if a player is abusive and that technical foul entitles the offending -- the offended team, in effect, the team that was not abusive, to shoot one basket for one point, a free throw, we call it. Free, because it's not contested. And I would guess about 80 percent of those free throws go in, and our games are often quite close, so technical fouls can make quite a difference.
If the player persists in such conduct, the referee is authorized to assess yet a second technical foul and the player is ejected from the game, and at that point, the player is subject to additional penalty by way of fine or suspension by the league.
So we really, and we implemented somewhat different enforcements about two years ago, which we called respect for the game rules, where we indicated to our players that there would be less tolerance for the continued complaining and arguing that happened. And that really just happens because, my mistake, we allowed it. And finally if a player touches an official advertently, he's going to be ejected from the game and suspended.
PETER MOORE: The game moves so quickly if a player stands and argues, the ball is moved 50 yards up-court. I know the situation at the weekend got so much press with Mascherano, and I felt disgusted as a Liverpool fan that he decided he was going to run 30 yards for an incident he was not involved in, which came out of an incident earlier in the week with Ashley Cole turning his back on the official giving a yellow card.
The only way it's going to be resolved in football is to apply a rugby-type rule where if he continues to argue, the referee can move the ball ten yards closer. Only when it's really punitive will they stop whining and start playing. Clearly it's come to a head; and the disrespect, as a lifelong Liverpool fan, I felt very disappointed.
COMMISSIONER DAVID STERN: I've only been commissioner for 24 years, and the number of times that an official has changed his call because it was berated by a player, now totals none.
So it's not even affected, and so it represents a complete loss of self-control and not representing your team very well.

Q. Regarding the expansion, I know you said you are not setting a deadline on it, but is it realistic that it will happen in the next ten years in Europe?
COMMISSIONER DAVID STERN: Yes. That is sort of an optimistic approach but I've set it out as saying that's something that can happen. We need the buildings. We need the increase in affinity in terms of television. And we need an economic model that works, but I think that in this real age of globalization, we are getting youngsters tuning in to our Web sites from all over the world following our sport, and it's really fascinating to me to see the growth that can possibly come from that.

Q. And similar case for the rest of the world, beyond Europe?
COMMISSIONER DAVID STERN: Yes, but it's different because Europe is probably the most, you know, developed because of our friends in Euroleague and the championships and the like that I think that in terms of ease of travel together with affinity, Europe represents the best case for division. In different cases we may have different approaches like an NBA-sponsored league or an affiliation with our NBA Development League. We have many different ways to approach that.

Q. You mentioned China. How damaging would a boycott be, and are boycotts generally for Olympic games would you say?
COMMISSIONER DAVID STERN: I think in our country it's generally believed that the boycott of the Moscow Olympics and the Moscow boycott of the Los Angeles Olympics were not -- were not effective, and basically penalized the athletes who were all encouraged to spend their times -- and I'm not referring to basketball players now -- but all of the athletes had some personal deprivation, because Olympics are supposed to be a time of coming together; of athletes from all nations and trying to stress their -- what they have in common, recognizing of course as you have to sort of the nationalism that accompanies that with each country and trying to win more medals than the next.
But essentially we drive athletes, especially courage them, support them to do this. And then with a pen, we write away their lifetime ambitions and tell them they will never get that opportunity. So I'm with those who have come to conclude -- however, I might have felt at the time, given a particular conflict, that the Olympics should be above cancellation and boycotts.

Q. Could you tell us reasons you come this year to Berlin besides the new arena, why is it important to be in Berlin and if this will happen in the future again, or is it just a one-time thing this year?
COMMISSIONER DAVID STERN: I think this will happen again in the future. I think that Berlin is a major market for us. Germany is potentially a huge market for us. We haven't been there in a while, and, there is this new arena, which we want to support the opening of very much because we see it as a huge potential for us for playing games in an extraordinary European market.
So I think this will be a real magnet for us to consider Berlin in an ongoing basis.

Q. The question is about the economic model of the expansion in Europe that you have alluded to. In the NBA the last time the NBA was expanded, Toronto invested to pay I think $125 million of expansion fees. What would be the number you would put on an expansion in Europe per team using numbers of today when it comes to expansion fee? And the second aspect of it, how much money do you think a country will have to generate in terms of team licensing fees to be a viable partner?
COMMISSIONER DAVID STERN: That's a good if not premature question. I would add one fact to your question, the last expansion team was actually Charlotte in 2005, which paid $300 million. And I guess in light of the devaluation of the U.S. dollar, we should be able to get substantially more dollars than that amount.
And the model, that I think it's fair to say -- and we've done no projections at this point, because this is a future project, but if teams locally on average can generate $15 million a year from local TV revenue, maybe between 15 and 20. I think we need to develop markets to a place where the country in which a team might be located with the benefit of a team being present, can generate more than $10 million from the market, which is not particularly farfetched given the rise of some of our TV deals with no teams in the market in some cases and in others, it anticipates that we would be developing the market further and that the presence of a team in the market would change the television equation greatly.

Q. The Giants played the Dolphins in the NFL at Wembley, and baseball just played in Tokyo to begin the defense of the World Series; do you see a date in the near future where the NBA will play a regular-season game abroad, hopefully in London?
COMMISSIONER DAVID STERN: Well, you see, those other leagues don't understand the true meaning of friendlies. So we haven't been quite as focused on regular-season games. But I can tell you, we were the first league in 1990 to play regular season games outside of the United States; that being in Japan, and between the Phoenix Suns and the Utah Jazz. And we subsequently opened in Japan, at least, I believe, four or five times beyond that. The last time we played in Saitama Arena.
So we know how to do that, although historically, the economic model has been requiring us to focus mostly on Japan for that. But given the change in economic circumstances, and the new size of the O2 Arena, I think that's a possibility for a regular-season game, if we can model it.
Because it's very expensive; we have to, as baseball did, buy out the regular-season gate, TV, concessions, parking, for two regular-season NBA games, and that's quite expensive for us. And historically, Japan was the only market that could support it, and that's why we did friendlies outside of the United States since then. But I think it's a subject we are going to be revisiting.

Q. How seriously are you considering expanding the league towards Europe and how likely?
COMMISSIONER DAVID STERN: Beauty of what we do is we watch what our fans are doing and what business practices are. If you had suggested to me in 1992 after the Olympics in Barcelona that at this time we would have had as many as 80 international players in our league, I would have said, not possible; the game won't grow that fast.
If you had suggested that we would be in TV in 215 countries in 41 different languages, I would have thought you optimistic. Now that we have played what is our McDonald's Championship in every city from Rome to Madrid to Barcelona to Munich to Paris, Milan, and then have these series of games from the four wonderful cities we're going to; and adding Istanbul and Madrid and Malaga, I think we are just determined to begin to develop the fan base.
And if the fans say yes because they are the new generation that's playing EA games and going to NBA.com and watching our games on television, then it will happen. If they don't, it won't happen.
But given the pace of globalization, I think that's a real possibility, and we are going to follow the developments of the fan affinity for our game.
THE MODERATOR: Thank you everyone for participating the call.

End of FastScripts

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