Memphis Grizzlies amend lease through 2029, rid local governments of ticket shortfall clause

The Memphis Grizzlies, the city of Memphis and Shelby County have all come to an agreement that will keep the NBA team competing inside the FedEx Forum through 2029, according to The Daily Memphian and the Memphis Commercial Appeal.

This is noteworthy because the Memphis Grizzlies had a clause in their contract that, if invoked, would have allowed owner Robert Pera to move the team out of Memphis.

With rumors swirling of NBA expansion on the horizon, Pera would have been well within his rights to beat someone else to the punch by moving the team to a more financially lucrative city (i.e. Las Vegas, Seattle).

An early-termination clause in their lease at the FedEx Forum stated the team could break their lease if any of variety of ticket thresholds were not met, characterized as a “ticket shortfall.” It’s reportedly been in place since the team’s 15th season in Memphis.

Here’s how the Memphis Commercial Appeal describes the shortfall:

"A shortfall season occurs under three scenarios, per the lease. The first is if the Grizzlies failed to sell an average of 14,900 tickets per home game. The second is a failure to sell all of the 64 largest suites. And the third is if the number of club season tickets sold is less than 2,500."

In other words, there was a very real possibility the city and county would have had to spend an obscene amount of money to buy up the minimum-required suites and tickets that were not purchased by fans.

There was reportedly a massive shortfall last season, namely due to the Covid-19 pandemic in which there were restrictions and mandates that kept fans out of FedEx Forum and left the area relatively thin on attendance.

Fortunately for the taxpayers, the Grizzlies have graciously offered to accept no payment for last season, according to the Daily Memphian.

You can imagine how many millions of dollars it would cost the local governments to buy up tickets and suites for all the home games. However, the very expensive and open-ended shortfall clause and subsequent exit scenario have now officially been laid to rest.

With this agreement, the ticket shortfall albatross (and subsequent guessing game as to how much the government would have to budget for such a scenario) has been removed from the obligations of the City of Memphis and the Shelby County government.

In its place is an agreement for the city and county to pay a flat rate of $4.95 million per year for four years (beginning with the 2021-22 season). That figure jumps to $6.3 million per year for four years thereafter (ending in the 2028-29 season), according to multiple reports.

Geoff Calkins wrote for the Daily Memphian that he expects the subject of FedEx Forum renovations to come up next, possibly with the (partial) financial help of the Tennessee state legislature.

The NFL’s Tennessee Titans have been lobbying the state government to chip in with renovating Nissan Stadium in Nashville. If the government helps out with a portion of the costs for renovating the football stadium, it “certainly should contribute to keep an NBA franchise here” in Memphis.

The FedEx Forum will turn 20-years old in 2024.