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View Full Version : Did LeBron's Departure Cost Cavs Owner $100 Million?



knightstemplar
02-19-2011, 04:13 AM
http://www.thepostgame.com/features/201102/did-lebrons-departure-cost-cavs-owner-100-million

By Darren Rovell, CNBC.com

Six years ago, Quicken Loans founder Dan Gilbert bought the Cleveland Cavaliers for $375 million. If Gilbert wanted to sell it today, one sports investment banker, who requested anonymity because he helps clients buy and sell sports teams, told CNBC that Gilbert could get about $275 million for the team.

The price Gilbert agreed to pay in January 2005 was undoubtedly boosted by the fact that hometown boy LeBron James, then in the middle of his second season, was helping to fill up the arena on a regular basis.

James was worth plenty to Gilbert over the next 5 seasons, as average per game attendance was never lower than 18,000 fans per game, a number the Cavaliers hadn't ever achieved before.

But when LeBron "took his talents" to Miami this past summer, he left the cupboard bare. The result? A team that is 10-46 at the All-Star break, thanks to a league record 26-game losing streak. If they lose as many games in the second half of the season that they did in the first half, they'll have their worst season since 1981-82.

The investment banker made the valuation based on projected revenues as well as the team's location in Cleveland. That's why it's so far off from what the Golden State Warriors sold for ($450 million) in July.

Revenues are obviously expected to plummet due to the team's fortunes.

Mark Klang, who says he is the Cavaliers biggest season ticket holder in terms of number of tickets, is predicting that, at best, 50 percent of season ticket holders will renew given the prices the Cavaliers have given season ticket holders for next season.

The prices, which were sent to current season ticket holders in late January, reportedly have been reduced between 0 and 20 percent.

The lower level center court seat, which teams usually don't have a problem selling to corporations, is being reduced from $158 a game to $155 a game. Klang, a ticket broker who says he currently owns 300 season tickets which he pays close to $1 million for, says his lower level baseline seats are being held at $140 each per game. The Cavaliers have more than 100 different price points due to seat location and season ticket holder history.

"Gilbert has that hustler sense to him, that's how he was raised," Klang, owner of Ohio-based Amazing Tickets, told CNBC. "It's tough for him to admit when his product isn't good, so it's just not his mentality to own up to it. He believes there is an entertainment value to the team and there is when they are winning, but there's clearly not when they aren't."

Klang should know. Given the team's performance, Klang says he is lucky to get $40 for a seat he paid $150 for. What he doesn't understand is how Gilbert could not know about what the market demand is, especially when he also owns Flash Seats, an online ticket reseller.

"There were $850 tickets to the Lakers game the other night, which includes food and drink that the Cavs value at $54," Klang said. "They went on his site for $200. And that was a Lakers game."

Cavaliers spokesman Tad Carper said that Gilbert isn't concerned about the one banker's valuation because he is not selling the team anytime soon. Carper said Gilbert also doesn't believe that valuation to be accurate.

Carper also said that the against-all-odds scenario is something Gilbert is used to.

"He guided Quicken Loans through the mortgage crisis and the company now has its highest average loan volume and has increased market share," Carper said. Quicken Loans, the nation's largest online retail mortgage lender, closed a record $29 billion in retail home loan volume in 2010, having recently closed its one millionth loan.

To be fair, this will likely be the highest year of revenues for Gilbert. A center court, lower bowl seat cost $95 a ticket to season ticket holders in the year that Gilbert bought the team. This year that ticket costs $158 a game.

Fans had to purchase their season tickets in March which is typical for the team at the highest prices the Cavaliers had ever charged, so they were locked in by the time LeBron decided to leave in the summer. That's why, despite the Cavs horrible season, announced attendance this year is averaging 20,343 per game, an average only trailing the Chicago Bulls and the Portland Trail Blazers. Then take into account that the Cavs are spending roughly $40 million less due to a reduction in payroll and lack of luxury tax.

There's also an argument to be made that, without his high profile status as the Cavaliers owner, Gilbert would not have gotten approval to build two casinos, along with Penn National Gaming, in Cleveland and Cincinnati. The statewide referendum was passed in November 2009, when Gilbert's popularity was arguably at an all-time high as Cavs owner. The casinos likely will be bigger revenue generators than the Cavaliers will be.

Carper says the Cavaliers have had "incredible fan support in the past and still have that and we want to work hard to continue to earn that."

But Mark Klang says he wants to see further reductions in the price of tickets to reflect the Cavs lack of a good on-the-court product.

"Out of my 300 season tickets, I'll probably renew about 12 for next season at these prices," Klang said. "If they reduced the prices like they should, by 30 to 40 percent, I would probably keep 100 seats."

Dan Gilbert is :mad:

hyb152
02-19-2011, 04:19 AM
Gilbert deserves to lose that money. Lebron > Gilbert

championships
02-19-2011, 04:33 AM
No one will pay those prices next season.

hgtiger32
02-19-2011, 04:59 AM
i know it's the cavs...but doesn't $375 seems kind of cheap?

BaustinSali08
02-19-2011, 05:02 AM
Why would he sell right now anyway? The price is obviously at an all-time low.

Bruno
02-19-2011, 05:02 AM
I'll never feel bad for multi-millionaires who lose money on investments. Dan Gilberts great-grand children will never have to work, regardless of how much the Cavs are worth post LeBron.

The only victims here are the Cleveland Cavs fans (although they did talk a lot of smack the past five years).

Confusious
02-19-2011, 05:05 AM
Just because he left is no excuse to pull out the comic sans font.

Anilyzer
02-19-2011, 05:17 AM
LoL

Lebron left, he freaked out, blamed everybody, hated on Lebron, lost 30 games in a row, and now he is just quitting the NBA all together?

LOL too funny. Like "who needs this damn NBA and The Decision anyway"

Wade>You
02-19-2011, 12:20 PM
It's obvious why Gilbert lost it after The Decision; the value of the franchise went to crap the minute LBJ decided he wasn't going to go back to CLE.

Like Chris Rock said, he could have traded LBJ for anyone. Instead, he's left with the crap the signed to those ridiculous contracts, like Varajeo.

Poor ownership and GM are the reason your favorite team sucks. Quit blaming the system.

daleja424
02-19-2011, 12:25 PM
actually, Lebron cost him over 200 million:


http://www.forbes.com/lists/2009/32/basketball-values-09_NBA-Team-Valuations_Rank.html

according to that link the Cavs were worth 476 million in 2009...

Maybe Gilbert should have taken some of that 200 million and reinvested it in a real team for Lebron....

Dade County
02-19-2011, 12:25 PM
I'll never feel bad for multi-millionaires who lose money on investments. Dan Gilberts great-grand children will never have to work, regardless of how much the Cavs are worth post LeBron.

The only victims here are the Cleveland Cavs fans (although they did talk a lot of smack the past five years).

Lesson here man, I think that guy is a billionaire! I don't feel bad for him for one second.

SteBO
02-19-2011, 12:26 PM
It's obvious why Gilbert lost it after The Decision; the value of the franchise went to crap the minute LBJ decided he wasn't going to go back to CLE.

Like Chris Rock said, he could have traded LBJ for anyone. Instead, he's left with the crap the signed to those ridiculous contracts, like Varajeo.

Poor ownership and GM are the reason your favorite team sucks. Quit blaming the system.
I think it was a game @ New York when Chris Rock said CLE should've traded him to NO for Chris Paul and David West.

justinnum1
02-19-2011, 01:20 PM
Karma

hgtiger32
02-19-2011, 01:32 PM
Karma

oooo boy, here we go...

John Walls Era
02-19-2011, 01:34 PM
Well thats why he was mad, cuz he knew he would lose millions

Gambeezy
02-19-2011, 01:36 PM
I don't doubt that it has cost him much more than $100 million. Not to mention what it will cost him as that franchises ticket sales and value continue to plummet.

justinnum1
02-19-2011, 01:37 PM
It will really hurt him in march when people get asked to renew their tickets and hang their phones up. lol

hugepatsfan
02-19-2011, 01:37 PM
Maybe Gilbert should have taken some of that 200 million and reinvested it in a real team for Lebron....

What would you have done. Boozer left them - not really CLE's fault. The only thing I think you can blame them for is the Jamison trade. The Hughes deal was bad, but if they didn't use that cap space then, they wouldn't have been able to use it ever. The Mo Williams trade was pretty bad too IMO - Delonte West was the perfect PG to play w/ LBJ. They should have focused on adding to other areas.

hyb152
02-19-2011, 03:18 PM
What would you have done. Boozer left them - not really CLE's fault. The only thing I think you can blame them for is the Jamison trade. The Hughes deal was bad, but if they didn't use that cap space then, they wouldn't have been able to use it ever. The Mo Williams trade was pretty bad too IMO - Delonte West was the perfect PG to play w/ LBJ. They should have focused on adding to other areas.

Yeah exactly. There was all that talk at the trade deadline last year about them getting either Bosh or Amare in a trade. What the cavs needed was a post presence. Instead they settled for a shooting guard trapped in a power forward's body, Jamison. Just what they needed right? Another shooter and a better version of Donyell Marshall. Management was terrible. They needed a big man that could actually be productive in a big way like Gasol. 37 year old Shaq, Z, and Varejao wasn't gonna cut it. The cleveland fans have been blaming lebron all this time, but in reality, they should be blaming cavs management and danny ferry for not putting the necessary team together to win a championship. I dont blame lebron for leaving one bit.

hugepatsfan
02-19-2011, 03:21 PM
Yeah exactly. There was all that talk at the trade deadline last year about them getting either Bosh or Amare in a trade. What the cavs needed was a post presence. They needed a big man that could actually be productive in a big way like Gasol. 37 year old Shaq, Z, and Varejao wasn't gonna cut it. The cleveland fans have been blaming lebron all this time, but in reality, they should be blaming cavs management and danny ferry for not putting the necessary team together to win a championship. I dont blame lebron for leaving one bit.

I don't blame Lebron for leaving. I think he handled it like a cowarly *****, but that issue has already been talked about to death.

As for CLE ownership, I agree they didn't put championship pieces around him. They had some good players, but not championship pieces. I think they were too impatient. They were constantly making shortsighted moves to try to please Lebron because they were scared he would leave. In the end, it left them w/ a lot of bad long term deals that screwed them.