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BALLER R
07-06-2011, 12:24 AM
I keep reading that the nba lost money but they don't say how much each team lost. I mean individually not as a whole. Are there even public records of that out there, because i think it would be nice to know exactly which teams are losing the most and which ones arent.

gerber
07-06-2011, 12:40 AM
this doesn't tell you a lot, just a lil tad bit

http://sports.yahoo.com/nba/blog/ball_dont_lie/post/NBA-owners-make-a-lot-of-money-but-they-spend-a;_ylt=Anf9agX0e3cOBy7JnTnZfWi8vLYF?urn=nba-wp5986

arkanian215
07-06-2011, 03:41 AM
Though NBA franchises’ reported losses are being grossly overstated in part due to commonly accepted accounting rules, expect NBA owners to eventually win this labor dispute versus NBA players, though it may ultimately cost both sides lost games, revenues, and momentum in league-wide interest.

How much money are owners really losing?

The short answer is that no one really knows without having access to each team’s books.

The league contends that 22 of the 30 teams lost money in the 2010-11 season, to the tune of about $370 million per season collectively.

At the beginning of the 2010-11 season I conducted a review of Forbes NBA financials from the last several years and found:

1) In 2008-09, 23 teams’ operating incomes fell by an average of $4 M relative to their 2007-08 position (a cumulative reduction of $85 M). However, aggregate team profits were a $232 M surplus for the 2008-09 season (or $6.3 M per team).

2) Looking at Forbes NBA franchise valuations for the 2009-10 season, aggregate team operating incomes did slip relative to 2008-09 but were still a $183 M surplus (or $6.1 M per team). 17 of 30 teams were losing money, but 11 of the 17 losing money were losing less than $8 M annually.

So though this data does show a recent trend of reduced profitability, it seems like “negotiation grandstanding” on behalf of the owners to suggest that in one season teams collectively went from a $183 M. surplus to a $370 M. loss.

Could creative yet legal accounting methods explain this differential?

In a word, hell yes it could.

Forbes calculates operating income before interest, taxes, depreciation, and amortization. In short, they measure an “operating profit” rather than a “book profit.”

Dating back to the days of eccentric baseball general manager Bill Veeck who introduced the practice, professional sports teams have been allowed under IRS rules to reduce their tax obligation under something called a roster depreciation allowance (RDAs). These RDAs allow pro sports teams to count players as both “direct labor costs” (i.e. team payroll) and depreciable assets. This “double-counting” of players on the expense side of the ledger can turn an “operating profit” into a “book loss.”

Why would teams want to do this? Well, if owners are set up like a partnership or Subchapter S corporation, then the team’s profits or losses are passed onto the owner’s individual income tax returns. So if the RDA accounting practice turns operating profits into book losses, then this can reduce the owner’s personal income tax liability.

This story from Deadspin.com shows financial records for the New Jersey Nets and how teams have used RDAs in the past to legally “cook their books.”

And as wild as this legal accounting practice sounds, this sweetheart deal realized by owners of pro sports teams has actually improved in recent times. Between 1977 and 2004, owners could write off half the team’s purchase price over five years. After tax law revisions were made in 2004, now owners can write off 100 percent of their team’s purchase price over 15 years.

This in mind, this seems the most likely explanation between the aggregate profitability gap between the Forbes estimates and David Stern’s rhetoric. Granted, the NBA at $4 B in revenues per year is nowhere near the financial health of the NFL’s $9 B annually, but the “gloom and doom” battle cry is more reflective of an uneasiness of seeing profits dwindle rather than a fear that half the league is about to go belly-up.

Why NBA owners will win the NBA labor dispute…eventually.

Despite what appears to be an attempt to deceive the player’s association and the public with the true collective profitability of their franchises, NBA owners are likely to be triumphant in the labor dispute that officially began at the stroke of midnight on July 1.

First, the owners have evidence – presumably – that league-wide profits are on the decline…despite the fact that interest in the NBA has skyrocketed since the 2007-08 season which culminated in the Boston Celtics beating the Los Angeles Lakers. When your league has seen declining profits despite amazing increases in ratings and interest, then this isn’t good for the financial health of your league. And it certainly isn’t good information for the players at the bargaining tables.

Second, NBA players relative to NFL players have very little “sympathy factor”. NBA players are the highest paid athletes on average in team sports in the United States, and their contracts are guaranteed. A stark contrast to the non-guaranteed contracts of a football player, as well as lower annual salaries and shorter careers.

Third, similarities with the NHL lockout which cancelled the 2004-05 season entirely. The NHL had no salary cap and poor revenue sharing. Now the NHL is on much more solid financial footing with an improved degree of revenue sharing and a hard salary cap. Additionally, a handful of NHL owners who lived through that lockout have seen the merits of “short-term pain for long-term gain.” Hence, there are some NBA owners that look back to the NHL lockout and think to themselves “Hey, a long lockout eventually corrected the financial model of hockey. Why can’t we stand tall and miss a whole NBA season if push came to shove?”

Fourth, there is no way that NBA players will be able to command anything north of 50% of league revenues when their NFL brethren are likely to only get 48-50% of their league revenues. We cannot ignore the idea that the NFL’s negotiations may shape the tenor of the NBA’s negotiations.

How does the NBA lockout get resolved, and will we miss games?

I’d like to think that NBA Commissioner David Stern and president of the player’s association Billy Hunter have worked long enough together and are bright enough to see that they don’t want to lose the momentum and increased demand for their product created over the last few years where we’ve seen great drama and story lines unfold in the NBA.

But when two sides are this far apart, anything is possible.

Where will the NBA negotiations finally end up?

- Players will agree eventually to a hard cap pegged at 45-48% of basketball-related revenue. Using this logic, teams would face a $64 M salary cap if the league makes $4 B per year and takes 48% of the revenue;

- To resolve the schism between large and small market owners, we’ll see a gradually implemented “revenue sharing plan” that will lend support to “net receivers”…though at the same time making them accountable for spending “shared money” on payroll through a mandated payroll floor to start at $50 M per season. A revenue-sharing system similar to baseball’s 31% of local revenues could be employed eventually, where perhaps in 2012 each team puts 15% of “local revenues” into the pot to be redistributed, followed by 22% in 2013, 28% in 2014, and lastly 31% in 2015;

- To start things off on good negotiating terms, the owners need to back off their current stance and repay current players for the money held in escrow for this past off-season.

Though basketball fans hope and pray that a full-slate of games will kick-off the NBA’s 2011-12 season in the fall, the tenor between the two sides has not been favorable. And the court of public opinion has far less sympathy for NBA players who enjoy guaranteed contracts and who make between twice and three times as much as their NFL compatriots.

If the players aren’t willing to back down in this soon-to-be street fight with NBA owners, expect at best another “lockout shortened” season like the 1998-99 season.

And at worst, the 2011-12 NBA season could join the 2004-05 NHL season in infamy as the only 2 North American sports seasons completed erased by a work stoppage.

The inflated loss estimates make NBA owners look less wealthy than they really are, and serve a dual purpose as a bargaining strategy and public relations ploy.

But even using Forbes estimates (which though not perfect are at least unbiased), collective league profitability has fallen over the last 3-4 seasons.

And when league profitability falls while ratings, interest, and fan momentum are on the rise, this should be a clear signal to players that they have to make major concessions if they wish to be playing the game they love in late October/early November 2011.http://blogs.forbes.com/sportsmoney/2011/07/01/nba-owners-are-inflating-loss-estimates-but-theyre-likely-to-win-labor-battle/

arkanian215
07-06-2011, 03:43 AM
Deadspin.com has gotten its hands on the Nets' books from 2003 to 2006 and offers a fascinating explanation of how a team can claim to be losing money even when it actually makes a profit.

According to the story, the Nets claimed to lose $27.6 million in 2003-04, when the team actually made a profit of nearly $7 million.

The team took advantage of a 1959 law that allowed them to reduce its tax obligation by $25 million under something called the roster depreciation allowance (RDA) which says that players, once signed to contracts, begin to depreciate almost immediately, a little bit like new cars, whose value dips the minute they are driven off the sales lot. According to the story, once you eliminate the $25 million RDA, and add the $9.1 million in tax savings the RDA got them, the team earned about $6.6 million in profit.

Furthermore, after the Nets were sold to developer Bruce Ratner, for whom the team was a small piece of his assets, it becomes even more difficult to figure out whether the team is making money or not, because of the way money can be moved around from the books of one asset to another.

In other words, according to the story, when the NBA owners claim that they are losing money and that is why they are locking the players out, that is not necessarily the case.http://www.nj.com/nets/index.ssf/2011/06/report_says_nets_made_money_in.html

Bornknick73
07-06-2011, 05:42 AM
Im a Union Sheet Metal worker in NYC and the owners of the companies we work for are always crying about losing money but this is what they dont explain.....

They bid a job for 5 million dollars

During the course of the job, expenses or overtime cut into that 5 mil by 200,000.

When the job is completed they still made 4.8 million but will still cry and say they lost money or are losing money.

They still made a huge profit but not the full profit they originally were supposed to make.

You would think they made no money the way they cry.

And thats how a rich man describes losing money.

Law25
07-06-2011, 05:51 AM
Very interesting reads. Thanks

Law25
07-06-2011, 05:52 AM
Im a Union Sheet Metal worker in NYC and the owners of the companies we work for are always crying about losing money but this is what they dont explain.....

They bid a job for 5 million dollars

During the course of the job, expenses or overtime cut into that 5 mil by 200,000.

When the job is completed they still made 4.8 million but will still cry and say they lost money or are losing money.

They still made a huge profit but not the full profit they originally were supposed to make.

You would think they made no money the way they cry.

And thats how a rich man describes losing money.

:clap::clap::clap:

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07-06-2011, 06:44 AM
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desertlakeshow
07-06-2011, 02:19 PM
I don't believe that they lost a dime. Yes everyone is overpaid, but not the point. It is not like basketball will get cheaper for us to watch.

Example: Team owner makes changes to the arena, parking structure, team plane, executive plane, executive lounge and deducts these expenses off of the money made for the year and oops we lost money.

It's all a scam.

Da Knicks
07-06-2011, 02:40 PM
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this is how they lost money? Man they should of held off buying all these things.;)

mzgrizz
07-06-2011, 11:40 PM
http://blogs.forbes.com/sportsmoney/2011/07/01/nba-owners-are-inflating-loss-estimates-but-theyre-likely-to-win-labor-battle/

Thanks for the post