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daleja424
10-04-2011, 10:53 AM
This is one of the things that has bothered me the most about these negociations... people forget all about the equity being built up by the teams.

Lets use the Warriors as an example:

The Warriors were purchased in 1995 for 119 million dollars.
The Warriors were sold in 2010 for 450 million dollars.

Even if the owner had to spend 10 million out of pocket every year to keep the team running (which is not the case AT ALL) the owner still got a HUGE return on his investment when he eventually sold.

How can that be ignored?

One argument that I have heard is that finding a buyer is hard so the equity doesn't mean much. Well I just wanted to go ahead and dismiss that right off. Finding a buyer is not that hard at all according to the Golden State Study (where the previous owner recieved 5 offer of more than 400 million).

likemystylez
10-04-2011, 10:59 AM
This is one of the things that has bothered me the most about these negociations... people forget all about the equity being built up by the teams.

Lets use the Warriors as an example:

The Warriors were purchased in 1995 for 119 million dollars.
The Warriors were sold in 2010 for 450 million dollars.

Even if the owner had to spend 10 million out of pocket every year to keep the team running (which is not the case AT ALL) the owner still got a HUGE return on his investment when he eventually sold.

How can that be ignored?

One argument that I have heard is that finding a buyer is hard so the equity doesn't mean much. Well I just wanted to go ahead and dismiss that right off. Finding a buyer is not that hard at all according to the Golden State Study (where the previous owner recieved 5 offer of more than 400 million).

I know of atleast 3 finalists, one of which was larry ellison. Another interesting point on the sale of the warriors- There was a plethora of rumors that The highest bidder didnt even get the team.

The warriors are a team that has been managed horribly, and they were able to turn that type of profit.... I would have to assume that a team that built any kind of winning tradition or even play off tradition wouldnt have a problem at all selling for a profit.

To get to the point though- the 300 million dollars in losses are usually considered operating loss (You have heard organizations talk about operating in the red). Usually equity isnt considered in that, but its clearly a huge consideration while purchasing a team.

daleja424
10-04-2011, 11:11 AM
That is my point though.

I understand that they don't consider equity... my question is why not...

The owner of the Warriors made 300+ million dollars by sitting on a below average team for 15 years... and we are suppose to feel bad for him b/c he may have had to spend a little out of pocket the last couple years to cover some team debt. Really?

asandhu23
10-04-2011, 11:19 AM
Cohan was a douche

beasted86
10-04-2011, 11:21 AM
Because it's probably not considered equity. For accounting purposes they likely report the difference as accounts payable (a debt) the team took on. This is why it would seem very easy to hide profits and make it look like they are taking a loss home each year... But I don't have access to their financial records, so I'm merely speculating.

daleja424
10-04-2011, 11:31 AM
And I am not even talking about why the owners don't report it...

I am talking about why NBA fans, reporters, and players don't call them out on it...

likemystylez
10-04-2011, 11:32 AM
Because it's probably not considered equity. For accounting purposes they likely report the difference as accounts payable (a debt) the team took on. This is why it would seem very easy to hide profits and make it look like they are taking a loss home each year... But I don't have access to their financial records, so I'm merely speculating.

Yes- but why are all the owners just starting to cry about it this year? I mean- why would they pick the one year when the league was doing so well. I would assume if the owners are greedy enough to be shady- why would this be the first time in recent history when the owners are saying they are suffering so much?

beasted86
10-04-2011, 11:38 AM
And I am not even talking about why the owners don't report it...

I am talking about why NBA fans, reporters, and players don't call them out on it...

They do. I've read others, but here is one from Larry Coon on ESPN:


The two sides do agree on something -- the league really is losing money. But that's where the agreement ends. The league points to losses of $370 million (audited), $340 million (audited) and $300 million (estimated) over the preceding three seasons, and has shared its certified financial statements with the players to prove it. It's all kosher according to generally accepted accounting practices (called GAAP), and much of it represents money going out the door on an annual basis -- the cost of running the league.

The players contend that the league is more profitable than it has led us to believe, and say that certain categories of expenses should be excluded from these discussions. One of these is the interest payments on debt used to finance franchise purchases. It is common for some of the purchase price of teams to be financed, and the interest on this debt counts toward the team's bottom line. According to union president Derek Fisher, this interest totaled $130 million in 2010-11, and none of it should be the players' problem. Just as players aren't entitled to share in the profits when a team is sold, neither should they be saddled with expenses related to buying the team in the first place.

The players say that if you remove the expenses that don't apply to them, the losses are closer to $100 million than $300 million, and seven to nine teams, rather than 22, are really struggling. The players' proposals have reflected this interpretation.

http://espn.go.com/nba/story/_/page/lockout-110916/why-owners-win-lockout

daleja424
10-04-2011, 11:43 AM
I have seen that before. I have also seen some pieces that expose the side business that NBA teams allow guys to run (like the huge Brooklyn project).

...but that doesnt even express my position to its fullest... which is that in reality...all operating income shortcomings should fall on ownership... that is the cost of being an owner. And the reward is the ability to make millions when you sell down the road.

asandhu23
10-04-2011, 11:49 AM
Btw warriors is a bad example. It's a mediocre team in a huuuuuuge market which can get bigger if kings leave for la

daleja424
10-04-2011, 11:52 AM
How is it a bad example? Compare any NBA team's current value to the value it had in 1995 and you will see the same thing... it has at least tripled over the last 15 years.

daleja424
10-04-2011, 11:56 AM
Heck, even look at the Milwaukee Bucks (The lest valued franchise in the NBA)...

They were reportedly worth 150 million in 2000, and are now worth 260 million.

(And they were bought 25 years ago for 19 million... I think increasing your money by a factor of 14 in 25 years is pretty good...)

Shmontaine
10-04-2011, 12:01 PM
something called loans...

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Golden-State-Warriors_324799.html

the warriors were purchased with a 41% debt. 184.5 million in debt loans that need to be paid... so while an owner 'owns' the GSW, they own it just as much as the average man 'owns' their home... they have to pay the banks interest and that 184.5 mil just keeps adding up to more and more...

so, while i understand what your saying, it's not as clear cut as you make it seem... the actual money made per year that new owners are seeing isn't the exorbitant amount that, say the owners make who bought their teams in the 80's for 10-20 million are getting...

daleja424
10-04-2011, 12:04 PM
something called loans...

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Golden-State-Warriors_324799.html

the warriors were purchased with a 41% debt. 184.5 million in debt loans that need to be paid... so while an owner 'owns' the GSW, they own it just as much as the average man 'owns' their home... they have to pay the banks interest and that 184.5 mil just keeps adding up to more and more...

so, while i understand what your saying, it's not as clear cut as you make it seem... the actual money made per year that new owners are seeing isn't the exorbitant amount that, say the owners make who bought their teams in the 80's for 10-20 million are getting...

Yes, but no. B/c they claim the loan debt as operating expenses and the players pay for it with BRI. I would agree with you if the interest payments were coming out of the owners pockets...but they are not...

So the owners get to claim interest on the books, but say nothing about equity accrued. So if an owner buys a team for 300 million... he pays the principle and the team's books get saddled with the interest.

Shmontaine
10-04-2011, 12:06 PM
Heck, even look at the Milwaukee Bucks (The lest valued franchise in the NBA)...

They were reportedly worth 150 million in 2000, and are now worth 260 million.

yes, worth 260 million... if and when they get sold... for a per year gain of 9.1 million... just as much as the mid level talent makes in the nba... does that seem right to you??


(And they were bought 25 years ago for 19 million... I think increasing your money by a factor of 14 in 25 years is pretty good...)

nobody is arguing the fact that the owners who bought teams in the 80's are golden now... the sport exploded exponentially in the 90's and there are only a handful of owners from that era still around.. new owners pay a lot to get a team and get loans for 100+ mil in order to do so...

Shmontaine
10-04-2011, 12:09 PM
Yes, but no. B/c they claim the loan debt as operating expenses and the players pay for it with BRI. I would agree with you if the interest payments were coming out of the owners pockets...but they are not...

So the owners get to claim interest on the books, but say nothing about equity accrued. So if an owner buys a team for 300 million... he pays the principle and the team's books get saddled with the interest.

well, that's the disparity in this CBA, isn't it... the players don't think the 'losses' are real because of what you mentioned... the owners claim it as a common accounting practice accepted across all businesses..

and the players salaries are increasing with the value of the teams and sport right?? so aren't they getting gained 'equity' as well??

daleja424
10-04-2011, 12:10 PM
Yes, I think making 9 million a year to do nothing but sit on a low-to-no risk investment is DAMN GOOD!

Kevj77
10-04-2011, 12:11 PM
The Maloof brothers were on Larry King last year and talked about this very thing. They said it was actually easy to lose money in a given year. Perhaps as easy as one bad contract. The actual value was in the franchise itself because it gains in value over time, but to realize it you would have to sell.

Also there is a group of owners who paid in the 300-400 million dollar range recently that haven't seen that kind of increase in value yet, but have lost revenue yearly and they are part of the hardline owners group.

daleja424
10-04-2011, 12:11 PM
well, that's the disparity in this CBA, isn't it... the players don't think the 'losses' are real because of what you mentioned... the owners claim it as a common accounting practice accepted across all businesses..

and the players salaries are increasing with the value of the teams and sport right?? so aren't they getting gained 'equity' as well??

no...b/c the players money is based on BRI... completely seperate concept than team value (ie exquity)...

likemystylez
10-04-2011, 12:14 PM
Yes, I think making 9 million a year to do nothing but sit on a low-to-no risk investment is DAMN GOOD!

owners didnt become billionaires by settling for what was "damn good"

beasted86
10-04-2011, 12:15 PM
something called loans...

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Golden-State-Warriors_324799.html

the warriors were purchased with a 41% debt. 184.5 million in debt loans that need to be paid... so while an owner 'owns' the GSW, they own it just as much as the average man 'owns' their home... they have to pay the banks interest and that 184.5 mil just keeps adding up to more and more...

so, while i understand what your saying, it's not as clear cut as you make it seem... the actual money made per year that new owners are seeing isn't the exorbitant amount that, say the owners make who bought their teams in the 80's for 10-20 million are getting...
You and I don't know how those figures are calculated unless we had all the financial statements and balance sheets. That site lists a debt of 38% for the Miami Heat even though they've had the same owner from the jump.

likemystylez
10-04-2011, 12:16 PM
LOL- Just heard a funny on TV. heres the solution guys. Allow current players on a team to purchase equity (Become partial owners) of the team.

daleja424
10-04-2011, 12:17 PM
owners didnt become billionaires by settling for what was "damn good"

they also didnt become billionaires by spending irresponsibly...yet they have done that too. I guess owning an NBA team isn't strictly business. ;)

likemystylez
10-04-2011, 12:18 PM
they also didnt become billionaires by spending irresponsibly...yet they have done that too. I guess owning an NBA team isn't strictly business. ;)

tu she

Rivera
10-04-2011, 12:24 PM
to be fair (i dont know the exact numbers) all the new owners who recently bought teams do not have the equity

DALEJA to use your example of the warriors...jacob lacey bought it for 400 mil he doesnt get the 300mil equity the previous ownership got...whether he lost money this past season or not im not sure

another example...abe polin...hes a relativley new owner he bought the team for x amount of dollars but abe wasnt around when the owners re collectively bargained for a new CBA (i want to say 99) and abe lost money this past season with the wiz. abe hasnt been around long enough to recieve the equity the washington wizards franchise has built over the years

as far as a team like the bucks (im not sure BUT i think they have had the same owner for years now) yes...the bucks built up tons of equity from when the owners first bought it...but now that the nba is loosing money on yearly operations that also affects the Bucks and there equity

and to be fair none of the owners will touch this equity they have built up with there franchises until they sell...which brings up another question

if the nba franchises are loosing money and NBA owners know this and the NBA owners that have been around for a long time...why havent they sold there franchises to get out of a bad situation and leave with the amount of equity built up over the years? its only smart business if a sector of a business (ie the NBA) is doing bad in business you would sell and get the most out of your franchise...this is no seceret the NBA was soon going to start loosing money on day to day operations and if small market teams complained they should have sold when the NBA was still good and making money to leave with the equity they have built up for the franchise

id imagine it hasnt been reported because its not like owners can touch the equity (aka the money) thier franchises have built up in there time period as an NBA owner...if you cant touch the money until you sell why would you report it to the nba fan base?

your trying to get more money and you need leverage in a negotiation

daleja424
10-04-2011, 12:30 PM
Yes, but I assume that these billionaires are familiar with how investments work. You do not put in money one day and have it doubled the next day. If investments worked like that everyone would be a billionaire. There are two very simple principles that I am sure they are all very well aware of:

1. Investments take time to mature. The value of an NBA team goes up... always has... but it takes time. They cannot honestly expect to make money on their investment right away.

2. If you get in on the ground floor of an investment the return is bigger. Guys that owned NBA teams 20 years ago have seen value increases of 10x and larger. These guys that are buying now are not going to see that same kinda money and they should know that.

Shmontaine
10-04-2011, 12:30 PM
Yes, I think making 9 million a year to do nothing but sit on a low-to-no risk investment is DAMN GOOD!

i understand where your coming from, and i don't necessarily disagree with you here... but what company do you know of where almost 20% of the employees make more than the owners...

there are 61 players slated to make 9+ mil in '12... this is what the owners see, and they don't like it... they're trying to push the pendulum back in their benefit more so than the players..

daleja424
10-04-2011, 12:32 PM
i understand where your coming from, and i don't necessarily disagree with you here... but what company do you know of where almost 20% of the employees make more than the owners...

there are 61 players slated to make 9+ mil in '12... this is what the owners see, and they don't like it... they're trying to push the pendulum back in their benefit more so than the players..

What other company do you know of that makes 4 billion dollars annually with a work force of 450 employees?

Look at it this way... in a traditional business model does the owner usually make 55% of the generated income? I highly doubt it...

beasted86
10-04-2011, 12:42 PM
What other company do you know of that makes 4 billion dollars annually with a work force of 450 employees?

Look at it this way... in a traditional business model does the owner usually make 55% of the generated income? I highly doubt it...

Many companies sell merchandise marked up well over 55%...

Anyway at the end of the day, the owners have not been responsible in how they spend their money regardless of where the split is. That's why it seems they aren't just looking at a bandaid fix where they will stop losing money. If that's all they wanted, the negotiations would have been much easier and we'd have an NBA season started already. They instead want clear cut ensured profits no matter how bad they mess up for the next 10 years.

Rivera
10-04-2011, 12:42 PM
Yes, but I assume that these billionaires are familiar with how investments work. You do not put in money one day and have it doubled the next day. If investments worked like that everyone would be a billionaire. There are two very simple principles that I am sure they are all very well aware of:

1. Investments take time to mature. The value of an NBA team goes up... always has... but it takes time. They cannot honestly expect to make money on their investment right away.

2. If you get in on the ground floor of an investment the return is bigger. Guys that owned NBA teams 20 years ago have seen value increases of 10x and larger. These guys that are buying now are not going to see that same kinda money and they should know that.

you hit the nail on the head and at the same time answered your own question in that sentence....this is why owners are insistent on a NEW CBA to lower salaries for players to help there investment and get a greater return from there investments

lets say owners get what they want and they drastically lower players salary by 50% (just throwing a number out there) not only would owners get an immediate return (even though they would still have to pay the actuall salary until the expiration I THINK) when the NEW CBA expires not only did they cut salary but there investment has matured over the years yielding the owners a greater return...and more equity to their nba franchise

daleja424
10-04-2011, 12:44 PM
Many companies sell merchandise marked up well over 55%...

Anyway at the end of the day, the owners have not been responsible in how they spend their money regardless of where the split is. That's why it seems they aren't just looking at a bandaid fix where they will stop losing money. If that's all they wanted, the negotiations would have been much easier and we'd have an NBA season started already. They instead want clear cut ensured profits no matter how bad they mess up for the next 10 years.

Yes...but then that money is split up to pay non production operating costs and employees... I doubt that there is any successful company in which the owner is pocketing half of the revenue.

daleja424
10-04-2011, 12:45 PM
correct... so we are in agreement that owners are just being unrealistic and greedy...

likemystylez
10-04-2011, 12:48 PM
Yes...but then that money is split up to pay non production operating costs and employees... I doubt that there is any successful company in which the owner is pocketing half of the revenue.

the little ghetto ice cream guy at the flea market??

Shmontaine
10-04-2011, 12:51 PM
What other company do you know of that makes 4 billion dollars annually with a work force of 450 employees?

I'm sorry if you think the entire workforce of the NBA is 450 people... that simply not true...

the nba league offices employ 750-1000 employees... and each team had upwards of a hundred employees to do the daily tasks of management, ticket sales, travel, food preparation, etc...


Look at it this way... in a traditional business model does the owner usually make 55% of the generated income? I highly doubt it...

it's the players who make 57% of the income, the owners get 43%... and what traditional business do the employees get 57% of generated income??? it goes both ways...

Shmontaine
10-04-2011, 12:55 PM
correct... so we are in agreement that owners are just being unrealistic and greedy...

I've never stated that the demands of the owners realistic and not greedy... i simply believe they have all the power and backing of the big money (espn, tnt, nike, adidas, etc.) and they will get the revisions they seek, much more so than the players...

and at the end of the day, everyone will be rich... so i don't feel sorry for anyone... all the money that everyone makes in the nba is unrealistic to me..

daleja424
10-04-2011, 12:56 PM
I'm sorry if you think the entire workforce of the NBA is 450 people... that simply not true...

the nba league offices employ 750-1000 employees... and each team had upwards of a hundred employees to do the daily tasks of management, ticket sales, travel, food preparation, etc...



it's the players who make 57% of the income, the owners get 43%... and what traditional business do the employees get 57% of generated income??? it goes both ways...

Those other employees are not the reason why the NBA makes 4 billion though which is why I wasnt talking about them

Also, I said owners with 55% bc that is what they are asking for

Rivera
10-04-2011, 01:01 PM
correct... so we are in agreement that owners are just being unrealistic and greedy...

im halfway with you...yes owners are greedy....unrealistic? im not so sure about that...i dont think what the owners want or to attain is unrealistic espcecially if the players bite...yes the set there bar high but any owner of any business is supposed to set the bar really really high

also take into account the "new" owners...they dont get the equity built up by the previous owner...jacob laceys equity stats at 0....the number he starts with is 400 mil...at the end whatever the equity of the warriors amount to when lacey decideds to sell the team gives you your +/-

i wish i knew the exact number of "new" owners...and when i mean new id say the past 2 or 3 years because there the ones that could be loosing money and equity from a) bad contracts by previous owners b) the market c) the economy

when the last cba was made the nba just came off of the jordan era and ALL owners made crazy cash...there was a down time from when jordan left to when lebron came in the league where the league was dead, and not making as many profits as they did previously...


my problem is the nba owners dont learn and they seem to be going in circles....did any of them learn from the previous cba? from the previous lockout? NBA just came off the jordan game...the shot on byron russel the peak...which led to all the bad contracts...but the lockout tuned out tons of fans that were watching when jordan was there and a lot of them didnt start coming back until now....the nba just came off its most intriguing season since the jordans last shot (thats how i want to remember jordan not with the wiz) and now there gonna lock themselves out again and again there gonna loose tons of fans again...i hope the upcoming season is as interesting as this past season because if its not its gonna take at least 5 years for fans to comeback and re embrace the nba again...others will never come back...the nba owners are playing with fire

Shmontaine
10-04-2011, 01:06 PM
Those other employees are not the reason why the NBA makes 4 billion though which is why I wasnt talking about them

Also, I said owners with 55% bc that is what they are asking for

well yeah, but when you talk about movie production, you don't just look at the cost of the actors, even though they are the reason for the popularity... there is a lot of work that goes into an nba season, and even though the players are the ones who bring in the business, the business still has to be brought in, and that takes a lot of people and work. are the players going to make the phone calls to sell season tickets? prepare the courts and arenas for play, etc??... i know it sounds trivial, but those are jobs that have to be done...

Shmontaine
10-04-2011, 01:10 PM
im halfway with you...yes owners are greedy....unrealistic? im not so sure about that...i dont think what the owners want or to attain is unrealistic espcecially if the players bite...yes the set there bar high but any owner of any business is supposed to set the bar really really high

also take into account the "new" owners...they dont get the equity built up by the previous owner...jacob laceys equity stats at 0....the number he starts with is 400 mil...at the end whatever the equity of the warriors amount to when lacey decideds to sell the team gives you your +/-

i wish i knew the exact number of "new" owners...and when i mean new id say the past 2 or 3 years because there the ones that could be loosing money and equity from a) bad contracts by previous owners b) the market c) the economy

when the last cba was made the nba just came off of the jordan era and ALL owners made crazy cash...there was a down time from when jordan left to when lebron came in the league where the league was dead, and not making as many profits as they did previously...


my problem is the nba owners dont learn and they seem to be going in circles....did any of them learn from the previous cba? from the previous lockout? NBA just came off the jordan game...the shot on byron russel the peak...which led to all the bad contracts...but the lockout tuned out tons of fans that were watching when jordan was there and a lot of them didnt start coming back until now....the nba just came off its most intriguing season since the jordans last shot (thats how i want to remember jordan not with the wiz) and now there gonna lock themselves out again and again there gonna loose tons of fans again...i hope the upcoming season is as interesting as this past season because if its not its gonna take at least 5 years for fans to comeback and re embrace the nba again...others will never come back...the nba owners are playing with fire

i gotta disagree with you on this... the last cba was a double whammy. it was part because of the lockout, but IMO more to do with jordan retiring.. there were just so many fans who were drawn to him and when he left, coupled with the lockout, it really did some damage to the league... today, i think the league will be just as popular as ever even with a shortened season...

Rivera
10-04-2011, 01:17 PM
i gotta disagree with you on this... the last cba was a double whammy. it was part because of the lockout, but IMO more to do with jordan retiring.. there were just so many fans who were drawn to him and when he left, coupled with the lockout, it really did some damage to the league... today, i think the league will be just as popular as ever even with a shortened season...

there were still stars....kobe , shaq, AI, kg, payton, marbury, etc stars make the league and the last lockout left a lot of bad taste in peoples mouths...

also the most dominant team during the "dead' period of the nba was the LA Lakers (one of the biggest NBA markets) led by the games 2 biggest SUPERstars KOBE AND SHAQ but yet the NBA still couldnt benifit because they lost a lot of fans due to the lockout...

a lot of fans turned out and simply didnt care because of the nba lockout

this past season was probably the most intriguing with all the moving parts and in part of a "super team" and people wanting to see them fail was a huge part of the return of popularity to the NBA...

if the heat win the championship in a lockout shortened season (AND BE HONEST)

a) do you think most nba fans in general (of course not heat fans) would care?

b) now that miami has there chip the people who tuned in to see this team fail wont even watch anymore because they finally won

beasted86
10-04-2011, 01:37 PM
well yeah, but when you talk about movie production, you don't just look at the cost of the actors, even though they are the reason for the popularity... there is a lot of work that goes into an nba season, and even though the players are the ones who bring in the business, the business still has to be brought in, and that takes a lot of people and work. are the players going to make the phone calls to sell season tickets? prepare the courts and arenas for play, etc??... i know it sounds trivial, but those are jobs that have to be done...

You can't really compare movie production and professional sports though. A movie is based on somebody else's story or book, another guy's screenplay and script, another guys CGI & special effects... all of these matter more than just the actor. You could put Will Smith in Battle: Los Angeles and it would have still flopped hard. In the NBA the players are the product.

But if we are looking at all the various reasons a team can operate (ownership, ticket sales, arena workers, etc..) citing the players as only one piece of the puzzle, we have to look at it the same way in terms of losses created.

The Philadelphia 76ers likely paid 3 different head coaches last season: Maurice Cheeks (signed extension 2008, fired 2009), Eddie Jordan (hired 2009, fired 2010), and Phil Collins (present head coach). I'm entirely certain that those contracts were all reported in the balance sheet leading to the financial statement claiming the 76ers loss money last season. The blame for this money contributing to the owner's loss is 100% fault of the owner himself, but the giveback is only being taken from the players in the new CBA.

This is basically the balance point of this whole negotiation process. How much are the owners really losing? How much blame should be placed on the system? This is the entire makeup of why the players don't want to budge further.

ChiSox219
10-04-2011, 01:53 PM
Heck, even look at the Milwaukee Bucks (The lest valued franchise in the NBA)...

They were reportedly worth 150 million in 2000, and are now worth 260 million.

(And they were bought 25 years ago for 19 million... I think increasing your money by a factor of 14 in 25 years is pretty good...)

The owner of the Bucks had to take a $55 million loan from the NBA last year so...

Kevj77
10-04-2011, 02:29 PM
something called loans...

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Golden-State-Warriors_324799.html

the warriors were purchased with a 41% debt. 184.5 million in debt loans that need to be paid... so while an owner 'owns' the GSW, they own it just as much as the average man 'owns' their home... they have to pay the banks interest and that 184.5 mil just keeps adding up to more and more...

so, while i understand what your saying, it's not as clear cut as you make it seem... the actual money made per year that new owners are seeing isn't the exorbitant amount that, say the owners make who bought their teams in the 80's for 10-20 million are getting...Wouldn't debt allow them to actually make money on their money. Totally hypothetical, but if they can get a low interest rate like say 4-5% and these extremely smart businessmen could get 7-8% interest on that 184.5 million they retained in cash it would be a net gain correct? It's like me having 300,000 dollars in the bank and wanting a 300,000 dollar house. Would I pay cash or finance as much as I could under those circumstances? I'd finance as much as I could.

Shmontaine
10-04-2011, 02:53 PM
Yes, but no. B/c they claim the loan debt as operating expenses and the players pay for it with BRI. I would agree with you if the interest payments were coming out of the owners pockets...but they are not...

So the owners get to claim interest on the books, but say nothing about equity accrued. So if an owner buys a team for 300 million... he pays the principle and the team's books get saddled with the interest.

sorry i missed this earlier... but since when do the players pay any nba related expenses??

Rivera
10-04-2011, 03:15 PM
The owner of the Bucks had to take a $55 million loan from the NBA last year so...

you completley missed the point or are misinformed

the loan for the bucks had to cover operating expenses....the equity of the bucks went down because of this loan...but the owner cant pull out the 200 million dollars (random number) from the "equity account" to pay for expenses...it doesnt work like that at all

the bucks owner still has made money and the equity of the franchise has grown considerably since he has been owner

daleja424
10-04-2011, 04:52 PM
sorry i missed this earlier... but since when do the players pay any nba related expenses??

They pay them all... b.c. they are the source of the 4 million in BRI. Owners do not pay for things out of pocket like everyone seems to believe. The only time an owner actually has to spend his own money is when he irresponsibly spends the BRI created by the players.

Bruno
10-04-2011, 04:57 PM
Good point Daleja.

Shmontaine
10-04-2011, 04:57 PM
They pay them all... b.c. they are the source of the 4 million in BRI. Owners do not pay for things out of pocket like everyone seems to believe. The only time an owner actually has to spend his own money is when he irresponsibly spends the BRI created by the players.

oh, got it... and here i thought we were trying to have a real conversation... you're right, the players should own the league... :rolleyes:

it was going so well for a little while...

Bishnoff
10-04-2011, 05:43 PM
Sarver's got no hope of selling the Suns for more than what the group of investors that he represents paid.

ChiSox219
10-04-2011, 06:06 PM
you completley missed the point or are misinformed

the loan for the bucks had to cover operating expenses....the equity of the bucks went down because of this loan...but the owner cant pull out the 200 million dollars (random number) from the "equity account" to pay for expenses...it doesnt work like that at all

the bucks owner still has made money and the equity of the franchise has grown considerably since he has been owner

if you are losing $50 million in a year and increasing equity by ~$10 million, how is that coming out ahead?

daleja424
10-04-2011, 06:22 PM
if you are losing $50 million in a year and increasing equity by ~$10 million, how is that coming out ahead?

except the average team doesn't lose 50 million a year. In fact, teams have only been losing money the last couple years...and it was an average of less than 10 mil per team.

daleja424
10-04-2011, 06:23 PM
oh, got it... and here i thought we were trying to have a real conversation... you're right, the players should own the league... :rolleyes:

it was going so well for a little while...

my point is simply that people act like owners take money out of pocket to pay for all this stuff, when in reality it is paid for by the revenues generated by the sport...

ChiSox219
10-04-2011, 06:41 PM
except the average team doesn't lose 50 million a year. In fact, teams have only been losing money the last couple years...and it was an average of less than 10 mil per team.

My point is, many teams do lose money and have lost equity over the recent years. I assume owners want both trends to stop.

daleja424
10-04-2011, 06:42 PM
My point is, many teams do lose money and have lost equity over the recent years.

That is incorrect. Even the worst teams have still continued to build equity.

Some lose money... but those teams are mismanaged... especially if they continue to lose money with a new revenue sharing plan.

ink
10-04-2011, 06:46 PM
my point is simply that people act like owners take money out of pocket to pay for all this stuff, when in reality it is paid for by the revenues generated by the sport...

Not if there is an operations shortfall. That's the whole point of the deficit problem they're claiming ... and they have been backed up by formal audits in the last 2-3 years. They're talking about losing money with the actual running of the corporation.

Franchise value is not actual until they sell, and even then it's not like someone just puts $300 million in your bank account.

These guys are rarely speculators right? i.e. they don't buy the franchises to flip them like people in real estate. They buy them to own them and run them. While they are doing that they are either profitable or not. If they're not, it's not because they're saying the franchise value is dropping. They're saying that their operation is losing money on an ongoing basis.

Franchise value and cost of operations are two different issues.

ChiSox219
10-04-2011, 06:54 PM
That is incorrect. Even the worst teams have still continued to build equity.

Some lose money... but those teams are mismanaged... especially if they continue to lose money with a new revenue sharing plan.

Ok, Memphis

They lost over $40 million in equity since the financial meltdown, in that same period they have lost over $40 million in EBIT.

They also just had a great playoff run with most of the players they had under contract over that period of time ~5 years.

beasted86
10-04-2011, 07:01 PM
My point is, many teams do lose money and have lost equity over the recent years. I assume owners want both trends to stop.

Did they really lose equity or did they lose over-inflation?

If someone bought a house for $300k in 2003 that was worth $150k in 1999, they didn't lose equity when their house was valued at $180k in their 2007 appraisal, they overpayed due to inflation.

ink
10-04-2011, 07:11 PM
Did they really lose equity or did they lose over-inflation?

If someone bought a house for $300k in 2003 that was worth $150k in 1999, they didn't lose equity when their house was valued at $180k in their 2007 appraisal, they overpayed due to inflation.

Problem with that analogy is that it's not real estate, it's an active, day to day business operation.

beasted86
10-04-2011, 07:21 PM
Problem with that analogy is that it's not real estate, it's an active, day to day business operation.

No NBA team has lost equity only gained. Anything that was lost was over-inflation. Inflation should only be 3-4% while many teams value have been increasing at a 6-10% rate over the past decade.

justinnum1
10-04-2011, 07:23 PM
inflation

daleja424
10-04-2011, 07:28 PM
Not if there is an operations shortfall. That's the whole point of the deficit problem they're claiming ... and they have been backed up by formal audits in the last 2-3 years. They're talking about losing money with the actual running of the corporation.

Franchise value is not actual until they sell, and even then it's not like someone just puts $300 million in your bank account.

These guys are rarely speculators right? i.e. they don't buy the franchises to flip them like people in real estate. They buy them to own them and run them. While they are doing that they are either profitable or not. If they're not, it's not because they're saying the franchise value is dropping. They're saying that their operation is losing money on an ongoing basis.

Franchise value and cost of operations are two different issues.

I know they are seperate issues. I just dont know how they can ask players to pay interest on their loans and get no benefit that ownership has on resale. Players are being asked to fund team purchases but not get any stake in the team.

can you explain that for me?

Voodoo Alchemy
10-04-2011, 08:17 PM
That is my point though.

I understand that they don't consider equity... my question is why not...

The owner of the Warriors made 300+ million dollars by sitting on a below average team for 15 years... and we are suppose to feel bad for him b/c he may have had to spend a little out of pocket the last couple years to cover some team debt. Really?

don't hate the owners for building equity in a team. why would that be any different than a homeowner or business owner building equity?

Bramaca
10-04-2011, 08:24 PM
I know they are seperate issues. I just dont know how they can ask players to pay interest on their loans and get no benefit that ownership has on resale. Players are being asked to fund team purchases but not get any stake in the team.

can you explain that for me?

Every business claims interest on loans as an expense, it is a cost of doing business. If an owner of a business isn't making enough money to cover their costs then there are two things they can do; somehow increase revenue without increasing any costs, or cut costs.

Increasing revenue without increasing costs is difficult and would directly affect fans since they would be paying a lot more. The other choice is to cut costs, so where do you start.

- loans, well those are pretty much set and there isn't a lot you can change about that
- coaching, scouting, front office staff and expenses. Many teams have already done this but it will only get you so far
- travel and hotels, once again this is pretty much a set cost and I think that chartered flights and a certain level of hotel is required in the CBA. Although I suppose the owners could ask the players whether they are willing to fly coach on commercial flights and stay in motels instead. Think the players would go for that?

So when there is only so much you can do with the above expenses where do you think the owners are going to look? The 12-15 players on their team that take home 57% of the revenue. I have heard you say how the owners need to reign in their expenses and be responsible, well this is them doing it by addressing their single biggest expense - players salaries.

I'll answer your question with one of my own. How can the players justify exempting a cost of business that every company in the world uses?

Voodoo Alchemy
10-04-2011, 08:32 PM
Every business claims interest on loans as an expense, it is a cost of doing business. If an owner of a business isn't making enough money to cover their costs then there are two things they can do; somehow increase revenue without increasing any costs, or cut costs.

Increasing revenue without increasing costs is difficult and would directly affect fans since they would be paying a lot more. The other choice is to cut costs, so where do you start.

- loans, well those are pretty much set and there isn't a lot you can change about that
- coaching, scouting, front office staff and expenses. Many teams have already done this but it will only get you so far
- travel and hotels, once again this is pretty much a set cost and I think that chartered flights and a certain level of hotel is required in the CBA. Although I suppose the owners could ask the players whether they are willing to fly coach on commercial flights and stay in motels instead. Think the players would go for that?

So when there is only so much you can do with the above expenses where do you think the owners are going to look? The 12-15 players on their team that take home 57% of the revenue. I have heard you say how the owners need to reign in their expenses and be responsible, well this is them doing it by addressing their single biggest expense - players salaries.

I'll answer your question with one of my own. How can the players justify exempting a cost of business that every company in the world uses?

well said from someone who's been in business.

the other point i want to make is owners know their hard line costs. if they give into the players, teams wont be able to pay player salaries and you have the nba taking over teams like mlb did to a storied franchise like the dodgers.

Bramaca
10-04-2011, 09:14 PM
No NBA team has lost equity only gained. Anything that was lost was over-inflation. Inflation should only be 3-4% while many teams value have been increasing at a 6-10% rate over the past decade.

The Bobcats sold last year for $25 million less then what they were bought for 6 years previous as well as losing tens of millions operating the team over that time.

If Cuban tried to sell the Mavs right now they would have to sell for close to $700 million just for him to break even on what he bought them for and the losses he has incurred since.

Anilyzer
10-04-2011, 10:24 PM
This is one of the things that has bothered me the most about these negociations... people forget all about the equity being built up by the teams.

Lets use the Warriors as an example:

The Warriors were purchased in 1995 for 119 million dollars.
The Warriors were sold in 2010 for 450 million dollars.

Even if the owner had to spend 10 million out of pocket every year to keep the team running (which is not the case AT ALL) the owner still got a HUGE return on his investment when he eventually sold.

How can that be ignored?

One argument that I have heard is that finding a buyer is hard so the equity doesn't mean much. Well I just wanted to go ahead and dismiss that right off. Finding a buyer is not that hard at all according to the Golden State Study (where the previous owner recieved 5 offer of more than 400 million).

The owners are just being deceitful and tgrying to maximize. I thought tat Malcol Gldwell article was spot on.

The operating losses not only include interest payments, but in addition everything is tx deductible. In corp accounting, all expense come directly off thebottom line isn't taxed. This is worth its wait in gold.

For me, the Clippers are the poster boys for pure profit. They pay low salaries, don't care about being successful, and they suck value from the league by getting top lottery picks and equal shares of TV revenue. And the value of the team is kept articially low, but if it was to be sold, slap a coat of pain.t on it, and you can say it's as valuable as the Lakers.

And of course, the deal wil be partof some stadium deal with tax breaks etc, so even is capital gains is 10x they all just cash in for free. All this, all this advertising, evrything, has NOHING to do with sports or bball

Voodoo Alchemy
10-05-2011, 12:37 AM
The owners are just being deceitful and tgrying to maximize. I thought tat Malcol Gldwell article was spot on.

The operating losses not only include interest payments, but in addition everything is tx deductible. In corp accounting, all expense come directly off thebottom line isn't taxed. This is worth its wait in gold.

For me, the Clippers are the poster boys for pure profit. They pay low salaries, don't care about being successful, and they suck value from the league by getting top lottery picks and equal shares of TV revenue. And the value of the team is kept articially low, but if it was to be sold, slap a coat of pain.t on it, and you can say it's as valuable as the Lakers.

And of course, the deal wil be partof some stadium deal with tax breaks etc, so even is capital gains is 10x they all just cash in for free. All this, all this advertising, evrything, has NOHING to do with sports or bball

it doesn't matter if you're a corp, llc, llp or sole, operating costs are all tax deductible. i'm not giving you a lesson in tax law.

how can the clippers be pure profit? if they don't put out a good brand of basketball, you don't sell tickets. it's the most basic and rudimentary concept in business: you have to spend money to make money.

as far as owners being deceitful, that depends on who you ask. it's no one's business how much they profit. that's like a customer demanding to see walmart's balance sheet. walmart turns a profit, customer buys for less, both sides win.

lakers4sho
10-05-2011, 12:55 AM
There are also externalities towards the fans.

FelixMillan
10-05-2011, 06:35 AM
All this franchise talk makes me realize that I'm not a New York Knicks fan. I'm a fan of the NBA League and follow one of it's franchises. It's akin to rooting for the McDonalds franchise on 85th street as opposed to the McDonalds franchise on 7th street. At the end of the day the Knicks, Bulls, Lakers, Celtics etc. are all really one big team.....One big company....

likemystylez
10-05-2011, 10:05 AM
All this franchise talk makes me realize that I'm not a New York Knicks fan. I'm a fan of the NBA League and follow one of it's franchises. It's akin to rooting for the McDonalds franchise on 85th street as opposed to the McDonalds franchise on 7th street. At the end of the day the Knicks, Bulls, Lakers, Celtics etc. are all really one big team.....One big company....

hmmm... LOL most people are fans of one organization. Casual fans like the whole league... but IM not sure its even possible to passionately root for all 30 teams to win each night

Shmontaine
10-05-2011, 10:59 AM
my point is simply that people act like owners take money out of pocket to pay for all this stuff, when in reality it is paid for by the revenues generated by the sport...

didn't owners take money out of their pocket to buy the team? does that mean nothing? some owners have put hundreds of millions of their own money into purchasing a team... how much money do the players put into the sport?? maybe there should be an entrance fee for the players into the nba...

there are fresh players coming into the league every year. there will always be new players who would fight to be in the nba.. if the players think they are the sport, they are mistaken... when they leave, the sport will still be here... and the nba will market whatever the best talent they have as the best, and people will watch...

beasted86
10-05-2011, 11:14 AM
The Bobcats sold last year for $25 million less then what they were bought for 6 years previous as well as losing tens of millions operating the team over that time.
6 years ago overinflation was at his highest. Anything purchased in any market in the US from 2002-2005 you more than likely overpaid.


If Cuban tried to sell the Mavs right now they would have to sell for close to $700 million just for him to break even on what he bought them for and the losses he has incurred since.

Mark Cuban has consistently kept a high payroll in an attempt to win a title. A lot of his "losses" are from poor business decisions, such as paying Brendan Haywood $55M to be a backup.

beasted86
10-05-2011, 11:24 AM
didn't owners take money out of their pocket to buy the team? does that mean nothing? some owners have put hundreds of millions of their own money into purchasing a team... how much money do the players put into the sport?? maybe there should be an entrance fee for the players into the nba...

Because anyone puts hundreds of millions of dollars into something doesn't grant them assured success. Because Kevin Costner put hundreds of millions into "Waterworld" didn't make it any better of a movie.

Overall it seems you are largely mistaken on how a business model works, and that it takes smart business decisions to make money as there are teams who are earning a profit under this supposedly broken system with overpaid players.


there are fresh players coming into the league every year. there will always be new players who would fight to be in the nba.. if the players think they are the sport, they are mistaken... when they leave, the sport will still be here... and the nba will market whatever the best talent they have as the best, and people will watch...

And there will always be an NBA even without Dan Gilbert or Robert Sarver. If not them, someone else. The NBA just bought a team, so it actually has no owner right now.

Shmontaine
10-05-2011, 11:35 AM
Because anyone puts hundreds of millions of dollars into something doesn't grant them assured success. Because Kevin Costner put hundreds of millions into "Waterworld" didn't make it any better of a movie.

Overall it seems you are largely mistaken on how a business model works, and that it takes smart business decisions to make money as there are teams who are earning a profit under this supposedly broken system with overpaid players.

so which is it?? they don't put money into the profitability of the game, or they do, but that doesn't mean they should still make money?? funny how the players have the only guarantees is this whole thing...

and i understand business just fine... i understand that an owner of a business is allowed to restructure their own business as they see fit... which is what the owners are doing, and it doesn't have to be seen as fair to employees (see wal-mart & ups)... sorry if you believe in gumdrops and fairytales, the real world is much more unfair..


And there will always be an NBA even without Dan Gilbert or Robert Sarver. If not them, someone else. The NBA just bought a team, so it actually has no owner right now.

umm... is there an nba right now?? no, because the owners closed it down... if gilbert and sarver sell their team, then they are no longer owners... until then, they are part owners of the game...

and NOLA is owned and supported by the rest of the owners, which is why Cuban wanted to void the trade that NOLA made last year, saying they didn't have the right, essentially because he was now part owner of NOLA...

Bramaca
10-05-2011, 12:10 PM
6 years ago overinflation was at his highest. Anything purchased in any market in the US from 2002-2005 you more than likely overpaid.

The reality is that he lost money and lost equity when he sold. Your position that no team has ever lost equity is complete crap and overinflation is not a defense for that.


Mark Cuban has consistently kept a high payroll in an attempt to win a title. A lot of his "losses" are from poor business decisions, such as paying Brendan Haywood $55M to be a backup.

So, in order to win an owner in a large market like Dallas has to overspend so much that it is unlikely that he will ever get the money back that he has put into it. How much would an owner in Milwaukee have to lose in order to have a chance to win? That is a broken system that needs to be fixed which is why we are where we are.