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daleja424
10-17-2011, 07:30 PM
On Election Night in 2009, Dan Gilbert threw a late-night party on the practice court inside Quicken Loans Arena. The extravagance in the room called to mind a mob-movie wedding reception, complete with live music, roaming waiters and five-star cuisine served on fine linens.

Gilbert was floating, and not because, after a disconcerting 0-2 start, his Cavaliers had just secured their first win of the season.

The game was hardly the day's main event.

Before he arrived at the party, Gilbert was watching election returns on a TV in his luxury bunker down the hall from the Cavs locker room. He enlisted some of the team's ball boys to help him prepare a water cooler. He used the back elevator, with the cooler hidden under a towel. Then he doused his campaign manager as soon as the victory became official.

That night, Ohio voters passed Issue 3, which was a measure to amend the state constitution to allow four casinos to be built. Gilbert, set to own two of them, and a casino company poured $35 million into the project and ran an intense and wide-ranging campaign. With victory secured, they were on the road to a windfall that some estimate could be in the billions.

With his tie ditched and his beautifully-cut blue blazer picking up champagne stains, Gilbert worked the room and hugged business associates. Cleveland mayor Frank G. Jackson, who had won re-election that night himself, took a detour from his personal celebration to stop in and make sure he got in on the photo op. Several Cavs players and members of the team's management, some of whom had personally worked the campaign trail for Gilbert, milled about.

LeBron James was invited but wasn't there, though his presence hung in the room. After casino measures had failed four times over the previous 18 years in Ohio, Gilbert had pulled the sword from the stone with an all-encompassing deal that essentially gave him and his partners a monopoly on gambling in the state. He got there with an attractive plan and timing, plus his personal sterling reputation in Ohio.

But mostly he got there on the back of the massive popularity of the Cavs at the time, which of course was powered by James.

Gilbert was a success story and a business leader before he bought the team. He's generally known as being a good boss and a forward thinker. He's certainly had his detractors, and there have been a few personal and business relationships that ended both badly and publicly. But then what self-made billionaire doesn't have a few scars? They were just lines on Gilbert's face as he'd steamed ahead, the continuing conqueror.

At the time, James and Gilbert weren't enemies. They were still on the same team and occasionally James even sought Gilbert's advice on investments or other business matters. Now, of course, they publically exchange zingers without actually using each other's name. They're even more ruthless in private matters, neither passing up a chance to grate the other if possible.

As the 2009-10 season opened, James was well aware that July 1, 2010, was going to be a huge moment in his career. For Gilbert, the big event was that referendum, which passed thanks in part to the popularity James brought the Cavs and Gilbert.

No matter what James and the Miami Heat accomplish in the future -- even if they end up making Gilbert eat his infamous words guaranteeing a Cavs title before there's a single parade held for the Heat -- Gilbert's business victory has already been assured.

James has left the Cavaliers, but his seven seasons with the team played a valuable role in likely making sure Gilbert will become a permanent fixture on the Forbes 400 list -- where he currently ranks 293rd at $1.5 billion, higher than at any time when James was an employee.

To be clear, Gilbert had always been confident he would convince James to re-sign. All the way up until the two had their last conversation on July 3, 2010, when the Cavs made what they certainly believed was a great pitch to secure a contract extension.

Gilbert is both an unrelenting optimist and someone who has reason to expect things to go well. He sold his online mortgage company in 1999 for $532 million, then bought it back three years later after the tech bubble burst for $64 million and turned it into a cash cow. And that's just one story.

So despite conviction that James wasn't leaving home, Gilbert and his partners found a hedge. The need for such thinking hit Gilbert hard after James requested just a three-year contract from the team starting in 2007 instead of the five-year deal that was offered (they settled on a three-year deal with a player option for a fourth). Gilbert raised a glass to celebrate that deal at the time. But it also caused an organizational stutter-step that called for some long-term planning in both basketball and business operations.

On the court, the Cavs ended up spending tens of millions more than was planned, quickly ditching the organization's mantra that it could win big without becoming a luxury tax payer. This was perhaps what James wanted, for the team to feel urgency. The Cavs sold every seat season after season and landed a rich local cable deal, but they operated in the red as Gilbert kept green-lighting moves that added costs. No team in the league traveled, ate or was pampered better than the Cavs. By James' last season, seven players on the team were earning $8 million or more.

When the 2009 election arrived, which came on the heels of the mortgage crisis that hit Gilbert's core hard, he was committed to spending more than $100 million in salary and luxury taxes for the upcoming season -- more than the New York Knicks, more than the Los Angeles Lakers.

James, meanwhile, had turned down a nine-figure contract extension offer. His relationship with Gilbert, once rather close, had deteriorated. Was that natural? Was that just proper? Was it part of a plan that James' personal team implemented in preparation to leave? To this day, Gilbert must wonder. Regardless, in early 2009 he was already swinging for the fences business-wise just to make sure the whole thing didn't turn sour. Gilbert didn't get his championship. His $100 million ended up buying a bitter second-round loss. James was gone. Gilbert and his fans were devastated. But not before he'd hit a business grand slam.

In 2005, Gilbert bought the Cavs for $375 million -- a premium price for the team former owner Gordon Gund had bought 20 years earlier for $20 million. Looking at that transaction now, it doesn't seem like it was a great investment on the surface for Gilbert.

Teams in larger markets like Philadelphia, Detroit and Atlanta have recently sold for less money. James' departure in free agency directly led to a last-place finish for the Cavs in 2010-11. Attendance, sponsorships and merchandise sales are all expected to follow suit. Forbes estimated the Cavs' 2011 value at $355 million, though Gilbert would honestly have a hard time finding a buyer at that number if he wanted to at the moment.

Gilbert is fond of saying that owning an NBA team alone doesn't make a lot of fiscal sense. In interviews over the years he's compared buying a team to owning a rare piece of art. He is fond of talking about what he calls "threads" that come with such ownership. These threads are offshoots from the centerpiece, the team, that create value and make the investment worth making.

In his first few years of owning the Cavs, Gilbert started unspooling these threads. His mortgage company bought the naming rights to the arena and put the logo on the floor for all the national television games the Cavs played when James was on the team.

He bought Fathead, a company that sells sports-themed wall graphics. He promptly plastered hundreds of them around the arena in addition to ramping up the national advertising campaign. He bought a company that enabled the Cavs to get in on the secondary ticket market, a first in the NBA, and then sold the service to other NBA teams. Now he owns a ticket services company that operates electronic ticketing, as well.

No thread, though, is greater than the downtown Cleveland casino Gilbert is building. When it is completely finished it will literally be attached to the Cavs. A walkway will connect the arena and the casino, where fans will be able to park and walk to the game past the gaming tables and slots. The more fans that attend Cavs games, the more people there will be in the casino on game nights.

Park in the casino, have dinner there, walk into the arena past the slots and blackjack tables, stop at a bar in the casino for a nightcap on the way out after you walk past the slots and tables again. Or stop by before or after watching the Cleveland Indians, who play next door. You don't need an MBA to understand the business plan.

Threads everywhere, most of them leading to profit.

The Cavs aren't the only team to use such leverage. Just last month the Orlando Magic won approval to purchase land around their new downtown arena to develop a retail complex that promises to earn millions in upcoming years. The Orlando Sentinel called it a "sweetheart" real estate deal that upset competitors. The Magic might as well call it a thread.

It's not all just public projects. Houston Rockets owner Leslie Alexander's venture capital company got the chance at some Chinese IPOs after he drafted Yao Ming. Mark Cuban was a billionaire before he owned the Dallas Mavericks but that purchase made him a famous billionaire and opened the door to numerous other projects including a television career and a movie production company. There are numerous other examples and none of that scratches the surface on the taxpayer dollars that have built the arenas that teams play in.

All a great use of threads, Gilbert would say.
http://espn.go.com/nba/story/_/id/7097067/nba-cleveland-cavaliers-good-business-dan-gilbert

This on the heals of very similar stories emerging around the country...

To me, it seems very slimy to me for an owner to complain about a 10 million dollar surface loss when they are dealing with hundreds of millions (and often billions) in side deals that hinge on that very same NBA franchise. There is little doubt in my mind now that the owners are working out way ahead of the curve for investing in the NBA...even if the immediate books don't show it.

Tom Stone
10-17-2011, 07:59 PM
Yup your defiantly paid to fight that side of the argument or have an invested interest in this.....Your trying way too hard......and it reeks of desperation.

daleja424
10-17-2011, 08:14 PM
huh? The article was posted on ESPN and it popped up on my twitter...

do u have an opinion on it...or do you just want to be a jerk?

PlezPlayDKnicks
10-17-2011, 08:49 PM
Yup your defiantly paid to fight that side of the argument or have an invested interest in this.....Your trying way too hard......and it reeks of desperation.

And your fighting him just as hard to validate your feelings for a hard cap. We understand how bad you want a cap.

Fnom11
10-17-2011, 08:49 PM
Yup your defiantly paid to fight that side of the argument or have an invested interest in this.....Your trying way too hard......and it reeks of desperation.

You, you're definitely paid to fight that side of the argument or have an invested in this.....You're trying way too hard and it reeks of desperation.

Edit that into your post please.

beasted86
10-17-2011, 09:04 PM
I don't really get the point of this.

It's been clear for a while owners separate their outside business gains (even based on ownership of the team) from their actual basketball accounting. They aren't using capital from their team ownership to fund those outside expenditures, so there's nothing wrong with this as far as accounting is concerned. Even if they advertise their own outside company in the arena, the two separate corporations conduct it as a business transaction and it's accounted as such. Fathead would right a check to the Cavaliers.

Bramaca
10-17-2011, 09:09 PM
http://espn.go.com/nba/story/_/id/7097067/nba-cleveland-cavaliers-good-business-dan-gilbert

This on the heals of very similar stories emerging around the country...

To me, it seems very slimy to me for an owner to complain about a 10 million dollar surface loss when they are dealing with hundreds of millions (and often billions) in side deals that hinge on that very same NBA franchise. There is little doubt in my mind now that the owners are working out way ahead of the curve for investing in the NBA...even if the immediate books don't show it.

You have to learn how to seperate. These businesses are not a part of the NBA. Sure, as the writer said, owning the Cavs really helped grease the wheels but it is a seperate business. If the NBA is not making money then the players salaries have to fit within that reality, which they currently don't.

Don't the players also benefit through massive endorsment deals (that have a lot more to do with the NBA then the businesses in the article) and connections in business and media for current and future opportunities that they never would have had without the NBA.

There are 'threads' for the owners and the are just as many 'threads' for the players. Its not slimy, its taking advantage of opportunities. Where are the articles about how Barkley got a easy job as a tv analyst due to his involvement in the NBA.:rolleyes:

sixer04fan
10-17-2011, 09:16 PM
You do understand that the financial losses associated with the lockout are completely separate issues than what this article talks about, right?

In my eyes, this weakens your case. Sorry.

ink
10-17-2011, 09:44 PM
http://espn.go.com/nba/story/_/id/7097067/nba-cleveland-cavaliers-good-business-dan-gilbert

This on the heals of very similar stories emerging around the country...

To me, it seems very slimy to me for an owner to complain about a 10 million dollar surface loss when they are dealing with hundreds of millions (and often billions) in side deals that hinge on that very same NBA franchise. There is little doubt in my mind now that the owners are working out way ahead of the curve for investing in the NBA...even if the immediate books don't show it.

Read it again, it says that by far the biggest profit-maker is a casino. They're not "side deals", they're business developments. The guy is an astute business man no matter how much you want to hate him. You can't fault a guy for making money with his business ventures. The POINT is that the BRI is a money loser. Nothing in the article really supports what you're saying.

daleja424
10-18-2011, 08:41 AM
I read it just fine. It said that he would not have been able to get approval for the casino project without Lebron and the Cavs. It also says he is linking the project directly to his arena to further generate profit.

I understand these are seperate things and they are not on the NBA books, but that is my point. There is a ton of business that is done, and a ton of money made, indirectly on the Cavs. So even though those profits do not show up in the books, they still exist. Dan Gilbert would not be in the middle of a multi billion dollar casino project if he wasn't the owner of the Cavs...

My point is simply this... He is making million and millions of dollars on the side using the Cavs name and brand... so I find it cheesy that he is complaining about a few million in losses.

Just because the NBA books say the Cavs are costing him money doesn't mean it is the truth, since he can use the Cavs as a catalyst for other businesses.

It says right in the article that Gilbert has made it known that he owns the Cavs b/c it allows his thread ventures to thrive and make money.

ink
10-18-2011, 04:21 PM
There's nothing underhanded about these business dealings as you're insinuating. I agree with sixer04fan, this weakens your case. You seem to be reaching to find some dirt on the guy when all he's doing is pursuing business ventures. As the article says, most of the big profits come from casinos which have absolutely nothing to do with the NBA team. The actual team is costing him money and the article even re-asserts that point.

naps
10-18-2011, 04:33 PM
Yup your defiantly paid to fight that side of the argument or have an invested interest in this.....Your trying way too hard......and it reeks of desperation.

Man, you always sound bitter.

daleja424
10-18-2011, 05:20 PM
There's nothing underhanded about these business dealings as you're insinuating. I agree with sixer04fan, this weakens your case. You seem to be reaching to find some dirt on the guy when all he's doing is pursuing business ventures. As the article says, most of the big profits come from casinos which have absolutely nothing to do with the NBA team. The actual team is costing him money and the article even re-asserts that point.

I'm not "reaching" for anything... I posted an ESPN article that connected those dots on its own.

Tom Stone
10-18-2011, 05:34 PM
I think people keep missing the point.....Again you seem to think people actually care about players or owners getting a little more money.....we don't ...yes we have an opioion on these things but it's not our main concern....it's all about teams in big markets shouldn't be able to buy there way to the finals, or increase there chances of doing so, on the current broken system.....

daleja424
10-18-2011, 05:38 PM
I think people keep missing the point.....Again you seem to think people actually care about players or owners getting a little more money.....we don't ...yes we have an opioion on these things but it's not our main concern....it's all about teams in big markets shouldn't be able to buy there way to the finals, or increase there chances of doing so, on the current broken system.....

But no one has proposed a system to date that would level the playing field...

go ahead and try if you think you have the answers...

ink
10-18-2011, 06:07 PM
I'm not "reaching" for anything... I posted an ESPN article that connected those dots on its own.

And misread it. The article clearly says the biggest loser is the actual team. The rest are just business ventures no matter how you want to try to spin it and impugn him.

Tom Stone
10-18-2011, 06:36 PM
But no one has proposed a system to date that would level the playing field...

go ahead and try if you think you have the answers...






It's quite simple and complicated at the same time......it's simple in the fact that a Hard cap, would take away from big Markets loading up on players....The superstars would be spread more evenly through the league as well....that on it's own would be huge.....it's complicated in the fact that, there will always be high profile cites that have advantages, more money of endorsements can be made there, so players may take a little less to play for said team.......So to finish up.....it will never be perfectly even......But it's the best we got...........because if things were to continue on the current system we would have a Yankee situation in a few years, if we don't already have that going on......Hard Cap = Basketball Saved

daleja424
10-18-2011, 06:56 PM
It's quite simple and complicated at the same time......it's simple in the fact that a Hard cap, would take away from big Markets loading up on players....The superstars would be spread more evenly through the league as well....that on it's own would be huge.....it's complicated in the fact that, there will always be high profile cites that have advantages, more money of endorsements can be made there, so players may take a little less to play for said team.......So to finish up.....it will never be perfectly even......But it's the best we got...........because if things were to continue on the current system we would have a Yankee situation in a few years, if we don't already have that going on......Hard Cap = Basketball Saved

There are maybe 10-15 "superstars" in the league...and even with a hard cap teams could afford to sign two (if not three) of them.

So two in LA, NY, Miami, Chicago, Dallas, and OKC...

Now where are the rest of your leveled playing field teams getting superstars from?

Tom Stone
10-19-2011, 09:01 AM
There are maybe 10-15 "superstars" in the league...and even with a hard cap teams could afford to sign two (if not three) of them.

So two in LA, NY, Miami, Chicago, Dallas, and OKC...

Now where are the rest of your leveled playing field teams getting superstars from?




There are a lot more super stars then that in the league !......your under estimating the talent !

daleja424
10-19-2011, 09:17 AM
There are a lot more super stars then that in the league !......your under estimating the talent !

Try to name me more than 10-15 guys that can be legit number one options on a championship contender. Name me more than 10-15 guys that can win a series single handedly. Here is my list:

Wade, Kobe, Dirk, Lebron, CP3, Howard, Durant, Rose

Those are the only true superstars I see. The only guys that have proven they can be number one guys on contending teams.

Who else you got? You really think you can name 22+ more players of the quality of those guys? 22+ more players that can lead a team to a title?

tjlipford
10-19-2011, 09:40 AM
I don't see the problem at all. He along with all the other owners in the league are great businessmen. In case people didn't know there only business is not the nba team. I really don't care what these owners do outside of basketball honestly. That's none of my business. Hell I hope they do have other business ventures outside of basketball.

Also, really stopping players from stacking up is gonna be difficult. The fact that these players nowadays actually want to join forces is the actual problem. Also, what happened with Miami they were "Free Agents" so in a sense they did nothing wrong. The landscape of the NBA is just different now. Players want to be buddy buddy and want to play with each other. Also on a social aspect younger players don't want to play in colder cities really with the exception of Boston, NY, and Chicago the rest of the markets are just unattractive. There is no way they can change that. Players will play wherever they get drafted then once there contract is up they will want to play somewhere else. It's just that simple. These owners are gonna have a hard time keeping great players unless the players change. The system is because of the players IMO

tjlipford
10-19-2011, 09:43 AM
This could have happened 10 years ago, but the players were a little different. It's just happening now and everyone is talking about its the system.