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View Full Version : ELI5: How did the Clippers just get sold for 2 Billion? & will they move to Seattle?



JasonJohnHorn
05-30-2014, 07:46 AM
First let me say that though I am not a 'business' man, I am not unaware of how things work. I know for a fact that if I were a billionaire I would have no issue taking a loss to buy a basketball team (the Pistons or the Raptors), because I would LOVE to have a basketball team. So if that is the case with Steve Ballmer, then this makes total sense.

As a business investment, however, this makes NO sense to me whatsoever.

Business people usually want a 100% return on their investment within 5 years tops, followed by a healthy annual income. If that annual income is going to be HUGE, then the investor might be willing to wait a while before they take a 100% return. This is problem #1 with the Clippers. Forbes reported two years ago that the team only pulled in around 12 million that year, and that was a good year for the Clippers. Assuming the Clippers do well, they can double that, but even if the Clippers were making 20 million a year, it would take 100 years to earn back the 2 billion, and even if the Clippers starting making 50 million a year, it would take 40 years to make that money back. Given that Ballmer is 58 years old, he's going to be almost 100 years old before he makes his money back, and that's IF the Clippers are making 50 million a year, which they have NEVER done before (that is a VERY optimistic outcome).


Now I realize that having a basketball team affords you other avenues of income. For instances, if you are an investor and you have money tied up in food vendors, clothing manufacturers and security companies, you can throw some business to these companies and have them sell food at the stadium, have manufacturers produce merchandise and give a contract to the security company to take care of the building you play it. Likewise, if you have an investment in a construction company, then you give it a contract to build a new building ($$$$$) and once you do that, you suddenly get to have concerts there on nights when the team isn't playing ($$$$). The problem with this is that NONE of these avenues are available to the Clippers' owner, because the building they play in is shared with two other teams (Kings and Lakers). So unless Ballmer is planning on building his own stadium (and maybe he is, but there is another few hundred million), none of this works out.

These businesses could still benefit, of course, by getting free advertising, but I'm not sure how much that helps. I mean, the Grizzlies named their building the FedEx building... has that helped increase business for FedEx?


There is also the status of owning a team. When you are working on deals, being able to bring other business men to a game and introduce them to players is a big point when trying to lock down a deal. But I'm not sure that will generate 2 billion dollars in a significant amount of time.


Now, all this said, Steve Ballmer, according to Wiki, is worth almost TWENTY BILLION DOLLARS!!! 18 to be exact. If he takes a total wash on this an NEVER makes his money back, he's still got 16 billion.


It is important to note that Ballmer has been trying to buy a team for a while. He offered to invest 150 million to help redo the arena in Seattle and keep the Sonics there, and tries buying the Kings as well. Perhaps a move to Seattle will follow the purchase and he will have his own arena, which will open up a lot of potential profits for him. And perhaps with as much money as he has, he might start looking into doing more philanthropy and owning a basketball team might be something that helps out with that a lot.

Or maybe he's just been a basketball fan forever and this is a pet project for him, in which case he has 16 billion left over to help over-pay for talent and win a banner.


What are your thoughts? Does this purchase make sense as an INVESTMENT (in which case the Clippers aren't worth more than 800 million), or is this a fantasy buy for a fan who happens to have the money to drop on it? And does Ballmer's history with the Sonics suggest that this team might be moving and that Seattle will finally get their team back?

SiteWolf
05-30-2014, 08:05 AM
Firstly, what a privately owned company 'makes' depends totally on what numbers they decide to release....it's called management accounting. For tax purposes, of course, they can't 'cook the books' legally...but a private company doesn't have to reveal numbers the way a publicly traded one does.

So, to say they're only making those few million a year may or may not be close to true....all depends on what all is being included and how the numbers are being juggled.

Also, tho...what a team makes in a year is the equivalent of what a stock holder earns in dividends....the value of the team itself (just like the stock itself) is where the real money is...and team valuations tend to trend upward far more than 'normal investments'.

I'm not sure where you're getting the 100% ROI within 5 years, but you're talking gross revenue there while comparing it to net.

My bet is he has no plan to pull a team out of a market like LA to put it in a smaller market nor would the league approve him as an owner if he said he wanted to.....UNLESS, that's what the league wants, too.

scissors
05-30-2014, 08:22 AM
Yeah you are forgetting that the value of the team is an excellent inflation hedge. And no way in hell he takes a team out of the incredibly profitable LA area and brings them to SEA to die.

Maybe some really crappy market like MIL would upgrade to SEA but you don't move from LA to SEA.

JasonJohnHorn
05-30-2014, 08:54 AM
Yeah you are forgetting that the value of the team is an excellent inflation hedge. And no way in hell he takes a team out of the incredibly profitable LA area and brings them to SEA to die.

Maybe some really crappy market like MIL would upgrade to SEA but you don't move from LA to SEA.

I don't see a 'business' man moving it to Seattle, but if this is a passion and a pet project, then he might.

I wouldn't imagine him moving it to Seattle, it's just that he seems to have made an effort in the past to keep the Sonics in Seattle, so now that he has a team...

Obviously the team is worth more in LA, just like the Nets saw an increase in their value when they moved to NY.

I'm just curious because then he was part of the business group trying to keep the Sonics in Seattle. The he was part of the group that was out to buy the Kings, and there were rumours that if the purchase went down, they'd move to Seattle. That buy got killed.

Now he finally has a team. Does his love affair with Seattle come into play here?

JasonJohnHorn
05-30-2014, 08:56 AM
Firstly, what a privately owned company 'makes' depends totally on what numbers they decide to release....it's called management accounting. For tax purposes, of course, they can't 'cook the books' legally...but a private company doesn't have to reveal numbers the way a publicly traded one does.

So, to say they're only making those few million a year may or may not be close to true....all depends on what all is being included and how the numbers are being juggled.

Also, tho...what a team makes in a year is the equivalent of what a stock holder earns in dividends....the value of the team itself (just like the stock itself) is where the real money is...and team valuations tend to trend upward far more than 'normal investments'.

I'm not sure where you're getting the 100% ROI within 5 years, but you're talking gross revenue there while comparing it to net.

My bet is he has no plan to pull a team out of a market like LA to put it in a smaller market nor would the league approve him as an owner if he said he wanted to.....UNLESS, that's what the league wants, too.


Good points. I know a business can 'cook the books', so to speak, but I would just assume that the NBA woudl want everything on the up-and-up because that LAST thing the league would want is for the IRS to have to get involved. That would be AWFUL for the league.



Crazy thing is, Sterling bought the team for 12 million... sells it for 2 billion less than 35 years later? WOW!!!

pacofunk64
05-30-2014, 09:22 AM
DTS is laughing all the way to the bank. Ballmer overpaid for the Clippers by a lot but the Clippers stock is rising fast. The way the NBA is ran can make it difficult for terrible teams to get better. Terrible contracts with terrible rookie depth. The Clippers will be the main show for at least the next 10 years in LA. The Lakers, especially when Kobe retires, will be absolutely terrible. They are not going to get Love or Anthony. Ballmer isn't a billionaire for no reason. He's done his risk assessment and even though he overpaid he bought the team that should only continue to grow for the next 5-10 years with ease.

goingfor28
05-30-2014, 09:32 AM
No. They are not moving to Seattle. :facepalm:

kobe4thewinbang
05-30-2014, 09:36 AM
My take on this:

Maybe the buyer is a little nuts? Who knows what the other bids were? I wonder how much more he paid. If it's anything like a standard auction, I can see the price going up very fast. Plus, all of the publicity and "hero" nature of whoever buys it from this racist SOB. It is certainly a big payday for Sterling, but he's still a hateful POS.

I really don't care what rich hoity-toity losers are doing with their money. But I would assume this guy kind of knows he is doing, whether it's just a bucket list thing or what-have-you. If it's just a rich person whim, it makes sense too because you don't see rich people shopping at the .99 store. They kind of enjoy blowing money on dumb stuff.

The point is! Sterling is hopefully out of the picture now and we can all move on from this 1800s mindset nonsense. My girl was saying that she figures Sterling became an owner because he saw it as some kind of pseudo-slavery thing in which he was the owner of his predominantly Black players. Otherwise, what the heck was he thinking? The league has been predominantly Black and otherwise foreign for a while now. Dude's just really stupid. Nobody will miss him.

And Mark Cuban better get off the drugs and vote Sterling out or he'll bring the same stigma to the Mavericks (who have perhaps the whitest player ever, lol).

ManRam
05-30-2014, 09:39 AM
They're certainly not moving to Seattle. The NBA could use a team there, but not at the expense of an LA market. And I actually take Ballmer's word on this too. Unless he really just views it as an expensive toy, there's also no way it becomes a viable investment at that price in Seattle either.

How are they worth $2B? LA Market. Two young stars. Things are on the upswing there, and their in-house rivals are kinda in a lull. But I'm sure he's not even thinking that short-term. We can mock the Clippers for what they have been, bu DTS was a big source of many of those problems and he's gone. They have the coach and stable front office. There's no real reason to think of this as the same team they've been, because aside from the jerseys, the name and the arena, they aren't. It's an over pay, but he can afford it. Ultimately they're worth that much because someone was willing to spend that much. And I'm not sure this means you can project the Lakers or Knicks being worth $7B because of this...because that's just an absurd amount. It's also the first time a big market team has hit the open market in a while...people were chomping at the bit.

It's great for the league. The next CBA will be interesting because of this too. It will be even harder to sympathize with the big market owners.

Thumper 88
05-30-2014, 10:32 AM
My take on this:

Maybe the buyer is a little nuts? Who knows what the other bids were? I wonder how much more he paid. If it's anything like a standard auction, I can see the price going up very fast. Plus, all of the publicity and "hero" nature of whoever buys it from this racist SOB. It is certainly a big payday for Sterling, but he's still a hateful POS.

I really don't care what rich hoity-toity losers are doing with their money. But I would assume this guy kind of knows he is doing, whether it's just a bucket list thing or what-have-you. If it's just a rich person whim, it makes sense too because you don't see rich people shopping at the .99 store. They kind of enjoy blowing money on dumb stuff.

The point is! Sterling is hopefully out of the picture now and we can all move on from this 1800s mindset nonsense. My girl was saying that she figures Sterling became an owner because he saw it as some kind of pseudo-slavery thing in which he was the owner of his predominantly Black players. Otherwise, what the heck was he thinking? The league has been predominantly Black and otherwise foreign for a while now. Dude's just really stupid. Nobody will miss him.

And Mark Cuban better get off the drugs and vote Sterling out or he'll bring the same stigma to the Mavericks (who have perhaps the whitest player ever, lol).

Mark Cuban is a billionaire for a reason.

Having the whitest player ever... I don't get it.. Are you racist?

SiteWolf
05-30-2014, 11:36 AM
lol @ Cuban being a billionaire for a reason........the guy got massively overpaid for a product Yahoo completely lost out on.................now, that said, he's a smart guy and has become a very solid businessman..he just learned a lot AFTER becoming a billionaire

he's also not wrong in his questions about pushing Sterling out...or his honesty about all of us having our own prejudices.........he's not supporting Sterling, contrary to what some seem to think

NoahH
05-30-2014, 12:09 PM
I don't see a 'business' man moving it to Seattle, but if this is a passion and a pet project, then he might.

I wouldn't imagine him moving it to Seattle, it's just that he seems to have made an effort in the past to keep the Sonics in Seattle, so now that he has a team...

Obviously the team is worth more in LA, just like the Nets saw an increase in their value when they moved to NY.

I'm just curious because then he was part of the business group trying to keep the Sonics in Seattle. The he was part of the group that was out to buy the Kings, and there were rumours that if the purchase went down, they'd move to Seattle. That buy got killed.

Now he finally has a team. Does his love affair with Seattle come into play here?

That was exactly my thinking. As a 'business' decision there is NO WAY you move a team from LA to Seattle, but Ballmer is in love with Seattle and he just bought the clippers for 4x what they are worth so maybe his NBA purchase is more of a personal choice than a business decision.

But can you blame the guy? If you were worth 18billion would you really care about paying an extra 1.5bill for an NBA team you want?

NoahH
05-30-2014, 12:11 PM
My take on this:

Maybe the buyer is a little nuts? Who knows what the other bids were? I wonder how much more he paid. If it's anything like a standard auction, I can see the price going up very fast. Plus, all of the publicity and "hero" nature of whoever buys it from this racist SOB. It is certainly a big payday for Sterling, but he's still a hateful POS.

I really don't care what rich hoity-toity losers are doing with their money. But I would assume this guy kind of knows he is doing, whether it's just a bucket list thing or what-have-you. If it's just a rich person whim, it makes sense too because you don't see rich people shopping at the .99 store. They kind of enjoy blowing money on dumb stuff.

The point is! Sterling is hopefully out of the picture now and we can all move on from this 1800s mindset nonsense. My girl was saying that she figures Sterling became an owner because he saw it as some kind of pseudo-slavery thing in which he was the owner of his predominantly Black players. Otherwise, what the heck was he thinking? The league has been predominantly Black and otherwise foreign for a while now. Dude's just really stupid. Nobody will miss him.

And Mark Cuban better get off the drugs and vote Sterling out or he'll bring the same stigma to the Mavericks (who have perhaps the whitest player ever, lol).

Geffen offered 1.6bill and they other people offered 1.2bill

D-Leethal
05-30-2014, 12:22 PM
If you don't understand business you should refrain from talking about it. 100% return on your investment in 5 years :punish:

D-Leethal
05-30-2014, 12:23 PM
That was exactly my thinking. As a 'business' decision there is NO WAY you move a team from LA to Seattle, but Ballmer is in love with Seattle and he just bought the clippers for 4x what they are worth so maybe his NBA purchase is more of a personal choice than a business decision.

But can you blame the guy? If you were worth 18billion would you really care about paying an extra 1.5bill for an NBA team you want?

Umm.....yea.

D-Leethal
05-30-2014, 12:24 PM
Clippers are the redheaded stepchild of LA. Seattle would be a much better spot for them. Seattle has one of the best fanbases in all of sports. See: Seattle Seahawks.

goingfor28
05-30-2014, 12:57 PM
Clippers are the redheaded stepchild of LA. Seattle would be a much better spot for them. Seattle has one of the best fanbases in all of sports. See: Seattle Seahawks.

In no way shape or form is Seattle better than LA for any sports team.

Clippersfan86
05-30-2014, 12:57 PM
http://www.bloomberg.com/news/2014-05-30/barbarians-arrive-at-clippers-gate-with-nba-s-value-days-over.html

Forgot NBA's TV deal is about to profit probably 10 times more coming up. Nevermind what I said yesterday that the Clippers TV deal is a pathetic 20 million a year and likely will climb to near 100. Ballmer is looking at least 100-150 million profit a year in two years and going forward (currently team profits about 15 a year).

JasonJohnHorn
05-30-2014, 01:04 PM
That was exactly my thinking. As a 'business' decision there is NO WAY you move a team from LA to Seattle, but Ballmer is in love with Seattle and he just bought the clippers for 4x what they are worth so maybe his NBA purchase is more of a personal choice than a business decision.

But can you blame the guy? If you were worth 18billion would you really care about paying an extra 1.5bill for an NBA team you want?

If I had 18 billion, I would over pay for a team in a heartbeat! Even if it was losing money hand over fist. Like Charles Foster Kane said: "You're right. I did lose a million dollars this year. And I expect to lose a million dolalrs next year, and you know, and this rate, I just may go out of business.... in 50 years."

You got 16 billion AFTER you bought a team... you are doing ok.

Clippersfan86
05-30-2014, 01:08 PM
If I had 18 billion, I would over pay for a team in a heartbeat! Even if it was losing money hand over fist. Like Charles Foster Kane said: "You're right. I did lose a million dollars this year. And I expect to lose a million dolalrs next year, and you know, and this rate, I just may go out of business.... in 50 years."

You got 16 billion AFTER you bought a team... you are doing ok.

He's worth 20.2. He's got 18 left.

JasonJohnHorn
05-30-2014, 01:08 PM
If you don't understand business you should refrain from talking about it. 100% return on your investment in 5 years :punish:


You're right. Most people want a return much quicker than that. But for investments like this, it usually takes more time.

P&GRealist
05-30-2014, 01:44 PM
NBA Board of governors will NOT approve this transaction if Ballmer decides to move it to Seattle. The NBA would lose too much $$$$$$.

ccg34
05-30-2014, 01:47 PM
As much as I would love the Clippers to move to Seattle, I don't think it will happen. Ballmer aint a lying douche like Clay Bennett. Seattle is hungry for a basketball team but the NBA can care less. They screwed us twice with the Sonics moving to OKC and rejecting the relocation of the Kings. Screw David Stern! Screw Clay Bennett! Screw Howard Schultz! As a die hard Supersonic fan who cheered for them all the way from Payton to Durant, it pains me to watch the NBA at times.

IndyRealist
05-30-2014, 01:48 PM
Have we not covered this a hundred times during the lockout? Owning an NBA team is like printing money.

1. Local and State incentives. Owners get massive tax breaks to move to or stay in a city. The Pacers are getting like $15M/yr from Indianapolis in their new lease.
2. Non-team benefits. Brooklyn use imminent domain to evict hundreds of residents to build the arena. Bruce Ratner got a massive amount of prime real estate, more than he needed for the arena. He developed that land into high priced condos and made a FORTUNE, and sold off the team while retaining all of that real estate.
3. Roster depreciation. The IRS treats NBA rosters like cattle. If someone buys the Clippers for $2 billion, that new owner can claim $2 billion in tax deductions over the next 10 years. In effect, he won't have to claim he makes ANY money or pay ANY taxes for the next decade.
4. Value appreciation. Sterling bought the Clippers for like $15 million, and is about to sell them for $2 billion. Teams go up in value. Especially teams in large TV markets like LA. The NBA is only going to increase in revenue with their global expansion strategy.

Chronz
05-30-2014, 02:00 PM
I've made a few threads where I ask the obvious, but this is pretty damn obvious.

Clippersfan86
05-30-2014, 02:11 PM
As much as I would love the Clippers to move to Seattle, I don't think it will happen. Ballmer aint a lying douche like Clay Bennett. Seattle is hungry for a basketball team but the NBA can care less. They screwed us twice with the Sonics moving to OKC and rejecting the relocation of the Kings. Screw David Stern! Screw Clay Bennett! Screw Howard Schultz! As a die hard Supersonic fan who cheered for them all the way from Payton to Durant, it pains me to watch the NBA at times.

I'm sorry for you man :(. An interesting thing about me nobody knows here. The Sonics were the team that got me into basketball. My favorite player of all time is Gary Payton. I got in to basketball because somebody gave me an old NBA Jam game and I always used Payton with Kemp.

So from say 96-98 I actually was just a casual basketball fan, but the one team I liked and tried to follow was the Sonics. Then in 1999 I watched the NBA predraft stuff+draft and fell in love with Lamar Odom's game. So when the Clippers picked him, I decided to give them a watch. What hooked me on the team though, was I accidentally stumbled across Ralph Lawler's broadcast of the game and realized it was the Clippers, I had already started having interest in. Being a local team, it was much easier to follow them than Seattle Supersonics, so my decision was made.

I chose the perennial loser, over the contender. The rest is history.

Clippersfan86
05-30-2014, 02:12 PM
PS I used to wreck people with Detlaf Shremph and Jim McIlvaine (I know I probably butchered names) on Kobe Bryant Courtside for 64 lmao. Detlaf, I'd make like 15 threes a game and cheese the fu** out of people with the Sonics.

Sly Guy
05-30-2014, 02:14 PM
it kinda drives me nuts that this guy is being forced out of his position as owner of the clippers in disgrace, but is still going to come away with over $2billion dollars to show for it.

Chronz
05-30-2014, 02:17 PM
Clippers are the redheaded stepchild of LA. Seattle would be a much better spot for them. Seattle has one of the best fanbases in all of sports. See: Seattle Seahawks.

Do you go out of your way to say things that upset me on daily basis?

Yes Seattle is great, but this is LA bro. And now, the Clippers can actually act like a team that belongs in the market.


It does bring up an interesting question tho, wtf happens to my fandom if they move to Seattle? Do I root for them the same way some Seattle fans root for Durant? Would it be weird for all involved to see Thunders vs Clippers. Do the Sonic fans immediately give up all loyalty to the MVP that began in Seattle and should have rightfully been their MVP, or do they root for the new team, the same team they probably rooted against the year prior.

Chronz
05-30-2014, 02:20 PM
it kinda drives me nuts that this guy is being forced out of his position as owner of the clippers in disgrace, but is still going to come away with over $2billion dollars to show for it.

He had a good run man. Life has been pretty sweet to him and hes been a scum to EVERYONE. Dude only looks out for his own kind and has no place in a more civilized society, hes probably not alone but I find solace in the fact that he was the biggest turd stain in NBA history so ANYONE would be an upgrade on him.

abe_froman
05-30-2014, 02:32 PM
because balmer was desperate and is crazy rich ,so it allowed for a blank check mentality

....and no chance they move ,they have 10 years left in their staples deal

bleedprple&gold
05-30-2014, 02:33 PM
PS I used to wreck people with Detlaf Shremph and Jim McIlvaine (I know I probably butchered names) on Kobe Bryant Courtside for 64 lmao. Detlaf, I'd make like 15 threes a game and cheese the fu** out of people with the Sonics.

I loved that game!!

SiteWolf
05-30-2014, 02:47 PM
it kinda drives me nuts that this guy is being forced out of his position as owner of the clippers in disgrace, but is still going to come away with over $2billion dollars to show for it.

not like he's the first douchebag to make a lot of money....and not like the $15mil he paid for the team was his only expense...........even convicted felons get to keep their assets if they weren't attained illegally

IndyRealist
05-30-2014, 03:01 PM
it kinda drives me nuts that this guy is being forced out of his position as owner of the clippers in disgrace, but is still going to come away with over $2billion dollars to show for it.

If it makes you feel any better, he's going to have to pay taxes on it, and his estranged wife is entitled to half.

bleedprple&gold
05-30-2014, 03:18 PM
I don't think Ballmer is really to concerned with how many years it would take to turn a profit. I think he just wanted to own a freaking nba team! I mean think how awesome that would be. And who knows by the times he's ready to sell the team could be worth well over $2B. Just look at how much the value of the team went up while Sterling had it.

Sly Guy
05-30-2014, 03:20 PM
not like he's the first douchebag to make a lot of money....and not like the $15mil he paid for the team was his only expense...........even convicted felons get to keep their assets if they weren't attained illegally

yeah, I know, but it's just so way way WAY above market value.

HoodedSB
05-30-2014, 03:42 PM
Clippers are the redheaded stepchild of LA. Seattle would be a much better spot for them. Seattle has one of the best fanbases in all of sports. See: Seattle Seahawks.
Mariners can't even fill half the seats in their stadium most nights, that fanbase is more fair-weather than you think.

Gibby23
05-30-2014, 03:51 PM
They are not moving to Seattle. Balmer isn't stupid. The team he just paid 2 billion for whould be worth less than 1 billion if he moved them out of LA.

Kevj77
05-30-2014, 04:00 PM
http://www.bloomberg.com/news/2014-05-30/barbarians-arrive-at-clippers-gate-with-nba-s-value-days-over.html

Forgot NBA's TV deal is about to profit probably 10 times more coming up. Nevermind what I said yesterday that the Clippers TV deal is a pathetic 20 million a year and likely will climb to near 100. Ballmer is looking at least 100-150 million profit a year in two years and going forward (currently team profits about 15 a year).This is without a doubt part of the value of the team. The Guggenhiem group paid 2 billion for the Dodgers when Forbes only valued them at 800 million because they knew they would be getting a 200 million dollar per year local television contract. Clippers won't get the same money the Dodgers or Lakers did, but they could get anywhere from 60-100 million per year.

It is also the reason it would be absolutely absurd to move them out of LA. Seattle isn't going to happen.

slashsnake
05-30-2014, 04:41 PM
First let me say that though I am not a 'business' man, I am not unaware of how things work. I know for a fact that if I were a billionaire I would have no issue taking a loss to buy a basketball team (the Pistons or the Raptors), because I would LOVE to have a basketball team. So if that is the case with Steve Ballmer, then this makes total sense.

As a business investment, however, this makes NO sense to me whatsoever.

Business people usually want a 100% return on their investment within 5 years tops, followed by a healthy annual income. If that annual income is going to be HUGE, then the investor might be willing to wait a while before they take a 100% return. This is problem #1 with the Clippers.




Not really... Lets say you buy gold for your retirement. It earns you nothing every day. Nothing every year. Not a dime until you retire and sell it. Then you get your return, or you pass it on to your kids and it does nothing for them until they sell it.

Think if Donald Sterling paid 4 times what people thought the Clippers were worth in 1980. People would call that a ridiculous amount to spend, what was he thinking... yadda yadda, bad investment, he just wants to enjoy a team and has no business acumen...

He'd have spent 50 million, or about 175 million in today's money. That would give him a 1.825 BILLION dollar return on his investment counting for inflation here. And that would be if his team never made him a cent in those 30 years. Imagine that kind of return?

Basically Sterling gained back his initial teams value in today's money every 3 years over three decades. PLUS during that time he had that steady income, which has amounted to 128 million in the past 10 years alone.

If you believe the NBA bubble is about to pop, this is a bad investment. If you believe they can achieve their target goals for the league, he may be handing his kids a 20 billion dollar franchise in 30 years before adjusting for inflation.

Sssmush
05-30-2014, 05:13 PM
Ballmer is the right guy to buy the Clippers, and the team may very well transform into something really exciting and super popular. Imagine something like the Orlando Magic, but in Los Angeles. And if we are moving into an era of (what seems like) extremely high valuations of scarce or rare commodities, winning this bidding war is probably a really lucrative victory for Ballmer.

bleedprple&gold
05-30-2014, 06:15 PM
They are not moving to Seattle. Balmer isn't stupid. The team he just paid 2 billion for whould be worth less than 1 billion if he moved them out of LA.

The team is already worth less than 1 billion. Thats why people are saying Ballmer way overpaid in case you didnt catch that.

Sssmush
05-30-2014, 06:43 PM
it's also possible that the NBA threw in some behind the scenes considerations for the buyer, such as shared revenue credits, waiving league fees, promises of enhanced marketing and future national TV games, etc

NoahH
05-30-2014, 07:22 PM
Umm.....yea.

Clearly you dont want to own an NBA team as bad as me (or Ballmer)

ryder78c
05-30-2014, 08:34 PM
Sonics are worth a ton...there selling Sonics gear even with no Seattle SuperSonics.
Seahawks jerseys were top 3 this year won a super bowl and are bringing in consistent money from fans,endorsements,radio,t.v. ...the clippers like wise if this is just from a business perspective then bringing the Sonics back can bring in more money then keeping them the clippers. I'd buy a Blake Griffin Sonics jersey not a clippers same goes for CP3 not sure why but I just wouldn't keep them the clippers

Bringing the Sonics back in the first 5 years he'll get 50% of his investment back then the tv contract could bring in another 25%-50% he'd easily get his money back.
staying in LA he would stay under the same t.v. deal and not much else would change from that going to seattle you get your own Arena your own city you wouldn't get a quarter of the city's profit because the city wouldn't be Lakers city

Honestly if you know about NBA business and how to run a business you know staying in a area that your not in full control of can ruin your buisness(location location location)...so when the Lakers get good again you get to go back to being 2nd fittle or move to your own city get consistent income and a consistent fan base

A guy said in two years when Kobe retires the Lakers will go down hill, that's when they will go back up hill..the Lakers only stay down for a few years before they make a return look at Kobe without Shaq the first few years just like when magic retired

NBA_Starter
05-30-2014, 09:00 PM
Seattle does deserve another team, it is worth looking into and what a quality team they would be receiving!

Tony_Starks
05-31-2014, 09:55 AM
The Clipps have 9 years left on their lease at Staples Center btw.....they're not going anywhere.

As others have mentioned you don't buy a LA team to move it, that's insane. I get that everybody wants Seatfle to have a team again but it won't come from a big market.

torocan
05-31-2014, 10:23 AM
On a cash flow basis, even with the new TV deal owning the Clippers isn't going to earn much more return than savings bonds (2-4%). However, his direct return will depend a lot on how much leverage he is willing and able to carry. When you have leverage involved it acts as a return multiplier.

Additionally, I have no doubt that Ballmer is banking on continued asset appreciation over the long term (and at least an inflation hedge in the short term).

In 20 or 30 years, he'll have the double benefit of leveraged return plus asset appreciation, all tax sheltered under $2B in capital depreciation (tax sheltered income). Oh, and he gets to own a NBA team one of the best markets in the Country.

This of course doesn't even factor in the Management factor. Ballmer may also be banking on his ability to run the Clippers better than Sterling has... given the innate advantages of being in the LA market, it can be argued that Sterling has not maximized the growth potential of the team.

If Ballmer turns out to be a good owner and the Clippers remain a marquee franchise over the medium term, the team could end up having its value matching its purchase price of $2B and even significantly surpassing it faster than many would expect.

Would anyone be truly shocked if the Clippers was worth $10-15B or even more in 20 or 30 years? Especially if the Clippers develop into a perennial play off team with a good shot at contention?

And lets not forget, Ballmer is worth $20B. Overpaying $400M is a fairly trivial amount for a man of his wealth. The equivalent would be you having $20,000 to your name and overpaying on a used car by offering $2,000 instead of $1,600. Sure, you could have saved that $400, but are you going to lose any sleep over it?

At Ballmer's level of wealth, he could burn $400M per year in his fireplace and it would still take 50 years for him to go broke.

Ballmer wanted the team. He paid a premium. Barring the NBA imploding, he'll do okay.

Cracka2HI!
05-31-2014, 02:28 PM
I'm really glad this is all over. The Sterling era is over. He may be in the news for a while but his NBA life is over. Now we can move on with basketball. It looks like we got a pretty awesome owner too!