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Do NBA tems lose money because of the system?
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Olbrannon
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7/6/2011  9:43 PM
Andrew wrote:
PresIke wrote:hey nba owners...

open your books to prove us wrong...

I think the owners have opened their books to the players, and I've seen at least 1 report where a player rep states they don't dispute the numbers. What is up for debate is how much responsibility each party takes for the results.

Precisely to avoid this issue, the N.B.A. and its teams shared their complete league and team audited financials as well as our state and Federal tax returns with the Players Union. Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several year

I don't know who to believe....just because you quote tax returns doesn't mean you are honest. I only know the sums seen here are well beyond those any fan will normally see in their lifetime.

In the end it is the fans who suffer. Cancel the season at your own peril. And the young players just starting in the league. I watched the strike shortened season's playoffs because Ewing and Ward were in it After that I didn't watch an NBA game until 2009. But I watch the NCAA tourney every year. I am a fan of basketball. Not the me first rich spoiled brats on either side.

Bill Simmons on Tyreke Evans "The prototypical 0-guard: Someone who handles the ball all the time, looks for his own shot, gets to the rim at will and operates best if his teammates spread the floor to watch him."
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crzymdups
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7/6/2011  9:48 PM
i thought Nate Silver's (and DeadSpins's) article basically said that the NBA was hiding some of its losses in the depreciation of contract stuff - that, while legal (and i'm sure big corporations do much worse), doesn't really reflect the financial reality of the situation.

you're allowed to claim 50% of a contracts value in the NBA as depreciation??? really? if EVERY contract devalues by 50% why sign them for that amount in the first place? it's bull.

¿ △ ?
knickstorrents
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7/6/2011  10:50 PM    LAST EDITED: 7/6/2011  10:54 PM
Here's info on the 'Roster Depreciation Allowance':

http://seattletimes.nwsource.com/html/localnews/2002911235_ownertaxes05m.html

It's funny... all the new team owners are the most aggressive from what I hear.. and yet being a new owner allows you to show the largest paper losses on your team.


"The potential tax write-off is often biggest in the early years of ownership. For example, in 2002, the Sonics reported an operating loss of about $9.5 million, based on actual expenses, but claimed additional depreciation, allowing the team to report a loss of more than $50 million to the IRS."

"But in 2004, Congress changed the tax rules in a way that could make the Sonics even more valuable if the team is sold.

The new rules allow future buyers of sports franchises to write off 100 percent of a team's purchase price over 15 years. Tax experts told The New York Times the change would likely boost the collective value of the nation's professional sports teams by $2 billion."

Rose is not the answer.
nixluva
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7/6/2011  11:38 PM
The money isn't in the day to day of owning an NBA franchise its in the value of the team as an asset.

The average NBA team is now worth $369 million, 1% more than last year. But several of the league’s 30 teams have not fully recovered from the recession, and as a result values are still 2.6% below the $379 million peak average they hit two years ago.

No player in the 64-year history of the National Basketball Association has come close to having the immediate and profound impact that LeBron James had when he bolted the Cleveland Cavaliers for the Miami Heat this summer. The King’s move accounted for both the biggest gain and drop in team values: the Heat’s worth increased 17%, to $425 million (seventh among the NBA’s 30 teams), and the Cavaliers plummeted 26%, to $355 million (15th).

The Heat sold out their season ticket inventory for the 2010-11 campaign after four straight years of attendance declines. Ticket prices are going up next year and ratings for Heat games on Sun Sports, the Fox-owned regional sports network, have doubled this season. Meanwhile, after winning more than 60 games each of the past two seasons, the Cavs won only eight of their first 45 games this year and owner Dan Gilbert recently announced that prices for Cavs games would be lowered next season.

The New York Knicks replace the Los Angeles Lakers as the NBA’s most valuable team, worth $655 million, up 12% from last year. Signing Amar’e Stoudemire has been a big help both on the court and with sponsors. The Knicks sold out their full-season ticket inventory for the first time since the 2001-02 season. The Knicks’ parent company, Madison Square Garden, Inc., signed a sponsorship deal with JPMorgan Chase in September that’s worth at least $30 million a year over 10 years.

http://blogs.forbes.com/mikeozanian/2011/01/26/the-nbas-most-valuable-teams-2/
Bonn1997
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7/7/2011  11:24 AM    LAST EDITED: 7/7/2011  11:24 AM
knickstorrents wrote:Owners lose money because of the owners. None of these owners rely on their teams to make money. There are many tax benefits to having vanity assets like teams lose money. They get to reduce their income which gets taxed at regular income rates (35% or more), and when they sell their teams they get taxed at long term capital gains rates (15%).

There are numerous ways the wealthy have to shield their income from taxation. A basketball team is actually a pretty good way. You get to write off interest on the loan you used to buy the team, you get to depreciate the players contracts, owners with stadiums get to depreciate that as well... all of these things allow teams that are making money to look like they are losing money.

Do you think it's right that owners can use their teams as tax shelters, and use the losses from these shelters as the main argument in getting clawbacks from players?

Greedy corporate executives are destroying the US and the NBA is just a microcosm of this larger problem.
loweyecue
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7/7/2011  3:57 PM
crzymdups wrote:i thought Nate Silver's (and DeadSpins's) article basically said that the NBA was hiding some of its losses in the depreciation of contract stuff - that, while legal (and i'm sure big corporations do much worse), doesn't really reflect the financial reality of the situation.

you're allowed to claim 50% of a contracts value in the NBA as depreciation??? really? if EVERY contract devalues by 50% why sign them for that amount in the first place? it's bull.

Depreciating assets is a standard accounting practice. Companies can choose how to depreciate: straight line, declining balance etc. This should not be an argument against acquisition of an asset.

TKF on Melo ::....he is a punk, a jerk, a self absorbed out of shape, self aggrandizing, unprofessional, volume chucking coach killing playoff loser!!
nixluva
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7/7/2011  7:00 PM
Man even with the recession the value of an NBA franchise is still gargantuan and I can't get behind the owners when it's their own fault that they overspend and didn't manage their finances. The Spurs have been very responsible and I think overall teams have so much control over their financial situations. If anything perhaps the owners should reconsider their Salary cap Tax penalty so that the teams that go over pay even more to help the weaker teams. They can expand the revenue sharing and it doesn't have to do with the players share much more than what the players are already willing to give up.
y2zipper
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7/7/2011  8:09 PM
I think the NBA does need revenue sharing no matter what happens. It's the only sport in America where teams don't share the revenue from local television contracts, and I buy the argument that the big-market teams make enough money to carry the rest of league. The NFL is built on the premise that there's enough television revenue to give all 32 teams the fundamental ability to be competitive. Now, this model won't work for the NBA because the players will never agree to a hard salary cap or a cap with a hard upper limit, so it's probably best for the NBA to share the television revenue amongst the owners, find a number that comes a salary floor, and a second number that comes as a luxury tax line but that allows the owners to make a profit.

To illustrate this point, I'll point out that the Sacramento Kings made $11 million dollars in local tv revenue last year. A team like the LA Lakers will make 3 billion dollars, or 150 million dollars per year over the course of it's new 20-year television agreement with time warner, and the local tv contracts are only based on market size.

I can't find the numbers to figure out all the teams, but if you take the entire television pot, split it thirty ways, and figure out what profit percentge you want, you should be able to come up with a fundamentally competitive floor and ceiling. It just doesn't seem that hard, but this isn't really what the strike is about.

The reality of the NBA is that elite players control the value of franchises these days, and owners don't like it. That's really the biggest issue here, and it's why owners are looking to further restrict player movement through the use of franchise tags, etc... LeBron James walked away from cleveland, and it basically cost Dan Gilbert 100 billion dollars.
knickstorrents
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7/7/2011  10:15 PM    LAST EDITED: 7/8/2011  7:51 AM
y2zipper wrote:I think the NBA does need revenue sharing no matter what happens. It's the only sport in America where teams don't share the revenue from local television contracts, and I buy the argument that the big-market teams make enough money to carry the rest of league. The NFL is built on the premise that there's enough television revenue to give all 32 teams the fundamental ability to be competitive. Now, this model won't work for the NBA because the players will never agree to a hard salary cap or a cap with a hard upper limit, so it's probably best for the NBA to share the television revenue amongst the owners, find a number that comes a salary floor, and a second number that comes as a luxury tax line but that allows the owners to make a profit.

You know I previously stated that local teams should keep their local tv revenue, but you are right. All teams need to share all TV revenue for the health of the league. Right now, the BRI is too high. I am very pro-player, but this is a fact (and the players have conceded as much with their proposals).

They need to figure out what a fair gross margin is for the league as a whole, then use revenue sharing to make it so that everyone's gross margin is positive (or at least, not negative).

Let's say the gross margin if you sum up all the losses and profits for all the teams should be 5%. Reduce the BRI until that magic number is hit, then use revenue sharing and luxury taxes to make sure no teams lose money.

Rose is not the answer.
nixluva
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7/7/2011  11:25 PM
The players really don't bare responsibility for the mess the league is in. They are employees and don't control what the owners do with their finances. They don't sign themselves, don't set ticket prices or make TV deals. If you think a player is asking for too much money... don't sign him. The owners did this to themselves. NO ONE made the Hawks sign Joe Johnson to that ridiculous contract!!! It's moves like this that just come back to kill teams down the line.

Still the players have agreed to take less money in the last CBA and again in this one. They've actually agreed to place limits on the amount of money they can make and so I really don't have a problem with them.
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