eViL wrote:Dolan a founder of the nba? c'mon martin...

Looking on waht NBA is Dolan should be the main founder...

By the time they get to a new NBA season, MSG will completely be renovated and the Nets will finally be in brooklyn.

Olbrannon wrote:The owners had enough resources to be able to buy the teams and are holding the upper hand. Don't expect any basketball before Xmas if at all.

Arenas can hold more events than basketball and the owners will still be pulling some revenues. The players?...depends how wise they were with the money they've received. WWF probably has better attendance than the average NBA contest and a better profit margin anyways.

Bet this sites hits are WAY down though that is likely usual this time of year.

WWE vs. a single team? For the most part, yes... but that's because WWE is making money and some of the NBA teams are not. The star salaries are much much less and the "role player" salaries are much much less.

http://www.wrestlingnewsworld.com/ask-wnw/randy-orton-in-10-years-wwe-salaries-non-compete-more.php

The main section to read is this:

What's the average salary for the top WWE Superstars and Divas?

With the wide range of salaries in WWE, it's nearly impossible to give an accurate average. A main event talent (such as John Cena) has a downside guarantee that is going to be in the hundreds of thousands while a developmental contract includes a downside in the $25,000 range. Workers such as Christian have downsides in the ballpark of $75,000 and Beth Phoenix has one around $100,000. A worker makes a percentage of their downside each week they are with WWE and are paid it as long as they are with the company (regardless of being injured). The only time the pay stops is when a worker is suspended. Workers are then paid bonuses on show appearances, merchandise sold, etc.

Basically, WWE contracts are only partially guaranteed. Not surprising that that's a key element to maintaining a profitable business.

Here's a list of WWE salaries from 2006, so you can see for comparison: http://www.newgrounds.com/bbs/topic/514106

Nobody made much over $2 million and only a fraction of those was guaranteed.

I do think, in the NBA, players need to make some concessions. I would be happy to say that the players get some guaranteed percentage, but how it's split is partially based on factors like performance, appearances, merchandise sold, etc.. I doubt it will happen, though.

If there is fancy accounting cooking the books it's a little more than passing through the cost of capital - or are the players just arguing that since they do not see a dime of the sale of a franchise that they should not be passing through the costs of borrowing to finance the purchase?

I would want to see the statement of cashflows and income statement to get a better idea of what's going on - the balance sheet is only telling you the list of assets and liabilities on the books, just part of the story. What really matters here is operating income, and what else is affecting net income.

Either way I'm not sure the players should be getting a cut of the sale price of a team because then they would be owners. So the question is how can an owner pass through the expenses of operating a team when calculating revenue sharing if the players don't get any ownership. Also, when an owner buys a team they probably don't take outa personal loan, they get a business loan through the franchise which would make it a valid line item on the books.

If you worked for a private company that had profit sharing I am willing to bet you would see the cost of financing included on the books - so there has to be more to this.

OasisBU wrote:I'm not sure how the accounting explanation shows the owners are making more money than they are claiming on the books. Businesses claim the cost of financing all the time - if you couldn't do that then borrowing money would cost even more than it does.

Quite simple. I borrowed 1000 bucks to buy basketball team X. Every year, my team grosses 100 bucks in revenue. I have expenses of 80 bucks per year to run the team (marketing, player salaries, etc). I also pay 20 bucks a year in interest on the loan I used to purchase the team. My net profit is 0 using GAAP (GAAP allows treating interest on the loan as an expense). But the team actually made 20 bucks if it wasn't bogged down with that loan.

You tell me if that's fair to the players? The players have no control on how leveraged a team gets sold for, the interest terms on the loan, etc. The players do not participate in any windfall profit when the team gets sold. BUT the players do positively impact a team's value (e.g., see how much the Cleveland Cavaliers are worth before and after Lebron James).

If you have the resources, you can make anything look favorable. To me, an independent 3rd party needs to audit the books. Not auditors hired by the NBA, or auditors hired by the players. An independent arbitrator needs to appoint an auditor to get some rough understanding of the profitability of the NBA. It doesn't need to be 100% exact. An 80% approximation should be enough.

Interest on loans, depreciation and other accounting tricks should not be allowed in figuring if a team is profitable or not.

To determine what's a fair profit, you need to get a rough understanding of the gross margins of other sports, such as baseball and football. Once this is known, do the math to balance the BRI such that the gross profit for the League has that margin(it should be somewhere around 5%). The way the owners want to do it now is to insure each and every team has at LEAST a gross margin of X%, which is completely ludicrous. The owners themselves need to revenue share such that all teams can be profitable if the league itself is profitable.

Right now, it is WAY tougher (impossible?) for small market teams in rebuilding mode to be profitable (Sacramento, Milwaukee). It is also practically impossible for teams in large markets to lose money, even if they are really bad (e.g., Clippers, Knicks before Walsh)

knickstorrents wrote:

OasisBU wrote:I'm not sure how the accounting explanation shows the owners are making more money than they are claiming on the books. Businesses claim the cost of financing all the time - if you couldn't do that then borrowing money would cost even more than it does.

Quite simple. I borrowed 1000 bucks to buy basketball team X. Every year, my team grosses 100 bucks in revenue. I have expenses of 80 bucks per year to run the team (marketing, player salaries, etc). I also pay 20 bucks a year in interest on the loan I used to purchase the team. My net profit is 0 using GAAP (GAAP allows treating interest on the loan as an expense). But the team actually made 20 bucks if it wasn't bogged down with that loan.

You tell me if that's fair to the players? The players have no control on how leveraged a team gets sold for, the interest terms on the loan, etc. The players do not participate in any windfall profit when the team gets sold. BUT the players do positively impact a team's value (e.g., see how much the Cleveland Cavaliers are worth before and after Lebron James).

If you have the resources, you can make anything look favorable. To me, an independent 3rd party needs to audit the books. Not auditors hired by the NBA, or auditors hired by the players. An independent arbitrator needs to appoint an auditor to get some rough understanding of the profitability of the NBA. It doesn't need to be 100% exact. An 80% approximation should be enough.

Interest on loans, depreciation and other accounting tricks should not be allowed in figuring if a team is profitable or not.

To determine what's a fair profit, you need to get a rough understanding of the gross margins of other sports, such as baseball and football. Once this is known, do the math to balance the BRI such that the gross profit for the League has that margin(it should be somewhere around 5%). The way the owners want to do it now is to insure each and every team has at LEAST a gross margin of X%, which is completely ludicrous. The owners themselves need to revenue share such that all teams can be profitable if the league itself is profitable.

Right now, it is WAY tougher (impossible?) for small market teams in rebuilding mode to be profitable (Sacramento, Milwaukee). It is also practically impossible for teams in large markets to lose money, even if they are really bad (e.g., Clippers, Knicks before Walsh)

I think you missed my point - under GAAP that is an allowable expense and since the company borrowed money to finance the purchase, it is a business expense. Who do you think should be hit with that? The owners have a right to run it through the business otherwise they wouldn't have made the purchase in the first place.

I fail to see how this is hurting the players. It's not like the owners went out and borrowed the money to make the books look bad - they have a real cost of interest.

You are telling me that the profitability of a business shouldn't factor in the debt that was incurred to purchase it?

If I buy a business for $1000 of all borrowed money, and the business makes $100, $80 goes to the cost of operations and $20 goes to the cost of servicing the money I borrowed to make the purchase, then my business is not profitable unless I go out and find a more favorable loan. Why should I have to pay the players a share of $20 of profit that doesn't exist?

It would only exist if I wasn't leveraged, I don't see the benefit the owners are getting here. You are basically saying that instead of paying the players a portion of the $20 in profit the owners would rather have zero profit and pay it all to interest.

The players don't get a piece of the sale of a team because they are players, not owners. This is the equivalent of working for a privately held company that has institutes profit sharing with its employees but then gets sold for more than the owner paid for it. The owner gets that benefit and does not pass it on to the employees. Until someone can give a solid argument that the players somehow deserve this money, I think this is foolish.

You are saying that profit sharing should be based on EBIT and not Net Income. This is exactly why I want to see the Income Statement and Statement of Cash Flows - so you can see where all the money is coming from. Even if you prove that NOI is good and it gets eaten up by interest costs, I still don't know any owner who would calculate profit sharing from EBIT, do you?

OasisBU wrote:If I buy a business for $1000 of all borrowed money, and the business makes $100, $80 goes to the cost of operations and $20 goes to the cost of servicing the money I borrowed to make the purchase, then my business is not profitable unless I go out and find a more favorable loan. Why should I have to pay the players a share of $20 of profit that doesn't exist?

Are you intentionally trying not to make sense?

Someone else please try to explain.

In these cases, the team is losing money because the owner borrowed too much to buy the team (and/or the interest on the loan is too high, etc). It is not because the team is paying too much money in salaries.

We need to get an honest accounting of what the teams are making and losing in real dollars. What the owner is trying to show in terms of a tax statement is very different from the economic health of a team. Business Owners frequently WANT to show a loss to shelter his income from taxes. Using a tax statement to try to prove that player salaries are the reason why a team loses money is NOT grounded in reality.