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Old 10-24-2011, 06:11 PM   #27 (permalink)
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Originally Posted by moremilk View Post
What the players are disputing is the right of the owners to include interest expenses on the amounts used to finance the purchase of the teams. Which is a ridiculous claim if you ask any business person. Almost any legislation in the world will allow a business to depreciate the interest cost of investment, otherwise nobody (of very few) would be able borrow for such a purpose.
But the players aren't contesting the owners' book keeping. Not from tax law point of view.
The books are fine. The owners can keep borrowing money.

Players just don't consider those expenses basketball related. Same as a lot of income is not considered basketball related. And they don't want the team purchase expenses affecting their salaries in any way.

Owners are saying "we are losing money because you get paid too much + we got to pay the bank loans back".
Players aren't disputing that they are losing the money because of loans, they just don't care about it because they didn't get any piece of the loans.

I'm not defending players' position here. But it's not a tax law question. It's a PR battle. And it can't be judged 'ridiculous' or not from legal perspective.

Btw, it's not just the interests. Owners are free to depreciate full purchase value over 15 year period. But i'm not sure if they included that in the losses figure as well, the reports were mixed.
That is, I'm sure they include it as losses in the books otherwise they have to fire their accountants, just not sure if they include it in those 400 mil or 300 mil or whatever PR figures.
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