Raptors Biggest Losers - Page 2
Old 10-23-2011, 06:33 PM   #21 (permalink)
chucking wood like a woodchuck would if a woodchuck could chuck wood

Senior Member
 
Join Date: Aug 2011
Posts: 728
Representing:
Default

The initial owners' claim was that they were losing 400 mil a year not 300, i believe.
And the initial stand was a 40-60 split (60 being owners), where they recover losses + add about 8 mil per team in profits.
ValanciunasFanboy is offline   Boss Key Wife Key Reply With Quote
Old 10-23-2011, 07:19 PM   #22 (permalink)
sticking to his guns... is stuck to his guns...

Senior Member

 
DanH's Avatar
 
Join Date: Jul 2010
Location: Montreal, QC
Posts: 4,516
Representing:
Default

Quote:
Originally Posted by ValanciunasFanboy View Post
The initial owners' claim was that they were losing 400 mil a year not 300, i believe.
And the initial stand was a 40-60 split (60 being owners), where they recover losses + add about 8 mil per team in profits.
The number you are thinking of was a one year loss incurred in 2006-07 I believe, when the league saw its worst loss of the past CBA. It may have been a different year, but it was a low point rather than the most recent data.

And the original offer was a flat 2 billion per year, which using a 4% growth projection would equate to an average of 38% for the players, dropping almost to 30% by the final year.
DanH is online now   Boss Key Wife Key Reply With Quote
Old 10-23-2011, 07:38 PM   #23 (permalink)
chucking wood like a woodchuck would if a woodchuck could chuck wood

Senior Member
 
Join Date: Aug 2011
Posts: 728
Representing:
Default

no iirc 400 mil was the all star game figure that Stern threw out, as in, they were going to lose 400 in 2010-11 and they wanted a ~750 mil swing which would be a 40-60 split. Idk if the 400 mil held up, likely not - as the end of last season and the playoffs must've been very lucrative i assume.

either way, i guess it doesn't matter much now, as owners went from a 750 mil swing to less than 300 mil, and now it's 'only' a hundred or so that separates them.
ValanciunasFanboy is offline   Boss Key Wife Key Reply With Quote
Old 10-24-2011, 01:39 PM   #24 (permalink)
whatever

Senior Member
 
Join Date: Dec 2007
Location: toronto
Posts: 9,542
Representing:
Default

Quote:
Originally Posted by ValanciunasFanboy View Post
Correct me if I'm wrong, but that math seems odd.
NBA revenues are at around 4 bil a year AFAIK. So those 3% would be ~120 mil, or ~4 mil per team.
Idk how you came up with a 2% profit rate or those huge valuations (for your math to be correct, NBA teams' combined value should be ~15 bil, no way).

Btw, as per owners' math, they are breaking even at 53% if owners get those 53%. At 50-50 owners are still losing money - but that epends on who you ask, of course.
I was referring to the ROI vs the initial investment. The average franchise is probably worth around 500m, based on the prices paid lately for Detroit and GSW. If I invest 500m and I make 10 million a year, that's a 2% ROI which is ridiculously low.
moremilk is online now   Boss Key Wife Key Reply With Quote
Old 10-24-2011, 01:47 PM   #25 (permalink)
whatever

Senior Member
 
Join Date: Dec 2007
Location: toronto
Posts: 9,542
Representing:
Default

Quote:
Originally Posted by DanH View Post
Let's assume we believe the owners' claims, and that they lost 300 million last year alone. Last year, the total revenue was 3.817 billion. At 57%, the players received 2.176 billion. To recover 300 million, assuming no growth in revenue due to the effects of the lockout, the owners would logically have to pay the players only 1.876 billion, which is 49% of the revenues. So at 50-50, the owners claim to still be losing money. Revenue growth would help bring that to a gain.

Of course, the owners' claims are up for debate, but without personal access to the entire league's books, I can't really comment on that, except to say that I expect some of the accusations that have been made hold merit, and some don't and have been refuted. Personally I don't find the conversation too interesting, since it really isn't about what each side SHOULD be asking for, but what they are asking for, and what leverage they have.
That's not an assumption, it's a fact. Owners have opened up the books to the players and the figures were confirmed. 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.

So in effect, if you discount that claim from the players, basically everybody is in agreement that the owners are losing money as a whole. Whether the breaking point is 50% or 51% is less relevant. Players know that and yet they claim owners are greedy for wanting to turn a profit on what amounts to a huge business investment and claim that owners should, AT BEST, break even. Anything else constitutes greed from their point of view.

How can anybody support such a point is beyond me, assuming they fully understand the situation (which I grant very few people do, including most espn writers).
moremilk is online now   Boss Key Wife Key Reply With Quote
Old 10-24-2011, 06:40 PM   #26 (permalink)
chucking wood like a woodchuck would if a woodchuck could chuck wood

Senior Member
 
Join Date: Aug 2011
Posts: 728
Representing:
Default

Quote:
Originally Posted by moremilk View Post
I was referring to the ROI vs the initial investment. The average franchise is probably worth around 500m, based on the prices paid lately for Detroit and GSW. If I invest 500m and I make 10 million a year, that's a 2% ROI which is ridiculously low.
i don't think a franchise on average is worth anything close to 500 mil. GSW sure, profitable team, huge market (although they sold for 450 or so i believe?). I'd guess it's more ~350.
And the 50/50 split won't bring profits, at least according to owners' projections.

Either way, I agree, we are talking incredibly small profit margins here. There are tax exceptions, but still, the system does not really encourage buying teams unless you want to develop an arena or have other secondary benefits in mind.
ValanciunasFanboy is offline   Boss Key Wife Key Reply With Quote
Old 10-24-2011, 07:11 PM   #27 (permalink)
chucking wood like a woodchuck would if a woodchuck could chuck wood

Senior Member
 
Join Date: Aug 2011
Posts: 728
Representing:
Default

Quote:
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.
ValanciunasFanboy is offline   Boss Key Wife Key Reply With Quote
Old 10-25-2011, 03:06 PM   #28 (permalink)
is pounding the rock!

Senior Member
 
Superjudge's Avatar
 
Join Date: Dec 2007
Posts: 17,592
Representing:
Default

you know what they say.... "make hay while the sun shines".

Well the so called "slaves" are standing around pissing and moaning about pennies, and they are about to loses millions.

Idiots.

I'd bring in scabs. Kids only care about and1 streetballers now anyhow, as long as there are in game dunks, the NBA will still work on a decent level while the lockout remains.

is that legal dan??
Superjudge is offline   Boss Key Wife Key Reply With Quote
Old 10-25-2011, 03:17 PM   #29 (permalink)
sticking to his guns... is stuck to his guns...

Senior Member

 
DanH's Avatar
 
Join Date: Jul 2010
Location: Montreal, QC
Posts: 4,516
Representing:
Default

Quote:
Originally Posted by Superjudge View Post
you know what they say.... "make hay while the sun shines".

Well the so called "slaves" are standing around pissing and moaning about pennies, and they are about to loses millions.

Idiots.

I'd bring in scabs. Kids only care about and1 streetballers now anyhow, as long as there are in game dunks, the NBA will still work on a decent level while the lockout remains.

is that legal dan??
It's complicated. Once the owners do that, the union will decertify, and the owners cannot collaborate not to hire those players. That would violate anti-trust law. Then the competitive owners will start outspending everyone else (there could be no salary cap restrictions if there is no union) and all the big names will go to the same place, half the teams would collapse competitively and financially, the league would likely have to split into an A and B league, one of which would fold shortly, then the remaining players form a union the next summer to protect themselves and we're back where we started but with half the current owners losing the hundreds of millions they paid to own a team. And now you have half the number of jobs (if that) to offer the players. Both sides lose big time if they take this path. That's why you rarely see a league do this, and even when they do, they don't do it for long.
DanH is online now   Boss Key Wife Key Reply With Quote
Old 10-25-2011, 03:35 PM   #30 (permalink)
I believe in Masai!

giant steps

 
'trane's Avatar
 
Join Date: Dec 2007
Posts: 16,658
Representing:
Default

you make too much sense dan!
'trane is online now   Boss Key Wife Key Reply With Quote
Old 10-25-2011, 06:12 PM   #31 (permalink)
is.....

Tai-Pan
 
m5racer's Avatar
 
Join Date: Aug 2008
Posts: 2,903
Representing:
Default

Quote:
Originally Posted by ValanciunasFanboy View Post
50/50 split won't bring profits, at least according to owners' projections.
Its not about that from the players POV.

Players are supposedly doing this for "future" players and future bargaining agreements. Think of it this way.

Players lets say agree to 50% instead of 52.5% or 53%.....what happens in 5 years when they go back to the tables and the BRI is at 50%, then the owners are going to offer 42-45% further effecting the players BRI. THey are holding true so that during the next BA, the figure is at 53% rather then 50% allowing for further negotiations to be conducted.

Considering everything that is going on the players are the ones using their bodies, and potentially risking future health problems (imagine J.Oneal in 20 years, will he even be able to walk? ) The owners are a bunch of ultra rich, mostly older white men that are "INVESTING" their money into an investment opertunity.....lets face it, not all investments leave one's bank books in the black.....believe it or not, but some investments actually cause one to lose money.

If you want to own a sports franchise, your number one goal should not be profits (yes its important and prob in top 3, but if your doing it solely for profits then your just a making bad business decisions beucase its FACT that professional teams in NA lose money.... referring to hockey and basketball)

***Disclaimer: Im just stating an opinion, and AM NOT taking a side or saying one party is more right then the other.****
m5racer is online now   Boss Key Wife Key Reply With Quote
Old 10-25-2011, 11:05 PM   #32 (permalink)
chucking wood like a woodchuck would if a woodchuck could chuck wood

Senior Member
 
Join Date: Aug 2011
Posts: 728
Representing:
Default

Quote:
Originally Posted by m5racer View Post
Its not about that from the players POV.

Players are supposedly doing this for "future" players and future bargaining agreements. Think of it this way.

Players lets say agree to 50% instead of 52.5% or 53%.....what happens in 5 years when they go back to the tables and the BRI is at 50%, then the owners are going to offer 42-45% further effecting the players BRI. THey are holding true so that during the next BA, the figure is at 53% rather then 50% allowing for further negotiations to be conducted.
2016 or 2021 (if it's the long deal) negotiation is about the last thing on players' mind, i suspect.

Quote:
Originally Posted by m5racer View Post
If you want to own a sports franchise, your number one goal should not be profits
the lockout isn't really about getting serious profits at this point though. It's about limiting losses. If the reports are accurate and many teams have negative cash flows of tens of mils, it sucks.
Who can afford that? Paul Allen and a couple others?
GL finding a Paul Allen for every team.
A lot of owners have a net worth of 1 bil or so. They can't afford to lose 50 mil a year on luxury tax or best coaches. So what's the "number one goal" for them? Not winning if they can't afford it.
Unless you get huge indirect benefits for your main business to compensate those losses, it's a broken system.
ValanciunasFanboy is offline   Boss Key Wife Key Reply With Quote
Old 10-26-2011, 06:14 AM   #33 (permalink)
Likes raw prospects with a great work ethic...

Senior Member
 
LKeet6's Avatar
 
Join Date: Apr 2011
Location: Liverpool (UK)
Posts: 1,954
Representing:
Default

some really great debate on here guys, learnt a couple of new things i didn't know. I've always been pretty much against the players on this and that was confirmed at the start of this thread but then some interesting points were made about the loans affecting losses and interest payments and the argument about why should this be a part of the financial consideration of the players, that made sense to me.

for me though, it boils down to, what is best for the league? the sport itself. And that surely has to be swaying way over to the side of the owners? Both financially and systemically it is better for the sport if more of the owners' demands are met than the players? In terms of getting the finances of the league sorted and making another attempt at making a more balanced playing field, increasing the competitiveness of the league.
LKeet6 is offline   Boss Key Wife Key Reply With Quote
Old 10-26-2011, 08:43 AM   #34 (permalink)
the next dictator of MLSE

fresh and clean
 
Windex's Avatar
 
Join Date: Oct 2008
Location: uʍop ɹǝpun
Posts: 22,524
Representing:
Default

NBA teams are like rare paintings (only 30). You lose money maintaining it but you sell it for more than initial price in the future
Windex is offline   Boss Key Wife Key Reply With Quote
Old 10-26-2011, 09:25 AM   #35 (permalink)
chucking wood like a woodchuck would if a woodchuck could chuck wood

Senior Member
 
Join Date: Aug 2011
Posts: 728
Representing:
Default

Quote:
Originally Posted by Windex View Post
NBA teams are like rare paintings (only 30). You lose money maintaining it but you sell it for more than initial price in the future
It used to be the case, and it will certainly still be the case for some teams that were bought decades ago.
But since ~2003 the prices seem quite stuck. The expansion fee at the time was 300 mil, some teams like Phoenix, Celtics or Cavs got sold for around 400 mil.
And the prices haven't moved much since.
Certainly not enough to cover tens of mils in losses that you need to compete (in most places).
Some of those teams are even selling for less.

A better CBA and revenue sharing may trigger that growth again somewhat. Although no way it's going to be anything like the previous price growth.
Either way, a system change seems very reasonable imo and good for the league.
ValanciunasFanboy is offline   Boss Key Wife Key Reply With Quote
Reply


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On


All times are GMT -4. The time now is 03:50 AM.


Powered by vBulletin® Version 3.7.1
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
Copyright RaptorsForum.com 2005-2011

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24