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29.7.14 2016
The W - Basketball - Deadspin reveals how NBA owners can fabricate losses
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It's False
Scrapple








Since: 20.6.02
From: I am the Tag Team Champions!

Since last post: 1 day
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#1 Posted on | Instant Rating: 7.17
Showing that Deadspin is useful for more than just bashing ESPN.

Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss


    We've obtained audited financial data for the New Jersey Nets covering the three fiscal years from June 2003 to June 2006. Though the numbers end five years ago, you can still see the roots of the argument that will have NBA owners, come midnight, again locking out their players. You can also see how a team makes money and how it pretends not to be making any money at all.


First off, this shows how little I (and a lot of others) really know about the financial ins and outs of a sports league. I feel like an idiot. (Moreso than usual, anyway.)

This isn't to say that there aren't ANY teams that are losing money, but it sure leads me to believe that a number of teams are embellishing their losses.

So to fans that attend NBA games, from what you've seen, would you buy that your team is operating at a financial loss?



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hansen9j
Andouille








Since: 7.11.02
From: Riderville, SK

Since last post: 13 days
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#2 Posted on | Instant Rating: 8.59
I've been trying to wrap my head around that article and compare it to Canadian accounting and tax principles (which is more my forte). I was a little strong on Twitter when I called it a misleading simplification, but it's still shaky.

Probable error #1: I can say that it is not a double-count of expenses, as there is little relation between the RDA and the wage expense.; it's basically just a further allocation of "goodwill". If you buy a business for $300 million and the assets itself are worth $100 million, clearly you bought something else intangible for $200 million. In Canada, we would just lump that into one giant tax account and take a 7% deduction every year. In the US, it appears favorable tax rules allow it to be depreciated a lot faster.

Probable error #2: those deductions should still result in a tax bill upon sale. If I've depreciated my goodwill down to $150 million (and my assets are still worth $100 million), and I then sell the business for $275 million, I shouldn't have a loss of $25 million, I should have a gain of $25 million.

But in conclusion, this is still a valid argument against the bottom line income and how it relates to the labor problems, as it's pretty much bullshit to argue expenses incurred acquiring the business (goodwill amortization, interest on the debt used to acquire the business) are expenses that show how poor the businesses are and how salaries are out of control from reality.



Hooch is crazy.

Go Pack Go! (Champs!)
Let's Go Riders!
Zeruel
Thirty Millionth Hit
Moderator








Since: 2.1.02
From: The Silver Spring in the Land of Mary.

Since last post: 19 hours
Last activity: 9 min.
#3 Posted on | Instant Rating: 7.62
At least it isn't as bad as Hollywood Accounting where a parent company charges its subsidiary a distribution fee.

In this example, it shows how Warner Brothers LOST money on Harry Potter.
Click Here (techdirt.com)


In a Hollywood Accounting example, it would be like the team (which owns the arena) is charged a fee for the game by the arena, so the team is really moving the money from one account to another and can "make up" losses to avoid paying out profits.

(edited by Zeruel on 30.6.11 1952)


-- 2006 Time magazine Person of the Year --
Fuelly
-- July 2009 Ordained Reverend --
odessasteps
Scrapple








Since: 2.1.02
From: MD, USA

Since last post: 42 days
Last activity: 9 days
#4 Posted on | Instant Rating: 5.97

I believe the 1989 Batman movie also lost money, principally to keep Nicholson from getting his points for the movie.



Mark Coale
Odessa Steps Magazine presents


RUSSIAN FLAG BURIAL - an examination of 1984 mid-south


Zeruel
Thirty Millionth Hit
Moderator








Since: 2.1.02
From: The Silver Spring in the Land of Mary.

Since last post: 19 hours
Last activity: 9 min.
#5 Posted on | Instant Rating: 7.62
    Originally posted by odessasteps

    I believe the 1989 Batman movie also lost money, principally to keep Nicholson from getting his points for the movie.


Same with My Big Fat Greek Wedding, Coming to America, and Forrest Gump, among others. Because Forrest Gump was such a huge financial loss because of the accounting, the author of the book didn't sell the rights to the sequel because the first movie was such a huge "failure." He had a deal where he got a share of the profits and since the movie lost money on paper, he was barely paid anything.



-- 2006 Time magazine Person of the Year --
Fuelly
-- July 2009 Ordained Reverend --
shawnpatrick
Kishke








Since: 31.7.07
From: Leesville SC

Since last post: 804 days
Last activity: 686 days
#6 Posted on | Instant Rating: 2.77
The NBA's problems could be solved in just three easy steps.

1) Stop funding the WNBA. It's draining money. Women's basketball is more profitable in Europe (that's where the WNBA players make their REAL money during the season)

2) True revenue sharing between the teams. The Lakers for example earn more in one year from local broadcast rights then do the Blazers in ten years.

2) Eliminate some teams from the league. Let's face facts, there's a whole lot of dead weight in the NBA that does NOTHING for marketing or attendance. Get rid of the following six teams making into a 24 team NBA: Charlotte, Minnesota (sorry CRZ), Memphis, New Orleans, Sacramento, LA Clippers. Now of course the NBA union would never agree to this.
CajunMan
Boudin blanc
No longer registered








Since: 2.1.02
From: Give me a Title shot!

Since last post: 1013 days
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#7 Posted on | Instant Rating: 1.56
Have you checked out the new nba.com yet?

http://gizmodo.com/5817414/the-nba-isnt-allowed-to-post-pictures-of-basketball-players-on-their-website/gallery/1
odessasteps
Scrapple








Since: 2.1.02
From: MD, USA

Since last post: 42 days
Last activity: 9 days
#8 Posted on | Instant Rating: 5.97

I would think that the WNBA is not a huge money drain for the league. Most teams are owned by NBA parent clubs and they play in NBA owned buildings. Better to have 10-20 events in there over the summer than nothing.

One mid-level contract for an average NBA player would probably pay for the whole NBA.



Mark Coale
Odessa Steps Magazine presents


RUSSIAN FLAG BURIAL - an examination of 1984 mid-south


Mr. Boffo
Scrapple








Since: 24.3.02
From: Oshkosh, WI

Since last post: 366 days
Last activity: 326 days
#9 Posted on | Instant Rating: 5.78
Saw an interesting blog post where the author claims that that the idea that the problem with the NBA is the player salaries is ridiculous. And if it's true that the NBA salary cap is based on a fixed percentage of gross revenue, then I agree that it seems like a specious argument. And tying that salary instead to the owner's net revenue sounds like a bad idea to me, since the owner's aren't going to be opening up their books to prove that their team expenses are all legitimate, and that seems way too easy to game to the owner's benefit.
hansen9j
Andouille








Since: 7.11.02
From: Riderville, SK

Since last post: 13 days
Last activity: 1 hour
#10 Posted on | Instant Rating: 8.59
    Originally posted by shawnpatrick

    Eliminate some teams from the league. Let's face facts, there's a whole lot of dead weight in the NBA that does NOTHING for marketing or attendance. Get rid of the following six teams making into a 24 team NBA: Charlotte, Minnesota (sorry CRZ), Memphis, New Orleans, Sacramento, LA Clippers. Now of course the NBA union would never agree to this.
Each of the non-Hornets teams will cost about $300M to buy from the owners (judging by the Deadspin article). I find it difficult to think that the savings of the 6 team drop are going to make back that $1.5B startup cost.



Hooch is crazy.

Go Pack Go! (Champs!)
Let's Go Riders!
odessasteps
Scrapple








Since: 2.1.02
From: MD, USA

Since last post: 42 days
Last activity: 9 days
#11 Posted on | Instant Rating: 5.97

move them all across the pond and start the long-rumored NBA Europe division.



Mark Coale
Odessa Steps Magazine presents


RUSSIAN FLAG BURIAL - an examination of 1984 mid-south


shawnpatrick
Kishke








Since: 31.7.07
From: Leesville SC

Since last post: 804 days
Last activity: 686 days
#12 Posted on | Instant Rating: 2.81
    Originally posted by hansen9j
    >Each of the non-Hornets teams will cost about $300M to buy from the owners


Good point, plus all the court fights would nix the deal. If they REALLY are losing money, then some of them will go out of business on their own (the NHL I think was the last major sport to have a team go belly up)..
Zeruel
Thirty Millionth Hit
Moderator








Since: 2.1.02
From: The Silver Spring in the Land of Mary.

Since last post: 19 hours
Last activity: 9 min.
#13 Posted on | Instant Rating: 7.62
    Originally posted by shawnpatrick
      Originally posted by hansen9j
      >Each of the non-Hornets teams will cost about $300M to buy from the owners


    Good point, plus all the court fights would nix the deal. If they REALLY are losing money, then some of them will go out of business on their own (the NHL I think was the last major sport to have a team go belly up)..


By my research, you are right. The NHL Cleveland Barons, in 1978, merged with the Minnesota North Stars and they took the Barons' place in the Adams division.



-- 2006 Time magazine Person of the Year --
Fuelly
-- July 2009 Ordained Reverend --
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