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NBA Off-season thread: Duncan and Garnett retire

palmab03 said:
Most everything is valued at a cap rate. NBA franchises have a low one because of the prestige/scarcity. Everything's valued the same way, but cap rate is used in the real estate realm (where I live). In stocks its called multiples. You can invert a 5% cap rate and say its selling at 20x earnings. Same shit.

the Clippers are worth as much as the Red Sox based on that CBA. Before it they were worth like $500 mil. That's absurd.
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Clips are a bad example / outlier
 
palmab03 said:
So if the Salary cap is $107 million, and that equals to 50% of the revenue, approx $214 million in revenue to be split. Going from 57% of the revenue down to 50% of revenue means a $17 million a year difference to each owner. Lets assume NBA teams trade at a 3 cap (take net income divided by 3%) then each owner immediately reaped $566 million in value to their franchise, or about $17 billion in value the owners created by getting that split.

The players are better off than football players and dart players, but that doesn't mean they didn't get fleeced.
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You're ignoring a key factor in your calculations - you are using revenue instead of net income. The players get 50% of the revenue without bearing any of the expenses. The owners get 50% of the revenue but incur 100% of the operating expenses against that 50% (including the arenas, staff, marketing, ticketing, employer payroll taxes on the players' 50%, etc). The players are definitely getting the biggest share of the pie.
 
2&2 Slider To Leyritz said:
You're ignoring a key factor in your calculations - you are using revenue instead of net income. The players get 50% of the revenue without bearing any of the expenses. The owners get 50% of the revenue but incur 100% of the operating expenses against that 50% (including the arenas, staff, marketing, ticketing, employer payroll taxes on the players' 50%, etc). The players are definitely getting the biggest share of the pie.
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I'm assuming they're profitable thus increasing revenue goes straight to the bottom line net income
 
I was flipping through the channels and saw Zeke on NBA TV. He said his sleeper for a #4 or #5 seed in the West was...........I think more of a pause than that...............................Where's Irish when we need him? The Sactown Kings were Zeke's pick.

And you wonder why no one other than Dolan wants him in an NBA front office.
 
palmab03 said:
So franchise values have tripled from 369 million average to 1.25 billion while players average salaries went from 5 million to 8 million. 300% gain for owners, 60% for players. Fleeced is accurate
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the single biggest factor in the valuation boom was steve ballmer making an insane blind bid on the clippers because he just really wanted an nba team. notice the majority of boom in the chart below occurs not after the 2011 CBA but ballmer's purchase.

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Under the old Cba it averaged 2% a year for 5 years, then went 10,25,25 then balmer purchased it
 
palmab03 said:
Under the old Cba it averaged 2% a year for 5 years, then went 10,25,25 then balmer purchased it
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well of course claiming back 7% of the revenue increased the value of the franchises, that's to be expected... but not nearly as much as one of the richest men in the world resetting the nba team market.
 
also the massive $24 billion dollar TV deal was announced shortly after ballmer's purchase as well, another factor in the valuation boom
 
Yeah, sports franchises are like toys for the ultra-wealthy, not necessarily pure business investments.
 
palmab03 said:
I'm assuming they're profitable thus increasing revenue goes straight to the bottom line net income
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That doesn't make any sense. I can think of many ways to increase my revenue, and almost all of them involve increasing expenses as well, regardless of existing profitability. The reason they took back some of the players portion was because some teams weren't profitable. Value and positive cash flow are two completely different concepts in this context. People who have the money will pay more far more for a pro sports team than it is "worth" from a pure business valuation perspective, simply because of the prestige. But the business itself still has to cash flow for the league.
 
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