• Welcome to OGBoards 10.0, keep in mind that we will be making LOTS of changes to smooth out the experience here and make it as close as possible functionally to the old software, but feel free to drop suggestions or requests in the Tech Support subforum!

NBA Lockout Thread

I don't believe for a minute that people will pay 25% ($90M) they don't have to pay. The Hawks also were purchased for grossly more than Forbes values the team. The same happened with the Sonics/Thunder and very likely with the Wizards.

If it happens once, it could be a very rich person overspending. There's a problem with your premise in that there's a patterm of overpaying. Plus, it's not individuals wirting checks like Mark Cuban did. It's groups of investors.

It makes no sense for groups of investors to put themselves tens or hundreds of millions underwater from Day One.
 
You really don't think there's something to it when the best franchises from an investor perspective are the worst franchises from a fan perspective? What constitutes a good owner from your perspective? Who is a better owner, Donald Sterling or Mark Cuban? The Clippers make $19m more per year than the Mavericks.

Owning a sports franchise is like collecting classic cars. Sometimes you end up making money on them, but that isn't really the objective. The case of ownership groups would seem to throw a wrinkle, but is it really that far of a stretch to say that there are some wealthy guys out there who can't afford to buy a team themselves but are still willing to pony up a lot of cash for the thrill of even partial ownership? Talk to me when mutual funds are investing in these teams.
 
If it was an individual I might agree with you. This would possible for a group like OKC but happening every time makes it much more likely that the numbers are fake.
 
The numbers are fake? What does that even mean? Do you really think that Forbes just pulled them out of their ass?

I would assume they are based on rigorous analysis. If they have access to the copious data (and I am sure they do) and experts in the business (and I am sure they do) needed to come up with good assumptions, Forbes should be able to come up with accurate values. The math here isn't complicated, and there's only one way to do it. Valuation is all about the assumptions, and Forbes should be able to attain just as accurate assumptions as individuals/groups bidding to purchase a team.
 
ToughLoveDeac said:
Yea, I was on the side of the players during the NFL lockout, but I'm with you here. The fact that they were taking in 57% of BRI was insane.
Click to expand...

No, not really. The NBA % is slightly high at best.

fivethirtyeight-0705-nba3-blog480.jpg
 
Deadbolt said:
Players have to take less money. I know it's not their fault they were granted the contracts they were given, but the league can't sustain itself the way it was hemorrhaging money.
Click to expand...

It's not hemorrhaging money, in fact it's making a profit. It's just not making as much as the NFL or MLB, and the money is shared very poorly (which is a whole different story).

fivethirtyeight-0705-nba2-blog480.jpg
 
vadimivich said:
Nate Silver pretty much took apart the NBA's position in a withering piece in his NYT blog a while back: http://fivethirtyeight.blogs.nytime...foul-on-n-b-a-s-claims-of-financial-distress/

That should be required reading for anyone following this.
Click to expand...

Very interesting. I would argue that the profitability of the league is inflated by a few key franchises and that additionally the risk profile of a NBA team is a lot different from a blue chip publicly traded company. The damning part of the blog is the comparison to NFL and MLB. I am sure the NBA's counter argument would be that NBA rosters are much smaller so theoretically they should be paid less. I don't necessarily agree with that reasoning.
 
TBR said:
The numbers are fake? What does that even mean? Do you really think that Forbes just pulled them out of their ass?

I would assume they are based on rigorous analysis. If they have access to the copious data (and I am sure they do) and experts in the business (and I am sure they do) needed to come up with good assumptions, Forbes should be able to come up with accurate values. The math here isn't complicated, and there's only one way to do it. Valuation is all about the assumptions, and Forbes should be able to attain just as accurate assumptions as individuals/groups bidding to purchase a team.
Click to expand...

Either Forbes is wrong or the basis for their valuations are wrong. I tend to believe the latter.

Investment groups of wealthy people don't pay $90M more than something is worth.

Group after group doesn't overpay by many tens of millions of dollars.

Much, much more often than not, if it doesn't make sense it isn't as you think it is. It doesn't make sense that every group grossly overpays.

What does make sense is that the underlying numbers are not acurate.

By the way, I'm stunned that Sterling doesn't make much more than that as his team has been free and clear for decades.

As to Cuban, the Mavs salaries are tens of millions more than the Clippers.
 
vadimivich said:
It's not hemorrhaging money, in fact it's making a profit. It's just not making as much as the NFL or MLB, and the money is shared very poorly (which is a whole different story).

fivethirtyeight-0705-nba2-blog480.jpg
Click to expand...

This is a perfect example of why I don't believen owners' numbers.

In the above chart, MLB reported $6.1B in 2010.

Below MLB is reporting $7B in 2010. That's about 15% difference.

'The amount of money that moved from haves such as the Yankees and Red Sox to have-nots such as the Athletics and Padres in Major League Baseball totaled $404 million for 2010, according to league sources. The amount was a decline of 6.7 percent from last year when the total was $433 million.

The amount of money per club that was transferred from those that pulled in high revenues to those that needed assistance was not divulged.

Total gross revenues increased from $6.6 billion in 2009 to $7 billion for 2010. While revenues increased, some of the payors saw net local revenues increase at less a rate than some of the payees, hence the decline in revenue-sharing dollars.."
 
TBR said:
Very interesting. I would argue that the profitability of the league is inflated by a few key franchises and that additionally the risk profile of a NBA team is a lot different from a blue chip publicly traded company.
Click to expand...

The NFL is actually very similar to the NBA in terms of a few key franchises generating a huge proportion of the revenue - but the far more effective revenue sharing deals with it far better.
 
You couldn't GIVE me FREE tickets to 90% of the NBA regular season games.

Their product is garbage. It's a terrible game to watch in person. Worse on t.v. in the regular season.
 
Lost my post, and I am too tired to retype it, but it seems pretty clear to me that the majority of franchises are in rough shape with respect to income. The few that aren't either have a very favorable contract situation due lack of experience and/or talent (Thunder) or have a massive following (Knicks).

Remove the Bulls, the Knicks, and the Lakers from the picture, and there's $40m left to split between 27 franchises. Quick calculations indicate that 6.5% annual appreciation in the value of the franchise would be required in order to cover a 7% cost of capital assuming $1.5m in operating income in year 1 with 10% annual growth thereafter (another generous assumption). I don't really believe that this is happening. Take the Suns in 2004 versus the Warriors in 2011. These are fairly equivalent situations (certainly more so than the Thunder versus the Warriors or Hawks or the Suns versus the Hawks). The Suns were purchased for $404 million and the Warriors for $450 million. This is a $46 million or 11% difference. Annualize that, and you have 2.5% in annual appreciation, a far cry from the 6.5% needed to generate a reasonable return. Obviously this isn't very rigorous analysis, but it's as good as we're going to get using actual purchase prices.

Note: my assumptions were designed to ignore the special cases noted earlier. By using an average, you balance the franchises that have favorable contract situations (ie: Warriors) against the franchises that have unfavorable contract situations (ie: Mavericks) (and by favorable versus unfavorable, I am essentially referring to the combination of age and talent). By leaving out the Bulls, the Knicks, and the Lakers you leave out the teams with the massive followings.
 
Last edited:
david stern is a dictator and an arrogant bully.

bkf's posts on the sports and politics boards continue to confuse me
 
What ever happened to the 30% pay cut the owners were talking about back in the Spring?
 
The problem with the NBA is that the owners are stupid, this is the second time in 15 years they need to be saved from themselves. It's a joke, here's a sweet quote from Rashard Lewis
"Talk to the owner. He gave me the deal," Lewis recently told the Washington Post's Michael Lee. "When it comes to contracts, the players aren't sitting there negotiating that contract. I'm sitting at home and my agent calls me, saying, 'I got a max on the table.' I'm not going to sit there and say, 'Naw, that's too much. Go out there and negotiate $20 or $30 [million] less.'
Click to expand...
 
I feel no sympathy for the owners that continually sign terrible deals year after year, and then cry poverty.
 
bobknightfan said:
It's really pretty simple, milhouse. As much as anything else, I hate the NBA for what they have done to the game of basketball.....particularly college basketball. When played as a team game, using things like Coach Knight's motion offense, helpside defense, back picks & screens, etc., basketball is a thing of beauty. The NBA has lowered the game to a lot of one-on-one show-off stunts with emphasis on trash talk, baggy pants, jewelry, tattoes & flashy dunks. (The 24-second clock is responsible for a lot of that as well.) Running one's mouth all the time is not necessary to have a good basketball game. And what makes it worse for me is that basketball was always my favorite sport. As I said, I was an all-conference player in high school. Turned down a basketball scholarship offer to a junior college because I wanted to go to Wake Forest, and briefly even considering trying to walk-on to the freshman team at Wake. I'm not saying that the game should go back to being like it was 50 years ago....but the things I listed above simply are not necessary to the game and, in reality, detract from it greatly.

And with all the one, two & done players today, the NBA has completely ruined continuity in college basketball. That's reason #2.

I despise the NBA more than I despise most of today's Republican leaders....and that's saying a lot.
Click to expand...

sigh

the 24 second clock has been in place since 1954, and the team that just won the title emphasized team play and defense. the teams that generally win emphasize team play and defense. it's still basketball

when was the last time you sat down and watched an nba game?
 
You must log in or register to reply here.
Back
Top