RealGM

musiqsoulchild wrote:

johnnyvann840 wrote:

ATRAIN53 wrote:Think of it like a long marriage that has just gotten STALE

new owner would breathe some life into the franchise, maybe be some charasmatic guy who like to do interviews.
If they spend 4 billion on the team - they will want that playoff revenue bad. Maybe we got "A Process" going.

It's never going to happen so it's really not worth discussing.
He has no compelling reason to sell.
There is a whole generation of Reinsdorfs ready to take the helm.

Stale is the word I've been using for the last five years.

Agree, it's tough to compete on the court with team owners who really don't care about the balance sheet. Truth is that none of these owners should care that much about operating costs. It's a pittance when compared to the equity inceases of these teams. I mean, FFS, the Bulls are worth damn near $3 BILLION. Reinsdorf got ownership and control of the team for $9.2 MILLION (wound up paying a total of $16 million). Well, a billion is ONE THOUSAND MILLION. Let that marinate. The Bulls have increased in value 18,650% since Reinsorf bought the team (the percentage increase of $16M to $3B) .... yeah, not a typo, that is eighteen thousand six hundred fifty percent (has to be put into words to be comprehended).

Johnny, this is patently untrue. How is an equity increase going to pay for anything?

You cant pay salaries with that.

Valuations are just that - they are not real money. Net Income after Operations - thats the prize. And keeping that high, keeps the valuations high.

No, the PRIZE is in the VALUATION. These are highly liquid assets that would have people lined up to buy them and we are talking about what $50 million or even $100 million in net income. That is NOTHING!!!. It's not like these team owners are struggling to make payroll or losing money. Even if their operation losses were significant, they are still NOTHING compared to the real PRIZE which is what they could cash out for at any given time.

johnnyvann840 wrote:

League Circles wrote:

coldfish wrote:https://www.forbes.com/nba-valuations/list/

Warriors made almost as much as Chicago last year while paying $50m in tax.

As I have noted in other threads and here, the Bulls are leaving hundreds of millions of dollars on the table by Chicago being so disinterested in them. Even a big luxury tax bill is small in comparison to how much potential money that Chicago is losing.

Where is your correction for the fact that the SF area has many, many more rich people than the chicago area? People who can effectively bid up the ticket prices and everything else to a level way beyond what the chicago market can bear.

It's not just that the warriors are better than the Bulls that yields them so much more revenue. It's that there is way more disposable income and people with disposable income in that area. Perhaps more than anywhere in the world.

Well, the truth is that if we are talking affluence, NYC, Los Angeles and Chicago have more millionaires than the Bay Area in total. In fact, NYC has the most BILLIONAIRES in the country and the World....

but for people worth over a million (HNW households- HIGH NET WORTH households worth over a million dollars) in volume, it's NYC, LA and Chicago at the top in the USA. San Francisco is not even in the top three of the nation.

New York City has nearly one million millionaires and is the richest city in the World with the most BILLIONAIRES and MILLIONAIRES of any World city... according to the latest data... NYC, Chicago, LA are all more affluent in total households than the Bay Area.

San Francisco, which is what those numbers are about, doesn't even begin to scratch the surface of silicon valley wealth. I'd bet it crushes Chicago area. Maybe even LA and NY areas.

League Circles wrote:

johnnyvann840 wrote:

League Circles wrote:Where is your correction for the fact that the SF area has many, many more rich people than the chicago area? People who can effectively bid up the ticket prices and everything else to a level way beyond what the chicago market can bear.

It's not just that the warriors are better than the Bulls that yields them so much more revenue. It's that there is way more disposable income and people with disposable income in that area. Perhaps more than anywhere in the world.

Well, the truth is that if we are talking affluence, NYC, Los Angeles and Chicago have more millionaires than the Bay Area in total. In fact, NYC has the most BILLIONAIRES in the country and the World....

but for people worth over a million (HNW households- HIGH NET WORTH households worth over a million dollars) in volume, it's NYC, LA and Chicago at the top in the USA. San Francisco is not even in the top three of the nation.

New York City has nearly one million millionaires and is the richest city in the World with the most BILLIONAIRES and MILLIONAIRES of any World city... according to the latest data... NYC, Chicago, LA are all more affluent in total households than the Bay Area.

San Francisco, which is what those numbers are about, doesn't even begin to scratch the surface of silicon valley wealth. I'd bet it crushes Chicago area. Maybe even LA and NY areas.

Pretty sure those numbers are the San Francisco Bay Area in total.. not just the city limits. Since California in total has around a million millionaires (which is what that graphic shows New York City alone having, I don't know if you are right. Sure we hear a lot about "tech millionaires and billionaires" but it still pales in comparison to the old money that is in NYC and Chicago.

and this would actually make sense because they are saying that 314,055 HNW households would fit the percentage of 7 million BAY AREA residents, not just the city of SF. That population of the Bay Area is about 7 million and that includes all of San Jose, Milpitas, Sunnyvale, Santa Cruz and the entire Bay Area, not just SF.

johnnyvann840 wrote:

League Circles wrote:

johnnyvann840 wrote:
Well, the truth is that if we are talking affluence, NYC, Los Angeles and Chicago have more millionaires than the Bay Area in total. In fact, NYC has the most BILLIONAIRES in the country and the World....

but for people worth over a million (HNW households- HIGH NET WORTH households worth over a million dollars) in volume, it's NYC, LA and Chicago at the top in the USA. San Francisco is not even in the top three of the nation.

New York City has nearly one million millionaires and is the richest city in the World with the most BILLIONAIRES and MILLIONAIRES of any World city... according to the latest data... NYC, Chicago, LA are all more affluent in total households than the Bay Area.

San Francisco, which is what those numbers are about, doesn't even begin to scratch the surface of silicon valley wealth. I'd bet it crushes Chicago area. Maybe even LA and NY areas.

Pretty sure those numbers are the San Francisco Bay Area in total.. not just the city limits. Since California in total has around a million millionaires (which is what that graphic shows New York City alone having, I don't know if you are right. Sure we hear a lot about "tech millionaires and billionaires" but it still pales in comparison to the old money that is in NYC and Chicago.

and this would actually make sense because they are saying that 314,055 HNW households would fit the percentage of 7 million BAY AREA residents, not just the city of SF.

I hear you, and I certainly may be wrong, but I'd guess the "bay area" still doesn't include much of the rich people living further out who attend games etc. There's also the dynamic as you allude to of old money in Chicago and NY. That's probably true, and those people probably don't spend money on the NBA product at the same rate as the much younger money silicon valley types. Obviously this is just spitballing but my point is that you can't just look at warriors style revenue and look at something as simple as TV households ostensibly in market and then say with any real meaning that the Bulls are leaving hundreds of millions of dollars on the table.

There are also probably way more low net worth but high income types in the warriors market that aren't millionaires but maybe make 300k, have no kids, and flock to warriors games.

I think, and this is probably Coldfish's prime point, the Bulls have not done a good job capturing the Chicago market. Their games don't seem to be the same level of attraction as other major cities.

There could be a number of reasons why that is true, including the lousy location of the stadium which is in a lousy neighborhood instead of a cool place to hang out. Bulls fans don't seem that prominent among the masses despite having the greatest basketball player ever.

The order of sports priorities is probably something like:
Bears
Cubs
....
....
....
Whomever is having the best year between Bulls, Sox, and Hawks

Given that the Hawks also seemed to dip in popularity extremely quickly after winning multiple titles, Chicago seems like a tough nut to crack in terms of changing preferences. I note the stadium location because that plagues all three of the other teams.

johnnyvann840 wrote:

League Circles wrote:

coldfish wrote:https://www.forbes.com/nba-valuations/list/

Warriors made almost as much as Chicago last year while paying $50m in tax.

As I have noted in other threads and here, the Bulls are leaving hundreds of millions of dollars on the table by Chicago being so disinterested in them. Even a big luxury tax bill is small in comparison to how much potential money that Chicago is losing.

Where is your correction for the fact that the SF area has many, many more rich people than the chicago area? People who can effectively bid up the ticket prices and everything else to a level way beyond what the chicago market can bear.

It's not just that the warriors are better than the Bulls that yields them so much more revenue. It's that there is way more disposable income and people with disposable income in that area. Perhaps more than anywhere in the world.

Well, the truth is that if we are talking affluence, NYC, Los Angeles and Chicago have more millionaires than the Bay Area in total. In fact, NYC has the most BILLIONAIRES in the country and the World....

but for people worth over a million (HNW households- HIGH NET WORTH households worth over a million dollars) in volume, it's NYC, LA and Chicago at the top in the USA. San Francisco is not even in the top three of the nation.

New York City has nearly one million millionaires and is the richest city in the World with the most BILLIONAIRES and MILLIONAIRES of any World city... according to the latest data... NYC, Chicago, LA are all more affluent in total households than the Bay Area.

Johnny, this is NOT what League Circles is talking about.

He is talking about multiple things:
1) Middle class income - most likely NBA fan is not a Millionaire or a Billionaire.
2) Ticket price as a percentage of disposable income
3) Disposable income as a percentage of total income
4) How much buzz there is about the Warriors vs. the Bulls?
5) How many other sports options are there in Oakland/SF that are viable alternatives compared to the 3 big ones here (Blackhawks, Cubs and Bears)?

Again, we can go deep into financial analytics. But we shouldnt. However, the kind of extremely superficial analysis you are presenting throws red meat at posters who just want to vent.

We need to be better than that. And go with facts and a more robust analysis.

johnnyvann840 wrote:

musiqsoulchild wrote:

johnnyvann840 wrote:
Stale is the word I've been using for the last five years.

Agree, it's tough to compete on the court with team owners who really don't care about the balance sheet. Truth is that none of these owners should care that much about operating costs. It's a pittance when compared to the equity inceases of these teams. I mean, FFS, the Bulls are worth damn near $3 BILLION. Reinsdorf got ownership and control of the team for $9.2 MILLION (wound up paying a total of $16 million). Well, a billion is ONE THOUSAND MILLION. Let that marinate. The Bulls have increased in value 18,650% since Reinsorf bought the team (the percentage increase of $16M to $3B) .... yeah, not a typo, that is eighteen thousand six hundred fifty percent (has to be put into words to be comprehended).

Johnny, this is patently untrue. How is an equity increase going to pay for anything?

You cant pay salaries with that.

Valuations are just that - they are not real money. Net Income after Operations - thats the prize. And keeping that high, keeps the valuations high.

No, the PRIZE is in the VALUATION. These are highly liquid assets that would have people lined up to buy them and we are talking about what $50 million or even $100 million in net income. That is NOTHING!!!. It's not like these team owners are struggling to make payroll or losing money. Even if their operation losses were significant, they are still NOTHING compared to the real PRIZE which is what they could cash out for at any given time.

Ok....tell me how a team with an operating loss but a high valuation makes its money in a fiscal year.

Actual money.

Fiduciary responsibility for the stakeholders. How do you hold yourself accountable to that? You cant just show them a Forbes valuation report.

League Circles wrote:I genuinely don't want a rich, cool young owner with billions to run my team into the red in an effort to win. It would just feel like watching some entitled rich kid play with his toys.

did you watch Ballmer when he introduced PG and Khawi a few weeks ago?



I've never seen Uncle Jerry that fired up, even when Konerko handed him that WS clinching baseball.

My owner comes out like that in a presser to introduce me like that- I'm ready to run thru a brick wall.
Look at Khawi's face, he's laughing at how intense the guy is but they have zero question what his level of commitment is. They both cited Ballmer a s reason they came to LA. No NBA player will ever say that about Reinsdorf.

All we get now is the obligatory once a year interview of spoon fed questions from him. Then we get Paxson calming how rebuilds take partience. Rinse and repeat while they count their $$$ and pretend to care about winning.

You take MJ the MJ tears out of the Bulls, we're basically the Knicks.


What happened when the Ricketts finally wrestled the Cubs away from the Tribune?
They came in and hired Theo and made it a edict to win the WS.

Rocky Wirtz went against his dads philosiphy and put the Hawks on TV, spent big on FA and brought a cup.

dougthonus wrote:I think, and this is probably Coldfish's prime point, the Bulls have not done a good job capturing the Chicago market. Their games don't seem to be the same level of attraction as other major cities.

There could be a number of reasons why that is true, including the lousy location of the stadium which is in a lousy neighborhood instead of a cool place to hang out. Bulls fans don't seem that prominent among the masses despite having the greatest basketball player ever.

The order of sports priorities is probably something like:
Bears
Cubs
....
....
....
Whomever is having the best year between Bulls, Sox, and Hawks

Given that the Hawks also seemed to dip in popularity extremely quickly after winning multiple titles, Chicago seems like a tough nut to crack in terms of changing preferences. I note the stadium location because that plagues all three of the other teams.

People aren’t very vocal about the Bulls but I don’t think attendance has been a problem. Hawks likely do better in Merch (well it seems that way). Sox have the stadium everyone is afraid of. Nothing to do around there. Nothing to really do around soldier field though either. With the UC you have spots just east at least to hang out. Plus if you are in Naperville and your kid is on heroin you can pick some up just west. That being said I don’t think the UC is that unappealing as far as getting there and attendance. Comiskey is considered way worse.

Nothing is going to compare to wrigley and they keep building it up... Bridgeport will never do that nor will the Westside imho.

Your chart is right though it is Bears, Cubs and then way down everyone else.

musiqsoulchild wrote:Ok....tell me how a team with an operating loss but a high valuation makes its money in a fiscal year.

Actual money.

Fiduciary responsibility for the stakeholders. How do you hold yourself accountable to that? You cant just show them a Forbes valuation report.

It is extremely common for investors to make money on firms that don't have operating profit. It doesn't happen in a fiscal year, but it isn't a requirement for everyone to make a profit in a fiscal year.

Michael Jordan purchased the Bobcats for 275m 10 years ago, they're now worth an estimated 1.25b (say roughly 4x that amount). Do you think it matters if he lost 10m a year in operating profit along the way?

There are lots of ways for teams to manage these operating losses that don't impact the owners on a day to day basis but they accumulate some debt that goes against their franchise value. Also worth noting that basically every team in the NBA is profitable today, so team aren't experiencing repeated large loss seasons.

Michael Jackson wrote:People aren’t very vocal about the Bulls but I don’t think attendance has been a problem. Hawks likely do better in Merch (well it seems that way). Sox have the stadium everyone is afraid of. Nothing to do around there. Nothing to really do around soldier field though either. With the UC you have spots just east at least to hang out. Plus if you are in Naperville and your kid is on heroin you can pick some up just west. That being said I don’t think the UC is that unappealing as far as getting there and attendance. Comiskey is considered way worse.

Nothing is going to compare to wrigley and they keep building it up... Bridgeport will never do that nor will the Westside imho.

Your chart is right though it is Bears, Cubs and then way down everyone else.

It's not just attendance though, as Coldfish pointed out, it's total operating revenue just feels like it could be higher given their market. Local TV / Radio money is probably the biggest area you would expect gains in if you were to get large gains. Revenue would also obviously be much higher with deep playoff runs.

At any rate, it's hard to say how big a problem it is, because when the Bulls were good, I think they were 3rd in revenue, so it could literally simply be the rebuild has hurt them in the short run but leaves them lots of headroom to improve.

dougthonus wrote:

musiqsoulchild wrote:Ok....tell me how a team with an operating loss but a high valuation makes its money in a fiscal year.

Actual money.

Fiduciary responsibility for the stakeholders. How do you hold yourself accountable to that? You cant just show them a Forbes valuation report.

It is extremely common for investors to make money on firms that don't have operating profit. It doesn't happen in a fiscal year, but it isn't a requirement for everyone to make a profit in a fiscal year.

Michael Jordan purchased the Bobcats for 275m 10 years ago, they're now worth an estimated 1.25b (say roughly 4x that amount). Do you think it matters if he lost 10m a year in operating profit along the way?

There are lots of ways for teams to manage these operating losses that don't impact the owners on a day to day basis but they accumulate some debt that goes against their franchise value. Also worth noting that basically every team in the NBA is profitable today, so team aren't experiencing repeated large loss seasons.

I know what you're talking about Doug. But theres no dividend payout here. Theres no Bulls stock that appreciates in value.

I am fairly certain that we are using the profit model to pay off the Advocate Center. Thats what the company I work for did. They financed an acquisition and until the debt for that financing was paid off, we were ultra-profit prioritizing our decisions.

musiqsoulchild wrote:I know what you're talking about Doug. But theres no dividend payout here. Theres no Bulls stock that appreciates in value.

So? People who have billions of dollars can wait for the final sale. Not everyone needs cash. In fact, most people rich enough to own an NBA team don't need cash.

I am fairly certain that we are using the profit model to pay off the Advocate Center. Thats what the company I work for did. They financed an acquisition and until the debt for that financing was paid off, we were ultra-profit prioritizing our decisions.

Sure, it doesn't mean those are the only viable models though.

dougthonus wrote:

musiqsoulchild wrote:I know what you're talking about Doug. But theres no dividend payout here. Theres no Bulls stock that appreciates in value.

So? People who have billions of dollars can wait for the final sale. Not everyone needs cash. In fact, most people rich enough to own an NBA team don't need cash.

I am fairly certain that we are using the profit model to pay off the Advocate Center. Thats what the company I work for did. They financed an acquisition and until the debt for that financing was paid off, we were ultra-profit prioritizing our decisions.

Sure, it doesn't mean those are the only viable models though.

What youre typing in response to my ideas is flying in the face of 30 years of Reinsdorfian Bulls history.

And especially so in the salary cap era version of the Bulls.

musiqsoulchild wrote:What youre typing in response to my ideas is flying in the face of 30 years of Reinsdorfian Bulls history.

And especially so in the salary cap era version of the Bulls.

I wasn't discussing what the Bulls are doing. I was just saying it isn't required that they make bottom line profits for it to be a good decision. The model they've chosen to use isn't necessarily the only viable model.

Also worth noting their revenues are so absurdly high relative to the league, that they'd have had to go into mega tax territory to have ever lost money.

One thing that is interesting to note is that over the court of time, the Bulls have probably gained at 2-3x more money in equity than they have in operating revenue.

dougthonus wrote:
Also worth noting their revenues are so absurdly high relative to the league, that they'd have had to go into mega tax territory to have ever lost money.

https://www.forbes.com/nba-valuations/list/#header:revenue_sortreverse:true

Bulls were 9th in revenue last year and only 11% more than the league median. They are making their profits nowadays by keeping costs down, not by just blowing everyone away in revenue.

coldfish wrote:

dougthonus wrote:
Also worth noting their revenues are so absurdly high relative to the league, that they'd have had to go into mega tax territory to have ever lost money.

https://www.forbes.com/nba-valuations/list/#header:revenue_sortreverse:true

Bulls were 9th in revenue last year and only 11% more than the league median. They are making their profits nowadays by keeping costs down, not by just blowing everyone away in revenue.

Sorry, meant profits. They were at 114M operating profit, I don't think they're going to experience 80M in tax bills anytime soon.

Assuming absolutely nothing changes with ownership, I would not be surprised if, in 10 years, both NY and both LA teams were ahead of the Bulls on these valuation lists.

coldfish wrote:

dougthonus wrote:
Also worth noting their revenues are so absurdly high relative to the league, that they'd have had to go into mega tax territory to have ever lost money.

https://www.forbes.com/nba-valuations/list/#header:revenue_sortreverse:true

Bulls were 9th in revenue last year and only 11% more than the league median. They are making their profits nowadays by keeping costs down, not by just blowing everyone away in revenue.

Of course - thats EXACTLY what you do if you dont have a good product and your investment into making that product is cyclical (cap cycle).