RealGM

jnrjr79 wrote:Bingo. The best-case scenario for an NBA fan is to have a filthy rich owner who wants to own the team for fun/vanity purposes rather than an investment vehicle.

That's pie in the sky though.

It's still primarily an investment vehicle. It's not like the new owner of the Nets invested primarily because he badly wants to win an NBA championship as badly as the fans do. It's why "At the end of the day, it's a business" is a timeless quote about NBA teams.

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Red Larrivee wrote:

jnrjr79 wrote:Bingo. The best-case scenario for an NBA fan is to have a filthy rich owner who wants to own the team for fun/vanity purposes rather than an investment vehicle.

That's pie in the sky though.

It's still primarily an investment vehicle. It's not like the new owner of the Nets invested primarily because he badly wants to win an NBA championship as badly as the fans do. It's why "At the end of the day, it's a business" is a timeless quote about NBA teams.

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It also wouldn't feel very cool to me as a fan when pushed to the extreme. It would feel like watching a rich kid play alone with his own toys. Call me old school but even having my star take way under market value to win, like Tim Duncan did for the last several years of his career, kind of taints the feeling of winning. Feels like half cheating. Basically watching people buy titles.

coldfish wrote:

TheSuzerain wrote:

Betta Bulleavit wrote:OMG. Please tell me that you don’t truly believe that. Answer this question for me. How many franchises are owned by poor people? Second question. How many are owned by billionaires or billionaire groups? Last question, did any of those billionaires become such by accident? Every owner is looking to make money. All of them. Period. If they weren’t, they wouldn’t be wasting their time. Billionaires don’t operate to lose money. They operate to make it. It’s jist that simple. Very black and white.

All owners grow richer due to the escalating value of their equity in the franchise.

But there are definitely owners who are in the red in terms of cashflow/yearly profits.

For some of the uber-rich, the NBA team itself is the luxury asset and is not a source of cashflow.

If you are an uber rich guy, you don't need billions of dollars every year to live. With that said, most rich guys want to be richer.

So, how does your typical rich guy accomplish this? Pay themselves a nominal salary to cover their own expenses either through their sports team or other interests. Then they want NO money coming to them directly. The tax on profit going to an owner is absurd because the business pays tax on it and then the owner pays tax on it as income.

Effectively, a rich guy would far and away rather increase the value of his sports team by $100m than to get $100m in profit in his pocket. The former is only taxed at capital gains at a time of his choosing. The latter gets double taxed immediately. This gives them a pretty big incentive to plow profits back into the company to grow it. They want to *show* no profit with significant revenue growth, in effect.

it all becomes income eventually when the team is sold, though, right? it's not like the owner can dip into the team funds for personal use so that he gets the personal benefit of the revenue w/o paying the income tax. re-investing is better than taking the income and sitting on it, but it's also just postponing the inevitable, which is even MORE income to be taxed

as for the general discussion, it's pretty obvious that $$$ is the primary motivation of the bulls organization. which is to be expected with an ownership group. it's probably the primary motivation for almost every sports organization. finishing second every year is a nonsensical objective, however. if you're good enough to finish 2nd, you're good enough to finish first. and obviously after winning a title the fans don't say to themselves "that was fun! now that my basketball team has gotten to the mountaintop, I think i'll move on to other entertainment options" no, they come back the next season and hope to watch their team win it all again. what IS good business strategy is to maintain hope within the fanbase regardless of whether the team actually has a strong chance of winning it all. spending enough to maintain the fanbase but no more than necessary

dice wrote:

coldfish wrote:

TheSuzerain wrote:All owners grow richer due to the escalating value of their equity in the franchise.

But there are definitely owners who are in the red in terms of cashflow/yearly profits.

For some of the uber-rich, the NBA team itself is the luxury asset and is not a source of cashflow.

If you are an uber rich guy, you don't need billions of dollars every year to live. With that said, most rich guys want to be richer.

So, how does your typical rich guy accomplish this? Pay themselves a nominal salary to cover their own expenses either through their sports team or other interests. Then they want NO money coming to them directly. The tax on profit going to an owner is absurd because the business pays tax on it and then the owner pays tax on it as income.

Effectively, a rich guy would far and away rather increase the value of his sports team by $100m than to get $100m in profit in his pocket. The former is only taxed at capital gains at a time of his choosing. The latter gets double taxed immediately. This gives them a pretty big incentive to plow profits back into the company to grow it. They want to *show* no profit with significant revenue growth, in effect.

it all becomes income eventually when the team is sold, though, right? it's not like the owner can dip into the team funds for personal use so that he gets the personal benefit of the revenue w/o paying the income tax. re-investing is better than taking the income and sitting on it, but it's also just postponing the inevitable, which is even MORE income to be taxed

Correct me if I am wrong

Owner 1: Owns team for 5 years, increases value by $500m and takes no profit. Sells and pays 20% long term capital gains and puts $400m in his pocket.
Owner 2: Owns team for 5 years, takes $100m in profit out per year and doesn't increase value. Pays 21% corporate tax and 37% individual income on the dividends. Puts $210m in his pocket.

Did I get it right?

Effectively your typical rich guy has a MASSIVE incentive to not make money but focus on growth as long as he can afford it for his lifestyle.

coldfish wrote:

dice wrote:

coldfish wrote:
If you are an uber rich guy, you don't need billions of dollars every year to live. With that said, most rich guys want to be richer.

So, how does your typical rich guy accomplish this? Pay themselves a nominal salary to cover their own expenses either through their sports team or other interests. Then they want NO money coming to them directly. The tax on profit going to an owner is absurd because the business pays tax on it and then the owner pays tax on it as income.

Effectively, a rich guy would far and away rather increase the value of his sports team by $100m than to get $100m in profit in his pocket. The former is only taxed at capital gains at a time of his choosing. The latter gets double taxed immediately. This gives them a pretty big incentive to plow profits back into the company to grow it. They want to *show* no profit with significant revenue growth, in effect.

it all becomes income eventually when the team is sold, though, right? it's not like the owner can dip into the team funds for personal use so that he gets the personal benefit of the revenue w/o paying the income tax. re-investing is better than taking the income and sitting on it, but it's also just postponing the inevitable, which is even MORE income to be taxed

Correct me if I am wrong

Owner 1: Owns team for 5 years, increases value by $500m and takes no profit. Sells and pays 20% long term capital gains and puts $400m in his pocket.
Owner 2: Owns team for 5 years, takes $100m in profit out per year and doesn't increase value. Pays 21% corporate tax and 37% individual income on the dividends. Puts $210m in his pocket.

Did I get it right?

Effectively your typical rich guy has a MASSIVE incentive to not make money but focus on growth as long as he can afford it for his lifestyle.

why would there be no corporate tax for owner 1?

you're right about the incentive to profit via capital gains rather than annual income. screwy tax system we've got

dice wrote:why would there be no corporate tax for owner 1?

you're right about the incentive to profit via capital gains rather than annual income. screwy tax system we've got

You only pay corporate tax on profit. There are a lot of companies that minimize profit as a result. Just constantly rolling it into expansion efforts is one way. Up until recently, a lot of NBA teams made no profit or even showed a loss. Despite that, they kept functioning and growing in value. I wonder why?

coldfish wrote:

dice wrote:why would there be no corporate tax for owner 1?

you're right about the incentive to profit via capital gains rather than annual income. screwy tax system we've got

You only pay corporate tax on profit. There are a lot of companies that minimize profit as a result. Just constantly rolling it into expansion efforts is one way. Up until recently, a lot of NBA teams made no profit or even showed a loss. Despite that, they kept functioning and growing in value. I wonder why?

out of curiosity, what exactly are they expanding when they don't report as profit?

also, payouts to employees are not double-taxed as corporate profits. they are subtracted from profits. so while there is certainly much incentive to reduce profits on the balance sheet, the disparity isn't nearly as wide as in your example

dice wrote:

coldfish wrote:

dice wrote:it all becomes income eventually when the team is sold, though, right? it's not like the owner can dip into the team funds for personal use so that he gets the personal benefit of the revenue w/o paying the income tax. re-investing is better than taking the income and sitting on it, but it's also just postponing the inevitable, which is even MORE income to be taxed

Correct me if I am wrong

Owner 1: Owns team for 5 years, increases value by $500m and takes no profit. Sells and pays 20% long term capital gains and puts $400m in his pocket.
Owner 2: Owns team for 5 years, takes $100m in profit out per year and doesn't increase value. Pays 21% corporate tax and 37% individual income on the dividends. Puts $210m in his pocket.

Did I get it right?

Effectively your typical rich guy has a MASSIVE incentive to not make money but focus on growth as long as he can afford it for his lifestyle.

why would there be no corporate tax for owner 1?

you're right about the incentive to profit via capital gains rather than annual income. screwy tax system we've got

I thought corporate taxes were on profits NOT distributed to shareholders (which are taxed as individual income). Maybe not.

Then those withdrawn individual profits can be invested in any way the shareholder chooses, whether other capital endeavor or buying millions of treasury bonds whose income is not subject to income tax. So you have to factor in whatever return might be gained from that (for example investing 100 million annually into an index stock fund in this scenario).

Remember those baby bulls and D rose bulls?

Those was the 2nd place Jerry was talking about.

This guy is a piece of work.

ShadyMoney wrote:Remember those baby bulls and D rose bulls?

Those was the 2nd place Jerry was talking about.

This guy is a piece of work.

I am all in on Jerry being gone and my does he have his faults but what you said there isn’t true.

With Rose he was absolutely willing to pay Wade and Lebron. Later he was willing to pay Carmelo still with Rose. It is easy to cherry pick the guy he is so unlikable but in those cases he wasn’t OK with just a second place finish.

Also a second place finish is something different in baseball compared to basketball. Limited teams make the playoffs in baseball.