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Relocation of a different sort is taking place in Detroit. The Pistons lost $63.2 million before collecting revenue sharing last season, the largest loss by a wide margin, despite being one of the NBA's larger markets. (The team received $17.6 million in revenue sharing to help offset the losses.)

Such shortfalls help explain why the Pistons wanted to move out of a building their parent company owned far into the suburbs and relocate to a new arena in downtown Detroit this season, hoping that it helps boost revenue.

This snippet is from a much larger piece on ESPN regarding revenue sharing in the NBA that is worth a read if you're bored - http://www.espn.com/nba/story/_/id/20747413/a-confidential-report-shows-nearly-half-nba-lost-money-last-season-now-what

Not shocking given the team and the boring Palace location but I expect a big jump in ticket sales Downtown

Yeah, leaving Auburn Hills makes a ton of sense when factoring this information in.

Hopefully that helps get the team above water. Losing over 40 million even after revenue sharing is just plain ugly. Crazy that we lost more money than any other team.

They'll have a hard time turning a profit unless there's a better or more interesting product on the floor, though it should hopefully reduce losses. Even a die hard fan like me had a hard time sitting through games last season. There just wasn't anything fun to watch. That kills TV ratings and it kills ticket sales.

Losing 62M when you own the arena completely and all the parking/concessions/advertising 100% is damning. Not sure how moving to a shared venue you don't own will help in that regard. I wonder if this includes the capital upgrades to The Palace Gores put in just last off-season. I guess it depends on ticket sales - but tickets are not seemingly selling well at the LCA either. If we don't make the play-offs this season I think we could see a complete tear down.

The team was bought 7 years ago for $400 million and is now worth almost a billion so I'm not so sure that he is really "losing money"... he certainly isn't losing value.

bstein14 wrote:The team was bought 7 years ago for $400 million and is now worth almost a billion so I'm not so sure that he is really "losing money"... he certainly isn't losing value.

Yeah, I doubt Gores is regretting his purchase overall thanks to the TV deal and all that which has inflated the value of all NBA franchises, but I'm sure he'd still prefer to make money.

Revenue and value are two entirely different things and both matter to an owner- unless you're Dan Gilbert or Mike Illitch (God rest his soul).

bstein14 wrote:The team was bought 7 years ago for $400 million and is now worth almost a billion so I'm not so sure that he is really "losing money"... he certainly isn't losing value.

Karen Davidson got ripped off on the deal though - Cranes reports $325M final price. I mean that is for the Pistons, the Palace, Pine Knob. She picked the worst time to sell right after the housing bubble burst and economic meltdown. And Ilitch didn't want the buildings.

The deal Gores got with the team is probably is what is allowing Pistons to spend right now.

Sounds like some pretty creative accounting going on. That would be the team only made revenue of half the player salaries? Not buying it. I assume they must be counting some expense payments to themselves - ie the pistons owe palace entertainment x bazzillion for arena use even though it's really the same company.

That "loss" is most likely not a "loss" in the sense most of us define a "loss"

And I bet they took a giant depreciation loss on the palace, but that offset the improvements.

That was the largest loss of any team, by the way.

flow wrote:That was the largest loss of any team, by the way.

Honestly i would have been shocked if it wasn't with what a ghost town the Palace has been for a while now.

Creative accounting to some extent for sure but wouldn't surprise me if we're "losing" money.

The pressure to turn this team around quickly is real!

It doesn't have to be creative accounting at all. Profits and losses are a function of operating costs vs. revenue. The fact that the saleable value of the business has increased doesn't mean it can't lose money in its operations. The saleable value has nothing to do with the annual profit/loss reporting because it means nothing unless the business is sold. Annual increases in value are not increases in the revenue stream.

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Manocad wrote:It doesn't have to be creative accounting at all. Profits and losses are a function of operating costs vs. revenue. The fact that the saleable value of the business has increased doesn't mean it can't lose money in its operations. The saleable value has nothing to do with the annual profit/loss reporting because it means nothing unless the business is sold. Annual increases in value are not increases in the revenue stream.

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That is NOT how accounting works at large businesses. The pistons could certainly lose money. Bad team + big payroll. Those losses can't realistically be roughly half of expenses tthough. They have to be taking a pretty big writedown on something.

You just supported my point.

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When cost (team payroll plus
operating expenses) is less than revenue (ticket/concession sales) the team loses money. This is not rocket science.

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Writeoffs are expensives that are deducted from business revenue.

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We have a pretty apathetic fan base. People show up when we have a good team. I assume they would also show up if we had a superstar talent. Moving downtown might help, but it's been years since we really had a marketable player. Hell, for a while we were pushing Rodney Stuckey as the face of the franchise. That's just not going to get it done.

When this team gets back to 48-50 wins and hopefully has an All-Star or two the seats will start to fill up again. It really is that simple. Create a better product.

You'd think this would make the selling of floor space to Platinum Equity more understandable.

Still hate it. Both the idea and the script.



http://detroit.cbslocal.com/2017/09/18/pistons-new-floor-at-little-caesars-arena-to-feature-platinum-equity-on-it-photo/

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