Lockout

[Sleepy51]

They don't have to pay players anything while locked out.

[Sleepy51]

Oh, and as long as the owners are crying poverty, can they please stop throwing my money down that WNBA hellhole already?

[turk3d]

They don't have to pay players anything while locked out.

Doesn't their pay cycle continue for a while though? Maybe it's previous years pay?

[turk3d]

Oh, and here's another nice little tidbit:

http://fivethirtyeight.blogs.nytimes.co ... um=twitter

The N.B.A.’s operating margin (operating income divided by revenues) was about 5 percent in 2009-10 and has been about 7 percent during the life of the current labor deal.

A 5 percent or 7 percent profit is not dissimilar to what other businesses have experienced recently. Fortune 500 companies, for instance, collectively turned a 4.0 percent profit in 2009 and a 6.6 percent profit in 2010 (both figures after taxes). Profit margins in the entertainment industry, in which the N.B.A. should probably be classified, have generally been a bit lower than that.

[Twinkie defense]

5% is not a big profit margin... even with interest rates really low right now, you can just put that money in the bank and make 1% or more. Certainly teams like the T-Wolves would be better off just doing that if it were only about their annual return on investment.

And it should be noted that many businesses, including in the entertainment sector, have similarly looked to cut costs in recent years. In my own work, there has been no merit increases for several years, we had a year's worth of furloughs, and are about to announce layoffs. And in the mean time my rent has gone up 25% over the last three years (and no I didn't move). Basketball is not immune - even when revenues have gone up, expenses have tended to go up even more.

Turk, if basketball misses a season, do you think you will find something to permanently replace it? And if so what might that be? One year from now will I not see you on the RealGM basketball board, but instead spending all your time on the soccer board? Or Sleepy's WNBA board?

[turk3d]

5% is not a big profit margin... even with interest rates really low right now, you can just put that money in the bank and make 1% or more. Certainly teams like the T-Wolves would be better off just doing that if it were only about their annual return on investment.

And it should be noted that many businesses, including in the entertainment sector, have similarly looked to cut costs in recent years. In my own work, there has been no merit increases for several years, we had a year's worth of furloughs, and are about to announce layoffs. And in the mean time my rent has gone up 25% over the last three years (and no I didn't move). Basketball is not immune - even when revenues have gone up, expenses have tended to go up even more.

Turk, if basketball misses a season, do you think you will find something to permanently replace it? And if so what might that be? One year from now will I not see you on the RealGM basketball board, but instead spending all your time on the soccer board? Or Sleepy's WNBA board?

Actually Twinkie 5% is quite high in todays economy (I think one of the points of article). And you show me a bank that currently pays 6% interest in todays market when they can only lend it out for 3%. This of course is providing that 5% is all the teams are getting and not a lot more. If that's all they[re getting then they should be opening their books to the Union. At least they would be able to use that as a justification for radically changing the split.

As for whether or not you or I am posting on Realgm, that's not the issue, it's whether we're continuing to pay to go to games anymore (in Baseball there was an actual boycott for a while). Fans I'm sure would have a blast going onto the blogs and talk shows and badmouthing the greedy owners along with talk radio host and newspaper writers while boycotting the games for a while. Who needs to go to games for that? Sure would be a lot cheaper, lol.

[Coxy]

I'd like to see Sleepy51's WNBA board. It would have a strict policy on pictures no doubt.

[Twinkie defense]

Again, the League says 22/30 teams incurred losses, so my point is not that they should be happy with their 5% returns. But 5% is not a lot. And yeah times are tough, and you're not going to get 5% interest at a bank. But it's exactly because times are tough that businesses are wanting to reduce the total amount of money they pay for expenses such as labor.

And my other point is that no matter how much we complain, we will come back and watch games on NBC (driving television revenue), go to a game or two if not a seasons worth (driving gate receipts, concessions, and merchandise sales), and we'll continue to show our love by yammering incessantly about the sport.

Just like people were supposedly boycotting Cohan - the team sold for a record amount. Because we are slave to our team, not because we were withholding the love until the sale.

Here's an acid test for you: We're in the lockout already. I would love to see one single Warriors fan here tell me they've had enough, they are done with the NBA. And stay done. Any takers?

[don nelson]

5% is not a big profit margin... even with interest rates really low right now, you can just put that money in the bank and make 1% or more. Certainly teams like the T-Wolves would be better off just doing that if it were only about their annual return on investment.

And it should be noted that many businesses, including in the entertainment sector, have similarly looked to cut costs in recent years. In my own work, there has been no merit increases for several years, we had a year's worth of furloughs, and are about to announce layoffs. And in the mean time my rent has gone up 25% over the last three years (and no I didn't move). Basketball is not immune - even when revenues have gone up, expenses have tended to go up even more.

Turk, if basketball misses a season, do you think you will find something to permanently replace it? And if so what might that be? One year from now will I not see you on the RealGM basketball board, but instead spending all your time on the soccer board? Or Sleepy's WNBA board?

Actually Twinkie 5% is quite high in todays economy (I think one of the points of article). And you show me a bank that currently pays 6% interest in todays market when they can only lend it out for 3%. This of course is providing that 5% is all the teams are getting and not a lot more. If that's all they[re getting then they should be opening their books to the Union. At least they would be able to use that as a justification for radically changing the split.

As for whether or not you or I am posting on Realgm, that's not the issue, it's whether we're continuing to pay to go to games anymore (in Baseball there was an actual boycott for a while). Fans I'm sure would have a blast going onto the blogs and talk shows and badmouthing the greedy owners along with talk radio host and newspaper writers while boycotting the games for a while. Who needs to go to games for that? Sure would be a lot cheaper, lol.

The weakness in your thought process is you're limiting interest rates to yields from local banks even though the NBA's a global enterprise. FYI banks in Australia which are comparable to and fully insured like Wells Fargo or Bank of America are currently offering 6.5% on 6 month CD's. If you are Joe Lacob why would you want to invest $450 million to buy the Warriors if you aren't getting a better return than what is available from established banks in reputable countries?

[Twinkie defense]

Because you got a Basketball Jones

[turk3d]

5% is not a big profit margin... even with interest rates really low right now, you can just put that money in the bank and make 1% or more. Certainly teams like the T-Wolves would be better off just doing that if it were only about their annual return on investment.

And it should be noted that many businesses, including in the entertainment sector, have similarly looked to cut costs in recent years. In my own work, there has been no merit increases for several years, we had a year's worth of furloughs, and are about to announce layoffs. And in the mean time my rent has gone up 25% over the last three years (and no I didn't move). Basketball is not immune - even when revenues have gone up, expenses have tended to go up even more.

Turk, if basketball misses a season, do you think you will find something to permanently replace it? And if so what might that be? One year from now will I not see you on the RealGM basketball board, but instead spending all your time on the soccer board? Or Sleepy's WNBA board?

Actually Twinkie 5% is quite high in todays economy (I think one of the points of article). And you show me a bank that currently pays 6% interest in todays market when they can only lend it out for 3%. This of course is providing that 5% is all the teams are getting and not a lot more. If that's all they[re getting then they should be opening their books to the Union. At least they would be able to use that as a justification for radically changing the split.

As for whether or not you or I am posting on Realgm, that's not the issue, it's whether we're continuing to pay to go to games anymore (in Baseball there was an actual boycott for a while). Fans I'm sure would have a blast going onto the blogs and talk shows and badmouthing the greedy owners along with talk radio host and newspaper writers while boycotting the games for a while. Who needs to go to games for that? Sure would be a lot cheaper, lol.

The weakness in your thought process is you're limiting interest rates to yields from local banks even though the NBA's a global enterprise. FYI banks in Australia which are comparable to and fully insured like Wells Fargo or Bank of America are currently offering 6.5% on 6 month CD's. If you are Joe Lacob why would you want to invest $450 million to buy the Warriors if you aren't getting a better return than what is available from established banks in reputable countries?

There's no weakness in my thought process Don (at least if there is, it's not here). I was merely responding to Twinkie's contention that you can easily get more than 5% on American Banks (unless you want to go overseas where the risks on investing with a foreign bank is much higher). I don't believe you'll find any foreign banks in this country giving you those kind of yields. And even if they are insured (as you maintain overseas) I'm sure that many business owners don't have the confidence in overseas investments as they do here.

And to answer you question on Joe Lacob. I'd actually like you to answer it (you can provide just as good an answer as I can if not better) except I'll shorten the question add something additional to it:

Why would Joe Lacob invest a half a billion dollars (about a 100 Million more than it was valued at) when he knew that the league was about to go into a lockout? I think the answer is pretty obvious. The flawed thinking is when you try and equate sports franchises and their owner with real world businesses. They don't compute. Even the laws are different let alone how they're run. There's a ton of ways that smart businessmen can make more money than what banks pay (even ones that pay 5-6% if they in fact do exist).

Heck, no sound businessman would be buying an NBA franchise for the amount paid if the reality was that they were making as little as the NBA claims they are, that is unless they're in love with the sport and they're not concerned about whether or not they're going to make any money. One thing I sense about Lacob whenever I here him talk or read an article about him is that he's genuinely a basketball fan and that the money is secondary to him.

I could be wrong, but that's my impression of him thus far. And BTW, when I say "greedy owners" I'm not including Joe Lacob in that category, I'm just using it as a general term. I think Lacob is far from greedy. On the contrary, he's a very generous man, putting Warrior fans out of the misery of having to put up with Cohan. I love the guy.

[Twinkie defense]

FWIW...

NBA disputes NY Times blog report

NBA spokesman Mike Bass said the information was inaccurate, saying Forbes "does not have the financial data for our teams and the magazine's estimates do not reflect reality."

"Precisely to avoid this issue, the NBA and its teams shared their complete league and team audited financials as well as our state and federal tax returns with the players' union," Bass said. "Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several years.

The union has frequently questioned the league's financials, saying it believes there were losses but not anywhere near what the NBA has stated. The players offered to give up $100 million in salary costs annually in a recent proposal for a new five-year deal, believing that was more in line with the true losses.

Bass said the league never had a positive net or operating income in the last CBA and that 11 teams had net losses of more than $20 million in the 2009-10 season.

He said the losses from that season, the one studied in the article, were $340 million and that 23 of the 30 teams lost money that season. Forbes estimated there were 17.

"We do not know how they do their calculations," Bass said.

[Twinkie defense]

PS people seem to think I said you could deposit money in a US savings account and get a 6% APY. I suggest you read my post again

Otherwise, of course people can make a better investment than buying an NBA franchise. They do it for more than monetary reward. However that doesn't mean that they got into it for love and $20 mil in losses per year - with any business, including vanity businesses like the NBA, there is a baseline assumption that if you run your business right you should have a decent chance of making some year-over-year profit, and that doesn't appear to be the case for the majority of teams right now (even the NY Times blog agrees that most teams are losing money). And if that is the case, it threatens not only those unprofitable franchises, but the whole enterprise. And again, players recognize that, which is why they agree they need to give some back. The only question is how much. And they will be able to figure that out, eventually.

And in the case of Lacob in particular, I'm sure the fact that GS is one of the few profitable franchises, even though they usually suck on the court, was an important variable. No doubt he thinks that with some smart management they can not only win, but make even more money.

[turk3d]

PS people seem to think I said you could deposit money in a US savings account and get a 6% APY. I suggest you read my post again

Otherwise, of course people can make a better investment than buying an NBA franchise. They do it for more than monetary reward. However that doesn't mean that they got into it for love and $20 mil in losses per year - with any business, including vanity businesses like the NBA, there is a baseline assumption that if you run your business right you should have a decent chance of making some year-over-year profit, and that doesn't appear to be the case for the majority of teams right now (even the NY Times blog agrees that most teams are losing money). And if that is the case, it threatens not only those unprofitable franchises, but the whole enterprise. And again, players recognize that, which is why they agree they need to give some back. The only question is how much. And they will be able to figure that out, eventually.

And in the case of Lacob in particular, I'm sure the fact that GS is one of the few profitable franchises, even though they usually suck on the court, was an important variable. No doubt he thinks that with some smart management they can not only win, but make even more money.

5% is not a big profit margin... even with interest rates really low right now, you can just put that money in the bank and make 1% or more.

That is what you said Twinkie and this was implied that you could get this in a US bank (when banks typically pay 1% or less nowadays), Don Nelson came back and claimed that you could get over 6% in a foreign bank (which I seriously doubt).

Can you make investments where you can get higher yields than that? No doubt but risks go up proportionally as well. But anyways, that's not the point. Even 5% isn't much, but 5% low risk is considered an excellent investment in this day and age.

However, for an entrepreneur it's very little and they typically will invest in a high risk investment. Heck, if you're really well off then you'd likely invest in a Warren Buffet Berkshire Fund instead of investing in a basketball team. Anyone who's seriously concerned with making a lot of money should not be investing (overpaying) for a sports team which is potentially going to be on a long protracted lockout.

Maybe you didn't weren't talking about a bank, but it sure as heck sounded like it.

[Sleepy51]

Total Return

What Does Total Return Mean?
When measuring performance, the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realized over a given period of time.
Investopedia explains Total Return
Total return accounts for two categories of return: income and capital appreciation. Income includes interest paid by fixed-income investments, distributions or dividends. Capital appreciation represents the change in the market price of an asset.

http://www.investopedia.com/terms/t/totalreturn.asp

[marthafokker]

I got a 4 letter word for you guys for 6% return.


















REIT

[floppymoose]

REIT

Is it 1995 again?

http://shulmaven.blogspot.com/2010/08/s ... -term.html

[Sleepy51]

Not a huge fan of publicly traded REITs. Real Estate is not supposed to behave like a stock. Trading real estate stocks instead of real estate holdings makes it take on some of those characteristics.

[Twinkie defense]

5% is not a big profit margin... even with interest rates really low right now, you can just put that money in the bank and make 1% *or* more [e.g., 1.5%, 1.7%]

Is that more clear? In other words, even if the League as a whole is making a 5% profit each year - which is not a great amount - many teams are making far less. Even the NY Times blog that is taking the League to task for their financial reporting says that (I think it was) 17 teams lost money recently. No doubt Sacramento is one of them. No doubt, a better financial investment for the Kings would be to put that money in a low-interest savings account (let alone invest it more intelligently). But of course, financial performance, whether it's a resource-draining $20 mil per year loss, or a modest 5% gain, is not the primary reason why the Maloofs are in this business.

[Twinkie defense]

The Union's objections to the League's reporting is pretty weak BTW. They have what the League says are audited financial reports and tax returns. So what specifically do they object to in that reporting? "Well, the League originally projected that there would be a revenue decline in 09-10, but revenues actually went up that year!"

Wow.