Found this quote on BulletsForever in the comments section.
It is Leonsis's best interest to operate the Wizards at a loss
You push all your revenue to your other holdings(Verizon Center, The media company that handles the local tv deals and licensing, Owners get to pay themselves a salary as a tax deductible business expense ,etc…..) and then report a loss on the Wizards/Mystics which drastically lowers the percentage you pay for Capital Gains on your other holdings. Basically you take all the costs on the Wizards and divert the revenue to other holdings to save money on taxes. Common business practice, Abe was known for it but it is wide spread throughout the Sports World where you own the venue you play in.
Not sure what to make of Leonsis’s statement because it is very incomplete and doesn’t mean anything without examing the 5-8 other holdings he has aligned with the Wizards. Should definitely be taken with a boulder of salt to say the least. Of course his debt obligations could be so toweringly huge that they affect all of his holdings but thats not what he is saying. Professional sports teams are not managed as you or I would balance our personal budgets or checkbooks. It’s tough to wrap our heads around as fans Lot of money being pushed around to lower your tax burden. Not to mention how effective it is when it comes time for CBA talks. Also let’s remember we are the 8th biggest NBA TV market(we are ranked #10 but thats counting both LA teams and both NY teams), Leonsis owns the V-Center, It is one of the highest per capita income areas in the country, and DC has unique features with the business and political worlds making it easier to sell the Tax payer refurbuished luxury boxes. We are not Memphis or Minny. We are a big shark whether we chose to operate as one or not(IMO Abe chose not to).
There are alot of inequities in the current CBA specifically in the fact that not every team can make a profit if the Luxury Tax line was viewed as a hard cap. Alot of teams are even well beyond that level. They need to set a hard cap level where the truly small markets can still be profitable assuming. This means the teams that create huge revenue NYK, LAL will just make way more money but not have a competitive edge. There has been alot of thought, that I agree with, that indicate that the most assured way to profitability is winning and the best way to do that is by spending. The Owners need to work it out amongst themselves either by revenue sharing or hard cap so that certain owners can’t have a spending advantage. Then the more lucrative markets like NY, LA, DC, BOS, CHI won’t have the advantages over the truly small markets.
How-many of you got the "Evening with the Owners" email inviting you to meet Ted, Sheila Johnson, and the WNBA prez?, all for only $60 in-advance and $70 the night of the event. Hard Times.