OT: Wizards amongst teams to monitor if Bob Myers leaves Warriors

[AFM]

Ted a broke boy Lord Bezos please make this moron an offer he can’t refuse

[TGW]

The difference between Leonsis and Ballmer is night and day. Ted at $1.6B is still trying to make money. Ballmer at $83B has enough that he can buy every single team in the league and still have money than Ted.

Ted obviously thinks that growing Monumental Sports with the Wizards as a profit-generating asset is the way to go, and from a business perspective, he's probably right. An investment dollar probably yields more returns going to a media company than a sports franchise that has built-in revenue sharing. But that means he's less willing to take the Wizards' profits to reinvest into the franchise, paying luxtax, get better scouting, expanding front office, improve facilities, etc. because he needs that money to expand Monumental Sports' operations. Even if Ted had the money, he'd rather deploy those to buy up the Commies and Nats before dedicating the cash to improve the Wizards.

He's show us from the beginning, all he wants from the team is to be profitable, so he'll spend the minimally necessary amount to make the team profitable. Not a penny more because those pennies need to go towards his other endeavors.

This is my cynical take, too, I just wish Ted would get over his dumb anti-tanking bias.

They must have consultants on the payroll that have told them EBIT growth YOY is higher with a team that makes the play-in and with marketable players like a Beal or Kuzma vs. a tanking strategy where salary commitments are less, but you lose ticket and play-in revenue. I don't know that for sure, thats just a guess based off pancakes' explanation, which makes a helluva lot of sense. PIF said it awhile back I think....Monumental Sports is a business, and the goal is to make money. Because of that we probably won't see a tank unless the team is absoulte garbage with the current roster.

[pancakes3]

The difference between Leonsis and Ballmer is night and day. Ted at $1.6B is still trying to make money. Ballmer at $83B has enough that he can buy every single team in the league and still have money than Ted.

Ted obviously thinks that growing Monumental Sports with the Wizards as a profit-generating asset is the way to go, and from a business perspective, he's probably right. An investment dollar probably yields more returns going to a media company than a sports franchise that has built-in revenue sharing. But that means he's less willing to take the Wizards' profits to reinvest into the franchise, paying luxtax, get better scouting, expanding front office, improve facilities, etc. because he needs that money to expand Monumental Sports' operations. Even if Ted had the money, he'd rather deploy those to buy up the Commies and Nats before dedicating the cash to improve the Wizards.

He's show us from the beginning, all he wants from the team is to be profitable, so he'll spend the minimally necessary amount to make the team profitable. Not a penny more because those pennies need to go towards his other endeavors.

Totally agree. this is a solid high-level view of the vision of Monumental Sports. Goal #1 for Leonsis is positive EBIT growth. I don't know what the Wizards' balance sheet looks like, but maybe someone can explain to me why operating at a lower expense (i.e. tanking and lowering salary committment) isn't more profitable than their current path? The finance and accounting nerds need to explain it to me.

not a finance nerd or cap expert but this is how i understand it: salary cap is essentially revenue sharing.

an NBA team has all manner of income streams: tv deals, merch, ticket sales, licensing, etc. This is aggregated and called "basketball related income." A team then takes a portion of that (I believe in the NBA it's 50%) and contributes it to the league. The league then pools that contribution and based on the average contribution, determines the salary cap and the league takes the dollar amount of the cap and gives it BACK TO THE TEAMS, EVENLY. That means if the Knicks kick in $80M, and the Wizards kick in $40M, the cap will be set at $60M, and both teams get a check for that amount to pay their players; the Knicks pay 80M get back 60M and lose $20M whereas the Wiz pays 40M, get back 60M and gains $20M in free money.

There's a provision that a team's total revenue must be at least 70% of the league average (2x the cap), so you can't operate a $1M team and expect $59M back in rev share/free money. But theoretically, a team can operate leanly and expect free money year after year. So tanking by jettisoning stars/big contracts is directly tied to the cap, which is guaranteed and paid for through rev sharing. So the only incentive to tank is to enhance team performance, not profit.

A shrewd businessman with 0 emotional investment to the team would operate at/near the cap year after year (luxtax is obviously not reimbursed through rev share), have enough stars on the team to maximize income through merchandise, licensing, ticket sales, etc., try to perennially sneak into the playoffs to get extra TV money, and still operate as cheaply as possible to take in below league average so as to get the benefit of rev share.

Boy does that sound familiar.

[TGW]

Thanks for that explanation of the salary cap. I honestly did not know it worked that way. I wholehearetedly believed the salary cap was a means of creating parity. I had no idea it was directly tied to the profit share.

Damn...now I get why Leonsis operates the way he does.

[montestewart]

In addition to marketing “stars,” Terd markets the possibility of play in crumbs, as if that’s orgasmically tantalizing, and even markets his own presence at games, as if that’s love of the game, rather than pride of ownership. Sad.

[FAH1223]

The difference between Leonsis and Ballmer is night and day. Ted at $1.6B is still trying to make money. Ballmer at $83B has enough that he can buy every single team in the league and still have money than Ted.

Ted obviously thinks that growing Monumental Sports with the Wizards as a profit-generating asset is the way to go, and from a business perspective, he's probably right. An investment dollar probably yields more returns going to a media company than a sports franchise that has built-in revenue sharing. But that means he's less willing to take the Wizards' profits to reinvest into the franchise, paying luxtax, get better scouting, expanding front office, improve facilities, etc. because he needs that money to expand Monumental Sports' operations. Even if Ted had the money, he'd rather deploy those to buy up the Commies and Nats before dedicating the cash to improve the Wizards.

He's show us from the beginning, all he wants from the team is to be profitable, so he'll spend the minimally necessary amount to make the team profitable. Not a penny more because those pennies need to go towards his other endeavors.

Totally agree. this is a solid high-level view of the vision of Monumental Sports. Goal #1 for Leonsis is positive EBIT growth. I don't know what the Wizards' balance sheet looks like, but maybe someone can explain to me why operating at a lower expense (i.e. tanking and lowering salary committment) isn't more profitable than their current path? The finance and accounting nerds need to explain it to me.

not a finance nerd or cap expert but this is how i understand it: salary cap is essentially revenue sharing.

an NBA team has all manner of income streams: tv deals, merch, ticket sales, licensing, etc. This is aggregated and called "basketball related income." A team then takes a portion of that (I believe in the NBA it's 50%) and contributes it to the league. The league then pools that contribution and based on the average contribution, determines the salary cap and the league takes the dollar amount of the cap and gives it BACK TO THE TEAMS, EVENLY. That means if the Knicks kick in $80M, and the Wizards kick in $40M, the cap will be set at $60M, and both teams get a check for that amount to pay their players; the Knicks pay 80M get back 60M and lose $20M whereas the Wiz pays 40M, get back 60M and gains $20M in free money.

There's a provision that a team's total revenue must be at least 70% of the league average (2x the cap), so you can't operate a $1M team and expect $59M back in rev share/free money. But theoretically, a team can operate leanly and expect free money year after year. So tanking by jettisoning stars/big contracts is directly tied to the cap, which is guaranteed and paid for through rev sharing. So the only incentive to tank is to enhance team performance, not profit.

A shrewd businessman with 0 emotional investment to the team would operate at/near the cap year after year (luxtax is obviously not reimbursed through rev share), have enough stars on the team to maximize income through merchandise, licensing, ticket sales, etc., try to perennially sneak into the playoffs to get extra TV money, and still operate as cheaply as possible to take in below league average so as to get the benefit of rev share.

Boy does that sound familiar.

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[AFM]

Yeah. Not even mentioning the exploding value of these teams as an asset. Look at what Snyder bought the Skins for and the offers he’s getting now.

[nate33]

The difference between Leonsis and Ballmer is night and day. Ted at $1.6B is still trying to make money. Ballmer at $83B has enough that he can buy every single team in the league and still have money than Ted.

Ted obviously thinks that growing Monumental Sports with the Wizards as a profit-generating asset is the way to go, and from a business perspective, he's probably right. An investment dollar probably yields more returns going to a media company than a sports franchise that has built-in revenue sharing. But that means he's less willing to take the Wizards' profits to reinvest into the franchise, paying luxtax, get better scouting, expanding front office, improve facilities, etc. because he needs that money to expand Monumental Sports' operations. Even if Ted had the money, he'd rather deploy those to buy up the Commies and Nats before dedicating the cash to improve the Wizards.

He's show us from the beginning, all he wants from the team is to be profitable, so he'll spend the minimally necessary amount to make the team profitable. Not a penny more because those pennies need to go towards his other endeavors.

Totally agree. this is a solid high-level view of the vision of Monumental Sports. Goal #1 for Leonsis is positive EBIT growth. I don't know what the Wizards' balance sheet looks like, but maybe someone can explain to me why operating at a lower expense (i.e. tanking and lowering salary committment) isn't more profitable than their current path? The finance and accounting nerds need to explain it to me.

Yeah, I don't understand it either.

The Wizards rank 27th in attendance. So clearly, the "never tank" strategy isn't bringing butts to seats in the regular season. We've heard stories that the regular season is break-even and that Ted makes most of his profit by hosting playoff games. But the way his running things, we will make the playoffs maybe every other year, without home court and lose in the first round 4-1. That's just 2 home playoff games every other year. It seems pretty self-evident that a better route to profitability would be to tank and rebuild over 4 years and then start making the 2nd round every year. Yeah, you go 4 years with no playoff games (instead of the 4 playoff games by sticking with the current plan), but you make that up in Year 5 by getting the 4th seed, landing home court advantage in the first round, winning your first series, and losing 4-2 in the second series. That's 6 or 7 home playoff games. And each year after that, you go further into the black.

And as TGW pointed out, the other subtle advantage is that in your first two tank years, you can maintain a payroll well below the luxtax limit and nobody will complain. Having a payroll of, say, $120M instead of $148M saves a lot of money.

[Endless Loop]

Further supporting your ideas that the Wiz are purely a business from Ted's standpoint is how he treats non-player costs. In particular, coaches and the GM are expensive, so he is extremely hesitant to let one go.

I wonder how nuanced a look his fancy consultants took on various management approaches. I'm sure a fresh-out MBA can do a regression analysis and come up with recommendations that he's implemented- build around stars and don't tank. But did said MBA ask, "What is a star?" A genuine star like Ovechkin will fill seats. But will a pretty good player who isn't really awesome do the same if you annoint him as the team's star? I doubt it. There are too many important and non-correlated variables. It's like doing macroeconomic forecasting. Every situation is unique- that's why the only thing macroeconomists are good for is invoicing.

Then there's the off-court investments. Did Ted's MBAs analyze return on investment for different types of investments to support player development? I've always thought that teams underinvest in player development.

Financial stuff aside, I strongly suspect that the biggest problem the Wizards have is that the organization is not structured well. This last year's draft feels like the sort of outcome you get when you have too many people deciding who to pick. You have a hard time getting a consensus, so you finally agree on the least risky pick, ie somebody you think has a high floor but a low ceiling. Neither Deni nor Rui was that sort of pick. Both were very "young", either in age (Deni) or experience (Rui).

The only person that can properly structure the organization is Ted. There needs to be clear delineation of responsibilities, with as little overlap as possible, and ways to measure performance. It should be clear to everybody that Tommy and Tommy alone is responsible for player personnel, and Tommy alone should be rewarded or penalized for outcomes. Same thing for WUJ and coaching.

Something in particular to watch is how players do when they leave the organization. That will say a lot how important culture and coaching are. So far, I don't think the Wiz look too bad on this front, though we'll see with Rui.

[Kanyewest]

Someone pointed out that Myers has not done great lately with all his lottery picks

2020- #2 pick- James Wiseman (could have had Ball or traded down to take Halliburton)
2020- Traded 2 2nd round picks for Kelly Oubre
2020- Drafted Nico Manion and Justinan Jessup
2021 draft- Selected Jonathan Kuminga over Franz Wagner
2021 draft- selected Moses Moody over Senguin

Granted he did select Draymond Green in the 2nd round and Jordan Poole late in the 1st round. Not to mention he flipped Russell for multiple picks.

[FAH1223]

Someone pointed out that Myers has not done great lately with all his lottery picks

2020- #2 pick- James Wiseman (could have had Ball or traded down to take Halliburton)
2020- Traded 2 2nd round picks for Kelly Oubre
2020- Drafted Nico Manion and Justinan Jessup
2021 draft- Selected Jonathan Kuminga over Franz Wagner
2021 draft- selected Moses Moody over Senguin

Granted he did select Draymond Green in the 2nd round and Jordan Poole late in the 1st round. Not to mention he flipped Russell for multiple picks.

Looney was another good late 1st round pick.

[FAH1223]

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Myers is a podcaster now