Gery Woelful was just on 1250 WSSP

[EastSideBucksFan]

-= original quote snipped =-

How can you fail to understand my point? You guys actually believe that because it was a good investment at $15 million, it is therefore a good investment now no matter what price you pay for it?

Every business, and even deeper, every asset which can be purchased, has a possible price that is too high. I guess I'm happy that people who think that way exist, because it makes what I do possible.

Edit to add: Maybe if I rephrase, I can help you understand my position. I don't think buying the Bucks in and of itself is a risky investment. I think buying the Bucks at $300 million is a risky investment. You guys are trying to refute my point by alluding to examples of people who made money by buying sports teams at prices that are an order of magnitude less than that, and I don't know why it's relevent.

Without addressing every point I think Adams main argument is that it is unlikely that if you buy the Bucks at $300M you would be able to make money off the appreciation of the franchise.

Given it's current state of income, payroll, city market, and lack of an arena. It is logical to think that there are few reasons this franchise will increase it's value in the near future. There is one big X factor though, that is Yi.

However, Kohl has put himself in a position where the franchise could increase it's value significantly based on the drafting of Yi and the new market of China, and the potential advertising marketing opportunities that will arise.

[Pressey]

Nothing earth shattering in terms of rumors for actually improving the team. He basically introduced the public to who Ron Walter was (he said he would call him the 2nd most powerful person in the organization), while Cliff was asking why the hell this guy should have any pull within the organization even though he has no experience in the industry.

But here's where it gets a bit interesting for those that are looking closely at the ownership situation. Woelful said there was an investment team that was interested in buying the Bucks last year. He didn't give any names, unfortunately, but he did mention that at the time, the Bucks' value was around $230-$240 million. Since the drafting of Yi, the number has ballooned to over $300 million. Yikes.

He also said the two people most associated with being potential buyers were Herb Kholer and that Leopold guy (but went on to say that he'd be shocked if Leopold put in any stake into buying this team, having just purchased the Minnesota Wild nHL team).

Doesn't suprise me. Before the draft I predicted the potential economic impact draftng Yi would have on a team, and several people on this board thought it was ridiculous. Those people were obviously wrong.

[schweig]

Can you show me in numbers why that's true

My whole point was to stay away from the numbers, and ask the question you didn't answer either. Do you see a big shift in American entertainment that causes the big sports leagues like the NFL to drop off the map and drop these team values? There is definitely a chance of that. But people love their sports and entertainment.

You also raise a good point about how fast the values have been increasing the last 10-20 years, and it's not a safe bet to assume it'll continue at that rate indefinitely. There's a premium to pay if you want to be one of 30 owners, but it's in the hundreds of millions right now, not the hundred billions. If I want a beer at a game I have to pay an extra $5, that's the small exclusive program they've set up.

[LISTEN2JAZZ]

My whole point was to stay away from the numbers, and ask the question you didn't answer either. Do you see a big shift in American entertainment that causes the big sports leagues like the NFL to drop off the map and drop these team values? There is definitely a chance of that. But people love their sports and entertainment.

Do you see a big shift in American beverage consumption that will cause Americans to stop drinking Coke? Because I'm willing to sell you all of my Coke shares for $100 each. Stay away from the numbers and just answer that one simple question. People love their Coke. If Americans keep drinking Coke, how can this possibly be a bad deal for you? If you are interested in doing this transaction let me know, and we will make it happen.

[schweig]

Have Coke stocks gone up over 1000% over 25 years while becoming a bigger part of people's lives than ever before? Does Coke sign billion dollar TV deals, or do they still have to actually pay to get time on tv? Are there only 30 people who can own Coke stocks and make different flavors of Coke or redesign the cans however they want?

Edit: I agree with you in general, but we're not going to be able to find a close enough parallel to these teams to make a good comparison. I think we all agree in general, you don't really buy a team if you're looking for another investment like all your other ones. If I want to drink a beer at a game, I have to be willing to get ripped off for it. Really it's stupid to pay for beer at a game unless other factors outweigh that extra cost for you, and you can look at it as stupid to own a team unless some other factors outweigh that premium for owners too.

[LISTEN2JAZZ]

Have Coke stocks gone up over 1000% over 25 years while becoming a bigger part of people's lives than ever before?

Yes. From Oct 4, 1976 to July 10, 1998, the price of Coke went up almost 9,000%, without even including dividends. I'm sort of disappointed that you seemingly thought that the answer would have been no. Am I right to assume that if I had this conversation with you on July 10, '98, you would say that the price has gone up 9,000%, and therefore any price you pay on that date is justified?

On that date in '98, somebody could have made the same argument you guys are making in this thread: "show me an example of somebody who has lost money on Coke in the past 15 or 20 years." Indeed, nobody had lost money on Coke during that time frame, because the price kept rising and rising. schweig, El Duderino, and others would have said that because there are no examples of people losing money, it isn't possible to lose money, and there's no need to correlate the purchase price to the underlying economics.

Of course, the people who bought Coke in the summer of '98 did lose money. By October of 2004 the price had more than cut in half. Don't even try to tell me that the NBA brand is more valuable, rare, or special than the Coca-Cola brand. The opposite is of course true. If it is possible to pay too much for Coke (probably the best brand on earth), then it is possible to pay too much for any business.

Does Coke sign billion dollar TV deals, or do they still have to actually pay to get time on tv?

You've got to be f'ing kidding me! Coke's weekly revenues are roughly the same as the NBA's yearly television revenues.

I agree with you in general, but we're not going to be able to find a close enough parallel to these teams to make a good comparison.

Only because you're granting the NBA unique powers that it doesn't really have.

[schweig]

Now you're putting words in my mouth, and still ignoring the points you choose to. My fault for not tightening it up. I've been careful to say anything could happen, and acknowledge your points. Edit: Never said at all that numbers don't matter at all, but however you'd like to describe it. I'm done here.

[LISTEN2JAZZ]

I'm not ignoring anything of importance. Your overall point is that you don't need to worry about the numbers because sports are so popular, and you are wrong. I'm proving it by showing you an example of something that is much more popular and much more valuable than the NBA, and how lots of people in '98 lost money by thinking that there was no need to worry about the numbers, because of the strong history of price appreciation.

[MartyConlonOnTheRun]

One thing you are missing Adam is anyone can buy parts of coke. Who the F' cares?
What sounds cooler: I own a manufactoring company or I own a NBA sports franchise? Both are rich, but this come down to ego.

A lot of these owners are crazy rich. A sports franchise can get them in the news, gain public opinion, etc.

When you buy and use a private jet and plan to keep it for ever, will you make a profit?

Yes, I know Herb is all about the money, but a lot of owners the ego boost.

[MartyConlonOnTheRun]

To add, it is the reason why the prices will go up continously, well atleast for a long time

[LISTEN2JAZZ]

To add, it is the reason why the prices will go up continously, well atleast for a long time

No matter what price they are today, they will go up continuously. They are the safest investment in the world. Got it.

[beyond_the_arc]

Coke can reach market saturation faster than a sports league. That's why their price dropped like a rock before rebounding.

[LISTEN2JAZZ]

Coke can reach market saturation faster than a sports league. That's why their price dropped like a rock before rebounding.

Show me with numbers how Coke "reached market saturation" in 1998. I have no idea where you could have gotten an idea like that, but maybe you can show me.

The only reason Coke's price dropped was because people were paying far too much for it. It was a great company with the world's strongest brand every step of the way.

[beyond_the_arc]

No, that was when the shift to marketing Dasani and Sports drink (water development) changed the focus of Coke.

[LISTEN2JAZZ]

Pretty amazing that after the point of reaching "market saturation," Coke has increased earnings by 80%.

[beyond_the_arc]

They reached it with one product line, soda. They reorganized their product line and changed the volume output and voila, found a higher margin product. Increase in profit.