Official CBA/Labour Talks Discussion Thread

[J-Roc]

I firmly believe that 80% of the players would vote in favour of a 51% BRI cut and any tax system the owners want right now. But the union would fight that because of the stars and the agents.

That deal is there to be made today and its the union holding it up. I dont' think the owners would keep the lockout going for that 1% difference. They've put 50 on the table.

If it goes longer I could see the owners insisting on 49 just for the symbolism that it now puts them ahead of the players and is below their best offer of a week ago. Even 49.9% would be a major slap in the face to the union. That would force Hunter out for sure which is the ultimate sign of undisputed victory for Stern.

In regular union negotiations, you're fighting for how you'll be paid for years to come. And your pension, etc. These players can put up a good battle in the name of young punks still to enter the league, but at some point in the near future they'll crack because any one individual player in the league now is only fighting for his own short career.

[Rapsfan07]

Rightly or wrongly, and I now believe wrongly, the focus of the last CBA seemed to be doing something about the massive contracts the elite players were getting. The NBA accomplished that by circumventing David Falk's clients in the Executive of the union and appealing directly to the entire union with a here's the deal you vote on it, after a lockout. The after affect of that, was the average players is now not worth the current average salary, and length and guaranteed nature of the contracts have backfired on teams. Now, in these negotiations NBA has a different objective. There are two main, to rein in costs so teams have a very good shot at a profit, they wold prefer guaranteed obviously who wouldn't, but they know that's not reasonable in business, and to quell this trend of a few strong teams and the rest with no chance, especially the teaming up of stars. I'm sure ideally for them there'd be 30 tops stars with each team having on. however the with the last CBA, and max deals, it's allowed some teams to double and triple up on those players, without drafting them. With players looking to set themselves up in those situations in setting up their free agency. I think a few teams like that, I think most don't. I think fan interest in the short term peaked with that and made for profit, but long term owners don't like the idea of only selling out the conseco field house when the Heat and Lakers come to town. Hell, we've got Wade and Lebron on one team, both those guys would be selling out most arenas, in MIA where combined they don't even sell it out most nights. TV money may be good, but long term, it may have an adverse effect.

I could be wrong, but that's my impression. The players feel like they're being screwed by the owners, and i can understand that. If you look at where they were, they are taking a loss. If you look at it from the fact they'll still be guaranteed over 2 billion to share among them to play ball, they could do a lot worse. Personally, i'll be upset with Stern and the owners if all they do is shave some money, and basically get bought off on the system changes. If anything, I don't understand why the players are giving the money and fighting the system. Give in on the system and keep more of the money, would be my strategy. Seems like the Union is being run by Garnet and Wade at times. And I don't get it. There going to lose alot more than they are holding out for.

I wish they'd try and take their difference in $, divert it to some retirement fund, and some community relations to help rebuild image and make good with fans, even to help out arena workers. I'll state it again the given that % of BRI is guaranteed, I don't get the resistence to the punitive luxury tax or cap provisions the league wants. Seems to me a group of 400 players, would be better served by making it more competitive for everyone then in helping Chris Paul and Dwight get NY addresses. In following this lockout, I know all 30 owners have met and discussed what they want, has the union ever brought all 400 players together? I bet they know if they did, they'd have a deal, although.....Hunter may be fired shortly after.

I agree with every word of this. The player's strategy is completely messed up and it's going to come back to haunt them. McGee tweeted recently that there are some player ready to fold but because of the big "stars" who are paying more union dues than the rest, they just shut up and go for the ride. I am 100% sure that there are players willing to strike a deal that involves getting 50-52% of BRI and the longer they hold out, the worse it'll get for them.

The sides need to build on this principle: the more you get on system issues, the less you get on BRI, and vice versa. The reason these negotiations are taking so long is that both parties want to have their cake and eat it too. And with the amount of financial damage both sides are taking, it doesn't make sense. For example, if the players want...lets say 55% of BRI, they must also agree to a flex cap, salary rollbacks, shorter contracts, reduced MLE etc. Something I haven't heard on the table much is a Franchise Tag (which could work well in a flex cap or hard cap scenario). Players with the tag wouldn't count against the cap, but the cap would be lowered to allow for more player movement (unless they want to take a hard hit in salary). Another thing could be another Amnesty Clause (which I doubt the players oppose).

But ultimately the union is actually fighting for a handful of players because the players who will be hurt the most out of these dragged out negotiations would be the middle guys. Fisher has nice things to say and what not but the player gotta wake up and realize that this isn't the same economic environment as the last deal. They can't get paid so much, all be on the same team AND make >53% of BRI. It's not logical and with so many teams bringing in a profit, it's just not sustainable. Fisher was right though when he said that some of the money should go to cheaper parking, cheaper tickets, better working environments for people who work at the stadiums etc. and Wade was also right when he said that better management would lead to better profit because there is no guarantee in ANY business venture but I think there should be a legitimate chance for owners to turn a profit. Right now, there isn't.

[MEDIC]

Wade was also right when he said that better management would lead to better profit.

See, I don't agree with this.

How do you get your fans to fill the stadiums in a small market when your team can't compete on the floor? Not possible.

You can be the best GM on the planet, but if you have no way to draw players to Minny or keep players in Minny, you're pretty much screwed.

There is an unfair competitive advantage for some teams from a team building perspective.

I understand that some cities will always be more profitable than others & that's fine, but the team building ability should be as even as possible of you want a competitive league.

[knickerbocker2k2]

Some of you who believe the union is fighting for/run by bigger players are mistaken. Union has always represented the middle class player. In fact it is to the advantage of the top players there is no union restricting the maximum they can get. All these proposed system changes affects the middle class player the most, thus the reason they are holding.

See, I don't agree with this.

How do you get your fans to fill the stadiums in a small market when your team can't compete on the floor? Not possible.

You can be the best GM on the planet, but if you have no way to draw players to Minny or keep players in Minny, you're pretty much screwed.

Two different issues. If you are arguing that teams should be able keep their top talent, I think most people would agree with this, and I think the players would not fight this militantly. However my impression is that owners are really not interested in this, but rather how they get more money from the players by restricting player movement/bidding opportunities. There are ways of tweaking the current system that makes it more advantageous of player staying (more money, more years, getting rid of sign & trade, etc).

Secondly your point about small market teams not being able to compete in the current system is not true. The room for error is smaller, but it it definitely is possible. How long were Minny good in the late 90s/this decade? Sacramento in early 2000 is another prime example. Utah has being western powerhouse for most of this decade. Spurs have had 15 good years. Phoenix had good stretch. Orlando solid current stretch. Thunder is another example of young team with good opportunity in the next few years. Small markets can succeed. Trick is having good management.

This fight is mainly about money. Some fans think changing the amount of money players receive will of sudden fix the parity issues in the league. No it won't. All that will change is a billionaire will have more money in his bank account. As fan I would prefer league focus on reducing the length of contracts and making trades easier, because the biggest problem in the league right now is that rebuilding is 3-5 year project.

[carlosey]

Some of you who believe the union is fighting for/run by bigger players are mistaken. Union has always represented the middle class player. In fact it is to the advantage of the top players there is no union restricting the maximum they can get. All these proposed system changes affects the middle class player the most, thus the reason they are holding.

They certainly seem the ones running the show. Unless KG is willing to share some of his money with the little guys while things get settled, holding out any longer will have a significant impact on small guys. The NBA career span is short. 6 months of missed pay for a little guy is 6 months of payment they will never ever see again. The union is holding out because it benefits guys who will get big deals in the next few years. They dont care about the league, the game or the 400 players that are having a far more significant impact by not receiving their money.

Its easy to tell your friends that need the money to survive to hold out and stand strong when you have a fat bank account available to rely on.

[carlosey]

In fact I hope the players hold out longer, I want to see the a true hard cap and non-guaranteed deals. The longer they wait the higher the chances of the owners moving back to their original proposal.

Something tells me the players are going to keep holding out, half the season or the entire season gets wiped, and the end result is going to be them settling for this.

[BorisDK1]

The NBAPA has refuted that 22 teams lost money and the league lost $300 million in total, since that figure includes all kinds of expenses and paper losses that while fine under GAAP standards, are not indicative of real losses that the players should give a **** about.

They have made allegations, but they haven't proven anything. Where have they documented that this is the case? They're not even trying this argument any more. The last time they tried this, Billy Hunter stood up in front of the world and tried to convince everybody that interest costs were not a legitimate expense and don't represent cash losses. The NBPA's still wiping the egg off its face from that one.

[BorisDK1]

See, I don't agree with this.

How do you get your fans to fill the stadiums in a small market when your team can't compete on the floor? Not possible.

You can be the best GM on the planet, but if you have no way to draw players to Minny or keep players in Minny, you're pretty much screwed.

There is an unfair competitive advantage for some teams from a team building perspective.

I understand that some cities will always be more profitable than others & that's fine, but the team building ability should be as even as possible of you want a competitive league.

I agree with Dwyane Wade's point to an extent, just not as far as he takes it. If small market teams were winning, good players will gladly go or stay there, geographic disadvantages notwithstanding. Take Detroit, for instance - or San Antonio. Teams from small markets can be successful if they're managed well. If Toronto were a contending team for a championship, it would have no problems maintaining its free agents and attracting others as well - no matter how cold it is up here and how bad and deceitful our Premier is.

What Dwyane Wade ignores is that there is an inherent geographical advantage to certain cities: Miami, Los Angeles and New York spring to mind. Those advantages, sadly, are quite strong: a lot of premier NBA talents are drawn to those cities for really poor and ignorant reasons, IMO, but those pulls still exist (no matter how ignorant their foundations might be). Those advantages can never be completely overcome by CBA mechanisms, and being in one of those cities hardly guarantees a team of success, but geographically disadvantaged teams can certainly overcome that disadvantage by fielding a successful team.

It is sad that we have to have an entirely re-done CBA to overcome the douchebaggery of somebody like LeBron James.

[Fairview4Life]

The NBAPA has refuted that 22 teams lost money and the league lost $300 million in total, since that figure includes all kinds of expenses and paper losses that while fine under GAAP standards, are not indicative of real losses that the players should give a **** about.

They have made allegations, but they haven't proven anything. Where have they documented that this is the case? They're not even trying this argument any more. The last time they tried this, Billy Hunter stood up in front of the world and tried to convince everybody that interest costs were not a legitimate expense and don't represent cash losses. The NBPA's still wiping the egg off its face from that one.

They have made allegations only because the NBA won't release the books publicly. Others using previous years leaked returns have gone through some real numbers in detail.

http://sports.espn.go.com/nba/columns/s ... als-110630

That sums up the players position pretty well. They have not said interest isn't a real loss, but that it's not a real loss that the players should have to give back on, since New Orleans, for example, loaned Shinn 30 million at a low interest rate, and borrowed more at a high interest rate. So they are taking a loss on the 30 million of the loan they took out, just to give George Shinn money for something not on the books. Or that the vast majority of the Nets losses on their leaked books were tied to depreciation of assets, including player salaries. Legitimate for accounting purposes? Of course. Something the players should have to give back on? Of course not. Why are the players giving back salary and not, say, Phil Jackson, or Jeannie Buss, or Bryan Colangelo? The players have no say in management expenses but are being expected to fund them all, including completely paper losses that in no way reflect the health of the league or individual team, rather than expect better management of finances.

[BorisDK1]

They have made allegations only because the NBA won't release the books publicly. Others using previous years leaked returns have gone through some real numbers in detail.

We've been through this before. The NBA opened all its books to the NBPA, including owners' personal tax returns.

Telling point? The NBPA is no longer challenging the financial situation. And nice of you to include that "brilliant" quote from Mr. Hunter when he declares that interest isn't a legitimate expense, announces that the league is still in a losing position to the tune of over $100 million in losses without it and yet somehow (!) declares that revenue sharing can fix the losing situations (without declaring how revenue sharing works that way when the league is in an aggregate negative situation). That's pure gibberish, of course - and has been challenged and refuted successfully many times over.

That sums up the players position pretty well. They have not said interest isn't a real loss, but that it's not a real loss that the players should have to give back on, since New Orleans, for example, loaned Shinn 30 million at a low interest rate, and borrowed more at a high interest rate. So they are taking a loss on the 30 million of the loan they took out, just to give George Shinn money for something not on the books. Or that the vast majority of the Nets losses on their leaked books were tied to depreciation of assets, including player salaries. Legitimate for accounting purposes? Of course. Something the players should have to give back on? Of course not. Why are the players giving back salary and not, say, Phil Jackson, or Jeannie Buss, or Bryan Colangelo? The players have no say in management expenses but are being expected to fund them all, including completely paper losses that in no way reflect the health of the league or individual team, rather than expect better management of finances.

But the "vast majority of the Nets losses" were not "tied to depreciation of assets". That's been documented many times, like here, where the author first alleged that it was and then had to retract it. The league says the Nets had cash losses (not paper losses) well in excess of $20 million/year for three years running. Why do you repeat things that have been LONG since refuted? That's just pure lack of integrity.

What the city of New Orleans did is not germane to this conversation. The only thing that's relevant is that cash payments for interst charges are, in fact, part of cash losses. Try budgeting your household budget and not bothering to include the interest on your mortgage: you can't do it. Nobody reasonable thinks that businesses should just ignore interest charges when talking about their expenses - not if they want that business to survive.

[Fairview4Life]

They have made allegations only because the NBA won't release the books publicly. Others using previous years leaked returns have gone through some real numbers in detail.

We've been through this before. The NBA opened all its books to the NBPA, including owners' personal tax returns.

Telling point? The NBPA is no longer challenging the financial situation. And nice of you to include that "brilliant" quote from Mr. Hunter when he declares that interest isn't a legitimate expense, announces that the league is still in a losing position to the tune of over $100 million in losses without it and yet somehow (!) declares that revenue sharing can fix the losing situations (without declaring how revenue sharing works that way when the league is in an aggregate negative situation). That's pure gibberish, of course - and has been challenged and refuted successfully many times over.

That sums up the players position pretty well. They have not said interest isn't a real loss, but that it's not a real loss that the players should have to give back on, since New Orleans, for example, loaned Shinn 30 million at a low interest rate, and borrowed more at a high interest rate. So they are taking a loss on the 30 million of the loan they took out, just to give George Shinn money for something not on the books. Or that the vast majority of the Nets losses on their leaked books were tied to depreciation of assets, including player salaries. Legitimate for accounting purposes? Of course. Something the players should have to give back on? Of course not. Why are the players giving back salary and not, say, Phil Jackson, or Jeannie Buss, or Bryan Colangelo? The players have no say in management expenses but are being expected to fund them all, including completely paper losses that in no way reflect the health of the league or individual team, rather than expect better management of finances.

But the "vast majority of the Nets losses" were not "tied to depreciation of assets". That's been documented many times, like here, where the author first alleged that it was and then had to retract it. The league says the Nets had cash losses (not paper losses) well in excess of $20 million/year for three years running. Why do you repeat things that have been LONG since refuted? That's just pure lack of integrity.

What the city of New Orleans did is not germane to this conversation. The only thing that's relevant is that cash payments for interst charges are, in fact, part of cash losses. Try budgeting your household budget and not bothering to include the interest on your mortgage: you can't do it. Nobody reasonable thinks that businesses should just ignore interest charges when talking about their expenses - not if they want that business to survive.

it wasn't the city of New Orleans. It was the NBA franchise owned by one of Shinn's LLC's lending to another at a lower interest rate, while borrowing more at a higher interest rate. The LLC owning the Hornets losses money on that transaction on the Hornets books, according to Larry Coon and ESPN's accounting team.

As far as my lack of integrity goes, I was going by Larry Coon and ESPN's accounting teams comments in the article I linked, not by the Deadspin article.

The Nets were another weak franchise, which helps explain their upcoming move to Brooklyn. During the time period covered by these financial statements they were in the bottom half in attendance, had one of the league's highest payrolls, and were operating in a high-cost environment. Under these circumstances you would expect the team to lose a lot of money, and it did -- it claimed losses of $49 million in 2005 and $57.4 million in 2006.

But these statements also illustrate the accounting practices to which Hunter and the players association take issue. Brooklyn Basketball (the Nets' parent company) paid $361 million for the team. In order for the balance sheet to balance, it had to show assets in that amount. Some of these are real, physical assets; accounts receivable; and the like. Other parts are "intangible" assets, which represent the amount the buyer paid above the value of the tangible assets. These assets (but not the franchise itself) are amortized over their "useful lives," with a portion of their value (a total of $200 million for the Nets) counted as an operating expense each year. For the Nets this expense added up to $41.5 million in 2005 and $40.2 million in 2006.

In other words, $41.5 million of the Nets' $49 million operating loss in 2005, and $40.2 million of its $57.4 million in 2006, is there simply to make the books balance. It is part of the purchase price of the team, being expensed each year. This doesn't mean they cooked their books, or that they tried to pull a fast one on the players. It is part of the generally accepted accounting practice to transfer expenses from the acquisition to the profit and loss over a certain time period. However, it's an argument that doesn't hold water in a discussion with Hunter and the players association, who would claim that the Nets didn't really "lose" a combined $106.4 million in those two years, but rather that they lost $7.5 million and $17.2 million, respectively.

The majority of the Nets massive "losses" over those years in the leaked documents were paper amortization and depreciation losses. As I stated, while this is completely legitimate for accounting purposes, it does not really indicate a "loss" the players should be worried about, and giving up salary for.

On top of that, I also don't think the players should be paying management expenses they have no control over, even though they are being asked to.

[Schad]

It wasn't the city of New Orleans to which he referred, it was the Hornets. Shinn did two separate things, to my understanding: at one point, he loaned money to the organization through one of his businesses to cover expenses, at a high rate of interest, which was paid back (with him gaining $2m in interest as a result) by borrowing from the league. At another, the team loaned Shinn nearly $35m at rates well below the norm, money that the team itself had borrowed at higher interest rates. Herb Kohl borrowed $55m in 2010 through the Bucks, which was funneled into his trusts.

That's very much germane to the conversation, because the losses suffered there have nothing to do with their function as a basketball franchise, but speak to the manner in which some owners have driven up losses through actions that have little connection to the viability of the league.

[BorisDK1]

it wasn't the city of New Orleans. It was the NBA franchise owned by one of Shinn's LLC's lending to another at a lower interest rate, while borrowing more at a higher interest rate. The LLC owning the Hornets losses money on that transaction on the Hornets books, according to Larry Coon and ESPN's accounting team.

I incorrectly asserted that it was the City who gave the loan, but the source really isn't important. Do you really want to make a point about this? The Hornets were hemorraging money, and when you have to borrow just to pay expenses (as opposed to having to expand or improve operations), you're going to pay a high rate. That said, interest costs were only $8 million for New Orleans, compared to $72 million in salary and benefits to players. What's really the cause of the financial woes of NOH, now? Let's at least appear to be realistic.

The majority of the Nets massive "losses" over those years in the leaked documents were paper amortization and depreciation losses. As I stated, while this is completely legitimate for accounting purposes, it does not really indicate a "loss" the players should be worried about, and giving up salary for.

On top of that, I also don't think the players should be paying management expenses they have no control over, even though they are being asked to.

This has been refuted. They alleged that one line item was simply a paper loss for the team, and the NBA corrected that. Whereas Coon et al. assumed the line item for $25 million on the Statement of Operations represented the RDA, it in fact was a buyout for Dikembe Mutombo's contract, as even Deadspin admitted here:

CORRECTION: Portions of the analysis below are wrong. They were based on a misreading of the "Loss on players' contracts" line item, which, it turns out, wasn't an RDA claim after all. (If you look in the audit notes for 2004, No. 8 refers to a "player buy-out and a player injury" — the former of which is almost certainly Dikembe Mutombo — totaling the same $25.1 million listed in the "Loss" line item.) The example is bad, and I apologize for that.

Coon based his entire assertion on the uncorrected article. So referring to Coon's assertions now without making any reference to the fact that the underpinnings of his argument are not valid displays either ignorance or lack of integrity - you pick.

[BorisDK1]

It wasn't the city of New Orleans to which he referred, it was the Hornets. Shinn did two separate things, to my understanding: at one point, he loaned money to the organization through one of his businesses to cover expenses, at a high rate of interest, which was paid back (with him gaining $2m in interest as a result) by borrowing from the league. At another, the team loaned Shinn nearly $35m at rates well below the norm, money that the team itself had borrowed at higher interest rates. Herb Kohl borrowed $55m in 2010 through the Bucks, which was funneled into his trusts.

In other words, he temporarily propped up one of his businesses with a loan from another when the borrowing firm was hemorraging money like crazy. Do you really want to compare the cash losses of the Hornets to the $2 million he might have made on covering back a loan (with borrowed money)? From their statement of cash flows, it looks like that entire partnership has been sinking about $7 million+ cash into that team for the past several years, every year - out of their own wallets.

That's very much germane to the conversation, because the losses suffered there have nothing to do with their function as a basketball franchise, but speak to the manner in which some owners have driven up losses through actions that have little connection to the viability of the league.

But those loans were necessitated by the fact that New Orleans was losing a ton of money. Those loans weren't for capital expansion or something useful; they were just to cover operational losses. That's the worst kind of debt there is.

[Fairview4Life]

Coon based his entire assertion on the uncorrected article. So referring to Coon's assertions now without making any reference to the fact that the underpinnings of his argument are not valid displays either ignorance or lack of integrity - you pick.

From Coon's article I linked to:

ESPN.com assembled a group of financial experts to review these documents and help determine whether these teams are actually losing money.

He is not referring to the Deadspin calculations or the Deadspin article. ESPN had some of their own accountants look over the books and found the "intangible" part of the purchase price amortization and some depreciation was the majority of the Nets losses, on paper. This is separate from the Deadpsin Mutombo thing.

I am also getting a little tired of you questioning my integrity without actually reading the article I linked to.

[BorisDK1]

He is not referring to the Deadspin calculations or the Deadspin article. ESPN had some of their own accountants look over the books and found the "intangible" part of the purchase price amortization and some depreciation was the majority of the Nets losses, on paper. This is separate from the Deadpsin Mutombo thing.

I am also getting a little tired of you questioning my integrity without actually reading the article I linked to.

You show me on that Statement of Operations where there is any purchase price amortization or anything discussing intangible assets. Go ahead, look. When the Nets claimed a $21 million operating loss, ESPN's experts and everybody else assumed the $25 million line item for loss of contract was an RDA: it was not. Period. End of. They based their argument on a faulty assumption, one that has since been challenged. ESPN has never, ever responded to that challenge. So you know what? Their original assertions (which have never had an actual name put beside them) mean squat.

The NBA specifically said that for the purposes of their negotiations with the NBPA, they have NEVER included purchase price amortization. NEVER.

[Fairview4Life]

He is not referring to the Deadspin calculations or the Deadspin article. ESPN had some of their own accountants look over the books and found the "intangible" part of the purchase price amortization and some depreciation was the majority of the Nets losses, on paper. This is separate from the Deadpsin Mutombo thing.

I am also getting a little tired of you questioning my integrity without actually reading the article I linked to.

You show me on that Statement of Operations where there is any purchase price amortization or anything discussing intangible assets. Go ahead, look. When the Nets claimed a $21 million operating loss, ESPN's experts and everybody else assumed the $25 million line item for loss of contract was an RDA: it was not. Period. End of. They based their argument on a faulty assumption, one that has since been challenged. ESPN has never, ever responded to that challenge. So you know what? Their original assertions (which have never had an actual name put beside them) mean squat.

The NBA specifically said that for the purposes of their negotiations with the NBPA, they have NEVER included purchase price amortization. NEVER.

I am not an accountant. I will defer to Larry Coon and ESPN. If you believe they are in error, let them know. They came up with different numbers than Deadspin, and unlike Deadspin they have not issued a correction to their article, nor have they been asked to, as far as I can tell.

Despite not being an accountant, it looks like that 25 million line item was on the 04 document, and ESPN's quote refers to the 05 and 06 document:

In other words, $41.5 million of the Nets' $49 million operating loss in 2005, and $40.2 million of its $57.4 million in 2006, is there simply to make the books balance. It is part of the purchase price of the team, being expensed each year. This doesn't mean they cooked their books, or that they tried to pull a fast one on the players. It is part of the generally accepted accounting practice to transfer expenses from the acquisition to the profit and loss over a certain time period. However, it's an argument that doesn't hold water in a discussion with Hunter and the players association, who would claim that the Nets didn't really "lose" a combined $106.4 million in those two years, but rather that they lost $7.5 million and $17.2 million, respectively.

That quote refers to the depreciation and amortization line item on page 5 or page 7 of the 05 and 06 document:
http://edge-cache.deadspin.com/deadspin/nets0506.pdf

If you have a problem with that, take it up with ESPN, not me.

[BorisDK1]

I am not an accountant. I will defer to Larry Coon and ESPN. If you believe they are in error, let them know. They came up with different numbers than Deadspin, and unlike Deadspin they have not issued a correction to their article, nor have they been asked to, as far as I can tell.

Despite not being an accountant, it looks like that 25 million line item was on the 04 document, and ESPN's quote refers to the 05 and 06 document:

In other words, $41.5 million of the Nets' $49 million operating loss in 2005, and $40.2 million of its $57.4 million in 2006, is there simply to make the books balance. It is part of the purchase price of the team, being expensed each year. This doesn't mean they cooked their books, or that they tried to pull a fast one on the players. It is part of the generally accepted accounting practice to transfer expenses from the acquisition to the profit and loss over a certain time period. However, it's an argument that doesn't hold water in a discussion with Hunter and the players association, who would claim that the Nets didn't really "lose" a combined $106.4 million in those two years, but rather that they lost $7.5 million and $17.2 million, respectively.

So they don't want to countenance interest payments as an operating expense.

Okay - they don't want to include a paper loss like amortization and depreciation? Okay, fine. But you still need to account for interest, because that is a cash loss, not a paper one. And that makes operational losses for the Nets $13 million in 2005 and $27 million in 2006, not $7.5 and $17.2. And no business valued at $307 million can survive hemorraging $40 million in two years. Whether or not you think that financing should be used in the purchase of the franchise, the inescapable fact is that it has been, and if you want the business to be a profitable going concern (and it's in the players' interests that they are), interest has to be accounted for in the business' costs. Every other employee group in the world would agree: why do NBA players get a free pass on this?

So I am "taking it up with ESPN", but if you're going to use somebody else's argument as a lynchpin, you'd better make sure it's sound.

Again: the NBPA dropped this line of attack months ago. They don't even dare rest their arguments on it, so why are you?

[YogiStewart]

[ The only thing that's relevant is that cash payments for interst charges are, in fact, part of cash losses.

its funny...even though that you state that the Nets losses was a small %, i wanted to put it in layman's terms.

is it any difference to have a low mortgage rate on your house and use the value of your mortgage to invest in (for example) a mutual fund that, in the long run, may have a higher rate of return?

[BorisDK1]

its funny...even though that you state that the Nets losses was a small %, i wanted to put it in layman's terms.

is it any difference to have a low mortgage rate on your house and use the value of your mortgage to invest in (for example) a mutual fund that, in the long run, may have a higher rate of return?

Or borrowing against your house's equity to pay off your credit card debt.