Comments on: Books show Nets with $44 million loss in 2008-09 season

By: accfanto

accfanto — Fri, 08 Jul 2011 19:54:56 +0000

It also stands to reason that if revenue sharing is to solve at least part of the current impasse, that the owners have the power to set economic standards for teams that have no hope of profitability even with revenue sharing and player concessions. By that, I mean contraction. The players then will have a decision, the same one autoworkers had at GM and Chrysler – to make deeper concessions to save those jobs, or allow some jobs to disappear so they don’t have to make those greater concessions.

By: Dre

Dre — Fri, 08 Jul 2011 19:54:28 +0000

http://dberri.wordpress.com/2011/07/07/better-angels/ – Arturo checked out how teams can benefit hugely from amortization on player salaries.

By: craigw24

craigw24 — Thu, 07 Jul 2011 23:40:04 +0000

Nice summary Kurt.

I do agree with everything you said, which points to the players giving some of their % of BRI. I also agree they should compute this after some deductions – like investments in broadening the base of NBA popularity, as this benefits both owners and players.

However, the owner’s current position and some owners apparent extreme positions seems to be way out-of-line with your thinking. The owners absolutely have to get their revenue sharing plan complete before coming to the players with any requests for givebacks. Any plan that doesn’t proceed in this fashion only points to the owners trying to break the player’s union.

By: timmytoad

timmytoad — Thu, 07 Jul 2011 23:11:44 +0000

Finally a well written article about the subject. Being a CPA that specializes in M&A transactions I have found most articles about this topic very frustrating. The key on whether a team is making any money is how much EBITDA they earn (Earnings before Interest, Taxes, Deprecation and Amortization) not Bernie Madoff’s definition of EBITDA (Earnings before I Tricked a Dumb Auditor). If the EBITDA is negative then the team has a true cash loss and some teams will go bankrupt with long-term EBITDA losses.

The problem is that certain owners have so much money that losses do not matter to them and this drives up the salaries (Mark Cuban). The revenue split with the players should be a percentage where the owners get a positive EBITDA and some return for their investment. There also needs to be a firmer cap to prevent billionaire owners that do not care about cash flow from skewing the salary pool.