Let’s look at the “help” the Cavs got LeBron, shall we?:

1. Mo Williams

.53 x 525,000,000 = 278,000,000

So assuming the Maloofs hadn’t already sold part of the team to bring their equity down to 53%, their 156,000,000 grew to 278,000,000 over 15 years. That’s a 78% rate of return, annualized down to 3.92%. For comparisons’ sake, the S&P had a rate of return of 55% the past 15 years, but a diversified portfolio or one managed could have earned more. Lebron’s money manager, assuming he’s not some friend, likely would have been fired for earning less than 4% a year. Hell, back then an annuity would have guaranteed that much, if not more.

Granted they may have taken dividends, and they did enjoy the benefits of team ownership, so this isn’t a complete analysis, but really would it have been hard to throw that in to complement the wisdom of his majesty King James and some one sided figures?

bro…i 100% understand what you are saying. this is basically what LBJ is saying too. there is a fundamental flaw in the logic though. again, we both don’t know if the kings are actually profitable or not. with that said, let’s talk in generalities.

so what you are saying is that it should be acceptable for every business owner to lose money each and every year of operating a business with the mere *hope* that the business itself will appreciate in value for them to sell 15 or 20 years later? really? how is that logical? some points related to pro team ownership

1. using your hypothetical number of $10M loss/year (which we both stipulate that we do not know for sure applies to the Kings). so an owner should foot this bill each year just because he can?

2. what if the owner kept the franchise for more than 40 years…wouldn’t that negate this strange business ownership theory? should every owner be forced to sell just to make money on his business?

3. wouldn’t the asset be worth MORE if the business was profitable?

4. isn’t there a theoretical ceiling to the value of a business? i mean you can’t keep the buy it at $X, hold for 10-15 years, sell for $X+$400M model in perpetuity, right? logically you see that. the kings may be worth $500M today…do you think they will be worth $1B in 10 years? maybe. $1.5B in 20 years? maybe. $2B in 30 years (laughable though)? maybe. but keep going on this trend and the answer is eventually no.

is there a waiting list of billionaires wanting to own NBA teams? let’s say there is. so what? so does that mean that just because they’re billionaires, they should run the team (read: the business) with financial losses each year because they can? what a dumb concept. every business deserves to be profitable and if they aren’t, they should do what they can to become profitable. not every team can be in a major market like the lakers or knicks or celtics. but these major market teams know if the small markets can’t be profitable, its bad for the league which in turn is bad for them.

please know the difference between being a profitable business (actually making money from business operations) and the increase in PAPER value of your asset…which is not realized until you decide to sell the asset. yeah…the maloofs made money on their investment over 15 years but that doesn’t mean the business is profitable.

We’ll see how much concern he has for the fans of Miami when he takes his talents elsewhere in 2014. And yes, I know, it won’t be to Cleveland.

http://www.behindthebasket.com/btb/2011/10/24/why-youd-have-to-be-a-soulless-imbecile-to-side-with-the-own.html

You could argue that the big sale of the Memphis Grizzlies was due in part to that team being top-10 in the NBA. However, *this* sale demonstrated how much more valuable NBA franchises have become in the past decade – even franchises who have gotten *worse* over the past decade instead of better.

The owners are doing fine. And if they aren’t doing fine, they can easily sell their franchises at a significant profit if they’ve owned the team for at least 10 years (during which time, the NBA’s reach has expanded worldwide).