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Author Topic: The Profitablity of Rebuilding  (Read 2356 times)

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The Profitablity of Rebuilding
« on: March 10, 2009, 12:01:55 PM »

Offline huzy

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I saw this snippet on SI.com from the MIT Sports Informatics Conference this weekend and found it interesting….

Quote
Cuban offered that teams are most profitable when they are rebuilding. Why? They can maneuver their payroll toward the league minimum while still reaping the benefits of the NBA's national TV deal, revenue sharing and a fan base buying tickets to see a team viewed as hopeful, not hopeless.

Interesting point from someone who’s most recent BIG trade sent his team in the opposite direction. (Jason Kidd / Devin Harris.)

I think it’s more interesting to analyze this point. If you’re considering a team like Portland ‘rebuilding” I can definitely relate to the sentiment. However, if you look the Minnesota’s and Memphis’s of the league, I find it hard to believe that they are “killing it” on the balance sheets.

I’m also curious as to the recent news that the Celtics were one of several franchises’ that required assistance from the 175 Million loans from the NBA. I, like many others, wrote this off as the price of “rebuilding” before last years championship season. However, although this is just a snippet from what Cuban said, if it is in fact true that this is the most profitable way to operate and NBA franchise, you would have thought “Danny’s pre-Big 3 Team” would fit the mold.
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"      “I can make a trade every day if I want to, but that's not going to help us. A trade that would get us better rarely comes along. They're very difficult to find. Good trades are very difficult in our league and don't happen very often.”
-Danny Ainge
Re: The Profitablity of Rebuilding
« Reply #1 on: March 10, 2009, 12:25:47 PM »

Offline BballTim

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  On a related note, the NFL had some nice profits during the lockout/strike when they played half the season with replacement rosters.
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Re: The Profitablity of Rebuilding
« Reply #2 on: March 10, 2009, 12:31:54 PM »

Offline Hoyo de Monterrey

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Also, how about Cuban getting to rebuild in DALLAS! One of the biggest markets in the United States! You probably won't get as much of a hit when you're rebuilding when compared with Memphis, Tennessee or Sacramento, California.
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Re: The Profitablity of Rebuilding
« Reply #3 on: March 10, 2009, 12:43:04 PM »

Offline BballTim

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  Part of it is past success, although location helps. If the Celts contend for or win titles for the next 3 years and then reload with kids, it will take a few years for all of the sponsorship and fan support to dry up, and the salaries might be $30M+ lower at the time. If the Pacers decide to rebuild when they haven't had the same success they'd start the process with smaller and fewer revenue streams.
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Re: The Profitablity of Rebuilding
« Reply #4 on: March 10, 2009, 01:25:55 PM »

Offline papa shuttlesworth

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I think Cuban's statements are correct if the team is actually "rebuilding" and not just "stinking."  If you have a history of success and previous rebuilding efforts, then fans and sponsors will likely stick around.  I would think Boston would give Danny Ainge the benefit of the doubt during his next rebuilding period because he has proven that he can do it.  Same thing with Pat Riley.  I wouldnt, however, put much stock in Memphis' rebuilding.
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Re: The Profitablity of Rebuilding
« Reply #5 on: March 10, 2009, 02:21:44 PM »

Offline Brendan

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As long as you don't splurge using your salary cap space and MLEs to over pay guys, then he is correct. Rebuilding with profit sharing and TV revenue pays the bills.

This happens a ridiculous amount in MLB - where teams like CLE in a relatively small market send a boat load of $$ to teams like Philly (in the past when their revenue stunk.)

If you want to adjust for the market assign a "market" tax that is based on statistics of the market to each team. You play in NYC you pay the biggest tax, you play in Toronto? Not so much. Then you evenly distribute the tax to each team.
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