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[thirstyboots18]

So a franchise should be regarded as a piece of real estate...buy, hold for a time,  and sell, hoping for a profit?

That is actually what a lot of owners seem to be doing.  If you average operating losses of $5-8 million/year for ten years but sell for a $200 million profit, some might see that as a nice deal.

I'm thinking of doing some number crunching to estimate the capital gains of team owners.

Ahhh, and I would guess massive tax write offs in the meantime?

[Chris]

So a franchise should be regarded as a piece of real estate...buy, hold for a time,  and sell, hoping for a profit?

That is actually what a lot of owners seem to be doing.  If you average operating losses of $5-8 million/year for ten years but sell for a $200 million profit, some might see that as a nice deal.

I'm thinking of doing some number crunching to estimate the capital gains of team owners.

Actually, I think they have just been dealing with operating losses for a couple years, with the knowledge that they could fix things this summer.  This lockout has been a long time in the making, and I think a lot of the "stupid management" is directly related to owners trying to maintain a fan base over the last few years at the cost of losing some extra money, knowing that they will be able to fix the system this summer (and fall, and winter, and perhaps next summer as well).

I think if owners felt that the current system would be in place beyond this year, many of them would have taken a much different approach over the last few years, and basically risked alienating more fans, in the hopes of keeping the team financially viable for the longterm...kind of like you see with many of the smaller market baseball teams.  They know nothing is changing with the system, so they just work with what they have.  But in the NBA, the majority of the owners seem to be in agreement that it can't work like that in this sport, therefore, they could all be a little riskier over the last 5 years, knowing that they could fix things now.

[CaptainJackLee]

Seriously, this nothing more than owners trying to browbeat the players into massive Salary cuts, non guarenteed contracts, and poorer benefits for the sake of American Corporate Greed.

I tend to disagree.  If you believe the NBA, 22 out of 30 teams are losing money; if you trust Forbes, it's 17 out of 30 teams.  Either way, it's not a sustainable economic model.  In an industry that generates billions of dollars of revenue, it's ridiculous that any franchise is losing money, let alone two-thirds of teams.  

Yeah but according to Forbes the vast majority of the 17 teams are barely losing money, which might mean the answer is simply better management.  

I'm not sure that simply asking for better management would solve the league's problems; if it was that possible to find management that could keep your team both competitive and profitable, then it would be happening right now.  That being the case, I think the owners are doing the sensible thing, in attempting to control costs and in trying to put more money in the pockets of league owners.

I mean, in what other business do employees get rich, but owners lose money year after year (even if it's a fairly minor amount of money)?  That's just non-nonsensical, and has to change.

It's a classic problem of sports league of win-maximizers without a revenue-sharing system.

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

[Chris]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit. 

[CaptainJackLee]

The purpose of  owning or investing in a business (unless it is a non-profit) is to make money, at least that is what I always thought.

The purpose of owning a business should be decided by the owners of said business. It's a private enterprise and people are entitled to decide what to do with their own money. Many NBA owners don't manage their businesses with the purpose of making money. They admit so. And there is extensive economic literature about this. The recent Ross Perot vs Mark Cuban quid pro quo is a good example. The last motion filed by Cuban's attorneys capture the essence of the problem: Perot states that Cuban's "reckless and careless" management has put the Mavs at the "danger of insolvency". Cuban's answer is basically a picture of the Larry O'Brien trophy and repeating World Champions Dallas Mavericks over and over. Cuban freely admits he doesn't care about losing money. He told plenty of anecdotes about this firs hand. For example, he admitted he could make a lot more money of lower bowl tickets, but that he wanted to keep a fair chunk of them at a low-cost price to avoid out-pricing "real fans", the ones that make noise. It's very nice of him...

... but why should players pay for it?

If owners of NBA teams can't operate a profitable league with players getting a similar % of the revenue to every other sports professional league - as they claim - they need to see whatever they're doing wrong. If they can't find anything, they need to get out of business or accept their incompetence and take the losses.

[CaptainJackLee]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit. 

From the owners perspective it's the solution because it's the easier thing to do - much easier that, saying, prohibiting fellow owners from borrowing money from teams at a much lower interest rate than the team borrows for itself or from employing half of their family in the franchise. And much, much easier than sharing revenue.

Players shouldn't pay for the reckless management of NBA owners and much less should pay for the overexpansion of the league. The guys who pocket the expansion fees should be the ones paying for it.

If they decide to sell a license to some remote town in North Dakota or Alaska, should the NBA institute a $10 millions hard cap because that's the only way those teams can be profitable and competitive at the same time?

Because that's basically the owners current position. And at the pace that the revenue potential between large and small markets is growing, even if the owners have their way now, in five years we'll be talking about the NBA financial problems and how players are already so rich they can take another cut. Just like it's happening with the NHL again.

[jdz101]

People putting basketball in the same sentence as the "entertainment" industry are the reason there is loud crap music played at all the games and more timeouts than minutes to fit in all the ads. Knock 50% off player salaries for all I care… there will always be good exciting ball players in it for the love of the game. Who cares if the NBA loses a few arrogant chumps to Europe.

By the way, I'd be pretty confident that James Cameron would be making just as much if not more coin than his actors in the end.

[Chris]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit. 

From the owners perspective it's the solution because it's the easier thing to do - much easier that, saying, prohibiting fellow owners from borrowing money from teams at a much lower interest rate than the team borrows for itself or from employing half of their family in the franchise. And much, much easier than sharing revenue.

Players shouldn't pay for the reckless management of NBA owners and much less should pay for the overexpansion of the league. The guys who pocket the expansion fees should be the ones paying for it.

If they decide to sell a license to some remote town in North Dakota or Alaska, should the NBA institute a $10 millions hard cap because that's the only way those teams can be profitable and competitive at the same time?

Because that's basically the owners current position. And at the pace that the revenue potential between large and small markets is growing, even if the owners have their way now, in five years we'll be talking about the NBA financial problems and how players are already so rich they can take another cut. Just like it's happening with the NHL again.

Not buying the expansion argument, mainly because I think owners would be much more for contraction than the players.  I think if owners could they would contract New Orleans right now, rather than support them, but there is no way the players would allow that, because it costs them jobs.

[CaptainJackLee]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit. 

From the owners perspective it's the solution because it's the easier thing to do - much easier that, saying, prohibiting fellow owners from borrowing money from teams at a much lower interest rate than the team borrows for itself or from employing half of their family in the franchise. And much, much easier than sharing revenue.

Players shouldn't pay for the reckless management of NBA owners and much less should pay for the overexpansion of the league. The guys who pocket the expansion fees should be the ones paying for it.

If they decide to sell a license to some remote town in North Dakota or Alaska, should the NBA institute a $10 millions hard cap because that's the only way those teams can be profitable and competitive at the same time?

Because that's basically the owners current position. And at the pace that the revenue potential between large and small markets is growing, even if the owners have their way now, in five years we'll be talking about the NBA financial problems and how players are already so rich they can take another cut. Just like it's happening with the NHL again.

Not buying the expansion argument, mainly because I think owners would be much more for contraction than the players.  I think if owners could they would contract New Orleans right now, rather than support them, but there is no way the players would allow that, because it costs them jobs.

What "expansion argument"? I don't think you understood it at all. I really, really doubt the owners would support contracting a team after investing $300 millions on it and the players certainly wouldn't. A contraction is a bad solution IMO, a last resort solution if anything else fails. I don't see how that affects the argument that overexpansion created the massive gap in revenue potential between franchises, hence the financial/competitive imbalance.

[Chris]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit.  

From the owners perspective it's the solution because it's the easier thing to do - much easier that, saying, prohibiting fellow owners from borrowing money from teams at a much lower interest rate than the team borrows for itself or from employing half of their family in the franchise. And much, much easier than sharing revenue.

Players shouldn't pay for the reckless management of NBA owners and much less should pay for the overexpansion of the league. The guys who pocket the expansion fees should be the ones paying for it.

If they decide to sell a license to some remote town in North Dakota or Alaska, should the NBA institute a $10 millions hard cap because that's the only way those teams can be profitable and competitive at the same time?

Because that's basically the owners current position. And at the pace that the revenue potential between large and small markets is growing, even if the owners have their way now, in five years we'll be talking about the NBA financial problems and how players are already so rich they can take another cut. Just like it's happening with the NHL again.

Not buying the expansion argument, mainly because I think owners would be much more for contraction than the players.  I think if owners could they would contract New Orleans right now, rather than support them, but there is no way the players would allow that, because it costs them jobs.

What "expansion argument"? I don't think you understood it at all. I really, really doubt the owners would support contracting a team after investing $300 millions on it and the players certainly wouldn't. A contraction is a bad solution IMO, a last resort solution if anything else fails. I don't see how that affects the argument that overexpansion created the massive gap in revenue potential between franchises, hence the financial/competitive imbalance.

Well, my overall point is, that it doesn't matter who or what caused the problem, the issue is how to fix the problem.

Good businesses learn from mistakes, but they don't use those mistakes as a reason not to fix the problem that was made.

We can cast blame all we want, but when it comes down to determining how to go forward, blame means nothing.  The only think that matters is what is the best move for the business going forward.  

[Moranis]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit.  

From the owners perspective it's the solution because it's the easier thing to do - much easier that, saying, prohibiting fellow owners from borrowing money from teams at a much lower interest rate than the team borrows for itself or from employing half of their family in the franchise. And much, much easier than sharing revenue.

Players shouldn't pay for the reckless management of NBA owners and much less should pay for the overexpansion of the league. The guys who pocket the expansion fees should be the ones paying for it.

If they decide to sell a license to some remote town in North Dakota or Alaska, should the NBA institute a $10 millions hard cap because that's the only way those teams can be profitable and competitive at the same time?

Because that's basically the owners current position. And at the pace that the revenue potential between large and small markets is growing, even if the owners have their way now, in five years we'll be talking about the NBA financial problems and how players are already so rich they can take another cut. Just like it's happening with the NHL again.

Not buying the expansion argument, mainly because I think owners would be much more for contraction than the players.  I think if owners could they would contract New Orleans right now, rather than support them, but there is no way the players would allow that, because it costs them jobs.

What "expansion argument"? I don't think you understood it at all. I really, really doubt the owners would support contracting a team after investing $300 millions on it and the players certainly wouldn't. A contraction is a bad solution IMO, a last resort solution if anything else fails. I don't see how that affects the argument that overexpansion created the massive gap in revenue potential between franchises, hence the financial/competitive imbalance.

Well, my overall point is, that it doesn't matter who or what caused the problem, the issue is how to fix the problem.

Good businesses learn from mistakes, but they don't use those mistakes as a reason not to fix the problem that was made.

We can cast blame all we want, but when it comes down to determining how to go forward, blame means nothing.  The only think that matters is what is the best move for the business going forward.  

I believe that the solution is a much more comprehensive revenue sharing system like the NFL does. 

[LooseCannon]

I'd rather see franchise relocations to places likes Seattle/Vancouver, Kansas City/St. Louis, Las Vegas, and Anaheim before contracting teams.

[Chris]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit.  

From the owners perspective it's the solution because it's the easier thing to do - much easier that, saying, prohibiting fellow owners from borrowing money from teams at a much lower interest rate than the team borrows for itself or from employing half of their family in the franchise. And much, much easier than sharing revenue.

Players shouldn't pay for the reckless management of NBA owners and much less should pay for the overexpansion of the league. The guys who pocket the expansion fees should be the ones paying for it.

If they decide to sell a license to some remote town in North Dakota or Alaska, should the NBA institute a $10 millions hard cap because that's the only way those teams can be profitable and competitive at the same time?

Because that's basically the owners current position. And at the pace that the revenue potential between large and small markets is growing, even if the owners have their way now, in five years we'll be talking about the NBA financial problems and how players are already so rich they can take another cut. Just like it's happening with the NHL again.

Not buying the expansion argument, mainly because I think owners would be much more for contraction than the players.  I think if owners could they would contract New Orleans right now, rather than support them, but there is no way the players would allow that, because it costs them jobs.

What "expansion argument"? I don't think you understood it at all. I really, really doubt the owners would support contracting a team after investing $300 millions on it and the players certainly wouldn't. A contraction is a bad solution IMO, a last resort solution if anything else fails. I don't see how that affects the argument that overexpansion created the massive gap in revenue potential between franchises, hence the financial/competitive imbalance.

Well, my overall point is, that it doesn't matter who or what caused the problem, the issue is how to fix the problem.

Good businesses learn from mistakes, but they don't use those mistakes as a reason not to fix the problem that was made.

We can cast blame all we want, but when it comes down to determining how to go forward, blame means nothing.  The only think that matters is what is the best move for the business going forward.  

I believe that the solution is a much more comprehensive revenue sharing system like the NFL does. 

I agree with this.  Although I also think the money needs to come down a little as well.  

As always, I think the answer is in the middle.  Players need to take a bit of a pay cut (or give up fully guaranteed contracts...its one or the other IMO), and the owners need to share more money.

If the owners want to have an equal playing field, they need to do more to make it happen.

[CaptainJackLee]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit.  

From the owners perspective it's the solution because it's the easier thing to do - much easier that, saying, prohibiting fellow owners from borrowing money from teams at a much lower interest rate than the team borrows for itself or from employing half of their family in the franchise. And much, much easier than sharing revenue.

Players shouldn't pay for the reckless management of NBA owners and much less should pay for the overexpansion of the league. The guys who pocket the expansion fees should be the ones paying for it.

If they decide to sell a license to some remote town in North Dakota or Alaska, should the NBA institute a $10 millions hard cap because that's the only way those teams can be profitable and competitive at the same time?

Because that's basically the owners current position. And at the pace that the revenue potential between large and small markets is growing, even if the owners have their way now, in five years we'll be talking about the NBA financial problems and how players are already so rich they can take another cut. Just like it's happening with the NHL again.

Not buying the expansion argument, mainly because I think owners would be much more for contraction than the players.  I think if owners could they would contract New Orleans right now, rather than support them, but there is no way the players would allow that, because it costs them jobs.

What "expansion argument"? I don't think you understood it at all. I really, really doubt the owners would support contracting a team after investing $300 millions on it and the players certainly wouldn't. A contraction is a bad solution IMO, a last resort solution if anything else fails. I don't see how that affects the argument that overexpansion created the massive gap in revenue potential between franchises, hence the financial/competitive imbalance.

Well, my overall point is, that it doesn't matter who or what caused the problem, the issue is how to fix the problem.

Good businesses learn from mistakes, but they don't use those mistakes as a reason not to fix the problem that was made.

We can cast blame all we want, but when it comes down to determining how to go forward, blame means nothing.  The only think that matters is what is the best move for the business going forward.  

That's the line of reasoning of politicians and bad manager: do the easier thing - something that hides the problem.

If you don't address what is causing the problem, you won't be fixing the problem. That's why I said the important question to be made is what is causing those problems: players salaries or not? If the problem is being caused by something else, you won't fix it by "fixing" players salaries. At most you'll be temporarily hiding it. It's a cop out.

I thought this was a lot more clearer after the NHL experience.

[Chris]

The real question is: are players salaries the reason why teams are losing money? If not, why is cutting players salaries the solution?

It is the solution, because it is the largest, controllable expense.

They can't choose to pay less on their mortgages and rent.  If they cut things like advertising, then it could also cut revenue.

However, if they are able to cut salaries, then they can easily lower their costs, without lowering income.

Considering how much these players are making, I think they can stand to have their salaries cut a bit.  

From the owners perspective it's the solution because it's the easier thing to do - much easier that, saying, prohibiting fellow owners from borrowing money from teams at a much lower interest rate than the team borrows for itself or from employing half of their family in the franchise. And much, much easier than sharing revenue.

Players shouldn't pay for the reckless management of NBA owners and much less should pay for the overexpansion of the league. The guys who pocket the expansion fees should be the ones paying for it.

If they decide to sell a license to some remote town in North Dakota or Alaska, should the NBA institute a $10 millions hard cap because that's the only way those teams can be profitable and competitive at the same time?

Because that's basically the owners current position. And at the pace that the revenue potential between large and small markets is growing, even if the owners have their way now, in five years we'll be talking about the NBA financial problems and how players are already so rich they can take another cut. Just like it's happening with the NHL again.

Not buying the expansion argument, mainly because I think owners would be much more for contraction than the players.  I think if owners could they would contract New Orleans right now, rather than support them, but there is no way the players would allow that, because it costs them jobs.

What "expansion argument"? I don't think you understood it at all. I really, really doubt the owners would support contracting a team after investing $300 millions on it and the players certainly wouldn't. A contraction is a bad solution IMO, a last resort solution if anything else fails. I don't see how that affects the argument that overexpansion created the massive gap in revenue potential between franchises, hence the financial/competitive imbalance.

Well, my overall point is, that it doesn't matter who or what caused the problem, the issue is how to fix the problem.

Good businesses learn from mistakes, but they don't use those mistakes as a reason not to fix the problem that was made.

We can cast blame all we want, but when it comes down to determining how to go forward, blame means nothing.  The only think that matters is what is the best move for the business going forward.  

That's the line of reasoning of politicians and bad manager: do the easier thing - something that hides the problem.

If you don't address what is causing the problem, you won't be fixing the problem. That's why I said the important question to be made is what is causing those problems: players salaries or not? If the problem is being caused by something else, you won't fix it by "fixing" players salaries. At most you'll be temporarily hiding it. It's a cop out.

I thought this was a lot more clearer after the NHL experience.

Well, what is it if it isn't player salaries?

I would say that it is player salaries compared with revenue for individual clubs.

For some clubs, the salaries are fine, but for others, they are way too high.  So, by trying to control those salaries, I think that absolutely is dealing with the problem.

While contraction would be great, its just not going to happen.  And if they can come up with a way to either lower the salaries, or share revenues (or ideally a combination of the 2), then even the smallest markets will still be bringing in plenty of money, and they won't have to deal with laying off a ton of employees, and losing large streams of revenues, that CAN be profitable.