View Poll Results: Should the players accept the current proposal by owners by Wednesday?

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    24 77.42%
  • No - not a good deal, keep negotiating

    3 9.68%
  • No - not a good deal, decertify

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Thread: The Lockout & the Raptors: Players approve CBA, Owners too! (1944)

  1. #221
    Raptors Republic Superstar enlightenment's Avatar
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    what occurs if by the end of next season there is no agreement?
    (not like i think this will happen but..) Could the NBA dissolve completely because of a lockout, or would there be some serious court action to save the league?

  2. #222
    Raptors Republic Superstar enlightenment's Avatar
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    Quote ezz_bee wrote: View Post
    until stern shows me his books, I'll trust independent analysts, even if they are estimating.
    Really..?
    Im sorry but no NYtime Blogger could convince me with those kind of stats. The NBA and the owners are not HAPPY about this lockout, if there was no real economic issue with the league, there would be no lockout.

  3. #223
    Raptors Republic Starter MyMomLovesMe's Avatar
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    No one is disputing that there is an economic issue, its just that its a world issue, and the league is using its leverage to get a new CBA advantageous to the current economic plight.

    The players did not get locked out out in the middle of the old CBA. The lockout, co-incites with a new deal that is to be structured for another decade or so.



    The league is in a good place, the average guy cutting his grass, paying his cable and occasionally putting on the NBA can not understand these ridiculous sums of money the players are making, especially when his prospects are so lowly.

    The league is playing it off like the players are the greedy ones even though they have not done anything but abide by the last terms the NBA locked them out for, and the OWNERS & Stern themselves 'of course' are immune to greed, they only want what is right for the game.

    Those of us who have followed the economic side of this game, know that the owners are the greedier of the bunch. They are the ones in control of the ship, and they should bear responsibility for its management. The last CBA was advantageous to the owners like no other in this leagues history.


    The other thing to consider is that all the losses that are being shown in operational expenses can be written off in capital gains many years down the road. The franchise values continue to increase, and what momentary pitfalls we find ourselves in now, are by no means an indicator of the health of this brand.


    There is a lot of acting on the part of the owners, and I understand that the average fan does not want to really dig too deeply into the facts. We have lives, but there is a lot calculated risk being taken to gain a better position, mainly at the expense of fans, and the timming is right to take advantage of the PU.
    Last edited by MyMomLovesMe; Thu Jul 7th, 2011 at 04:41 PM.

  4. #224
    Raptors Republic Starter MyMomLovesMe's Avatar
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    Personally, I like that players can make large sums of money. It is the one thing in this world, that I know a kid in the slums of Brazil can suddenly become someone if they work hard.

    The benefits for hard work and dedication are there for all to see, maybe this is why I like PRO ATHLETES. The transparency of it all. They represent the common man amongst us rising above it all by sheer will and determination and heart.


    I trust the athletes more so than I do the owners. They made it by honing their physical skill, the owners made it by honing their tactical skills.

  5. #225
    Super Moderator Joey's Avatar
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    Great posts MMLM. I fully agree. Couldn't have said it better myself.
    "I just dunked. Got a little dunk. Thatís nice." Terrence Ross

  6. #226
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    Quote joey_hesketh wrote: View Post
    Great posts MMLM. I fully agree. Couldn't have said it better myself.
    Yes, MMLM has been very in depth, and pointed in posts. I enjoy reading the rundowns regarding the lockout and various viewpoints, but these have been well on point, even if some minor points I disagree with, on the whole bang up job!

  7. #227
    Raptors Republic Starter MyMomLovesMe's Avatar
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    Thanks guys.


    The other reason why business may not want to show a profit.


    Suppose you have a great revenue stream coming in. What do you do? Well being cheap in life may be cool, but being cheap in business can be a deal breaker.

    So you get 20 mil and it cost you 10 mil, well.... you can cash it out if you want, but the tax man is standing over you. So if you spend it internaly on the business, the expendature becomes more cost effective. If you make a profit you risk 30%, but if you spend it against your operational costs. By buying new HD cameras, new score board, buying up an adjacant property next to your areana and building a nice building there, etc... all are expenses against your operational costs... so in essence you can say you never made any money. But...the overall franchise value incerases with these expenditures.

    So in business, operational costs on year to year basis, don't mean so much. Teams often need to renevoate, buy new scoreboards, new HD equipment, new bandwith connections, etc.... these expenditures cost money, and go agaisnt your opertional costs.

    This is why operational costs are not THE INDICATOR. Asset value is.

    We all understand that business often take on expenditures that mean building a new stadium, renovations, upgrades in technology, these costs are often accounted for many years in adcance in terms of benefits... so its not always so obvious as to PROFIT or LOSS.

    I can hide profits for years by funneling it to the businesses asset base. I can take out MAJOR SUMS of money and make the business pay interest on MY GAIN. ... and blame the lossess on the salaries.


    EDIT: By the way, the only way you can get dinged by this is captial gains.... but you dont pay that out until you sell, whole or partialy (divisions).... and this is why some businessmen prefer to have a hedge in terms of losses, for capital gains you can write off you losses for 7 years.
    Last edited by MyMomLovesMe; Sat Jul 9th, 2011 at 07:54 AM.

  8. #228
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    As of now, compared to other pro sports leagues, the NBA lags far behind when it comes to sharing the wealth. Major League Baseball teams share around $450 million annually. In the NFL, teams share about 80% of all revenue from media deals, national sponsorships and merchandise sales, along with 34% of ticket sales after the home team has collected 66% of the gate. That has allowed the Green Bay Packers to continue to thrive in a league with the Giants and Jets and other major-market teams.

    But in the NBA, the Lakers and Knicks get to keep all of their revenue from ticket sales and broadcast revenues, giving them an enormous advantage over small-market teams. The Lakers are getting an estimated $3 billion from their new 20-year TV deal with Time Warner Cable that starts next season, but they won't have to share a dime of that.
    http://www.nydailynews.com/sports/ba...ket_teams.html

  9. #229
    Raptors Republic Starter MyMomLovesMe's Avatar
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    Great find.


    Stern is not really interested in coming up with THE BEST model that will help all franchises. The HUGE profits off of the top markets are off the table. So instead Stern is focusing on the players to make more concessions.

    This league can make incredible monies, the owners themselves do not want to be communist with each other, but they don't mind being communist with the players salaries. It is just greed at its finest, and Stern is the poster boy for it.

  10. #230
    Raptors Republic Veteran Bendit's Avatar
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    If the vast majority of the owners are losing money while the great revenues of the very few owners are contributing not just to their own personal wealth but also the total revenues of the league which in turn raises the cap thus contributing in an indirect way to rising salaries and maximums.....then why dont they turf these guys out of the lodge. I guess they cant legally speaking and Stern doesnt want an internal war on his hands. Until the players get more leverage I am afraid they lose every time. The problem is that the shelf life of the average player tends to be shorter than the length of each agreement. By the time the next one expires those that suffered the brunt & memories of the last one are gone and the newbies are too busy to either care or are enjoying their new millionaire status.

  11. #231
    Raptors Republic Starter MyMomLovesMe's Avatar
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    Let my reiterate that losses don't tell the full picture.


    The revenues are up since the last CBA, the clubs control their expenditures. It's very easy for an owner to over spend, or even borrow money against his franchise and the costs of the money is calculated against operational costs. Hence owners can very easily pay themselves out, and than claim that they lost money in operational expenses. (in fact since these negotiations were expected, it could have been a directive)

    Without looking at the books there is no way to tell. The revenues are up across the board, so the losses look self inflicted to me. At what point are owners going to be held accountable for their side of operations? (One of the ways to fuck the players over, is to encroach on the line drawn by expenses, and than put your hands up in the air and tell them that more must come from their side, as you are losing money.)

    If teams are mismanaged, no matter how much revenue is generated and how much players give up an owner can still find himself in a position where he is in the red.


    The other thing to consider is say a franchise like Dallas losses, 10 million, 5 million, 11 million, 3 million, consecutively. It looks bad operationally, but if the franchise value and brand has gone up by 100 Million in that time, than that 29 million total loss was worth it.

    So without seeing the books, and knowing if Owners are expensing themselves out lavish bonuses and perks, to see capital gains, there is no way of knowing if these losses are worth crying about or not. The revenue streams are healthier then they ever have been why are they inadequate to pay the players by the last CBA?


    Transparency is essential, not selected figures... but real books and statements, loans etc...

    (The players have a right to this, they should not agree on any deal, until owners explain where their side of the revenues are going and why. If the losses are due to shady loans, poor investments, extreme expensing, the players should not be held accountable for these expenditures.)
    Last edited by MyMomLovesMe; Sun Jul 10th, 2011 at 08:26 PM.

  12. #232
    Raptors Republic Icon mcHAPPY's Avatar
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    [QUOTE=MyMomLovesMe;93366]Let my reiterate that losses don't tell the full picture.


    The revenues are up since the last CBA, the clubs control their expenditures. It's very easy for an owner to over spend, or even borrow money against his franchise and the costs of the money is calculated against operational costs. Hence owners can very easily pay themselves out, and than claim that they lost money in operational expenses. (in fact since these negotiations were expected, it could have been a directive)
    Money borrowed that is counted against operational costs is a legitimate expense. Not only would the loan itself have to be included so would the interest. For an owner to do what you are saying actually costs them more money. The majority of these owners aren't nickel and diming like the local deli - these are hundred million dollar businesses and most are part of billion dollar businesses.

    Without looking at the books there is no way to tell. The revenues are up across the board, so the losses look self inflicted to me. At what point are owners going to be held accountable for their side of operations? (One of the ways to fuck the players over, is to encroach on the line drawn by expenses, and than put your hands up in the air and tell them that more must come from their side, as you are losing money.)
    Revenues may be up - but so are expenses. Chartered planes, hotels, trainers, coaches, arenas, maintenance, advertising, marketing, management, office staff, and player's salaries. What increase in expenses do players have that every other person in North America does not have?

    If teams are mismanaged, no matter how much revenue is generated and how much players give up an owner can still find himself in a position where he is in the red.
    True - but 22 out of 30 franchises are not mismanaged. There are fundamental flaws in the current CBA that need to be addressed.

    The other thing to consider is say a franchise like Dallas losses, 10 million, 5 million, 11 million, 3 million, consecutively. It looks bad operationally, but if the franchise value and brand has gone up by 100 Million in that time, than that 29 million total loss was worth it.
    There is a very large flaw in the argument: cash flow. A sound business is not bleeding out multi-million dollar losses per year in the hopes of capital appreciation. I have a lot of experience with rental properties. Buying a rental property was all about ensuring I could generate enough rental income for the property to pay for itself AND generate enough monthly cash to cover maintenance and unforseen expenses while giving me some extra coin for myself. Looking on a much larger scale to NBA franchises, I see no reason why owners should not have the same expectation from their business.

    Most NBA owners are not looking to sell after 4 seasons. For an owner who has lost $29M over 4 seasons, then $58 over 8 seasons, $87M over 12 - plus take on the compounding interest for the money borrowed to pay for these expenses and you are well over $100M. One thing to keep in mind is that of all the thousands of people associated with an NBA franchise (owners, players, support staff, management, trainers, vendors, etc. etc.) there were only 22 people who lost money last year - 22 owners.

    Also, what happens if the next leg down in this recession/depression takes franchise values with it? The future economic landscape is not very bright and I'm sure these owners recognize that as well.

    So without seeing the books, and knowing if Owners are expensing themselves out lavish bonuses and perks, to see capital gains, there is no way of knowing if these losses are worth crying about or not. The revenue streams are healthier then they ever have been why are they inadequate to pay the players by the last CBA?
    A capital gain is the difference in a sale price versus the purchase price of an item. Giving out money in bonuses or perks does not generate capital gains. The result of a capital gain is a final transaction i.e. sold a truck, sold a hot dog machine, sold a franchise.

    The revenue streams may be healthier than they have ever been - no doubt. However, the system is not working when 22 teams are losing money. In the United States the richest people in the country are getting richer while the middle class gets smaller and the poor are growing in numbers - obviously the system is not working for the majority of the people there. The difference is average people don't have a chance when the political parties on both sides are bought and paid for by the same interests. In the NBA, the owners have the power to make changes to benefit the majority. I'm pretty sure there are 8 teams plus a couple of teams with billionaire owners who are willing to stay status quo. Unfortunately that is not in the best interests of the league or those owners either.

    Transparency is essential, not selected figures... but real books and statements, loans etc...

    (The players have a right to this, they should not agree on any deal, until owners explain where their side of the revenues are going and why. If the losses are due to shady loans, poor investments, extreme expensing, the players should not be held accountable for these expenditures.)
    The books have been opened to the players. The books reflect generally accepted accounting principles that any other private or public company would be subjected to. The player's spin on this issue is more conspiracy theory based than accounting based.


    Without question the number one issue here is money. However very closely related to this (as winning teams typically have more success financially) is competitiveness. When the last 5 NBA championship teams were luxury tax payers there is a system of have's and have not's in place (SAS were the last non-tax paying team however even they already have $73M for 12 players for next season and are a tax payer).

    From an owner perspective, I believe they not only wish to have a legitimate shot to make a profit each year but have a legitimate shot to compete without having to spend over $100M in salary. For many teams this is not an issue, for the majority it is. From a fans perspective I'd much rather have a competitive league among 25 of 30 teams than a league competitive among 10-12 teams.

  13. #233
    Raptors Republic Starter MyMomLovesMe's Avatar
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    Without seeing the books, and seeing why money was taken out of against the franchise, we can not know if these expenses are legit (for labour negotiations) or not. The cost associated with them can very easily offset the cost that you would pay to the tax man if you made them as profits. This is why businesses often pad expenses, because if they show too much profits, the tax man takes his cut. So often times, you want to take the opportunity to spend for your business before the tax man takes his cut.

    Now banking future profits works this way too. You loan yourself the money NOW, and the interest on the money is the expense against the franchise (which you can push in the face of the players). The cost associated with this move can still be much smaller, than actually waiting to profit out and getting dinged by the tax man. This is at trick that is very real and LEGAL. You offset what you lose by what you would of paid in taxes. There is a lot of creative accounting out there.


    BTW you are mixing up a lot of stuff I said above. I used many examples and capital gains are real and they occur (and they are independent of padding and expensing out profits - don't understand why you got them mixed up). I mentioned many factors.

    If you renovate your house, its value goes up. You may be dealing with operational losses for years before your rent pays off what you put in. THIS IS WHY CHECKING THE BOOKS is important. The landlord can cry that he has not made any money for 10-15 years considering how much he has spent, and the interest on his capital etc... In fact this is the case for most home owners, yet many see the profitability of owning a house.

    ...but we all know that the landlord is going to be more than fine even though every year he has shown a loss.



    As for expenses, being expenses, well of course... ENRON used to write off strippers and orgies. Those were entertainment expenses. Again, without showing where the revenues are going to by the owners the players should not budge. If all that counted was PROFIT/LOSS, than as an owner I am laughing, because I control that side of things. I can screw you royally.



    ....btw, you could buy an NBA franchise in the 70's for 100K. The market and revenues are now huge, don't let their SHADY accounting tell you the league is in trouble. Their revenues streams have been growing, but lately so have their expenses, and until I have independent accounting verify that they are REAL EXPENSES associated with running a basketball team (and by that I mean expenses that can be used against the players for labour negotiations then yes - if on the other hand they are shady loans that did not benefit the franchises, or losses on risky investments that the ownership incurred, than the players should not have to give up their share of the pie for risks that bears no bearing on basic operations of running a team.)

    The players should not be paying for the owners capital expenses. This would make them beast of burden.


    If you rack up your credit cards, buy a Mercedes Benz, take out loans against your rental property, and find yourself in paying out more than you are taking in, you DO NOT HAVE THE RIGHT, to double the rent of everyone in your rental property. Your management bears responsibility for your predicament. You may just have to declare bankruptcy and let someone else run the rental property better. The NBA owners seem to have no risk of bankruptcy associated with them, when they get into trouble they just want more of the players share.


    Again, revenues are UP ACROSS THE BOARD, only horrible management could make 22/30 franchises be losers. BTW, those are league negotiator numbers, which have not been independently verified and the proper statements have not been submitted to make those credible numbers. The NBA and owners are very adverse to truly opening their books up to see where the losses are going.
    Last edited by MyMomLovesMe; Mon Jul 11th, 2011 at 11:15 AM.

  14. #234
    Raptors Republic Starter MyMomLovesMe's Avatar
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    BTW,


    We had a financial property on Young Street that was costing 20,000 a month in rent. The building had a much more prestigious space, that they wanted 50,000 for. It stood there vacant for 6 months, a prime location like that got us thinking maybe we can get it for a good price.

    At one point we approached the ownership to see if we can make a deal for the space for say 25-30K. They laughed, and said that the space means more to them in the losses against their profits than renting it to us for the sake of rent.

    Hence every 50K that was made in profit, could be covered up by the building using the 50K loss on the property. The actual space probably cost the building 10% or less to maintain. Creative accounting can take you a long way in this world, if you know how to structure your books, and how to break down your business into units.


    EDIT: So keep in mind that you can use your losses for many years down the road against your capital gains. In fact, good accounting counts on this. Hence, often losses are recouped by businesses in tax credits. Which is why GE did not pay a penny in tax in 2010 even though they showed 15 Billion in profits.

    Are the players going to get that money back when the owners apply the losses against taxes they would have had to pay in the future?



    In the light of the growth of NBA revenues, their books (as presented by their negotiators) smell like funky cheese to me.





    EDIT2: The players have a RIGHT to make sure that owners are using their revenues efficiently, before they budge on their share of the pie.
    Last edited by MyMomLovesMe; Mon Jul 11th, 2011 at 11:49 AM.

  15. #235
    Raptors Republic Icon mcHAPPY's Avatar
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    Quote MyMomLovesMe wrote: View Post
    Without seeing the books, and seeing why money was taken out of against the franchise, we can not know if these expenses are legit (for labour negotiations) or not. The cost associated with them can very easily offset the cost that you would pay to the tax man if you made them as profits. This is why businesses often pad expenses, because if they show too much profits, the tax man takes his cut. So often times, you want to take the opportunity to spend for your business before the tax man takes his cut.

    Now banking future profits works this way too. You loan yourself the money NOW, and the interest on the money is the expense against the franchise (which you can push in the face of the players). The cost associated with this move can still be much smaller, than actually waiting to profit out and getting dinged by the tax man. This is at trick that is very real and LEGAL. You offset what you lose by what you would of paid in taxes. There is a lot of creative accounting out there.


    BTW you are mixing up a lot of stuff I said above. I used many examples and capital gains are real and they occur (and they are independent of padding and expensing out profits - don't understand why you got them mixed up). I mentioned many factors.

    If you renovate your house, its value goes up. You may be dealing with operational losses for years before your rent pays off what you put in. THIS IS WHY CHECKING THE BOOKS is important. The landlord can cry that he has not made any money for 10-15 years considering how much he has spent, and the interest on his capital etc... In fact this is the case for most home owners, yet many see the profitability of owning a house.

    ...but we all know that the landlord is going to be more than fine even though every year he has shown a loss.



    As for expenses, being expenses, well of course... ENRON used to write off strippers and orgies. Those were entertainment expenses. Again, without showing where the revenues are going to by the owners the players should not budge. If all that counted was PROFIT/LOSS, than as an owner I am laughing, because I control that side of things. I can screw you royally.



    ....btw, you could buy an NBA franchise in the 70's for 100K. The market and revenues are now huge, don't let their SHADY accounting tell you the league is in trouble. Their revenues streams have been growing, but lately so have their expenses, and until I have independent accounting verify that they are REAL EXPENSES associated with running a basketball team (and by that I mean expenses that can be used against the players for labour negotiations then yes - if on the other hand they are shady loans that did not benefit the franchises, or losses on risky investments that the ownership incurred, than the players should not have to give up their share of the pie for risks that bears no bearing on basic operations of running a team.)

    The players should not be paying for the owners capital expenses. This would make them beast of burden.


    If you rack up your credit cards, buy a Mercedes Benz, take out loans against your rental property, and find yourself in paying out more than you are taking in, you DO NOT HAVE THE RIGHT, to double the rent of everyone in your rental property. Your management bears responsibility for your predicament. You may just have to declare bankruptcy and let someone else run the rental property better. The NBA owners seem to have no risk of bankruptcy associated with them, when they get into trouble they just want more of the players share.


    Again, revenues are UP ACROSS THE BOARD, only horrible management could make 22/30 franchises be losers. BTW, those are league negotiator numbers, which have not been independently verified and the proper statements have not been submitted to make those credible numbers. The NBA and owners are very adverse to truly opening their books up to see where the losses are going.
    I went through your post section for section.

  16. #236
    Raptors Republic Icon mcHAPPY's Avatar
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    Quote MyMomLovesMe wrote: View Post
    BTW,


    We had a financial property on Young Street that was costing 20,000 a month in rent. The building had a much more prestigious space, that they wanted 50,000 for. It stood there vacant for 6 months, a prime location like that got us thinking maybe we can get it for a good price.

    At one point we approached the ownership to see if we can make a deal for the space for say 25-30K. They laughed, and said that the space means more to them in the losses against their profits than renting it to us for the sake of rent.

    Hence every 50K that was made in profit, could be covered up by the building using the 50K loss on the property. The actual space probably cost the building 10% or less to maintain. Creative accounting can take you a long way in this world, if you know how to structure your books, and how to break down your business into units.


    EDIT: So keep in mind that you can use your losses for many years down the road against your capital gains. In fact, good accounting counts on this. Hence, often losses are recouped by businesses in tax credits. Which is why GE did not pay a penny in tax in 2010 even though they showed 15 Billion in profits.

    Are the players going to get that money back when the owners apply the losses against taxes they would have had to pay in the future?



    In the light of the growth of NBA revenues, their books (as presented by their negotiators) smell like funky cheese to me.





    EDIT2: The players have a RIGHT to make sure that owners are using their revenues efficiently, before they budge on their share of the pie.
    I am a landlord myself. I've had numerous rental properties. Nobody wants a rental property that is cash flow negative. I doubt owners want NBA franchises that are cash flow negative either.

    Your examples are all advocating capital gains outweighing operational loss. To receive those gains, one must sell. A sale is final. The examples you've provided are great for those who bought in the 1970's like LAL/Buss or even 5-10 years ago but what about GSW/Lacob who just purchased for $450M? Also for a team running in the red, what happens to all the debt upon sale? The new owner either takes it on which comes off the sale price OR the old owner pays it off with the capital gains of the sale.

    Losses might be acceptable for a year or two, but year after year, sustained losses require more borrowing and the arithmetic of compound interest eventually trumps all. To get the type of capital appreciation you speak of, owners have to own longer than a few seasons. There are owners who can sustain these losses but those are the multi-billionaires that most owners are not. Also, this is not about the LAL, CHI, NY i.e. large market teams, this is about the ORL, MEM, SAC, MIN, UTA. The example given of losing $29M over 4 seasons does not reflect the realty that in 2009-10 11 teams lost $20M or more - we are not talking chump change, even for the majority of owners.

    Operating profits are not capital gains hence capital losses cannot be used to offset them. Capital gains and losses are a direct result of buying or selling.

    Operating losses can only be used against revenues. Therefore when a team has a loss of $15M it has already factored in the losses against the revenue. Would you want to lose $1 to save 30 cents? This is what you are advocating.

    Regarding players rights.... I'm sorry but the players are employees. Their rights are limited to having contracts honoured. If I'm stocking shelves and serving customers at Wal-Mart, what RIGHT do I have to tell the people at the top how to allocate resources? The players have a right to come to an agreement with the owners on a CBA which dictates their terms of employment - nothing more, nothing less. If the players and owners cannot come to an agreement, then the players are free to take their services elsewhere.

    For all the arguments of capitalism versus socialism/communism, there is a two-tiered approach in the arguments: capitalism for the players and socialism/communism for the owners.

  17. #237
    Raptors Republic Starter MyMomLovesMe's Avatar
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    I did not want to do this, buts lets go through this.

    Quote Matt52 wrote: View Post
    I am a landlord myself. I've had numerous rental properties. Nobody wants a rental property that is cash flow negative. I doubt owners want NBA franchises that are cash flow negative either.
    So you are not going to be stupid and take on loans on the property, or make extra renovations when you are just at the break even point. If you do so, that is entirely your fault, and your rent can not be raised to compensate for your bad decisions. Across the board rent is up, year to year. So any extra expenditures not deemed necessary are your responsibility not your renters.

    You can see in the above example, how your own mismanagement can far outstrip your revenues source. (back to my main point, without a systematic audit of the franchises by PA accountants they should not budge).

    Your examples are all advocating capital gains outweighing operational loss. To receive those gains, one must sell.
    Wrong. Mistake #1, you can borrow money against your net worth. Your capital gains are YOUR CAPITAL GAINS, to monetize them you must pay taxes. Or you can take a reverse mortgage, and take them out. Do you get it now? Capital gains don't just appear because you buy or sell. Evaluations are made all the time and there is big money in getting it right. It can give your franchise increased leverage.

    A sale is final. The examples you've provided are great for those who bought in the 1970's like LAL/Buss or even 5-10 years ago but what about GSW/Lacob who just purchased for $450M? Also for a team running in the red, what happens to all the debt upon sale? The new owner either takes it on which comes off the sale price OR the old owner pays it off with the capital gains of the sale.
    The example I gave was an extreme one, but was meant to demonstrate that there are other ways of getting wealth than OPERATIONAL PROFITS, for the benefit of our examples.

    The league has continued to garner increased revenues, therefore there its fair to say there is still growth. On a franchise worth 500 Million, or in MLSE case a portfolio worth 1.8 Trillion. A 10% year to year capital gains is quite remarkable. MLSE continues to aquire assets, counting them as expenditures, like the condominium adjacent, soccer clubs, etc... these are all expenses that can be used against profits. So even though operational profits are small, the actual footprint of the business expands. This is what you need to understand.

    Losses might be acceptable for a year or two, but year after year, sustained losses require more borrowing and the arithmetic of compound interest eventually trumps all. To get the type of capital appreciation you speak of, owners have to own longer than a few seasons. There are owners who can sustain these losses but those are the multi-billionaires that most owners are not. Also, this is not about the LAL, CHI, NY i.e. large market teams, this is about the ORL, MEM, SAC, MIN, UTA. The example given of losing $29M over 4 seasons does not reflect the realty that in 2009-10 11 teams lost $20M or more - we are not talking chump change, even for the majority of owners.
    Again losses can be strategic, as mentioned above with the business creating a greater footprint.

    In your tenant landlord example, you can decide to build an extra 5 units, at 1Million to you. This will involve operational losses for you for the next 10 years, but you see the benefit to your revenue stream and your asset base in the long run, plus a smart business man can write off those expenses by incorporating etc...

    Operating profits are not capital gains hence capital losses cannot be used to offset them. Capital gains and losses are a direct result of buying or selling.
    Wrong, so much wrong with the above. You always have capital gains. It grows under your ass, you can monetize them when you sell, and pay taxes, or you can borrow against your assets by finding a lander that will give you an appraisal, you get it now?

    Operating losses can only be used against revenues. Therefore when a team has a loss of $15M it has already factored in the losses against the revenue. Would you want to lose $1 to save 30 cents? This is what you are advocating.
    Wrong. IF accounted for properly they can be used, they can be used against capital gains for up to 7 years.


    Regarding players rights.... I'm sorry but the players are employees. Their rights are limited to having contracts honoured. If I'm stocking shelves and serving customers at Wal-Mart, what RIGHT do I have to tell the people at the top how to allocate resources? The players have a right to come to an agreement with the owners on a CBA which dictates their terms of employment - nothing more, nothing less. If the players and owners cannot come to an agreement, then the players are free to take their services elsewhere.
    They honoured their contracts just fine. They are more than willing to accept the current CBA, the owners locked them out.

    For all the arguments of capitalism versus socialism/communism, there is a two-tiered approach in the arguments: capitalism for the players and socialism/communism for the owners.
    Again, the free market is being manipulated. Owners cant control each others spending, and no one wants to try. Their own egos will outbid them like you saw in the Jordan days when the league had a much more smaller revenue streams and stars were making much more money. JOs contract, Walker, you get the point. The new CBA took significant rights from the players while the owners got a significant increase in revenues. So IMO the books are cooked, like I mentioned above. SHOW ME THE BOOKS... its quite easy.
    Last edited by MyMomLovesMe; Mon Jul 11th, 2011 at 02:50 PM.

  18. #238
    Raptors Republic Starter MyMomLovesMe's Avatar
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    And by the way a lot of corporations got screwed this way. Their evaluations were made by stock price, they borrowed heavily and when the market collapsed they got stuck holding lots of debt, and needed to sell assets and even fire people.

    IF you borrowed and put that capital effectively back in to the business, great... your net worth will reflect that. If you didn't and squandered it on bonuses and hair brained schemes, than this is something that I would want to check before I make further concessions.

    Survival of the fittest does not go out the window simply because you have a players union that you can push around. Some teams are making money, and while others are not, teams made money before in worse conditions, so what is going on? (Hint: We just got out of the era of easy banking.)


    Open the books. That is all I say. Allow for an audit. There is nothing to be lost if this is the truth. (There is lots of funny accounting going on these days.)
    Last edited by MyMomLovesMe; Mon Jul 11th, 2011 at 02:52 PM.

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    Quote MyMomLovesMe wrote: View Post
    I did not want to do this, buts lets go through this.
    Did not wish to go through what? If you wish to discuss, discuss. if you don't want someone questioning you, don't post. *edit* this came off much coarse than was intended - the point was we are here to discuss and discussions are usually better served without group think so opposing views should not be viewed as 'right' or 'wrong', in my opinion.

    So you are not going to be stupid and take on loans on the property, or make extra renovations when you are just at the break even point. If you do so, that is entirely your fault, and your rent can not be raised to compensate for your bad decisions. Across the board rent is up, year to year. So any extra expenditures not deemed necessary are your responsibility not your renters.

    You can see in the above example, how your own mismanagement can far outstrip your revenues source. (back to my main point, without a systematic audit of the franchises by PA accountants they should not budge).
    Rent can be raised as much as a market is willing to take. Current tenants are given notice of rent increase, if they don't like it they move out UNLESS government has rent control in your market. New tenants come in. You never increase rent unless you are sure someone else is out there to pay it.

    The goal of making any renovation is to make more money. The goal of any franchise is to be more competitive and generate more money.

    The issue here is the landlords (owners) with the better location (market) are able to make renovations (add free agents, sign extensions) that the other landlords (owners) wtih the worse location (market) is unable to match. This creates a land of gated communities (luxury tax payers) versus slums (small markets) or teams able to compete year in and year out (deep playoff runs) versus teams in purgatory (just missing or first round and out).


    Wrong. Mistake #1, you can borrow money against your net worth. Your capital gains are YOUR CAPITAL GAINS, to monetize them you must pay taxes. Or you can take a reverse mortgage, and take them out. Do you get it now? Capital gains don't just appear because you buy or sell. Evaluations are made all the time and there is big money in getting it right. It can give your franchise increased leverage.
    This is the same premise that many homeowners in the US operated under - how did that work out? Canada happens to be on an approximate 5 year delay. It is also the same premise that many European countries and the US have operated under.

    This involves hoping for capital appreciation while being able to maintain minimal payments on debt AND being able to renew debts when they mature at low interest rates.

    Relying on capital appreciation to keep up with mounting debts/losses/expenses is a sure fire way to create a credit-crisis.

    With the next leg lower in the recession or depression (depending on which stats you use) hoping for capital appreciation is not a wise business decision.

    The example I gave was an extreme one, but was meant to demonstrate that there are other ways of getting wealth than OPERATIONAL PROFITS, for the benefit of our examples.
    Your example is also another way of going broke if the franchise doesn't increase in value.

    The league has continued to garner increased revenues, therefore there its fair to say there is still growth. On a franchise worth 500 Million, or in MLSE case a portfolio worth 1.8 Trillion. A 10% year to year capital gains is quite remarkable. MLSE continues to aquire assets, counting them as expenditures, like the condominium adjacent, soccer clubs, etc... these are all expenses that can be used against profits. So even though operational profits are small, the actual footprint of the business expands. This is what you need to understand.
    Trillion or billion?

    A 10% capital gain realized means sold.

    A 10% capital gain unrealized and used as a mechanism of borrowing (i.e. leverage) creates a net zero result.

    Assuming the money borrowed generates a positive cash flow (i.e. the cash flow is enough to cover the cost of borrowing), that is good. However, the goal is to generate positive cash flow to not only pay for the debt but to also pay down the debt. If not there comes a breaking point at which time the creditors (or bond market - see Italy's soaring yields today) says enough. At some point a creditor not only wants a return ON capital, they are going to want a return OF capital.

    By the way, I think claiming depreciation of assets is what you mean. I'm not familiar with US tax law but in Canada a building can be depreciated at 4% per year, items such as office equipment or furniture can be depreciated at 20% per year. Unfortunately you are only able to claim that against the amount already on the debit side of the ledger. If depreciation is used on these assets and later sold, the amount claimed against depreciation goes on the sale price directly increasing the capital gain.

    There is no such thing as a free lunch - unfortunately.

    Again losses can be strategic, as mentioned above with the business creating a greater footprint.

    In your tenant landlord example, you can decide to build an extra 5 units, at 1Million to you. This will involve operational losses for you for the next 10 years, but you see the benefit to your revenue stream and your asset base in the long run, plus a smart business man can write off those expenses by incorporating etc...
    If the property continues to appreciate in price - excellent. If prices do not continue to appreciate see Toronto condo crash around 1990, Calgary did not have any price appreciation in property for a good 15-20 years from the early '80's onwards, US housing market is down 40% and it needs to go down another 30% just to reach historical averages, Ireland property market crashed, Italy, Spain, etc.

    Wrong, so much wrong with the above. You always have capital gains. It grows under your ass, you can monetize them when you sell, and pay taxes, or you can borrow against your assets by finding a lander that will give you an appraisal, you get it now?
    I do get it - you are talking leverage which is great when an asset continues to appreciate and the resulting increase in revenue not only pays for the cost of borrowing but helps pay down debt. What happens when one is no longer able to generate enough cash flow (i.e. losses greater than revenues) to cover the debt? The ponzi scheme (and that is what you are advocating) blows up.

    Wrong. IF accounted for properly they can be used, they can be used against capital gains for up to 7 years
    .

    You can only use a capital loss against a capital gain when the gain is realized i.e. sold. We are talking franchises here - that requires selling of hundred of millions of dollar assets. You cannot use capital losses against operating revenues, you can use certainly depreciate an asset but this is a small percentage compared to the total expenditure. you cannot use


    They honoured their contracts just fine. They are more than willing to accept the current CBA, the owners locked them out.
    The old CBA expired. The owners honoured it for 6 years and, as a league, lost money every year of it. It is the owners right to lock the players out as there is no CBA currently in place and they do not wish to continue losing money.

    Again, the free market is being manipulated. Owners cant control each others spending, and no one wants to try. Their own egos will outbid them like you saw in the Jordan days when the league had a much more smaller revenue streams and stars were making much more money. JOs contract, Walker, you get the point. The new CBA took significant rights from the players while the owners got a significant increase in revenues. So IMO the books are cooked, like I mentioned above. SHOW ME THE BOOKS... its quite easy.
    The free market is being manipulated?

    So in order for ALL teams to have a chance to compete, teams need to go bankrupt?

    In order for teams to not go bankrupt, they have to accept losing or at best mediocrity?

    My opinion is, without a lockout and a new CBA, the players own greed is set to cause numerous teams to relocate - or worse fold in time. Going worst case scenario moving forward, having only 24 teams just cost the players 75 jobs.

    I'm glad you through in at the end "IMO". Unfortunately for you, or me, opinions do not equate facts.

  20. #240
    Raptors Republic Starter MyMomLovesMe's Avatar
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    Matt52,

    The reason I don't like doing this crap, is because its egotistical, and not fun for others who read this board.


    You still don't get it, and I think you think this is about right and wrong. You and I do not know who is right or wrong, because we don't see the books. I don't want to get into this back and forth with you because its obvious you are not understanding me, and when you are you are just playing devils advocate for the sake of argument. I am simply demonstrating ways to cook books, not saying they are cooked.


    I am also trying to contribute with my knowledge not my ego. I did not come here to argue, I just came here to make a point on how one can stack their books, and how operational costs may mean nothing. I have done that. Nothing you have said has disputed that fact. I come from an accounting family, so I have a good grasp of these things.



    If you want to add some original thought rather than parroting the leagues numbers, by all means go right ahead. I also don't see what the use is of attacking those that do. Good Day.


    EDIT: Seriously, posts with 20 quotes with back and forth rants are so last decade. You made your point that you think the owners are truthful and are not lying ,and I have made my point on how they could be. We can do this till the cows come home and nothing will change. Show me the books and lets see who can do a better analysis.

    EDIT2: And BTW asset amortization is so like yesterday, a simple lease will get you a full write off. Most companies don't even own their own computers, a third party does. They lease them for a 2 year term along with service contracts.
    Last edited by MyMomLovesMe; Mon Jul 11th, 2011 at 05:06 PM.

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