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View Full Version : Simon Is Willing to Spend, But Is He Willing to Spend Enough? [8p9s]



Hicks
05-04-2011, 01:11 PM
http://www.eightpointsnineseconds.com/2011/05/simon-willing-to-spend-but-is-he-willing-to-spend-enough/

Read the whole thing, but I'll highlight something from the middle:


The Los Angeles Lakers were the World Champions last year with a payroll of $91.4 million. Indulge me in a little of flight of fancy, and let’s pretend that the Pacer organization and the Laker organization — rosters, coaches, front office — switched places last year, and Kobe Bryant led the Indiana Pacers to the title.

Now, let’s do a little math.

The (real) Indiana Pacer payroll was $66.7 million so flipping rosters would have added $24.7 million in costs. The “new” payroll is also over the luxury tax threshold, which would have cost another $21.4 million in taxes, as well as the forfeiture of an estimated $3.5 million rebate the (real) Pacers received for being under the threshold. In strictly roster costs alone, the “new” roster would have added $49.6 million in costs to the Pacers’ ledger. Throw in the difference between the $3.0 million paid to then-Pacer coach Jim O’Brien and the roughly $10.3 million paid to Phil Jackson, and Herb Simon could have a Championship for only about $58 million more dollars in costs.

Of course, there are returns. According to Forbes, the Pacers had $95.0 million in revenue, including $15.0 million in gate receipts. Assuming sellouts every night (something that has not happened here for the NBA Pacers) and a doubling of average ticket prices, as well as 12 playoff games, would net Pacers Sports & Entertainment (PS&E) — after giving the league its cut — perhaps an additional $35.0 million in revenue. This would leave about $23.0 million in additional payroll and coaching costs to be offset by additional broadcast, advertising, and other revenue. Maybe they could do that, maybe not. It would be exceedingly difficult, as the local television contract and advertising market in a small market like Indy are never going to be all that lucrative.

But … even assuming that the Pacers were able to add $58.0 million in revenue through the various streams available to them, that would only offset the additional costs. Which would mean that the Pacers would still have a loss of almost $17. million (Forbes). It is not at all unrealistic to contemplate a scenario in which the Pacers would have lost more money winning a championship than they did going 32-50.

90'sNBARocked
05-04-2011, 01:19 PM
Well thats an upbeat article , lol

I really only hope one thing. If Simon decides to sell the team, he does so with the caveat that the team MUST remain in Indianapolis

Kegboy
05-04-2011, 02:34 PM
I'm of the opinion that none of this matters, because the tax is gonna go away and we'll have a hard cap. We may not have basketball until 2015 as a result, but at least it'll be a more level playing field.

Roaming Gnome
05-04-2011, 02:47 PM
I'm of the opinion that none of this matters, because the tax is gonna go away and we'll have a hard cap. We may not have basketball until 2015 as a result, but at least it'll be a more level playing field.

I don't know where I stand anymore on this issue. There is a pretty good argument going on in the "players don't like it" thread discussing how a hard cap doesn't automatically bring parity. I guess some of the arguments changed my mind a good bit on a hard cap being a "cure all" for all that ails the small market teams.

90'sNBARocked
05-04-2011, 02:56 PM
I don't know where I stand anymore on this issue. There is a pretty good argument going on in the "players don't like it" thread discussing how a hard cap doesn't automatically bring parity. I guess some of the arguments changed my mind a good bit on a hard cap being a "cure all" for all that ails the small market teams.

look at it like this man

How often are the Yankees and Red Sox in contention?

usually every year. Why ? Extreemly high budget

then look at Kansas City

pacer4ever
05-04-2011, 03:13 PM
look at it like this man

How often are the Yankees and Red Sox in contention?

usually every year. Why ? Extreemly high budget

then look at Kansas City

Thats not exactlly true if you bulid though the farm system like the Rays you can compete. You just have to be able to retain your young players. The Braves are a perfect example of how to bulid a MLB without a crazy budget. Crazy spending in baseball kind of ruins it but whatever.

xBulletproof
05-04-2011, 03:25 PM
Thats not exactlly true if you bulid though the farm system like the Rays you can compete. You just have to be able to retain your young players. The Braves are a perfect example of how to bulid a MLB without a crazy budget. Crazy spending in baseball kind of ruins it but whatever.

No, the Rays can contend in small stretches. Then they have to sell off all their players and start over. And the Braves in the late 90's were in the top 5 in the MLB in salary. Even between now and then they're very close to the top 10.

And the only reason it even works in the MLB for small market teams like that is because of how the salary structure works with young players. They develop in the minor leagues until they're ready for the MLB, and spend several years in the majors before they're eligible for arbitration to make any money. In the NBA you're paying them to develop, and about the time they're ready .... they're free to leave, or are making a boatload of money.

Roaming Gnome
05-04-2011, 03:35 PM
look at it like this man

How often are the Yankees and Red Sox in contention?

usually every year. Why ? Extreemly high budget

then look at Kansas City

I guess personally, I'm kind of where BillS is on the other thread. The real solution probably lies between having both revenue sharing and a hard cap. Maybe the revenue sharing makes a hard cap high enough for the players to stomach this kind of change instead of feeling like they are bankrolling all the changes.

90'sNBARocked
05-04-2011, 05:07 PM
I guess personally, I'm kind of where BillS is on the other thread. The real solution probably lies between having both revenue sharing and a hard cap. Maybe the revenue sharing makes a hard cap high enough for the players to stomach this kind of change instead of feeling like they are bankrolling all the changes.

To me

the real problem is honesty, or lack their of

similar to how the NFL owners are claiming their losing Millions

yet refuse to open their books

BillS
05-04-2011, 05:10 PM
To me

the real problem is honesty, or lack their of

similar to how the NFL owners are claiming their losing Millions

yet refuse to open their books

The NBA owners have opened their books. The dispute there is over whether the losses are due to accounting losses, not about the books being opened.

What part of things is "dishonest"?

90'sNBARocked
05-04-2011, 05:18 PM
The NBA owners have opened their books. The dispute there is over whether the losses are due to accounting losses, not about the books being opened.

What part of things is "dishonest"?


Bill

Do you really believe anyone in business is a 100% honest?

I honestly don't

BillS
05-04-2011, 05:23 PM
Bill

Do you really believe anyone in business is a 100% honest?

I honestly don't

Thanks for your comment on my integrity.

90'sNBARocked
05-04-2011, 06:10 PM
Thanks for your comment on my integrity.



Easy Bill

I wassnt commenting on your integrity sir

My point is there are a constant abundance of lies in business. some very minute, some big. I just think it is very hard to trust anyone's intention

I think about all the commercials , how companies claim how much they care about you as a customer, how important you are

blah blah blah

There used to be at least some integrity in business, now it seems screwing someone over is not mean, just good business

PaceBalls
05-04-2011, 07:59 PM
You realize that the NBA can't just lie about their books right? I'd think the IRS would have something to say about that.

90'sNBARocked
05-04-2011, 08:17 PM
You realize that the NBA can't just lie about their books right? I'd think the IRS would have something to say about that.

I was unaware the NBA opened their books

I guess I was thinking of the NFL

Richard_Skull
05-04-2011, 09:02 PM
I for one don't want a hard cap. I think it will force teams that do draft well to have to eventually relinquish their players. What I'd be for is a better revenue system and maybe steeper penalties other than a dollar for dollar tax. Or maybe (just thought of this) have a salary cap just on players that weren't drafted by the team. For instance, only DJ, Posey, and DC (I think that's it) would go to this "Foreign Cap". We could then be free to pay PG, Tyler, Roy and etc. whatever they are worth. May have to add rounds and a farm system(NBDL) for this to work better.

Trophy
05-04-2011, 09:06 PM
If we do a S&T (Danny for Eric Gordon), we're still going to have cap room to go out and straight up sign someone else like Nene for $15M a year and even doing that, there's still going to be more space than what we've had to extend guys like Roy, Tyler, Paul, etc.

BillS
05-05-2011, 10:41 AM
Bill

Do you really believe anyone in business is a 100% honest?

I honestly don't


Easy Bill

I wassnt commenting on your integrity sir

I don't see how, seeing as the first statement is pretty absolute and that I run a for-profit business.

In any event, you need to be careful about gross generalizations, particularly in a forum environment where you have no idea what people do In Real Life.

rexnom
05-05-2011, 12:40 PM
*I want to interrupt this thread for a quick public service announcement*

Folks, we're never getting Eric Gordon. Let's move on.

*Please resume regular discussion*

Hicks
05-05-2011, 12:49 PM
*I want to interrupt this thread for a quick public service announcement*

Folks, we're never getting Eric Gordon. Let's move on.

*Please resume regular discussion*

Thanks, pacer4ever.

naptownmenace
05-05-2011, 12:59 PM
Hicks, I think you left out the best part of the entire article and the whole basis of Jared's argument. Just quoting that middle section skews his point, IMO.

Glad you said to read the article because it made a lot more sense to me after I read this:



So problem solved. I mean, Simon’s “sort of disappointed” comment probably loosely translates to “kind of pissed,” but, no biggie. Simon having no problem spending up to the luxury tax threshold should allay Bird’s concerns, right?

Maybe.

But maybe not.

It really depends on whether or not Bird thinks that luxury tax limitation will prevent him from fielding a contender or not. It’s an open question with the new Collective Bargaining Agreement (CBA) on the horizon. However, under the current CBA — or a new one that is materially unchanged — Simon’s unwillingness to pay the luxury tax would be a significant, perhaps insurmountable obstacle to building a team that could contend for an NBA title.

So his point is that spending up to the luxury tax is probably not going to be enough to field a championship level team. If that's what Bird was hinting to when he made the statement questioning Simon's willingness to spend money... well he has a good point.

Even when the Pacers made it to the Finals back in 2000, they had a payroll up over 70 million a year, which would be higher than the luxury tax threshold today.

vnzla81
05-05-2011, 01:07 PM
*I want to interrupt this thread for a quick public service announcement*

Folks, we're never getting Eric Gordon. Let's move on.

*Please resume regular discussion*

thank you.

naptownmenace
05-05-2011, 01:12 PM
Not sure if this Jason is someone from PD but this point is an excellent one against introducing a hard cap.



Jason 05.04.11 at 1:18 pm

Great, great post. However, I have to say that I think a true hard cap and restrictions on guarantees would both be a blessing for big market teams. Under the current system, the pay difference between staying with the home team and going to a new market is significant…larger raises for home market plus an extra guaranteed year means that the home team can pay 10-20% more than anyone else. However, under a true hard cap and shorter contracts, that percentage will become smaller. Home teams will still be able to offer the most (assuming that some sort of Bird rights exist in the new CBA), but will it be enough to overpower the glitz and glamour of NYC, LA, Miami, Dallas, etc.?

If an up-and-coming player could play 3 years in Minnesota for $75 million or the same amount of time in NYC for $68 million, I’m sure he chooses NYC. The endorsement opportunities in NYC could make up the difference, not to mention that most 20-something millionaires can have a great time living in New York.

I would propose that the new CBA sticks with a soft cap that still gives the home team the bidding advantage when it comes to retaining the players they draft, and I think that contract lengths are still going to have to be 3 or 4 years to give the small teams a legit chance to retain their players.

http://www.eightpointsnineseconds.com/2011/05/simon-willing-to-spend-but-is-he-willing-to-spend-enough/#comment-7917

Larry Staverman
05-05-2011, 02:36 PM
Not sure if this Jason is someone from PD but this point is an excellent one against introducing a hard cap.



http://www.eightpointsnineseconds.com/2011/05/simon-willing-to-spend-but-is-he-willing-to-spend-enough/#comment-7917

But one thing it will do is make the big market teams make decisions on how they spend there money. The Knicks for example might be willing to overpay for a marginal center but with $40 million per invested in 2 players already a cap of $70 million gives you maybe one more player between 5 and 10 million and the rest are small or minimum contracts. If teams sign a couple max level stars they may not be able to keep their own young talent or other key players. If they have an injury to a key player the season is in trouble.

The teams with the best management and drafting results will be able to build the deepest and most balanced rosters similar to how the Pacers, Okla and Memphis are built now. You will have to choose between quality depth and balance or a top heavy roster. It will force the luxury tax payers to manage their rosters instead of spending their problems away.

In theory it should allow more teams to have a chance to repeat like the nfl with the best managed franchises to compete for longer periods such as the Colts and Pats