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Thread: CIB Meeting about Conseco Operating Expenses

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    Default CIB Meeting about Conseco Operating Expenses

    Pace Yourself
    by Abdul Hakim-Shabazz
    March 9, 2009
    IndianaBarrister.com

    http://www.indianabarrister.com/arch..._yourself.html

    Let me ask you a question.

    In this economic climate where average people are losing their homes and jobs at a rate not seen since the Great Depression, are you willing to fork over $15 million a year to operate Conseco Fieldhouse because the billionaire Simon family says it’s too expensive for them to operate?

    (Insert expletive here) NO!!! That’s exactly what I thought too.

    However, the Pacers are standing pretty firm in their demand that the city take over the operational costs of Conseco. In a presentation at this afternoon’s Capital Improvement Board Meeting, Vice-Chairman Patrick Early said while the Pacers have not threatened to leave, they have told the city that all options are on the table if they are forced to keep paying for the facility.

    Early says the Pacers have only turned a profit two out of the past 20+ years and by picking up the $15 million operational costs, the team would have a chance to break even. He also said they contribute $8 million in sales tax revenue for the downtown area.

    Early made his comments as the CIB outlined $1.5 million in additional cuts in order to close a $36 million shortfall. Cuts were made in grants to the arts, tourism, Indiana Black Expo and other operating expenses. Currently the board has found nearly $8 million, but still has $26 million more to go as well as find a way to pay for $57 million in loans to pay for Conseco, Lucas Oil and other properties.

    The Board also looked at what one percent increases in admissions, food and beverage and hotel taxes would bring annually. The total would be about $24 million, but also make Indianapolis first in the nation in admission taxes and second in food and beverage taxes.

    Just about everyone is waiting to see what kind of solution Indiana lawmakers come up with. But I can tell you this, I pity the politician or billionaire who asks the general taxpayer to pick up the costs of Conseco. I have a pretty good idea what the reaction will be and involves torches, pitchforks and a lot of (figuratively speaking) bloodshed.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    For one, I don't understand why Pacers Sports & Ent. doesn't schedule more events at Conseco? I mean I know they have concerts during the winter, and also the WWE is having events there more frequently, but it seems like during the summer the place just sits there empty most of the time.

    Here is the schedule of events from last August. Other than WWE's big pay per view event, what else did they bring in? Women of Faith? Joyce Meier ministries? And two Fever games?

    http://www.consecofieldhouse.com/eve...393F2832952DE0

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Yea, it doesn't seem like taxpayers should have to foot the bill. It's like walmart and other stores coming and saying we should pay their operating expenses.

    Maybe if the NBA lowered players salaries and TPTB took a pay cut then they could afford to pay their operating costs. It's pretty similar to these CEOs with extravagant lifestyles who drove their companies into the ground and now begging for a bailout. Greed is a major cause of many problems and of course the taxpayer is supposed to take the burden to fix it all according to their twisted thought process.
    Last edited by Swingman; 03-09-2009 at 04:31 PM.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by ToasterBusVIP View Post
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    For one, I don't understand why Pacers Sports & Ent. doesn't schedule more events at Conseco? I mean I know they have concerts during the winter, and also the WWE is having events there more frequently, but it seems like during the summer the place just sits there empty most of the time.

    Here is the schedule of events from last August. Other than WWE's big pay per view event, what else did they bring in? Women of Faith? Joyce Meier ministries? And two Fever games?

    http://www.consecofieldhouse.com/eve...393F2832952DE0
    Good point. They need to have events there as often as possible. Colts need to be holding events at Lucas Oil Stadium as well.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    I'm disturbed especially by the fact that they've only made profit once in the last 20 years?? Granted, half of that was at MSA, but for most of that period they've been a very consistent winning and popular team! That covers the entire Miller era--and they lost money during that span, are you kidding me?

    I love the Pacers, but...yeah, that to me sounds like an organization that can't hold its own in the best of times, and in the WORST of times can certainly end up losing a whole ton of money.

    I'd want to see how far the organization was from profiting most of those 20 years. If they were in the black two years my guess is they were usually only a few million out on most of the other years during the Pacers' strong years. In that case the CIB shouldn't be asked to foot the entire bill for the operating costs--let's say average out what it would have taken during those years for the team to profit. A few mil per year, I'd guess.
    Last edited by ToasterBusVIP; 03-09-2009 at 04:39 PM.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    One thing I learned in accounting is you can massage the numbers in many ways. How they factor in expenses, equipment depreciation etc.

    If the city even thinks about it (hopefully they don't) then they better be double checking the financial numbers for themselves.

  7. #7
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    Default Re: CIB Meeting about Conseco Operating Expenses

    I question the math that has the Pacers losing money in all but 2 years of the past 20.

    If that is true then they either can't exist in Indiana with the NBA's business model, or there needed to be a cleaning house of management a long time ago.

    I still wonder if PS&E isn't too bloated at the top with too many unnecessary positions that are more in feeding the old boy's club some cozy and unnecessary jobs and titles rather than in turning a profit.

    In any case, corporate welfare, no matter how you try and disguise it, sucks. Billionaires asking taxpayers for handouts so they can sell you overpriced tickets to see overpaid athletes isn't a winning proposition. The gravy train is simply coming to the end of the tracks. But never underestimate government's ability to overextend itself in these situations rather than forcing the entities to clean up their lax business practices. Unfortunately, when one city wises up and realizes they have milked the taxbase dry, another city is standing in line to sell it's soul for a shot at the brass ring and wring just a little more out of its taxbase.
    O'Brien has been fired! Yay! What took so long?

    ------

    "A player who makes a team great is more valuable than a great player. Losing yourself in the group, for the good of the group, that’s teamwork."

    -John Wooden

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    Default Re: CIB Meeting about Conseco Operating Expenses

    What's amazing about all this is that the whole problem could not only be fixed pretty much for good, but could even be made to start channeling profits back into the city, if the league would bring the salary cap down 10-15 mil a year. Or...if that can't happen (which as I understand the Players Union would never agree to) make sure the next CBA phases out yearly cap increases. Each CBA states a new cap number every what...ten years. If the cost of living is a little higher 8 years into the current contract and the players aren't taking home on average a few extra mil then so what?

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by ToasterBusVIP View Post
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    What's amazing about all this is that the whole problem could not only be fixed pretty much for good, but could even be made to start channeling profits back into the city, if the league would bring the salary cap down 10-15 mil a year. Or...if that can't happen (which as I understand the Players Union would never agree to) make sure the next CBA phases out yearly cap increases. Each CBA states a new cap number every what...ten years. If the cost of living is a little higher 8 years into the current contract and the players aren't taking home on average a few extra mil then so what?
    We're in a different kind of economic animal than ever before. The Players Union needs to recognize this or it could well end up with fewer places for players to land. This is serious. Other unions are having to ante up - sports unions can join the club.

    For the first time, I am concerned about the Pacers staying here. I think it's that bad.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Well as per usual, the people commenting on the article on Indystar.com have no clue what is going on here with the character status of our team.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    I will add my voice to those who doubt the numbers that say the Pacers have only shown a profit in two seasons. Yes, numbers can be made to say anything.

    If the Simons stick to their guns about the city (read as the taxpayers) should be paying their way for the fieldhouse, I would remind them of the sweetheart deal they got on Circle Center Mall. What is their lease on that place? It is something along the lines of a lifetime (99 years) deal for a dollar a year? Close to that, anyway.

    Before I say the next part, let me just say that I enjoy sports as much as anyone. But here is my feeling about all of this.

    I have ALWAYS felt that if a guy wants to own a sports franchise, he should build the arena himself. The regular Joe trying to make it as a private businessman certainly does not get anywhere near even proportional tax dollars to help his business. Yet these millionaires with their dollar a year lease on prime location city property keep saying "Give us more, or we'll pull the plug."

    My answer to them would be this:

    "Well, then pull the damn plug! We are sorry that you can't seem to make it work here, but maybe you are in the wrong business, in the wrong town. Why should the taxpayer, who has trouble just keeping his home, pay for a business that has been a losing proposition for twenty years?"

    The definition of insanity is doing the same thing, the same way, over and over, and expecting different results.

  12. #12
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    Default Re: CIB Meeting about Conseco Operating Expenses

    I also want to say this, and it is true of both sides in this 'negotiation'....
    It's easy to spend other people's money.

    -Bball
    O'Brien has been fired! Yay! What took so long?

    ------

    "A player who makes a team great is more valuable than a great player. Losing yourself in the group, for the good of the group, that’s teamwork."

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    Default Re: CIB Meeting about Conseco Operating Expenses

    NBA player salaries are ridiculous and need to be lowered. Honestly around what Danny is making starting next year should be about a max salary for an NBA player.
    Already stoked for 2013-2014.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by Swingman View Post
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    Good point. They need to have events there as often as possible. Colts need to be holding events at Lucas Oil Stadium as well.
    The Colts have little to do w/ the non-NFL events that occur in Lucas Oil Stadium beyond getting their share of the revenue.

    Both NFL and NBA teams have requirements w/ building owners on when they can/can't book events. As someone mentioned the Pacers getting more concerts in the summer, they have to hold X number of summer dates for the Fever up until the schedule is announced. This can make it difficult to book summer concerts because they're booked way in advance. Plus, summer concerts are better in outdoor venues, so The Lawn and Deer Creek will win out nearly every time.

    The big money makers have to be the conventions. Both Lucas Oil Stadium (that drumline convention) and the Fieldhouse (FFA) get non-public events that draw in a lot of non-Indiana residents who spend tons of money.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    It may take a few cities not giving in to the blackmail for the NBA to make itself profitable
    for all it's teams and not a select few. Stern saying the Pacers deserve a new lease
    agreement grinds on my nerves. Where was all his concern when he crushed the
    franchise after the brawl? Politically speaking increasing taxes is not likely to happen.
    {o,o}
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  16. #16
    Yeah, I'm a Pacers fan. MyFavMartin's Avatar
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    Default Re: CIB Meeting about Conseco Operating Expenses

    Any chance to renegotiate the price tag?

    Save money through refinancing to lower interest rates?

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    Default Re: CIB Meeting about Conseco Operating Expenses

    I'm with ABA Days, this is starting to look real bad.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by ToasterBusVIP View Post
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    What's amazing about all this is that the whole problem could not only be fixed pretty much for good, but could even be made to start channeling profits back into the city, if the league would bring the salary cap down 10-15 mil a year. Or...if that can't happen (which as I understand the Players Union would never agree to) make sure the next CBA phases out yearly cap increases. Each CBA states a new cap number every what...ten years. If the cost of living is a little higher 8 years into the current contract and the players aren't taking home on average a few extra mil then so what?
    Reducing salaries is the other edge of the sword--if you cut salaries substantially, then players would be more inclined to make the jump to Europe. A solid NBA player could easily get 2 million euro with no tax obligation and living expenses covered by a euroleague team. This is basically the equivalent of a $4.3 million a year NBA salary. If you cut salaries 20%, there is a real chance a $4.5 million a year guy now making $3.6 million will leave. Granted, this doesn't mean that 40 or 50 guys are suddenly going to bolt, but you could see the wealthiest dozen or so euroleague teams each poach a mid-tier NBA player. Depth would definitely suffer.

    Europe is definitely feeling the economic effects as well, but not nearly as badly as we are (yet at least). When you throw in the fact that euroleague revenues are growing faster than league revenues (with the game being less mature with more catching up to do over there), the long-term depth issue 5-10 years out may be even more pronounced.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by Bball View Post
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    I still wonder if PS&E isn't too bloated at the top with too many unnecessary positions.
    Having Larry and Donnie doing the same job for years leaps to my mind.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by grace View Post
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    Having Larry and Donnie doing the same job for years leaps to my mind.
    ...Don't you mean Boomer, Bowser, and Bird doing the same job?
    O'Brien has been fired! Yay! What took so long?

    ------

    "A player who makes a team great is more valuable than a great player. Losing yourself in the group, for the good of the group, that’s teamwork."

    -John Wooden

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    Default Re: CIB Meeting about Conseco Operating Expenses

    I haven't seen it mentioned anywhere how much loses can be attributed to having
    to support the Fever.

    There are a whole world of events that would pack the Fieldhouse more than the
    Fever ever have.

    Sorry Fever fans, but I see them going long before the Pacers do.

  22. #22
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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by ABADays View Post
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    We're in a different kind of economic animal than ever before. The Players Union needs to recognize this or it could well end up with fewer places for players to land. This is serious. Other unions are having to ante up - sports unions can join the club.

    For the first time, I am concerned about the Pacers staying here. I think it's that bad.
    This is certainly a bad time for the Simons to feel jilted about the Colt deal with the economy in a downturn, the Pacers recently hitting rock bottom with the fans, and the CIB realizing it's over extended itself. Meanwhile, the Pacers are far from 'back'.

    Maybe Reggie can give the Simons the Bentley back!?

    Seriously, this whole thing has been boiling for a while. We were handing out excessive contracts like they were candy and getting little in return for them... yet holding onto them like we had Kareem, Magic and Worthy instead of Bender, Croshere, and JO.

    Then we hired Bird to serve as a multi-million dollar long term apprentice to DW... or the 3rd member of the Boomer, Bowser, and Bird mascot team. And we also had Morway all that time too... and still do (and if I had to choose I'm taking Morway over Bird).

    God only knows why Tinsley got the contract he got and why this festered as long as it did.

    Then the team played a very 'anti' Indiana style of basketball that wore thin as it didn't get results and the fanbase soured. The team couldn't even be bothered to pretend they cared about Pacer basketball and the fans off the court. It was a very acidic situation and management waited far too long to address it.

    The way the team was managed the last few years had us on a direct collision course where moving the team went from some unthinkable hypothetical equation to a very real possibility. And then the economy crashed.

    The NBA salary structure has been out of whack for some time overall, and we've been at the forefront of that. So that isn't helping.

    And now, the Simons, who already hold a sweetheart deal with Conseco want a sweeter deal because the Colts rode their recent popularity to a better level of corporate welfare.

    I don't know what the answer is for the Pacers. It's going to have to start with the NBA getting the salaries under control. Please do away with guaranteed contracts for the life of the contract. Make them team options to be picked up yearly for X amount of years. Lower the cap. Lower ticket prices and try for a fast nickels over slow quarters approach.
    It's also going to have to include the NBA standing up for the fans and cities instead of the owners who want to put their hands out and head for the highest bidder every few years.

    Find a way out of that stupid ABA leftover contract with the St Louis owners. Renegotiate it, find a buyout number, or tell them the team is dissolving due to an agreement that is bleeding the team dry and they can roll the dice that it's a bluff or take something over nothing. It's crazy someone hasn't found a loophole out of that before now. That has to be the best contract that was ever drawn up... except only one side is benefiting (arguably).

    This economy is not going to help things in the least on the homefront. The only possible good is it might limit potential suitors looking to lure an NBA team. But I think there is always someone, somewhere, that will be willing to sellout everything for a shot at a pro sports team.

    Of course if the Simons really only purchased the team to 'save' Pacer basketball in Indiana then they should be looking to sell to someone else with the same ideals (if that person exists) but with some new vision for Indy rather than looking to protect and improve their investment or threaten to pull up stakes. But then, maybe the Simons would if that person/group existed.

    I hate to say I told you so... But I told you so. That wasn't being pessimistic, it was being realistic. IIRC my prediction was that if things didn't change the Simons would say they wanted to keep the team in Indy but the fans just didn't care any more and couldn't/wouldn't support it.

    We're still on that track. Truthfully, I think we finally made some of the right moves to slow the train down but then the economy picked a bad time to crash. First fuel went thru the roof putting a damper on travel and luxury spending, and then the economy couldn't sustain that and tanked. Neither being good when you're trying to sell a basketball team that isn't exactly on the verge of contending nor has marketing ever been their forte'.
    O'Brien has been fired! Yay! What took so long?

    ------

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    -John Wooden

  23. #23
    100 Miles from the B count55's Avatar
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    Default Re: CIB Meeting about Conseco Operating Expenses

    Indy Star Article
    http://www.indystar.com/article/2009.../1088/SPORTS04

    Conseco costs drain Pacers' bottomline
    By Brendan O’Shaughnessy
    Posted: March 9, 2009
    The Capital Improvement Board cut about $400,000 in grants to arts and tourism groups today and revealed new details about the Indiana Pacers’ financial problems.

    Pat Early, the board's vice president, said the Pacers are losing about $30 million this season and have lost money every year but two of the 28 years the Simons have owned the team.

    Early said the Pacers cannot continue to shoulder the $15 million per year operating costs of Conseco Fieldhouse. He said the team has not threatened to leave but that there is a good chance it will leave or shut down if the CIB does not assume those costs.

    “If we are unable to do this, we’re really jeopardizing the health of Downtown,” Early said.

    He called the Fieldhouse and Lucas Oil Stadium the bookends of a $4 billion annual tourism and convention industry. “If one of those bookends goes down, who knows what’s next.”

    Early said that the city still would have to shoulder the Fieldhouse’s operating costs if the Pacers didn’t play there and estimated that they would be nearly the same. He said the team acknowledges responsibility for its players’ problems off the court but cannot control a collective bargaining agreement that hurts small-market cities.

    “It’s important that everyone understands the Pacers can’t participate any more financially,” Early said of talk that the city cover only a portion of the operating costs. “They are already participating with millions of dollars every year. We are going to have to find a solution.”

    The update on talks with the Pacers overshadowed the expected cut to the grants it makes. The board cut 13 percent from cultural tourism, the Arts Council of Indianapolis and Indiana Black Expo. It exempted from the cuts the Finance Committee's recommendation to also cut 13 percent from the Central Indiana Corporate Partnership.

    Dave Lawrence, vice president of the Arts Council, said he appreciated the difficult situation facing the CIB but reminded the board that the arts also contribute to the city's vitality and $52 million in taxes. "As we’re talking about the Pacers and how to save Downtown, we also have to talk about the arts,” he said.
    This is the first time I've heard extensive comment from the city side of the equation. It certainly sounds like the CIB is trying to lay the groundwork for picking up the operations of Conseco.

    Also, as I've mentioned before, I firmly believe that contraction is in the future for the NBA. Memphis has spent years looking for a buyer, and that is very troublesome for the valuation of many of the teams in the league.

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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by Ivan Renko View Post
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    Reducing salaries is the other edge of the sword--if you cut salaries substantially, then players would be more inclined to make the jump to Europe. A solid NBA player could easily get 2 million euro with no tax obligation and living expenses covered by a euroleague team. This is basically the equivalent of a $4.3 million a year NBA salary. If you cut salaries 20%, there is a real chance a $4.5 million a year guy now making $3.6 million will leave. Granted, this doesn't mean that 40 or 50 guys are suddenly going to bolt, but you could see the wealthiest dozen or so euroleague teams each poach a mid-tier NBA player. Depth would definitely suffer.

    Europe is definitely feeling the economic effects as well, but not nearly as badly as we are (yet at least). When you throw in the fact that euroleague revenues are growing faster than league revenues (with the game being less mature with more catching up to do over there), the long-term depth issue 5-10 years out may be even more pronounced.
    Great post. Losing a few players is one thing, but losing 40 to 50 solid players would drastically affect competition.

  25. #25
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    Default Re: CIB Meeting about Conseco Operating Expenses

    Quote Originally Posted by Ivan Renko View Post
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    Reducing salaries is the other edge of the sword--if you cut salaries substantially, then players would be more inclined to make the jump to Europe. A solid NBA player could easily get 2 million euro with no tax obligation and living expenses covered by a euroleague team. This is basically the equivalent of a $4.3 million a year NBA salary. If you cut salaries 20%, there is a real chance a $4.5 million a year guy now making $3.6 million will leave. Granted, this doesn't mean that 40 or 50 guys are suddenly going to bolt, but you could see the wealthiest dozen or so euroleague teams each poach a mid-tier NBA player. Depth would definitely suffer.

    Europe is definitely feeling the economic effects as well, but not nearly as badly as we are (yet at least). When you throw in the fact that euroleague revenues are growing faster than league revenues (with the game being less mature with more catching up to do over there), the long-term depth issue 5-10 years out may be even more pronounced.
    I think this is overblown. The poaching last summer was greatly supported by two things: the strong Euro and high oil revenue (at least on the part of some of the Russian teams that were sniffing around).

    Oil revenues have dropped precipitously, and the dollar has strengthened against the Euro. At the time of Josh Childress' signing with Olympiakos, the Euro was the rough equivalent of $1.58. As of this morning, it's about $1.27.

    That means that if Childress' contract were signed today, for 3 yrs, $32.5mm, it would Olympiakos 25.6mm Euro, instead of the 20.6mm Euro at signing. The same Euro contract would only be worth $26.2mm.

    If the contract was signed in Euros, then Josh Childress is staring being paid several million US dollars less than he thought he was going to get. If it was signed in US dollars, then Olympiakos is looking at as much as 5mm Euro in translation losses over the length of the contract.

    One side or the other is going to feel considerably burned.

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