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Thread: Declining gate receipts behind projected cap decrease

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    Default Declining gate receipts behind projected cap decrease

    Sorry to say the Pacers name comes up quite a bit.

    Head straight to gate for sign of weakness in NBA money machine
    July 8, 2009
    By Ken Berger
    CBSSports.com Senior Writer
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    As the NBA ushered in its official free-agent signing period Wednesday, the usually feverish pace of trades, signings and huge contracts slowed to a crawl. The summer of 2009 has been a wakeup call for players and teams who've rarely known anything but booming economic times.

    Ron Artest and Trevor Ariza, who would've been in heavy demand any other year, had to settle for the mid-level exception starting at $5.854 million next season. Restricted free agents David Lee and Paul Millsap are still waiting for lucrative offer sheets that might never come. Mike Bibby, who has been a $10 million-plus player for the past five seasons, squeezed out a three-year, $18 million deal to stay in Atlanta. As you might imagine in this economy, he couldn't be happier.

    Potential free agents Kobe Bryant and Carlos Boozer opted to blow off the process altogether, keeping their current contracts intact rather than foolishly entering a buyer's market. Boozer, due to make $12.7 million next season, realized he wasn't going to exceed that as an unrestricted free agent. The richest agreements to this point, Ben Gordon to the Pistons and Hedo Turkoglu to the Raptors, will be in the $10 million to $11 million range in the first year of their new deals.

    The five-year contracts for Gordon and Turkoglu are worth $55 million and $53 million. For comparison's sake, Gilbert Arenas re-signed with the Wizards last summer for six years at $111 million, and Elton Brand landed $82 million over five years from the Sixers. Two summers ago, Rashard Lewis reeled in a six-year, $118 million deal from the Magic.

    The grim facts about how the recession has affected the NBA business have been delivered to executive offices throughout the league. In its annual memo setting the financial structure for the upcoming season, the NBA unveiled the widely expected news Tuesday night that the salary cap and luxury tax both will decline for the 2009-10 season. The salary cap will be $57.7 million, a modest decline of $980,000. The luxury tax threshold, after which teams are penalized $1 for each additional $1 in payroll, will be $69.92 million -- a decline of $1.23 million.

    But the league's assertion in its news release that basketball-related income (BRI) -- upon which the salary cap is based -- actually increased 2.5 percent during the 2008-09 season doesn't tell the whole story.

    A memo sent to all 30 teams warned that a reduction of between 2.5 percent and 5 percent in BRI is anticipated next season, which would send the 2010-11 salary cap plummeting as low as $50.4 million -- a level not seen in five years. A 5 percent reduction in revenue would set the '10-11 luxury tax threshold at $61.2 million.
    The 5 percent scenario is in line with what many teams already were projecting, and is significantly better than the doomsday prediction of a 10 percent decline that commissioner David Stern floated (to little fanfare) during the NBA Finals.

    Analysis of a league-wide revenue report for the 2008-09 season obtained by CBSSports.com helps to explain how and why the dollars are eroding.
    Regular-season gate receipts -- the money generated by individual ticket sales and all forms of season-ticket plans -- declined $2.66 million league-wide in 2008-09. That's a minuscule 0.2 percent in a business that generated $1.1 billion in gate revenue the previous season.

    But the results varied widely among the 30 teams, reflecting a growing chasm between haves and have-nots. Fifteen teams suffered declines in gate receipts last season, the worst being the New Jersey Nets, whose ticket revenue declined $11.4 million, a 29 percent drop from 2007-08. It's no wonder the Nets want so badly to move to a new arena in Brooklyn. The figures also peel away any curiosity over the Nets' decision to trade Vince Carter, scheduled to make $16.3 million next season. Carter, an eight-time All-Star, went to Orlando along with Ryan Anderson for the expiring contracts of Tony Battie and Rafer Alston, plus bargain-basement shooting guard Courtney Lee, due to make only $1.3 million next season.

    The Bucks' decision to dump Richard Jefferson and his $14.2 million salary on the Spurs in exchange for expiring contracts was thought to be a prelude to Milwaukee's bid to keep restricted free agent Charlie Villanueva. But Bucks GM John Hammond, trying to get the team's finances in order, didn't even extend a qualifying offer to Villanueva, who became an unrestricted free agent and signed with the Pistons.

    If restricted free agent Ramon Sessions gets a decent offer sheet, the Bucks might not retain him, either. It's easy to understand why if you examine Milwaukee's $3.6 million decline in gate receipts last season, a drop of nearly 18 percent, according to the figures obtained by CBSSports.com. The Bucks were one of only five teams in the league to generate less than $500,000 in gate receipts per home game, according to the data. The Pacers, Hawks, Timberwolves and Grizzlies were the others. Only the Hawks made the playoffs.

    After the Nets, the next hardest-hit team was Sacramento, whose gate receipts declined $9.7 million, or 23 percent, in 2008-09. The Kings were one of only a handful of teams with significant salary-cap space to sign free agents this summer -- joining Detroit, Oklahoma City and Memphis -- but have wisely stayed on the sideline.

    Other teams sustaining massive declines at the gate were the Raptors ($9.1 million), Pistons ($7.7 million), Clippers ($6.8 million) and Heat ($5.3 million). The Wizards, Bobcats and Pacers each went down more than $4 million.

    The most interesting case is Oklahoma City, whose gate receipts increased $27.2 million last season, a 145 percent jump over the franchise's final season in Seattle. Jim Grinstead, publisher of the trade publication Revenues from Sports Venues, said the one-time bump from a new arena in an expansion city overshadowed the struggles in many other cities -- and can't be counted on again. If the team had merely experienced flat ticket revenues compared to the previous season in Seattle, the league as a whole would have posted an $11.1 million decline in gate receipts, according to analysis by CBSSports.com. Once the novelty wears off, the NBA will no longer be able to bank on such a boost from one of its smallest-market teams.

    "I wouldn't call them a savior," said Grinstead, whose publication tracks arena revenues in all major sports. "I would say it made this year a lot better than it could have been otherwise."

    To a degree, NBA teams are insulated from downturns in the economy because they share the league's eight-year, $7.4 billion national broadcast rights contract, which just completed its second season. But Grinstead said teams still derive a significant portion of revenues from their arenas in the form of individual tickets, season-ticket plans, parking, concessions and sponsorships. Those are the sources of income that are most vulnerable during a recession.

    While the NBA claims that its arenas were at 90.4 percent capacity last season, that figure doesn't account for comp tickets and people who don't show up. According to the league data, an average of 14,072 fans actually attended NBA games last season, putting average arena capacity at 73 percent.

    Paid tickets are good, but teams prefer to fill seats with people who are paying for parking and concessions. The teams that struggled the most to get people through the turnstiles last season were Memphis (7,570 per game), Minnesota (8,969), Charlotte (9,404), Indiana (10,057), Sacramento (10,188), Milwaukee (10,884) and Washington (11,030).

    If a certain number of tickets can't be sold, Grinstead said teams prefer to give them away -- or "comp" them -- in the hopes that those fans will show up and spend money on food, souvenirs and parking. But too many comp tickets can also mean lost revenues. Three teams shared the dubious honor of handing out an average of more than 5,000 free tickets per game last season: the Hawks (5,616), Nets (5,213) and Timberwolves (5,205).

    Even two perennial attendance powers, the Pistons and Heat, struggled to get fans to show up this past season. The Pistons, at the epicenter of the depressed Michigan economy, saw their streak of 259 consecutive sellouts end and posted actual attendance of only 77 percent capacity (16,957) in the Palace of Auburn Hills. The Heat, despite making the playoffs and having the No. 3 MVP vote-getter, Dwyane Wade, were at 70 percent capacity with only 13,578 showing up per game. Even the Thunder, among the 12 teams generating more than $1 million in gate receipts per home date, had trouble getting actual people into their arena, which was at 75 percent capacity (14,415).

    With numbers like that, it's no wonder the usual free-agent spending spree took a hiatus -- one that almost certainly will last beyond this summer and might even get worse.


    Come to the Dark Side -- There's cookies!

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    Administrator Unclebuck's Avatar
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    Default Re: Declining gate receipts behind projected cap decrease

    Very, very, very interesting article. Interesting to see the number of people actually attending the games and to see the actual gate receipts.

    Sad that a team like the Hawks have to comp over 5500 tickets per game for a team that almost won 50 games, made the second round of the playoffs and are in an economy that is not nearly as bad as most cities.

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    Default Re: Declining gate receipts behind projected cap decrease

    Quote Originally Posted by Unclebuck View Post
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    Very, very, very interesting article. Interesting to see the number of people actually attending the games and to see the actual gate receipts.

    Sad that a team like the Hawks have to comp over 5500 tickets per game for a team that almost won 50 games, made the second round of the playoffs and are in an economy that is not nearly as bad as most cities.
    Excellent article and good points, Buck.

    The gate numbers tell the true story and it's hard to believe that 3 teams gave out over 5000 tickets per game!
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    Larry is not coming back, he didn't have a meeting with Orlando for not reason, yeah he is coming back to the NBA but not to the Pacers, the notion that he is a taking a year off and then come back is absurd.
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    Default Re: Declining gate receipts behind projected cap decrease

    Quote Originally Posted by naptownmenace View Post
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    Excellent article and good points, Buck.

    The gate numbers tell the true story and it's hard to believe that 3 teams gave out over 5000 tickets per game!
    It is also a bit eye-opening that the Pacers announced attendance increased by 2000 per game and yet their overall revenue decreased by more than 4 million. That shows just how much they discounted tickets. Plus the previous year was horrible to begin with. If the pacers were down $4M - they must be done at least $10-$15M from 2004 or 2005 seasons when there ticket prices were much higher
    Last edited by Unclebuck; 07-09-2009 at 11:03 AM.

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    Default Re: Declining gate receipts behind projected cap decrease

    [QUOTE=Unclebuck;909495Sad that a team like the Hawks have to comp over 5500 tickets per game for a team that almost won 50 games, made the second round of the playoffs and are in an economy that is not nearly as bad as most cities.[/QUOTE]

    Surprises me not at all given what passes for basketball fans in Atlanta.
    BillS

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    Default Re: Declining gate receipts behind projected cap decrease

    I wonder if there is any way that the public can get a look at the actual per team breakdowns that are referenced in this article? It would be interesting to see what the actual average price per seat sold that each franchise, including our Pacers, were able to charge.

    My guess is that the Pacers are somewhere around $30 per ticket "sold" and that we are hard pressed to match that for the upcoming season unless we have a significant improvement, both economically AND with our team record.

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    Default Re: Declining gate receipts behind projected cap decrease

    Hate to be the basher, but this is lingering from my defense of the thug era and how it would all be solved by milk. SOME people around PD were pointing to the attendance increase as proof that it was turning around. But those of us who paid full price and were hyper-aware of every single super-saver sale suspected different.

    I'm not at all surprised that the revenue was down despite the attendance increase. $5 seats in the upper level nearly all year long will do that, as well as endless 2 for 1s in the lower levels.

    I get the plan, not just to sell food but to gain interest. Show people the product to get them to pay attention more and start to enjoy the team again. The team never relented on these offers, right up to the end of the season, so the plan wasn't working right away.

    Of course I'll assume they didn't think it would and that they "gave up" on last season and were using it as a staging ground for sales this season. My concern there is that I think the buzz is that season ticket sales still aren't up, and the prices are lowered to some great deals.


    But bottom line to me is that it's just yet another indicator that Indy fans aren't basketball fans and have a bad habit of front running rather than supporting hard working players who play the game the right way. That's all just BS talk built on the rep created by ancient history and the movie Hoosiers.

    We've got about 6-8K of real NBA/Pacers fans and the rest are just waiting to be told that the team is one win away from the Finals so they can jump on board and say "I always knew this team could do it" or worse yet the dreaded "It's about time".


    And for you guys ready to say "this is the fallout from the brawl" I'm stopping you right there. We've already had the dismal numbers for the good but not great Chuck/Det era teams to prove my point. Besides that it took fans a few years of ECF caliber play to actually sell out a lot of games. People think it was all sell-outs circa 95-96, but it wasn't. Even after the first ECF it was still "yeah, but that was a fluke".

    The problem with front runners is they are slow to recognize a change in the team and only take interest when success is repeatedly shoved down their throats. 4 years of 45-48 win teams wouldn't fix attendance any more than the milk drinkers did. That's the chip on my shoulder in all this.

    Die hard basketball fans would know that Tins was permantly benched and that the "thugs" were all traded long ago. These people couldn't name 3 players for the current team. Try it sometime, ask that casual fan about the Pacers. When he grumbles something about them sucking or being punks or whatever, follow that up with "name 3 guys on the team".

    They can't.

    But die-hard Hoosier or Boiler fans can tell you about 8th graders the college might be recruiting. There's your difference. IU fans know Sampson is long gone. But they have no idea if JO or Jackson or Tinsley is still there or not. It's pathetic and shameful.

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    Default Re: Declining gate receipts behind projected cap decrease

    Seth, I agree with pretty much everything in your post. I'll just add that Indianapolis and surrounding area is not a good NBA market, they like college and high school ball more and have turned into a good NFL market, so the Pacers are back to being what they were pre-1994 - under the radar and appeal to only a small segment of the area population.

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    Default Re: Declining gate receipts behind projected cap decrease

    Quote Originally Posted by Unclebuck View Post
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    Seth, I agree with pretty much everything in your post. I'll just add that Indianapolis and surrounding area is not a good NBA market, they like college and high school ball more and have turned into a good NFL market, so the Pacers are back to being what they were pre-1994 - under the radar and appeal to only a small segment of the area population.
    Actually I will even question if they really are a good NFL market or if it just happens to be that the Colts have been good to great for the past 8-10 years? Check back to see what attendance is about 5 years after Manning retires and if the team is back to winning 6-8 wins a season. My guess is Lucas Stadium will look like the Hoosier Dome did circa 1995

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    Default Re: Declining gate receipts behind projected cap decrease

    Quote Originally Posted by Peck View Post
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    Actually I will even question if they really are a good NFL market or if it just happens to be that the Colts have been good to great for the past 8-10 years? Check back to see what attendance is about 5 years after Manning retires and if the team is back to winning 6-8 wins a season. My guess is Lucas Stadium will look like the Hoosier Dome did circa 1995

    Maybe. I hope to God not, but maybe.

    Let's keep in mind that in 1995 the team had been here just over 10 years. That's not a very long time to build up a big fan base, especially when you aren't winning. But a new generation of fans have been born in the Manning era (young people like myself) and I hope they feel a special connection to the team for the rest of their lives.

    It has always seemed to me that NFL fans are more diehard and less fickle than NBA fans.

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    Default Re: Declining gate receipts behind projected cap decrease

    Here's another sign of the times.

    http://nba.fanhouse.com/2009/07/08/n...back-9-of-pay/

    In fact, salaries and benefits went so far over the threshold that for the first time this decade players will not get a cent of their escrow funds back. In recent years, players had received a nominal amount (about 10 percent of what the league collected, or about 1 percent of their total salary). But this season, there will be no payback.

    Effectively, players made 9 percent less than you think. So Amar'e Stoudemire, for example, on the books for $15 million last year, only received $13.65 million from the Suns. That other $1.35 million is a part of the $191 million the league will now redistribute equally to teams, to the tune of $6.3 million per franchise.
    "He wanted to get to that money time. Time when the hardware was on the table. That's when Roger was going to show up. So all we needed to do was stay close"
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    Default Re: Declining gate receipts behind projected cap decrease

    And so the thought Indy does not support Pro sports brings us to what? I guess simply when and if the Pacers or Colts move out of town the die hard fans shouldn't complain because frankly you can't blame the owners right? If everyone thinks this is true then how can we complain when the team does not try to get the big star and not willing to shell out money to retain ones we think they should keep? I mean seriously why should they if Indy will not support them.
    You know how hippos are made out to be sweet and silly, like big cows, but are actually extremely dangerous and can kill you with stunning brutality? The Pacers are the NBA's hippos....Matt Moore CBS Sports....

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    Default Re: Declining gate receipts behind projected cap decrease

    Quote Originally Posted by Naptown_Seth View Post
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    But bottom line to me is that it's just yet another indicator that Indy fans aren't basketball fans

    Die hard basketball fans would know that Tins was permantly benched and that the "thugs" were all traded long ago
    .

    They can't.

    But die-hard Hoosier or Boiler fans can tell you about 8th graders the college might be recruiting. There's your difference. IU fans know Sampson is long gone. But they have no idea if JO or Jackson or Tinsley is still there or not. It's pathetic and shameful.
    Seth, I just don't get this comment. Just because someone is not a fan of the Pacers or NBA in general does not mean they are not baskeball fans. How about trying this instead....walk up to some Indy folks on the street and ask them what a pick and roll is? Then walk up to two or three times as many in LA and see what the response is? I could be completely wrong but suspect there will be more Indy folks who give you a coherent answer than the latter.
    You know how hippos are made out to be sweet and silly, like big cows, but are actually extremely dangerous and can kill you with stunning brutality? The Pacers are the NBA's hippos....Matt Moore CBS Sports....

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    Default Re: Declining gate receipts behind projected cap decrease

    Quote Originally Posted by RWB View Post
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    Seth, I just don't get this comment. Just because someone is not a fan of the Pacers or NBA in general does not mean they are not baskeball fans. How about trying this instead....walk up to some Indy folks on the street and ask them what a pick and roll is? Then walk up to two or three times as many in LA and see what the response is? I could be completely wrong but suspect there will be more Indy folks who give you a coherent answer than the latter.
    I agree with you on that. However ask those same fans in LA and Indy questions such as what is an intentional foul in the NBA.(there is no such thing, but I see dozens of fans calling for them at Pacers games), what is the defensive 3 second rule?, or does the defensive player need to be set before they can get a charge foul called on the guy he is guarding??

    I bet the LA fanw ill do better on the NBA specific rules, while the Indy fans will do better on college and or general basketball questions.

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    Default Re: Declining gate receipts behind projected cap decrease

    I think the 75-mile rule has a HUGE impact on this, considering that within those 75-mile limits you have the largest portion of the IU and Purdue fan bases. The problem is the competition - why cheer for a pro team with players you don't really identify with when you can spend somewhat less money to cheer for a team where you probably have a personal lifelong connection?

    If I were the league, I'd be changing that rule to be a 75-mile EXCLUSIVE zone, where teams can't advertise within another team's area but can advertise outside it to whatever distance they want.

    Obviously there'd have to be some special exceptions. How does the current rule affect teams that are right on top of each other like the Lakers/Clippers or the Knicks/Nets?
    BillS

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    Default Re: Declining gate receipts behind projected cap decrease

    Quote Originally Posted by BillS View Post
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    I think the 75-mile rule has a HUGE impact on this, considering that within those 75-mile limits you have the largest portion of the IU and Purdue fan bases. The problem is the competition - why cheer for a pro team with players you don't really identify with when you can spend somewhat less money to cheer for a team where you probably have a personal lifelong connection?
    Purdue's 2009 class had 5,790 graduates. I would imagine there are a few life long Boiler fans in that group.
    You know how hippos are made out to be sweet and silly, like big cows, but are actually extremely dangerous and can kill you with stunning brutality? The Pacers are the NBA's hippos....Matt Moore CBS Sports....

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