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Thread: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

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    Default Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    I'm not an expert in accounting so I can't speak for the numbers, but it's interesting nonetheless.

    http://deadspin.com/5816870/exclusiv...8-million-loss

    We've obtained audited financial data for the New Jersey Nets covering the three fiscal years from June 2003 to June 2006. Though the numbers end five years ago, you can still see the roots of the argument that will have NBA owners, come midnight, again locking out their players. You can also see how a team makes money and how it pretends not to be making any money at all.
    The documents are embedded below, but here are the salient parts (click images to enlarge):

    Full size
    The big loss: That $27.6 million net loss looks bad, but, as you'll see, it's an illusion a trick of accounting, one practiced by every sports franchise with the full blessing of American tax law and one we should keep in mind whenever an owner pleads poverty.

    "Anyone who quotes profits of a baseball club is missing the point," Paul Beeston once said (at the time he was a Blue Jays vice president). "Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I could get every national accounting firm to agree with me." If anything, he was being too modest.

    Full size
    The hustle: The first thing to do is toss out that $25 million loss, says Rodney Fort, a sports economist at the University of Michigan. That's not a real loss. That's house money. The Nets didn't have to write any checks for $25 million. What that $25 million represents is the amount by which Nets owners reduced their tax obligation under something called a roster depreciation allowance, or RDA.

    Bear with me now. The RDA dates back to 1959, and was maybe Bill Veeck's biggest hustle in a long lifetime of hustles. Veeck argued to the IRS that professional athletes, once they've been paid for, "waste away" like livestock. Therefore a sports team's roster, like a farmer's cattle or an office copy machine or a new Volvo, is a depreciable asset.

    The underlying logic is specious at best. As Fort points out, a team's roster at any given moment isn't actually depreciating. While some players are fading with age, others are developing and improving. But the Nets don't have to pay more taxes when a player becomes more valuable. And in any case, the cost of depreciation is borne by the athletes themselves, when they pass their primes and lose their personal earning power.

    Nevertheless, the IRS not only agreed with Veeck but allowed any owner claiming the write-off to deduct roster expenses twice first under "player salaries," in the case of the Nets' documents, and then under "loss on players' contracts" and an enormous tax shelter sprang up within the balance sheets of franchises everywhere. This can't be emphasized enough: Every year, taxpayers hand the plutocrats who own sports franchises a fat pile of money for no other reason than that one of those plutocrats, many years ago, convinced the IRS that his franchise is basically a herd of cattle. Fort calls it "special-interest legislation." "It's not illegal," he says. "It's just weird."

    The rules have changed over the years, but the depreciation shelter remains one of the great graces of owning a sports team. In some ways, it's gotten more fanciful. Between 1977 and 2004, owners could write off half the team's purchase price over five years, thanks to the pretend-loss of player value. One consequence, Fort notes, is that teams would change hands every five or six years, once the exemption had dried up. Now, after tax law revisions in 2004, owners can write off 100 percent of their team's purchase price, albeit over a 15-year span. What they're buying, as far as the RDA is concerned, is a set of players the brand identity, the right to stage games and charge admission, and everything else are throw-ins. (According to Fort's analysis [pdf], the new RDA rules had the twin effect of increasing both tax payments and team values.)

    It's not hard to see the benefits. Owners who've set themselves up as a partnership or a Subchapter S corporation can pass their "losses" onto their personal income tax forms. Let's assume that's what the Nets owners did, and let's put them in the 33 percent tax bracket. (The audit here covers the last year that Lewis Katz and Ray Chambers owned the team, the fiscal year ending in June 2004. In August 2004, six years after buying the Nets, they sold the franchise for $300 million to real estate developer Bruce Ratner. In 2009, Ratner sold an 80 percent share to a Rocky and Bullwinkle character named Mikhail Prokhorov for $293 million in equity.) That $27.6 million loss would mean tax savings of $9.1 million ($27.6 x .33).

    If we're trying to arrive at some idea of how much money the Nets really made in 2004, we'll need to do a little crude math. Knock out the $25.1 million RDA a paper loss, remember and add the $9.1 million in tax savings. Suddenly, that $27.6 million loss becomes a $6.6 million profit.

    Full size
    A typical profit: In the 2003-04 season, the Nets went 47-35, won the Atlantic Division, and lost in seven games to the eventual champions the Pistons in the Eastern Conference semifinals. (This was the last of the Kidd-Jefferson-Martin Nets.) That playoff run brought in an extra $4.8 million in revenue, a decent haul that few owners can count on every year. So let's pretend the playoffs didn't happen. Take away that $4.8 million, and the $1.4 million in expenses, and the $27.6 million net loss is now $31 million. Run the earlier calculation again and you would have a $4.4 million profit in a non-playoff season.

    Full size
    The sale: Bruce Ratner's ownership group took over in fall 2004, and the Nets became a small piece of Forest City's $12 billion portfolio. This includes the Atlantic Yards land grab in Brooklyn, the future home of the Nets and the best explanation for why a buccaneering real estate developer like Ratner might buy a middling franchise like the Nets in the first place. As Neil deMause, co-author of Field of Schemes, explains: "If Ratner had gone to Brooklyn politicians and said, 'Hey, I want to build offices and residential buildings on public land,' they'd have hung up on him. But when he says, 'I'm going to bring professional sports back to Brooklyn,' suddenly here's [Brooklyn Borough President] Marty Markowitz holding press conferences and sobbing about the Dodgers. [Buying the Nets] helped him get a foot in the door with Brooklyn politicians."

    This means you have to think about the Nets under Ratner as a single node on a vast network "an element in a billionaire's wealth-generating portfolio," as Rodney Fort says. The real value of the team to Forest City will likely show up in small type on the balance sheets of another subsidiary, lying just beyond our view.

    A real loss: "Something interesting happens in 2005," Fort says. "The team really did lose $30 million," even after you remove the phantom losses for player depreciation. (The adjustments aren't insignificant. The next year, in 2006, the team lost something south of $40 million, not the $70 million you see on the balance sheet.) Under previous ownership, the team had been a $4 million a year operation, give or take. What happened?

    The motor plant: Operating income was down in 2005, dropping from $95.7 million to $77.4 million, and expenses rose, particularly in those line items representing what we'll loosely call the team's self-presentation: ticket sales, marketing, broadcast, etc. Fort's guess is that the Nets were "presenting the team to Brooklyn" and spending a good deal of money in the process. (The accounting also changed among other things, we now have line items for both "loss on players' contracts" and "depreciation and amortization.") Still, that doesn't quite account for the swing from a mild profit to a seemingly large loss. "One of two things must be true," Fort says. "Either they haven't found all the values [of owning a team], or they're not losing money."

    We can't know for sure, though, since we're only seeing a sliver of Forest City's portfolio. The mistake is in thinking of a sports team as a self-contained unit. Fort says a team is more like the motor plant at Ford. If you were to look at the motor division's revenue, he says, "I'd promise you it's negative." He continues: "But if you said, 'Look, Ford is losing money!' that'd be ridiculous." The motor plant is selling motors at a price that enables Ford to turn a profit when it sells completed motor vehicles. It creates value, Fort says, "every time a Ford goes out of the assembly line."

    For anyone who wants to extrapolate these numbers to the rest of the league, caveats apply. These are six-year-old financials for a single team in the NBA, where market size is destiny and where, for instance, New York's books won't look anything like Milwaukee's. What's more, this is about as close a look as you'll get at the financial workings of a sports franchise, and even then the balance sheets are hopelessly opaque. But that's partly the point. In the modern era, franchises are owned by businessmen who approach their teams as one of many interconnected wealth-generating mechanisms. As in Fort's example above, the real value of one asset (the Nets) can't be known without looking at the numbers for another (the Barclays Center) and another (the rest of the Atlantic Yards development), and so on. There's nothing illegal or even wrong with that, but in such a system you can see very quickly why incentives for owners often fall irreparably out of plumb with the wishes of their fans owners want to maximize revenue (which is their right), and fans want to win (which is their nature), and both Wayne Huizenga and the folks in the grandstand at PNC Park will tell you that these goals aren't necessarily compatible.

    The other lesson to draw is that there are certain baked-in advantages to owning a team. You have both the relevant labor law and the tax code firmly on your side. You are making money you didn't exactly earn from the moment you sign the paperwork, and you are making more money for your other businesses your shopping mall across the street from the arena, your legal practice, your broadcast holdings and then, come tax time, you are allowed by law, and even encouraged, to pretend you are not making any money at all. Remember this the next time David Stern says the NBA's economic system is broken. "The bottom line about the bottom line," Fort says, "is that even if it looks like they're losing money, it doesn't mean they're losing money."

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    I would give an example of a company buying some machinery to illustrate:

    When you buy the machine, it becomes an asset worth, say $50,000. However, in 10 years it won't be worth any thing. It depreciates. So, every year you write off $5,000 from that asset (at least in straight-line depreciation, won't mention other methods). That is where the "phantom loss" is coming from I believe. You are not actually losing money, but your assets are losing value.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    So which is it for the Pacers, and their woeful 5 years post brawl. You had Simon claiming that he has lost money every year but 1 in Conseco. I don't buy this BS.

    Pacers got an 11 million dollar check from the CIB this year, couple that with this double dip write off on players, I tend to believe Simon made a profit this year. Especially with the playoff games.
    Last edited by graphic-er; 06-30-2011 at 04:54 PM.
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    How are you not losing money? Let's use your machinery example.

    Say we buy a $50,000 machine. The actual value of that machine is lower than $50,000, because the seller needs to make a profit, so the actual value is, say, $45,000. (obviously I'm being generous)

    So each year it depreciates $5,000, and let's say it bottoms out at $5,000 just due to pure scrap value.

    You started off with $50,000, and traded that for a machine worth $45,000. Now it's worth $5,000.

    You no longer have that $50,000 in cash, and you no longer have a machine worth that in value. You've still lost money. While it might be an accounting "trick" it's not making money magically disappear.

    You still don't have that money you started out with and you can't replace it.

    It's just like buying food. You buy $20 of food. When you eat it, you no longer have $20 of food. It's the same prinicple. Your net worth doesn't stay constant, it flucuates. You have to show your value in dollars. It's not like you've tucked away that $50,000 and could regain it by a simple sale.
    Last edited by Since86; 06-30-2011 at 04:57 PM.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Ok say you have $50 and spend $20 on food. Now you have $30 and food. After you eat it, you still have $30. You don't lose additional cash by eating the food. You lose assets, but it is not costing you another $20 to eat the food.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    I'm not an accountant, so someone with more professional knowledge please feel free to correct me.

    There is a difference between certain types of losses depending on where in the accounting process the losses are being shown.

    There is a category called "Operating Income Before Depreciation and Amortization", which is Revenue minus expenses but with Depreciation and Amortization added back in.

    The argument of the NBAPA is that almost all losses claimed by the NBA are accounted for by Depreciation OR by interest payments on loans to buy the team in the first place.

    One thing that no one looks at, though, is the Amortization part of the Depreciation and Amortization. Just as teams can depreciate a capital asset over time to show its reduced value, they also are prevented from counting the entire cost of many capital assets in the year those assets are purchased. What this means is that, while there are depreciation expenses that are "funny money", there are actual expenses that aren't allowed to be subtracted from revenue in a given year.
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by Since86 View Post
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    How are you not losing money? Let's use your machinery example.

    Say we buy a $50,000 machine. The actual value of that machine is lower than $50,000, because the seller needs to make a profit, so the actual value is, say, $45,000. (obviously I'm being generous)

    So each year it depreciates $5,000, and let's say it bottoms out at $5,000 just due to pure scrap value.

    You started off with $50,000, and traded that for a machine worth $45,000. Now it's worth $5,000.

    You no longer have that $50,000 in cash, and you no longer have a machine worth that in value. You've still lost money. While it might be an accounting "trick" it's not making money magically disappear.

    You still don't have that money you started out with and you can't replace it.

    It's just like buying food. You buy $20 of food. When you eat it, you no longer have $20 of food. It's the same prinicple. Your net worth doesn't stay constant, it flucuates. You have to show your value in dollars. It's not like you've tucked away that $50,000 and could regain it by a simple sale.
    From the article:

    "The underlying logic is specious at best. As Fort points out, a team's roster at any given moment isn't actually depreciating. While some players are fading with age, others are developing and improving. But the Nets don't have to pay more taxes when a player becomes more valuable. And in any case, the cost of depreciation is borne by the athletes themselves, when they pass their primes and lose their personal earning power."

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    So wait all those math problems I did in 3rd grade actually can be applied in everyday situations? I call BS. I still haven't figured out what time both trains will meet in the middle.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    What it boils down to in this article, is the author trying to say that depreciation should not be taken into account. He says that players worth does not automatically depreciate, some players will improve and their value will improve. Assets decrease over time. So basically he disagrees players contracts should be seen as assets.

    He might look at it as a trick, it is just normal accounting.
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by PurduePacer View Post
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    Ok say you have $50 and spend $20 on food. Now you have $30 and food. After you eat it, you still have $30. You don't lose additional cash by eating the food. You lose assets, but it is not costing you another $20 to eat the food.
    For purposes of telling someone how much money you make, you get to say the $20 is an expense.

    For purposes of taxes and accounting, you may not be able to take the entire amount of the machine in the year you bought it. That means you have to spread the cost of the machine out over years. To oversimplify, my understanding is that depreciation is meant to offset the "savings" you are supposedly putting aside each year so you can buy the new machine once the old one becomes worthless, since you won't be able to show that entire expense in the year you do it. Sure, it is "funny money" until you actually have to spend it.

    Now, applying it to players doesn't quite make sense to me, but we have to bear in mind that RDA isn't 100% of the salary in a given year, so it really isn't like they can claim $65M expense for salaries and then $65M in depreciation. In fact, though I'm very confused by the descriptions I'm finding, it almost looks like this only is in effect for 5 years after a team is purchased, which (if true) would be why it applies to a team that changed hands recently but would not apply to the Pacers.
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by Since86 View Post
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    How are you not losing money?
    In thise case (the example) the purchasing gets deducted as cost and the asset gets a tax write-off i.e. double dip

    or as the article goes;

    60 million = team salary (cost)(hard cash)
    25 million = value depreciation on the team (write off)(phantom money)

    income - 58 million(EXAMPLE, i know there are other cost but also income)

    Loss 27 million which is deducted from income tax and leads to 9.6 mio saving (hard cash)

    27 mio (loss) minus the 25 mio phantom omney is 2 mio minus the taxgains of 9.6 = income 7.6 mio
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by BillS View Post
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    Now, applying it to players doesn't quite make sense to me, but we have to bear in mind that RDA isn't 100% of the salary in a given year, so it really isn't like they can claim $65M expense for salaries and then $65M in depreciation. In fact, though I'm very confused by the descriptions I'm finding, it almost looks like this only is in effect for 5 years after a team is purchased, which (if true) would be why it applies to a team that changed hands recently but would not apply to the Pacers.
    it used to be 5 and is now 15 year and the amount is the value of the players aka the franchise and the number of years the time over which the depreciation goes.

    fact is that upon sale no profit is registered, (which in a normal business if i deprec, and sell for more then book, i need to pay over the "profit")
    fact is also that salaries are fully on "cost" and this is added on top of possible intrest over loans on purchase (again cost)

    players only in the eyes of the taxman depreciate for the business the contract runs out and is or is not renewed, player is replaced, traded etc, once the player's value is zero he retires.
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    P.S. only 10 out of 30 need to do this in accordance to the article and the 300 mio Stern claims is shown
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    The RDA is proper, he is trying to put a spin on it as it's a bad thing. Players fall under this depreciation. Humans/players are like cattle. Hell James Posey, Rashard Lewis, J. Oneal are prime example and there are a ton of players that would fit the RDA. Props for Veeck!!

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by Pacer Fan View Post
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    The RDA is proper, he is trying to put a spin on it as it's a bad thing. Players fall under this depreciation. Humans/players are like cattle. Hell James Posey, Rashard Lewis, J. Oneal are prime example and there are a ton of players that would fit the RDA. Props for Veeck!!
    He's not saying the RDA is a bad thing, he's saying the refusal of the owners to tell the truth about their books, and in turn use that disinformation as a bargaining chip in labor negotiations, is a bad thing.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by Pacer Fan View Post
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    The RDA is proper, he is trying to put a spin on it as it's a bad thing. Players fall under this depreciation. Humans/players are like cattle. Hell James Posey, Rashard Lewis, J. Oneal are prime example and there are a ton of players that would fit the RDA. Props for Veeck!!
    If you are buying the team then the players are assets that contribute to the value of the team. The same team without leBron will cost less to a buyer.
    Last edited by speakout4; 06-30-2011 at 06:23 PM.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    This is interesting, but the players are going to lose this go around and in the process they may lose a year of income as well. If the players get what they want the price of tickets and anything else related to basketball will go up (again). The fans will pay for it in the end. The average salary for an NBA player is 5 million per. I make $50,000. You do the math. The players should wise up and give back a little or no one will be able to afford to watch them play.

    I rarely support owners. I agree that they confuse reality and bend the system to their advantage. But the players will eventually cave to some extent. If we want fairness and clarity we should insist the owners open their books for scrutiny and close unfair tax loopholes. But the players are doing just fine and will continue to do so no matter what agreement they sign.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by Since86 View Post
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    How are you not losing money? Let's use your machinery example.

    Say we buy a $50,000 machine. The actual value of that machine is lower than $50,000, because the seller needs to make a profit, so the actual value is, say, $45,000. (obviously I'm being generous)

    So each year it depreciates $5,000, and let's say it bottoms out at $5,000 just due to pure scrap value.

    You started off with $50,000, and traded that for a machine worth $45,000. Now it's worth $5,000.

    You no longer have that $50,000 in cash, and you no longer have a machine worth that in value. You've still lost money. While it might be an accounting "trick" it's not making money magically disappear.

    You still don't have that money you started out with and you can't replace it.

    It's just like buying food. You buy $20 of food. When you eat it, you no longer have $20 of food. It's the same prinicple. Your net worth doesn't stay constant, it flucuates. You have to show your value in dollars. It's not like you've tucked away that $50,000 and could regain it by a simple sale.
    I am very weak in accounting so forgive me but doesnt that purchase of a 50,000 machine make you X amount of dollars?
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by King Tuts Tomb View Post
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    He's not saying the RDA is a bad thing, he's saying the refusal of the owners to tell the truth about their books, and in turn use that disinformation as a bargaining chip in labor negotiations, is a bad thing.
    But he is spinning it as it's a wrong thing to do and it's not. The Players are contracted and the owners have the right to exercise the RDA in legal tax law. The net profits should be after all losses including tax, not before. It is laughable to think that owners should not include an owners rights of loss torward their profit. This is not disinformation at all as long as the numbers are there correctly on a total profit/loss which they are. There is nothing hidden in any documentation I have read.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by speakout4 View Post
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    If you are buying the team then the players are assets that contribute to the value of the team. The same team without leBron will cost less to a buyer.
    Your quote has nothing to do with RDA in which I was speaking of from the article.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by Pacer Fan View Post
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    But he is spinning it as it's a wrong thing to do and it's not.
    I don't see anywhere in the article. He says:

    Every year, taxpayers hand the plutocrats who own sports franchises a fat pile of money for no other reason than that one of those plutocrats, many years ago, convinced the IRS that his franchise is basically a herd of cattle. Fort calls it "special-interest legislation." "It's not illegal," he says. "It's just weird."
    Is this not true?

    His main issue comes from the fact that they're using this (legal) exemption then lying about it.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by 90'sNBARocked View Post
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    I am very weak in accounting so forgive me but doesnt that purchase of a 50,000 machine make you X amount of dollars?
    Yes, but that doesn't change the loss on the investment into the machine. The machine and what it is used for are two different things. Even if you don't make any money with the machine the loss in the machines value still exists. Even if you don't use it at all, it still loses value. It's something that just factors into the cost of doing business.

    Quote Originally Posted by King Tuts Tomb View Post
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    I don't see anywhere in the article. He says:



    Is this not true?

    His main issue comes from the fact that they're using this (legal) exemption then lying about it.
    It is but isn't his example of a "herd of cattle" both inflammatory by design and misguided?

    The "herd of cattle" is merely a product that has value on paper. As is an NBA player. But he uses that term so that you associate the NBA player with the cattle, and make owners look like cattle drivers. We would all be wise to distrust anyone who uses these strategies to make their point in journalism. There is no doubt that NBA players are not treated in any way, like cattle.

    Quote Originally Posted by King Tuts Tomb View Post
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    From the article:

    "The underlying logic is specious at best. As Fort points out, a team's roster at any given moment isn't actually depreciating. While some players are fading with age, others are developing and improving. But the Nets don't have to pay more taxes when a player becomes more valuable. And in any case, the cost of depreciation is borne by the athletes themselves, when they pass their primes and lose their personal earning power."
    An athlete is looked at as a depreciating asset because he is aging. It's true that there is a progression during his career. But he can still only play so long. Just like cattle are only useful for a period of time. It's not an investment like a piece of property or even a machine that can be repaired. You can't refurbish cattle or a player and get more years out of them. With living things there is an hourglass constantly running on your investment and you don't know when it's due to run out, it could be tomorrow.

    If that makes any sense.
    Last edited by Taterhead; 06-30-2011 at 09:01 PM.

  27. #23
    Member Eleazar's Avatar
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Quote Originally Posted by Pacer Fan View Post
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    But he is spinning it as it's a wrong thing to do and it's not. The Players are contracted and the owners have the right to exercise the RDA in legal tax law. The net profits should be after all losses including tax, not before. It is laughable to think that owners should not include an owners rights of loss torward their profit. This is not disinformation at all as long as the numbers are there correctly on a total profit/loss which they are. There is nothing hidden in any documentation I have read.
    I'm sorry but anything where you claim a lose when there is no actual loss of money is shady at best, and in most cases down right wrong. Yes, over time an asset loses value, but you aren't losing money. Your assets are losing worth, but not money. The only way to do this in a way that is not shady is to take into account how much money the asset made you. Unless it was a bad investment in most cases it will end in a net profit not a net loss.

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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Owner's should be more concerned with their cash flows instead of their net income.

    As long as they are bringing in more cash than they spend each year, the owners should have nothing to ***** about.

    A net loss by a team doesn't take a cent out of the owner's pockets if the causes of that loss are non cash items.

    These teams do not have stock so earnings don't matter one bit. Who cares if net income is negative due to non-cash expenses?

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    Honorary Area 55'er TMJ31's Avatar
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    Default Re: Exclusive: How (And Why) An NBA Team Makes A $7 Million Profit Look Like A $28 Million Loss

    Wow, my brain hurts...
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