# Thread: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

3. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

What is that? An increase in value of more than 20% in one year? I'd have to question the model that gave these values.

4. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

So - one could say that Mr. Simon put an additional 92 million in his pocket.

I think he could go over the tax line juuuuust a little to keep this squad together.

6. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by PacerDude
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So - one could say that Mr. Simon put an additional 92 million in his pocket.

I think he could go over the tax line juuuuust a little to keep this squad together.
IF these numbers actually represent what he could sell the franchise for, and IF he did gain 90 million in one year, it seems logical to reason he could lose tens of million in any given year as well. I doubt he makes any operating decisions based on this number.

8. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

I was interested in this number so I checked recently but 2014 had not been released yet. Compare this number to the JOB era. From what I remember I think it is up well over 200 million since 2009. If they win the championship and smash Miami in the process with the slight chance of winning 73 games, the number could be between 600 and 700 million next year.

9. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by PacerDude
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So - one could say that Mr. Simon put an additional 92 million in his pocket.

I think he could go over the tax line juuuuust a little to keep this squad together.
The theoretical worth of something is not the same as money in the pocket.

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11. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

22nd in the league most of the increase was because of a league wide increase as a result of the upcoming TV deal.

Although our increase was ahead of the curve

13. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by Eleazar
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The theoretical worth of something is not the same as money in the pocket.
That's the argument that keeps repeating. The only way that money is available is if the franchise is sold. It isn't useful for operating expenses because to dip into it incurs debt - and the loan value of an asset with very few buyers is not going to come anywhere close to how much it might have been rated by Forbes.

However, now there will be people in the city claiming that Herb stole that increase in value if he doesn't go deep into the LT because, after all, he just got a check for that \$90M increase don't ya know...

15. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

BBL!

BRING BACK LANCE!

16. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by Eleazar
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The theoretical worth of something is not the same as money in the pocket.
But how often does something increase in value if it's not making more money?

Over the last year, there's no doubt that the Pacers have increased their ticket sales, concessions, merchandise sales, etc. Now there is the TV dealt to add to that.

The Pacers are making a lot more money right now than they were in prior seasons. The increase in value is a reflection of that.

18. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by Sollozzo
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But how often does something increase in value if it's not making more money?

Over the last year, there's no doubt that the Pacers have increased their ticket sales, concessions, merchandise sales, etc. Now there is the TV dealt to add to that.

The Pacers are making a lot more money right now than they were in prior seasons. The increase in value is a reflection of that.
Yep. Herb didn't make another \$90m this year, but this increase in value directly correlates with an increase in ticket sales, merchandise sales, and general profit increases. The raise in price means the Pacers are making a lot more money.

20. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Note though that we are still only #22 out of 30 on the list. So while the Pacers' (theoretical) value may have risen, so have pretty much all other NBA teams. Even the lowly Bucks (dead last) had a 30% increase. Our revenue isn't great either, significantly below other small market teams like SA or OKC. But hopefully our higher profile this year will help...

22. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by Sollozzo
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But how often does something increase in value if it's not making more money?

Over the last year, there's no doubt that the Pacers have increased their ticket sales, concessions, merchandise sales, etc. Now there is the TV dealt to add to that.

The Pacers are making a lot more money right now than they were in prior seasons. The increase in value is a reflection of that.
There are a lot of reasons why a business losing money year-over-year might have an increase in (an already positive) value. One (or more) of its assets may have increased in intrinsic value - for instance, property it owns, or its machinery, or its intellectual property - but that doesn't necessarily mean it has a corresponding increase in positive cash flow (i.e. making money).

In this case one of the explanations for the increase of the estimate is that the Pacers' share of the league TV deal has gone up. That's probably not the only thing, and I would certainly believe the Pacers are bringing in more money than in previous years.

The argument stands, though, that a theoretical valuation of something is not a direct reflection of a certain amount of money available to spend. The valuation is only as good as the person who is willing to spend that amount to get it. The fewer the customers, the less likely valuation will match actual sale value - and the more likely the only way to get that money out is to actually sell.

24. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by Sollozzo
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But how often does something increase in value if it's not making more money.
It's very common, most notably the value of one's home. The value can go up or down, and it doesn't influence how much money you have in the bank or in your pocket.

26. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

A lot of what goes into these values is potential over the long term. Potential can be a fickle wench.

28. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

The CIB has a pretty good argument to stop making these payments to the Pacers. At this point, the team is very successful, and they are turning a profit without it. (I know this article isn't directly referencing profit, but team values don't go up when a team is struggling to make ends meet)

30. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by Since86
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It's very common, most notably the value of one's home. The value can go up or down, and it doesn't influence how much money you have in the bank or in your pocket.
Yeah but your home doesn't generate money for you. It's just a home. I should have been more specific with my comments and said "sports franchises" instead of "something". I realize there are some external factors here, but I have a hard time believing that the Pacers would have a substantial increase in value if they weren't bringing in considerably more money. To me, the rise in Pacers' value seems pretty easily explained. More tickets are being sold, more concessions are being sold, and more merchandise is being sold. Since the business is making more money, it's worth more.

32. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by boombaby1987
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The CIB has a pretty good argument to stop making these payments to the Pacers. At this point, the team is very successful, and they are turning a profit without it. (I know this article isn't directly referencing profit, but team values don't go up when a team is struggling to make ends meet)
This is why I don't think that the LT is a big deal. If the Pacers have to pay it to keep Lance, then we all know that the CIB will bend over and reimburse them in one way or another. I don't think they've ever told Ir\$ay or \$imon "no" before.

33. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

How would a Franchise possibly rise in potential value if it were losing its current owner money? How can that possibly be explained?

34. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by GrangerRanger
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How would a Franchise possibly rise in potential value if it were losing its current owner money? How can that possibly be explained?

35. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by GrangerRanger
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How would a Franchise possibly rise in potential value if it were losing its current owner money? How can that possibly be explained?
Besides what Sollozzo pointed out (that a new owner might think he can make money), there are a lot of things that can't be monetized directly but have worth. Prestige, "good will" (in quotes because there actually is a very specific accounting procedure for handling good will as an asset), value of breaking things apart and selling them separately, and so forth.

Losing money in a given year has nothing to do with the actual value of your assets unless you are mortgaging them to pay the debt.

37. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by Sollozzo
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Yeah but your home doesn't generate money for you. It's just a home. I should have been more specific with my comments and said "sports franchises" instead of "something". I realize there are some external factors here, but I have a hard time believing that the Pacers would have a substantial increase in value if they weren't bringing in considerably more money. To me, the rise in Pacers' value seems pretty easily explained. More tickets are being sold, more concessions are being sold, and more merchandise is being sold. Since the business is making more money, it's worth more.
But you're confusing total value with annual revenue.

Just because it's 'worth' \$92M more doesn't mean he's making \$92M more every year; that value is spread over a period of returns. The shortest amount of time I'd expect this would value returns for would be 5 years, meaning only an annual increase of \$18.4M. A more conservative estimate would probably factor in a valuation over 10 years, meaning the average increase in returns would be \$9.2M per year.

39. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Originally Posted by BillS
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Besides what Sollozzo pointed out (that a new owner might think he can make money), there are a lot of things that can't be monetized directly but have worth. Prestige, "good will" (in quotes because there actually is a very specific accounting procedure for handling good will as an asset), value of breaking things apart and selling them separately, and so forth.

Losing money in a given year has nothing to do with the actual value of your assets unless you are mortgaging them to pay the debt.
I honestly did not know good will is considered an asset. Dont want to de-rail this thread, but if you get a moment I would love if you could message me more about this. I suck at math, but the whole concept is fascinating to me.

On topic, good for the Pacers. I dont think it means much, but its definitely better than having a bad report

40. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

Scarcity is a huge piece of the puzzle that I have not seen posted on here. There are only 30 NBA franchises. 30 years ago there were not as many billionaires as there are today. The more billionaires there are, the longer the line is to own an NBA team. I don't think I need to get to deep into Supply and Demand with you all. Most of these guys are hot shots that are looking to compete in something. A sports franchise gives them the opportunity to do just that. Aside from the Donald Sterlings and a few others, it is not all about the Benjamin's. If a franchise was losing tens of millions of dollars and the owner wanted to sell, there would still be a line of bidders, because it gives bored billionaires a release and an opportunity to beat up on other billionaires. So, a sports franchise is a little bit different from a lemonade stand. It is not just revenue plus assets equals value.

42. ## Re: Forbes: Pacers value increased from \$383M in 2013 to \$475M in 2014

My property value went up on my house...does that mean I will see a check?

This does not mean that now Simon can get into the LT. But it also doesn't negate that either.

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