Clips Valued at $2 Billion - Putting it in perspective (1 Viewer)

[SIDA!]

As many of you have probably read or heard already, Ballmer is valuing the Clippers at $2 billion dollars. Since the Sterling scandal broke we have repeatedly been told that he spent a "paltry" $12.5 million for the team back in 1982.

I decided to punch in the numbers into a calculator to see what the average annual return would be for this investment. Unless I am doing something wrong, I came up with a slightly more than 17% return. Pretty damn good return, no doubt. But honestly, when I see 12.5 million vs. 2 billion, I thought the rate of return would be higher. Just goes to show you how powerful compound interest.

Obviously, this ignores the "dividends" the Sterlings enjoyed each year from the club as the team has always been considered very profitable due to him being a tight ###.

So, essentially, all any of have to do is take $12,500 and put it into a vehicle that earns 17% per year and we will have $2 million dollars in 32 years. And that isn't eve counting any annual contributions to your savings account.

 

[mr roboto]

As many of you have probably read or heard already, Ballmer is valuing the Clippers at $2 billion dollars. Since the Sterling scandal broke we have repeatedly been told that he spent a "paltry" $12.5 million for the team back in 1982.

I decided to punch in the numbers into a calculator to see what the average annual return would be for this investment. Unless I am doing something wrong, I came up with a slightly more than 17% return. Pretty damn good return, no doubt. But honestly, when I see 12.5 million vs. 2 billion, I thought the rate of return would be higher. Just goes to show you how powerful compound interest.

Obviously, this ignores the "dividends" the Sterlings enjoyed each year from the club as the team has always been considered very profitable due to him being a tight ###.

So, essentially, all any of have to do is take $12,500 and put it into a vehicle that earns 17% per year and we will have $2 million dollars in 32 years. And that isn't eve counting any annual contributions to your savings account.

All we have to do is find a return rate of 17%? Yeah, I'll get right on producing that list for you.

 

[ChainsawU]

If you compounded the 12.5k semi-anually at 17% APR you would return about 2.3 million. If you compounded daily you would return around 2.9 million.

 

[SIDA!]

How about starting out with an investment amount of $12,500, adding $10,000 per year and earning a 9.5% return each year?

That will get you a tick over $2,000,000.

 

[Frostillicus]

 

[Slapdash]

Yes, compound interest is awesome

 

[Doug B]

I decided to punch in the numbers into a calculator to see what the average annual return would be for this investment. Unless I am doing something wrong, I came up with a slightly more than 17% return.

When I first looked at the amounts, I figured it had to be more than 17% & change. But you were on the money -- 17.79% APR.

$12,500,000.00

$14,723,750.00

$17,343,105.13

$20,428,443.53

$24,062,663.63

$28,343,411.49

$33,385,704.39

$39,325,021.21

$46,320,942.48

$54,561,438.15

$64,267,917.99

$75,701,180.60

$89,168,420.63

$105,031,482.66

$123,716,583.43

$145,725,763.62

$171,650,376.97

$202,186,979.03

$238,156,042.60

$280,524,002.57

$330,429,222.63

$389,212,581.34

$458,453,499.56

$540,012,377.13

$636,080,579.02

$749,239,314.03

$882,528,988.00

$1,039,530,894.96

$1,224,463,441.17

$1,442,295,487.36

$1,698,879,854.56

$2,001,110,580.69

 

[NewlyRetired]

What amazes me about this 2 billion number is that it does not come with ownership of the Staples Center.

 

[Fennis]

Bummed that in 1982 I put my 12.5 million in corn futures.

 

[timschochet]

I work with several very wealthy real estate investors. If I could offer them a fixed 17% annual return, they'd be calling me this second to sign up with every cent they had. Hell, if I could offer them 12% return they'd sign up.

 

[SIDA!]

Bummed that in 1982 I put my 12.5 million in corn futures.

Should have put it in Orange Juice...

 

[heckmanm]

Bummed that in 1982 I put my 12.5 million in corn futures wheat pennies.

 

[Da Guru]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

 

[Tiger Fan]

Racism is profitable

 

[Psychopav]

Now that the FFA has finally learned the value of compound interest, its time to get that magic working for you.

I give you...http://www.timetravelfund.com/

 

[Christo]

I work with several very wealthy real estate investors. If I could offer them a fixed 17% annual return, they'd be calling me this second to sign up with every cent they had. Hell, if I could offer them 12% return they'd sign up.

Nah, you're kidding!

 

[mr roboto]

I work with several very wealthy real estate investors. If I could offer them a fixed 17% annual return, they'd be calling me this second to sign up with every cent they had. Hell, if I could offer them 12% return they'd sign up.

Nah, you're kidding!

But only because they are 'very wealthy'.

 

[xulf]

I work with several very wealthy real estate investors. If I could offer them a fixed 17% annual return, they'd be calling me this second to sign up with every cent they had. Hell, if I could offer them 12% return they'd sign up.

Nah, you're kidding!

But only because they are 'very wealthy'.

Right, those non-wealthy investors won't even get out of bed for anything less than a 62% return.

 

[Premier]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

 

[Socrates11]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

 

[Da Guru]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

Forbes values the Clippers at 600 million before this happened. When a sale seems imminent the price went to the 750-800 right away. Then that figure doubled just as fast. Hell..maybe this was all a well thought out business ploy.

 

[Captain Quinoa]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

Still cheaper than buying Dre Beats

 

[Premier]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

Forbes values the Clippers at 600 million before this happened. When a sale seems imminent the price went to the 750-800 right away. Then that figure doubled just as fast. Hell..maybe this was all a well thought out business ploy.

The next time Forbes is anywhere near correct on sports franchise values it will be the first time. They are terrible.

 

[Christo]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

There's no way in hell the Clippers are worth that much. That figure puts them nearly on par with a global brand like Manchester United. It's nonsense and whoever pays that much is going to take a bath.

 

[SacramentoBob]

I work with several very wealthy real estate investors. If I could offer them a fixed 17% annual return, they'd be calling me this second to sign up with every cent they had. Hell, if I could offer them 12% return they'd sign up.

Nah, you're kidding!

But only because they are 'very wealthy'.

Right, those non-wealthy investors won't even get out of bed for anything less than a 62% return.

That wasn't his point.

 

[NCCommish]

I work with several very wealthy real estate investors. If I could offer them a fixed 17% annual return, they'd be calling me this second to sign up with every cent they had. Hell, if I could offer them 12% return they'd sign up.

Nah, you're kidding!

But only because they are 'very wealthy'.

Right, those non-wealthy investors won't even get out of bed for anything less than a 62% return.

That wasn't his point.

Of course but since it's Tim they will act like it was.

 

[Baloney Sandwich]

So all of a sudden sports franchise valuations are going to decrease? He is going to make money every year he owns the franchise and if/when it is ever sold the price will be well north of $2B.

 

[msommer]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

There's no way in hell the Clippers are worth that much. That figure puts them nearly on par with a global brand like Manchester United. It's nonsense and whoever pays that much is going to take a bath.

If that someone is Steve Ballmer that would constitute a win-win in my book

 

[rodg12]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

Forbes values the Clippers at 600 million before this happened. When a sale seems imminent the price went to the 750-800 right away. Then that figure doubled just as fast. Hell..maybe this was all a well thought out business ploy.

The next time Forbes is anywhere near correct on sports franchise values it will be the first time. They are terrible.

All you had to do was look at the Dodgers sale to know the Clippers were going to go for far, far more than 750-800.

 

[mr roboto]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

There's no way in hell the Clippers are worth that much. That figure puts them nearly on par with a global brand like Manchester United. It's nonsense and whoever pays that much is going to take a bath.

This was my sense as well. Isn't that more than the Yankees?

 

[rodg12]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

Multiple nba beat writers and Bill Simmons had them going for 1.5B+ when the Sterling story broke a month ago.

Even the 1.5B seemed high, but 2B!?!? Can he even realistically make a profit on buying at that price? Seems like Clippers fans are about to get screwed in ticket and concession prices.

There's no way in hell the Clippers are worth that much. That figure puts them nearly on par with a global brand like Manchester United. It's nonsense and whoever pays that much is going to take a bath.

This was my sense as well. Isn't that more than the Yankees?

The Yankees would sell for $3 billion. Easy. I could see the Cowboys fetching $5.

 

[mr roboto]

I will say this - it's a perfect storm to maybe try and flip the LA bball market though. Lakers are bad, Clippers have talent, team goes through racial turmoil in a very multi-racial city. Not worth 2Bil but the second largest market, good team, good vibes...

 

[roadkill1292]

So all of a sudden sports franchise valuations are going to decrease? He is going to make money every year he owns the franchise and if/when it is ever sold the price will be well north of $2B.

As long as they maintain their market dominance and that sweet sweet exclusivity, major league sports franchises in this country are about as close to a sure thing as there is. I don't say this with admiration.

 

[NCCommish]

So all of a sudden sports franchise valuations are going to decrease? He is going to make money every year he owns the franchise and if/when it is ever sold the price will be well north of $2B.

So how much do the Clips generate each year in gross profit? Based on reports from ESPN and Rod Fort they gross about 30 million a year. But that is not a great number because non-player costs are murky. But still let's call it 30 for a round number. That means 30+ years to return the initial investment.

 

[Premier]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

 

[lod001]

Racism is profitable

Can't wait for the rant by the next pro sports franchise owner who thinks the sale price is low. Should be a gem.

 

[Leroy Hoard]

Funny how what has been pretty much a joke of a franchise can still be worth that much.

Nice punchline bottom line.

 

[NCCommish]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

It's a bubble and it will pop when our tax dollars stop propping it up.

 

[Black Box]

Funny how what has been pretty much a joke of a franchise can still be worth that much.

Nice punchline bottom line.

Sell high, buy low.

 

[Premier]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

It's a bubble and it will pop when our tax dollars stop propping it up.

That isn't stopping anytime soon.

 

[NCCommish]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

It's a bubble and it will pop when our tax dollars stop propping it up.

That isn't stopping anytime soon.

I wouldn't be too sure. Here in Charlotte they had to get very creative to give anything to the Panthers and Richardson was not happy with what he managed to get. Nothing from the state at all by the way. Citizens are getting wise to the fact they are being taken to the cleaners. All bubbles burst. The bigger they get the closer the burst. This represents growing the bubble significantly IMO.

 

[Socrates11]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

It's a bubble and it will pop when our tax dollars stop propping it up.

Tax dollars and television money, which explains why everyone in sports is so desperate to bring in more revenue internationally. Still, at some point you have to think there will be a contraction, and these people spending billions to get into the exclusive sports franchise owner club are going to be crying.

 

[cdubz]

As many of you have probably read or heard already, Ballmer is valuing the Clippers at $2 billion dollars. Since the Sterling scandal broke we have repeatedly been told that he spent a "paltry" $12.5 million for the team back in 1982.

I decided to punch in the numbers into a calculator to see what the average annual return would be for this investment. Unless I am doing something wrong, I came up with a slightly more than 17% return. Pretty damn good return, no doubt. But honestly, when I see 12.5 million vs. 2 billion, I thought the rate of return would be higher. Just goes to show you how powerful compound interest.

Obviously, this ignores the "dividends" the Sterlings enjoyed each year from the club as the team has always been considered very profitable due to him being a tight ###.

So, essentially, all any of have to do is take $12,500 and put it into a vehicle that earns 17% per year and we will have $2 million dollars in 32 years. And that isn't eve counting any annual contributions to your savings account.

All we have to do is find a return rate of 17%? Yeah, I'll get right on producing that list for you.

Have I introduced you to my friend, Mr. Madoff?

 

[cdubz]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

It's a bubble and it will pop when our tax dollars stop propping it up.

Tax dollars and television money, which explains why everyone in sports is so desperate to bring in more revenue internationally. Still, at some point you have to think there will be a contraction, and these people spending billions to get into the exclusive sports franchise owner club are going to be crying.

But for Balmer though, does it really matter? He could literally light $2B on fire and I seriously doubt it changes a thing about his life. He just bought a big status item that isn't a big deal if he loses several hundred million on if he ever sells.

But if you are going in with the expectation to make money then yes, you could be in for a big surprise at some point.

 

[Anarchy99]

It makes you wonder why there isn't a football team in L.A. if the Clippers and Dodgers each sold for $2 billion.

 

[roadkill1292]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

It's a bubble and it will pop when our tax dollars stop propping it up.

That isn't stopping anytime soon.

I wouldn't be too sure. Here in Charlotte they had to get very creative to give anything to the Panthers and Richardson was not happy with what he managed to get. Nothing from the state at all by the way. Citizens are getting wise to the fact they are being taken to the cleaners. All bubbles burst. The bigger they get the closer the burst. This represents growing the bubble significantly IMO.

There are still a large and vocal percentage of citizens in major league regions who influence government officials to cave. Much of the motivation comes from fear of losing the franchise, a really despicable situation that government officials have allowed to happen and in fact have enabled. In essence, it's government-supported extortion by rich people to get richer.

 

[NCCommish]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

It's a bubble and it will pop when our tax dollars stop propping it up.

Tax dollars and television money, which explains why everyone in sports is so desperate to bring in more revenue internationally. Still, at some point you have to think there will be a contraction, and these people spending billions to get into the exclusive sports franchise owner club are going to be crying.

Well the Clippers make 70 million in non gate revenue allegedly. I assume that includes TV money. But they make only 30 million in gate revenue. Non gate covers their player payroll of slightly less than 70 million. No one seems clear on non player expenses but that lease can't be cheap and they are stuck another 12 years IIRC. Not sure what Ballmer sees here that I don't.

 

[NCCommish]

God this is horrible discussion.

Guys, the Yankees and Lakers and Cowboys are still worth more than the Clippers. They would sell for more if they are ever put up for sale. Stop looking behind at what dumb magazines incorrectly prognosticated and see that this is the future of sports franchises going forward.

If you need further proof, take a look at what the Bucks just sold for with a god awful arena in a terribly small market. The values have shifted; time to catch up.

It's a bubble and it will pop when our tax dollars stop propping it up.

That isn't stopping anytime soon.

I wouldn't be too sure. Here in Charlotte they had to get very creative to give anything to the Panthers and Richardson was not happy with what he managed to get. Nothing from the state at all by the way. Citizens are getting wise to the fact they are being taken to the cleaners. All bubbles burst. The bigger they get the closer the burst. This represents growing the bubble significantly IMO.

There are still a large and vocal percentage of citizens in major league regions who influence government officials to cave. Much of the motivation comes from fear of losing the franchise, a really despicable situation that government officials have allowed to happen and in fact have enabled. In essence, it's government-supported extortion by rich people to get richer.

True. But here it didn't work that way. People were pretty much against giving them anything. Of course when Richardson said he didn't feel like he should have to go in debt to improve his stadium that got people's backs up.

 

[roadkill1292]

It makes you wonder why there isn't a football team in L.A. if the Clippers and Dodgers each sold for $2 billion.

I wonder what's more valuable to the NFL, getting a one-time nice fat expansion fee from an LA consortium or year after year concessions from governments in the 31 league cities that amount to cumulative billions? I tend to think the latter, that LA is too important of an ace in the hole to relinquish until absolutely necessary but then I'm an opponent of the NFL who is always inclined to think the worst of it.

 

[Thorpe]

When this story first broke the Clippers value for a sale was in the 750-800 million area. Then the big players starting jumping on board. So the NBA stuck it to Sterling and his family by netting them a almost 2 billion dollar profit on his initial 12 million dollar purchase. Best ROI in pro-sports history.

McCourt had a much better ROI. I think turned about 400 mil into 2 bil in 8 years, and he got to keep a lot of land around Dodger stadium.