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

[Orlando RMF]

Valued by Forbes at $575 million with an operating profit of $15 million, how long does it take pay itself off?

http://www.forbes.com/pictures/mli45eheim/13-los-angeles-clippers/

 

[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.

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.

My guess is he doesn't see it as a mechanism to make money, or at least anything approaching the ROI he could get from say an index fund.

This was a status purchase for him, only 30 seats at the table, and he got one in a major metro with a good/great roster. Dude is loaded.

 

[Cliff Clavin]

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

 

[Baloney Sandwich]

The Clippers local TV is up in two years, currently it is only $20M a year. The Lakers deal is worth more than 150M a year. Big upside there and the league TV deal is being negotiated right now as well. They could easily be looking at an additional 50-100M+ a year once those two deals are in place. The other factor is the league crushed the union coming out of the lockout which has been a huge cost savings for every team.

 

[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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

 

[Leroy Hoard]

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.

I always wondered why they don't just give the new city the expansion team instead of the old city that got their franchise ripped away years ago. This "ace in the hole" theory would explain it.

 

[Cliff Clavin]

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

So you've seen the Clipper's books? I mean, you can't just be basing this of reading a few articles, right?

 

[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.

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.

You have absolutely zero idea what their books are really like.

 

[Mister Martie]

You guys really think Ballmer is concerned about losing money on this transaction? The guy is worth $20b. He wants to own an NBA team and they aren't up for sale very often so he paid what it would take to get it. Just look at Sterling. If it was up to him, it seems like he'd rather keep the team than sell it for a $2b gain.

 

[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.

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.

You have absolutely zero idea what their books are really like.

Why does this deal NEED to make sense from a financial standpoint? If you are a multi-millionaire, do you buy a Bentley because it is a good investment? While none of us have seen the Clippers' books, I think it is reasonable assumption that the immediate ROI on this "investment" is not going to be very good.

Dude just has funny money that he can do whatever he wants with.

 

[rodg12]

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.

My guess is he doesn't see it as a mechanism to make money, or at least anything approaching the ROI he could get from say an index fund.

This was a status purchase for him, only 30 seats at the table, and he got one in a major metro with a good/great roster. Dude is loaded.

Buying a pro franchise is like buying a really freaking cool painting that can possibly make you money each year.

 

[Mister Martie]

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.You have absolutely zero idea what their books are really like.

Why does this deal NEED to make sense from a financial standpoint? If you are a multi-millionaire, do you buy a Bentley because it is a good investment? While none of us have seen the Clippers' books, I think it is reasonable assumption that the immediate ROI on this "investment" is not going to be very good.Dude just has funny money that he can do whatever he wants with.

Exactly. He's not buying the team to flip it and make a few hundred million. He probably has no intention to sell it in his lifetime.

 

[B Maverick]

The Clippers local TV is up in two years, currently it is only $20M a year. The Lakers deal is worth more than 150M a year. Big upside there and the league TV deal is being negotiated right now as well. They could easily be looking at an additional 50-100M+ a year once those two deals are in place. The other factor is the league crushed the union coming out of the lockout which has been a huge cost savings for every team.

This is something everyone seems to be overlooking. They are estimating their new tv deal (in 2015 i think) will be similar to what the angels got which is something like $3B. They are locked into Staples Center for 10 more years then they can negotiate a stadium, move to Anaheim, etc.

You guys really think Ballmer is concerned about losing money on this transaction? The guy is worth $20b. He wants to own an NBA team and they aren't up for sale very often so he paid what it would take to get it. Just look at Sterling. If it was up to him, it seems like he'd rather keep the team than sell it for a $2b gain.

He is in an exclusive club in LA with an up and coming team. Not bad there.

 

[Leroy Hoard]

At least we won't have to look at old ugly & his stupid visor wearing girlfriend anymore.

 

[RUSF18]

I've had a chance to look behind the curtain and review the financing from a bunch of team sales/stadium deals over the past couple years. None of these reported numbers are ever accurate when it comes to organization-wide cash flow. It's extremely rare for teams to actually lose money or have franchise values decrease. You know how it tends to happen? Look up Boots Del Biaggio and the Columbus Blue Jackets.

 

[Cliff Clavin]

Why does this deal NEED to make sense from a financial standpoint? If you are a multi-millionaire, do you buy a Bentley because it is a good investment? While none of us have seen the Clippers' books, I think it is reasonable assumption that the immediate ROI on this "investment" is not going to be very good.

Dude just has funny money that he can do whatever he wants with.

I think you're missing something here. We (Premier and myself) are not saying whether it makes sense or not from a financial standpoint. We are saying we don't know because like everyone else in this thread, we do not have access to the Clipper's financial statements.

Your opinion that it is a luxury purchase is certainly valid/plausible as is the people who say that the upcoming TV contract will make him boatloads. But no here knows. No one has a clue how much the Clippers make.

 

[SIDA!]

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.

I am going to place some money I have in a self-directed IRA with a real estate investor (flipper) in the next couple of weeks for what is slated to be a double digit return. Basically, I will be acting as a private bank/lender.

Unfortunately, the holding period is only 4-8 months on average depending on the property since some homes obviously take longer to rehab and others take longer to sell. He says he has more properties than financing so he should be able to turn it over and cycle my funds with minimal downtime.

 

[Fennis]

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.

I am going to place some money I have in a self-directed IRA with a real estate investor (flipper) in the next couple of weeks for what is slated to be a double digit return. Basically, I will be acting as a private bank/lender.

Unfortunately, the holding period is only 4-8 months on average depending on the property since some homes obviously take longer to rehab and others take longer to sell. He says he has more properties than financing so he should be able to turn it over and cycle my funds with minimal downtime.

sounds foolproof!

 

[culdeus]

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.

The value is in the TV deal. The gate and concessions barely pay the cheerleaders.

 

[SIDA!]

I think there is a lot of merit to the posts suggesting that Ballmer is making a vanity purchase and that he is so rich that it goes beyond numbers. I think there are a lot of things factoring into the decision as already mentioned here. I am sure the guy wants to be an owner of two championship sports franchises, as well.

I also think, as mentioned above, we have no idea what the books look like for these teams. I find it hard to believe that the Clips are only making a $10 million profit or whatever has been mentioned by Forbes in the past, per year.

One interesting observation I heard on LA radio this week regarding the mega tv deals like the one signed by the Lakers and Dodgers. Their point was that those franchises have a history. They have so much natural/historical content to produce for fans for their stations. What do the Clips have? Next to nothing in that regard.

 

[roadkill1292]

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.

The value is in the TV deal. The gate and concessions barely pay the cheerleaders.

By all reports the NBA is having the most success of the U.S. domestic leagues in marketing itself overseas. Two billion will look like a bargain in 20 years if the tv cash flow multiplies by some factor.

 

[thecatch]

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.

Cities are still chipping in but they are getting more savvy in how they do these deals. I think anyone who is telling you franchise values will continue to increase exponentially in perpetuity is selling you a bill of goods.Edit: I should clarify that those sentences are not necessarily related. I don't think public subsidies are the primary driver behind the recent value increases.

 

[SIDA!]

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.

I am going to place some money I have in a self-directed IRA with a real estate investor (flipper) in the next couple of weeks for what is slated to be a double digit return. Basically, I will be acting as a private bank/lender.

Unfortunately, the holding period is only 4-8 months on average depending on the property since some homes obviously take longer to rehab and others take longer to sell. He says he has more properties than financing so he should be able to turn it over and cycle my funds with minimal downtime.

sounds foolproof!

LOL...not as foolproof as owning a sports franchise that is for sure.

But safer than a bank lending at 97% LTV to John Q. Public in 2007. That is for sure.

 

[SIDA!]

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.

The value is in the TV deal. The gate and concessions barely pay the cheerleaders.

By all reports the NBA is having the most success of the U.S. domestic leagues in marketing itself overseas. Two billion will look like a bargain in 20 years if the tv cash flow multiplies by some factor.

I won't pretend to know anything about this side of NBA marketing or what the rules are. But, if I was an NBA team, I would probably give my television rights away to various international markets (China) for several years so that my team could be the "America's Team" ( a la Dallas Cowboys) of that country, so to speak.

 

[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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.

You have absolutely zero idea what their books are really like.

I am going by people who regularly report on the profitability of sports franchises and are generally considered well informed on the subject. Where are you getting your information?

 

[TobiasFunke]

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.

You have absolutely zero idea what their books are really like.

I am going by people who regularly report on the profitability of sports franchises and are generally considered well informed on the subject. Where are you getting your information?

What people are those?

The Clippers' local TV deal and the NBA's national deals both expire in the next couple years and both are in line for massive jumps. If you are getting your information from people who fail to account for that, their opinions are worthless.

 

[timschochet]

Just got off the phone with a real estate owner I know who knows the Sterlings. He told me that because the Sterlings were forced to sell the team, their amount of capital gains tax will be heavily reduced. According to this guy there is a clause that if a sale is not voluntary, the NBA has to pick up the tab for capital gains.

This is the first I've heard of it, and I can't vouch for my source- but if it's true, the Sterlings are making out even better than everybody thinks.

 

[TobiasFunke]

Just got off the phone with a real estate owner I know who knows the Sterlings. He told me that because the Sterlings were forced to sell the team, their amount of capital gains tax will be heavily reduced. According to this guy there is a clause that if a sale is not voluntary, the NBA has to pick up the tab for capital gains.

This is the first I've heard of it, and I can't vouch for my source- but if it's true, the Sterlings are making out even better than everybody thinks.

If it were true they would have waited until after the June 3 vote, right? This sale was voluntary.

 

[timschochet]

Just got off the phone with a real estate owner I know who knows the Sterlings. He told me that because the Sterlings were forced to sell the team, their amount of capital gains tax will be heavily reduced. According to this guy there is a clause that if a sale is not voluntary, the NBA has to pick up the tab for capital gains.

This is the first I've heard of it, and I can't vouch for my source- but if it's true, the Sterlings are making out even better than everybody thinks.

If it were true they would have waited until after the June 3 vote, right? This sale was voluntary.

Hmm, interesting point. It wasn't really voluntary though, but technically your argument makes sense to me. I think my guy is full of ####.

The capital gains from this will be HUGE.

 

[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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.

You have absolutely zero idea what their books are really like.

I am going by people who regularly report on the profitability of sports franchises and are generally considered well informed on the subject. Where are you getting your information?

What people are those?

The Clippers' local TV deal and the NBA's national deals both expire in the next couple years and both are in line for massive jumps. If you are getting your information from people who fail to account for that, their opinions are worthless.

Yeah I am not talking future here. Do you know the future? I could use the lotto numbers.

 

[pantherclub]

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

you are absolutely correct, not debating that, but I think since he is worth 20billion and wants to join an exclusive fraternity I am betting he is not viewing this as a business opportunity or investment.

 

[B Maverick]

Just got off the phone with a real estate owner I know who knows the Sterlings. He told me that because the Sterlings were forced to sell the team, their amount of capital gains tax will be heavily reduced. According to this guy there is a clause that if a sale is not voluntary, the NBA has to pick up the tab for capital gains.

This is the first I've heard of it, and I can't vouch for my source- but if it's true, the Sterlings are making out even better than everybody thinks.

If it were true they would have waited until after the June 3 vote, right? This sale was voluntary.

Hmm, interesting point. It wasn't really voluntary though, but technically your argument makes sense to me. I think my guy is full of ####.

The capital gains from this will be HUGE.

I think I heard/saw somewhere that on the sale of $2B, the tax would be $600M leaving them ONLY $1.4B

 

[thecatch]

Just got off the phone with a real estate owner I know who knows the Sterlings. He told me that because the Sterlings were forced to sell the team, their amount of capital gains tax will be heavily reduced. According to this guy there is a clause that if a sale is not voluntary, the NBA has to pick up the tab for capital gains.

This is the first I've heard of it, and I can't vouch for my source- but if it's true, the Sterlings are making out even better than everybody thinks.

If it were true they would have waited until after the June 3 vote, right? This sale was voluntary.

Hmm, interesting point. It wasn't really voluntary though, but technically your argument makes sense to me. I think my guy is full of ####.The capital gains from this will be HUGE.

IIRC, McCann broke all this down at SI and concluded for tax purposes even the forced sale would be considered "voluntary".

 

[Black Box]

I think there is a lot of merit to the posts suggesting that Ballmer is making a vanity purchase and that he is so rich that it goes beyond numbers. I think there are a lot of things factoring into the decision as already mentioned here. I am sure the guy wants to be an owner of two championship sports franchises, as well.

I think you're confusing Ballmer with Paul Allan (owner of the Seahawks), another Microsoft guy.

Another factor might be that Ballmer has made plays for basketball franchises in the past, but hasn't been able to buy one (yet).

 

[SaintsInDome2006]

Just got off the phone with a real estate owner I know who knows the Sterlings. He told me that because the Sterlings were forced to sell the team, their amount of capital gains tax will be heavily reduced. According to this guy there is a clause that if a sale is not voluntary, the NBA has to pick up the tab for capital gains.

This is the first I've heard of it, and I can't vouch for my source- but if it's true, the Sterlings are making out even better than everybody thinks.

Interesting but it might only apply if the sale is forced by the government.

http://sportsillustrated.cnn.com/nba/news/20140507/donald-sterling-los-angeles-clippers-lawsuit-taxes-adam-silver/

 

[SaintsInDome2006]

I think there is a lot of merit to the posts suggesting that Ballmer is making a vanity purchase and that he is so rich that it goes beyond numbers. I think there are a lot of things factoring into the decision as already mentioned here. I am sure the guy wants to be an owner of two championship sports franchises, as well.

I think you're confusing Ballmer with Paul Allan (owner of the Seahawks), another Microsoft guy.

Another factor might be that Ballmer has made plays for basketball franchises in the past, but hasn't been able to buy one (yet).

He also might have some silent backers in Seattle that want to see a team back there.

 

[Cliff Clavin]

you are absolutely correct, not debating that, but I think since he is worth 20billion and wants to join an exclusive fraternity I am betting he is not viewing this as a business opportunity or investment.

He isn't going to flush $2B down the drain no matter how rich he is. If he thought he could get the team for cheaper, I'd have to assume he would have.

There are absolutely guys who run these franchises like toys (see: Prokhorov) but that doesn't mean he is going to pay way above what the franchise is worth "just because".

Maybe he tossed in an extra $100M or something to get the deal done quick and not have it go to a bidding war where it could have cost him more. We have no idea.

 

[timschochet]

So in order to get this sale done, a neurologist determines that Donald Sterling is incapable of making decisions. And that allows Shelly to sign the papers herself. Meanwhile Sterling's attorney says that Sterling is NOT incompetent. Wondering if he can still hold up the sale? Gotta say, from the outside it sounds pretty fishy...

 

[SaintsInDome2006]

So in order to get this sale done, a neurologist determines that Donald Sterling is incapable of making decisions. And that allows Shelly to sign the papers herself. Meanwhile Sterling's attorney says that Sterling is NOT incompetent. Wondering if he can still hold up the sale? Gotta say, from the outside it sounds pretty fishy...

In property this is what they call a clouded title.

 

[TobiasFunke]

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.

You have absolutely zero idea what their books are really like.

I am going by people who regularly report on the profitability of sports franchises and are generally considered well informed on the subject. Where are you getting your information?

What people are those?

The Clippers' local TV deal and the NBA's national deals both expire in the next couple years and both are in line for massive jumps. If you are getting your information from people who fail to account for that, their opinions are worthless.

Yeah I am not talking future here. Do you know the future? I could use the lotto numbers.

I do know the future!

-I know that the national TV deal (ABC/ESPN and TNT) expires two seasons from now, and that some are projecting that the price of the new deal with triple the current deal given the new national sports networks that would love to put the NBA on the air as their tentpole property.

-I also know that the Clippers RSN deal also expires after the same season. I don't know what the local rights will fetch at that point, but I don't know if any recent RSN deal in any of the three most popular American team sports that didn't bring an astronomical sum that exceeded most projections and immediately doubled or tripled or more the existing deal, with the most glaring example coming in the same town in which the Clippers play; the Dodgers now get $340 million a year for their TV rights over the next 25 years.

Link for these two

- Finally, I know that there won't be a lot of other chances to buy an NBA team in the next few years, and that there are a lot more rich people who want to own a team (even if it's not a moneymaker) than there are teams for sale. Supply and demand ...

 

[timschochet]

Tobias, in addition to what you mentioned, there are going to be added revenue streams as well- world wide internet coverage, for instance. Really the potential for future profits for any major sports franchise is unlimited at this point.

 

[TobiasFunke]

Tobias, in addition to what you mentioned, there are going to be added revenue streams as well- world wide internet coverage, for instance. Really the potential for future profits for any major sports franchise is unlimited at this point.

Yup. And as someone mentioned in the NBA thread, there's also the fact that live sports are the only safe haven for some forms of advertising in the DVR era.

One thing we know for certain is that the Forbes valuations are waaaaay off the mark. They have been low on every franchise sale in recent years, and they will continue to be unless they change their formula. They're stuck in an old-school valuation, but the buyers are looking to future revenue streams and and comforted by the fact that even if they're wrong, they'll still own one of the coolest things a human being can own. That's another problem with the Forbes model; it's like they're pricing a Ferrari based on how much the raw materials and labor cost, and missing the value rich buyers place on owning a ####### Ferrari.

 

[timschochet]

Tobias, in addition to what you mentioned, there are going to be added revenue streams as well- world wide internet coverage, for instance. Really the potential for future profits for any major sports franchise is unlimited at this point.

Yup. And as someone mentioned in the NBA thread, there's also the fact that live sports are the only safe haven for some forms of advertising in the DVR era.

One thing we know for certain is that the Forbes valuations are waaaaay off the mark. They have been low on every franchise sale in recent years, and they will continue to be unless they change their formula. They're stuck in an old-school valuation, but the buyers are looking to future revenue streams and and comforted by the fact that even if they're wrong, they'll still own one of the coolest things a human being can own. That's another problem with the Forbes model; it's like they're pricing a Ferrari based on how much the raw materials and labor cost, and missing the value rich buyers place on owning a ####### Ferrari.

Exactly. I wrote in the NBA thread that, at least in part, it's like owning a Van Gogh. How does one put a price on a Van Gogh?

 

[timschochet]

Reminds me of a story I read once about Elvis Presley- when all of the the large record companies of the time were competing with each other to buy the rights for Elvis from Sun Records, RCA came up with a bid that was considered absurd- 5 times what the next highest bidder was offering! The head of Columbia, Mitch Miller, said publicly that RCA was crazy and that no artist would ever be worth that much. Of course he had to eat those words, and within two years Columbia was paying even more for their own artists...

 

[Baloney Sandwich]

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.

You have absolutely zero idea what their books are really like.

I am going by people who regularly report on the profitability of sports franchises and are generally considered well informed on the subject. Where are you getting your information?

What people are those?

The Clippers' local TV deal and the NBA's national deals both expire in the next couple years and both are in line for massive jumps. If you are getting your information from people who fail to account for that, their opinions are worthless.

Yeah I am not talking future here. Do you know the future? I could use the lotto numbers.

 

[BigSteelThrill]

You would need to own 2,222 McDonalds franchises to make that 2 billion as annual profit.

 

[TenTimes]

I think there is a lot of merit to the posts suggesting that Ballmer is making a vanity purchase and that he is so rich that it goes beyond numbers. I think there are a lot of things factoring into the decision as already mentioned here. I am sure the guy wants to be an owner of two championship sports franchises, as well.

I think you're confusing Ballmer with Paul Allan (owner of the Seahawks), another Microsoft guy.

Another factor might be that Ballmer has made plays for basketball franchises in the past, but hasn't been able to buy one (yet).

He also might have some silent backers in Seattle that want to see a team back there.

Even the ever optimistic (snicker) people of Seattle know there's no chance of this.

right?

 

[Mister Martie]

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.

Call me crazy, but I'm guessing Ballmer knows a little bit more about the team finances, and business in general, than you do.

Numbers are numbers. I know how to add and subtract.

Yea ok.You have absolutely zero idea what their books are really like.

I am going by people who regularly report on the profitability of sports franchises and are generally considered well informed on the subject. Where are you getting your information?

What people are those?

The Clippers' local TV deal and the NBA's national deals both expire in the next couple years and both are in line for massive jumps. If you are getting your information from people who fail to account for that, their opinions are worthless.

Yeah I am not talking future here. Do you know the future? I could use the lotto numbers.

Yeah, who would project future cash flows when valuing a company?

 

[Alonzo Mosely]

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.

HFS, that's rich.

 

[Fennis]

Clippers new logo: https://scontent-b-sjc.xx.fbcdn.net/hphotos-xpf1/t1.0-9/10378924_10152166519463932_6785116873373979587_n.jpg