Leslie Alexander puts the Houston Rockets up for sale

99ers with the Picasso reference
Drops art history on them baroque posters

 

Les is a genious. He is literally going to sell the team at an all time high. He'll make a giant profit and make enough money to cover the luxury tax and all. Les you should be teaching the kids of tomorrow your business savy. I hope we get a new owner that has the ability to think outside the box the way Les can.

 

is the price negotiable? i'll need to check my savings account.

 

if this guy buys the rockets then I might need to whip out my akuma

 

I have a feeling Les is selling to make up for what he lost in divorce and more.

 

I think it is, but highest bidder tend to get it in the end.

 

I just got done checking my ATM balance, apparently I'm about 2 billion short from it. I wonder if the bank will loan me the money to buy the team? I will ask them tomorrow and let you guys know what they said.

 

It's good investment. They should do it!

 

Football is not a good comparison and value is not judged by popularity.

Real Madrid and Barcelona are competing against hundreds of Spanish clubs in their domestic leagues and cups, and against thousands of European teams in European competitions. There are at least 7-8 other leagues with equal or greater viewership. When you own an NBA team, there is no second division and there is no pan american competition and the next best league is dramatically weaker. You are one of only 30 options in the NBA, no relegation from the league, and the next best competition is the Euro league which still struggles in generating revenue. And generating revenue is the big difference here. Further, the billionaires who own these teams are constantly using their money to convince state reps to force through legislation which makes residents pay for the stadium aside from paying for tickets and merchandise. For example, the toyota center cost ~ $230m to build, and people's taxes paid for $180m of it while toyota paid $90m for naming rights. Despite that, Les keeps virtually all the income from the asset. That's an incredible proposition for an asset that is a monopolistic money maker - there are only a handful of facilities in the gigantic city of Houston that could host the kind of events that can be hosted at the TC.

The value of a franchise equals the cost of its current assets + all the expected revenue minus costs + potential growth. It is FAR better to own 2-3 NBA teams than any of Barcelona or Real Madrid from an investment perspective. As you said, the cost of Barcelona and Real Madrid's fame is unsustainable losses and endless bribes to officials to constantly push away fair play regulations. And they are exceptions. 99.9% of European football clubs aim to make money, which is where the Madrids and the Barcelonas get their players from. Teams who are looking to make a profit from their assets. If those teams were in it for fun or to win it, they would not constantly be producing players to eventually sell to big clubs.

 

The question if you are aiming at investment while counting on appreciation of value over time is to understand if the value is real or are the prices overblown.
Just a few years ago almost all the NBA team prices were (exept lakers and knicks) estimated under 1 billion by forbes.
Then came Balmer and the TV deal and changed the game.
ESPN is losing crazy money over that deal (and for just being lousy in general) and viewers abandoning cable tv regardless.
Granted the NBA is in a good state, and run by real professionals like a buisness (not like europe where its all connected to power and politics).
And the Rockets management are one of the best in the leauge and kept the Rockets on a + Neto revenue over the years so lessening the risk element here.
However I do think the the price tag of the NBA teams are non realistic buisness wise. An owner that will come in will have to be willing to get much less on his investment than most investment of that size. His motives will need to be other than "make money". Some like Gilbert can use the free publicity and power positiin to influence on their other buisnesses. For others it can be penetration to the heart of the American public market, and for some maybe just an adventure/ego trip. None of it would be from a charity point of view, thats for sure, but again I doubt how much of it would be from a buisness stand point.

 

I think @heypartner clarified that part so I didn't include it in my response. Even the worst run franchises, over short and long term, through economic crisis and upturn - they are almost always outperforming the market for similar sized investments under all these circumstances.

And it doesn't require any effort either other than to hire an experienced operator of an NBA franchise and stay silent. The fact that we see the owners acting like they're passionate about basketball and they don't care about losses - this is mostly marketing. Those guys didn't get rich by being stupid. Most owners will forget this hobby the moment it doesn't look good in their investment portfolio.

In Les' case, he is predicting where the market is headed and where his life is headed. There is an economic crisis coming and he just wants to be a fan now. He gets to choose who he's selling to, and the management is so incredible that a new owner would be an idiot to tamper with it. He will enjoy this team regardless of whether he owns it as an investment or not, and the asset is peaking right now. The price is inflated. The new owner will not be happy with their investment unless the Rockets manage to win it all.

Inflated assets get traded all the time. That doesn't meant the buyer who's left holding the inflated asset did not intend it as an investment. If you are truly a hobbyist, then you wait till these prices come down. And Les would not be selling right now if the prices were not coming down imo.

 

Let’s not forget the HUGE tax benefits of purchasing and owning a sports team. The buyers/owners of these businesses value the tax savings generated by purchasing and owning a sports team. This is a major contributor to the rising prices of sports teams and the reason sports teams are exchanging hands more often now.


On the purchasing side, the purchase price of a team can be amortized over 15 years to create a tax deduction against current income. So the more you pay, the more you can write off. Steve Ballmer paid a premium price because the acquisition allowed him to reduce his tax bill by offsetting his current income as he realized some of his capital gains in MSFT.


On the ownership side, player’s salaries also create a tax shelter. The salaries are not only deducted from income as a business expense, but also included in depreciation and amortization line to create a paper loss. These ‘losses’ can then be passed onto the owner’s personal income tax forms if structured properly.


This is why I think the Rockets will trade at a record price to a US-based owner.

 

Thanks. That's an angle I did not know about.
Just hope it will sell sooner than later and will not drag too long.
To be honest, I don't care where the new owner will come from as long as he'll be willing to spend.

 

Any news on this front?

 

This! I don't know why people really think this team is going to go for 2 Billion and if it does the chances of it being bought by a single person is almost zero.

Not only is the list of people that can afford this investment small but you would have to think that half if not more of those people don't even give a damn about basketball.

So something's got to give... either the price goes down or we are dealing with a group that could be volatile.

 

Someone call Bill Gates and Oprah please.

 

Does your bank have that money at disposal or loans from bigger banks?

 

The G League is insulted,
and threatens to change its name.

 

plz put the sale on hold, give me 34131years, will bring my money!