Rockets, Alperen Şengün agree to 5-year, $185M deal

I mean, have you considered that it is not basketball and pro sports that is broken, but literally every other job in America?

The NBA is structured so that it guarantees its 450 most important and irreplaceable employees profit sharing; every dollar that the league makes off the back of the players is split 50-50 with the players. The better of an on-court product the players produce, which is a direct result of how hard they train, how much they study film, how much they invest of their own personal funds into their health, the more money everyone makes. The more they self-promote and grow their individual brands, the more volunteer work and press they do, everything funnels back to them in an even split.

Shouldn't that be the ideal that we all strive for? I would guess that for the majority of us who don't own our own businesses, if I hustle my ass off and save my company millions of dollars through being good at my job, I sure as heck am not going to see half of that returned to everyone as an end of year bonus; it's going to shareholders and CEOs first, and I'm getting pennies back.

 

Why would what other people make not make you want to watch sports anymore? It is simply a revenue share formula where players are now getting a decent cut, vs it mostly going to the ownership before. Keep in mind that up until a few years ago most NBA teams did not even make money, they were lucky to break even, they were considered trophy assets. They would literally invest hundreds of millions of dollars to risk losing money and be lucky to break even, that type of risk warrants a reward if things move in the right direction which it has. I would be more upset at companies that do not share profit with their employees fairly.

 

This is not remotely even close to being true.

 

Shhh let him cook lol

 

Lol it 100% is, up until a few years ago only the Lakers and 4-5 teams were barely profitable. The value in owning a team came from the appreciation of the team, not from earnings. The Lakers were worth $2B several years ago w a $150M net income and that was because their merchandise sales were significantly higher than any other team. Excluding the merchandise and TV deal, teams would lose money. The new TV deals are what allowed teams to make money recently along w an expansion of approved sponsors (alcohol and gaming industry). You have no idea what you are talking about, this was common in a lot of sports. The profit from owning a sports team is not going to be the same as owning another business with a similar value. Multiples for sports teams will always be higher than other businesses. It was not until the last 6-7 years that more teams began being profitable. The Rockets were one of the few teams that were profitable in the 2000s primarily because of Yao and Chinese sponsors. Don't speak on things you have no knowledge on.

Any sports team owner can invest in just about any other business with the same capital, and have a higher IRR if holding. The IRR expansion comes from the sale. These are still trophy assets because there are only 30 of them available, and you would have a much higher return investing in other businesses. The Rockets today would sell for $4.4B, investing the cash in a fixed income security at 5% annual return would net you more than any team in the NBA was making a few years ago, and maybe even still today.

 

You're just insanely wrong - please point me to the financial statements of the 25 NBA teams "losing money" in the "the last few years"

 

The Syracuse Nationals were the last NBA team to post an operating loss when the team doctor overspent his cigarette per diem in ' 53.

 

I’m surprised that Alpi took that deal, and thrilled at the same time. The contract is great for the team, of course, but as @heypartner posted a couple of times, Sengun might have done better in the long run by signing Green’s contract. I think the big fella is going to be a star. We lucked out. The incredibly weak Turkish currency may have also played a role in Alpi taking the deal.

 

@MadMax @SamFisher You know they are private entities, right? lmao Just asking to be pointed to financial statements of NBA teams just proves you are out of your lane, I doubt you would even be able to read a financial statement if provided. Actually I was being overly optimistic that net operating Income increased since the 2000s for the top teams, it actually has not while values have sky rocketed, meaning that multiples have expanded.

The most recent year reported still shows the most profitable team only making $169M in OPERATING INCOME, this is income BEFORE DEBT SERVICE, even after all of the new deals. We know Tilman and others have used leverage to buy teams, if you were to buy the team with the highest operating income today with debt , the NYK it would cost you $6.6B, rates for a business like this would be 7%-8% , that is $530M in interest expense each year, which is below the operating income line. So you are not even generating enough income to beat a fixed income investment. $169M (Knicks net operating income) - $528M in interest expense= -$359M in Net Income if you buy the team today using debt. Without debt, there is no LBO opportunity and no one looking to make money is going to invest in something that can not provide a return over the debt service. There are teams that make money because they dont have a ton of leverage, like the lakers being last sold for $20M obviously has a chance to make $150M a year, but as I stated in my other post, teams are trophy assets, we are talking about 40X+ EBITDA multiples here, no one in their right mind does this to make money from operations.


Explain to me how this is insanely wrong that NBA teams are not trophy assets? Im guessing you are not in this industry or even close to it, and are thinking that revenue = profit. I gave you two simpletons a ton of real data in my last two posts, all you are saying is it is wrong. If you did a google search and were able to do basic math, you would know that buying any NBA team using leverage is not designed to be profitable at current valuations.

https://www.statista.com/statistics...ational-basketball-association-teams-in-2010/

 

Calling those trades a fiasco is greatly overstating it. We dumped borderline NBA players, nbd.

His point stands: despite much complaining here, Stone’s trades are not some glaring weakness.

The Harden trade was great. The trade up for Sengun was great.

 

LMAO operating profit/loss is not net income. There are a handful of teams that are at a negative operating loss today, that is even before debt service or taxes. You literally would not be able to buy a single NBA team w debt and actually have positive net income given current rates, valuations of teams, and operating profit shown below.

https://www.statista.com/statistics...ational-basketball-association-teams-in-2010/

 

should've gone for 400mil/5 years.

@AroundTheWorld would

 

The problem here is you're treating it as a regular asset (focusing on IRR) when it's nothing like that. This business is not on the free or semi-free market so not all the usual patterns will emerge.

Yes the IRR is somewhat lower than other assets in that range, however there are no assets in the world where you can easily expect 50% asset appreciation in a couple of years practically guaranteed on billions of dollars.

Most important of all, the 50-50 split is a sham and it will continue to change in the direction of the players. The owners essentially provide financing. The players are the majority of the product. Financing is not worth a 50% cut in perpetuity. They are holding the players hostage through the artificial fear of franchise brand equity.

However, that brand equity would dramatically lose value if some recently retired legends took a few big name players and started a new league that can be financed for 15%. In fact that's kind of how the NBA started. I believe that's where it will go again. At some point some smart player will come to CBA negotiations prepared to take pay cuts in a league of their own. That will prompt these dumbass owners to accept less than 50% until we reach something closer to what the free market would dictate.

I can't believe you're arguing Lebron James and an NBA owner should go half-half. It's practically impossible to replace these players. There are tons of billionaires who can replace any current one. It's not remotely comparable. This thing should belong mostly to players and brand equity should mostly belong to the fans. The financiers got in early and have played hardball but they are the ones who should thank their lucky stars they found a place to make guaranteed 50-100% returns on billions of dollars while using the players' image rights to promote themselves.

 

Didn't read all this but the reason why you couldn't point to *a single team* that lost money is because there aren't any and haven't been for decades

Owning an NBA team is a risk free enterprise - it's literally impossible to lose money doing it.

 

That is why he is Around the World and not just Around the States.

/thread.

 

I have no horse in this race, but in 2017 almost half the NBA was losing money according to this article: https://www.espn.com/nba/story/_/id...arly-half-nba-lost-money-last-season-now-what

Last year I think the Nets were the only team to lose money.

 

currently breh is only around the states. quite disappoint