Rockets is the 4th highest valued franchise in the NBA per Forbes

yao and tmac will do that for us.

 

Wow, $35.5M Operating Income!!!

Can we depreciate some of our players/contracts (MoT, Spoon?

 

Great, so I guess that means that Le$ won't mind going ABOVE the LUXARY TAX threshold to take on salaries so we can add ASSETS to our team to make it competitive!

Thanks Les!

 

Player contracts are intangible assets. They are amortized, not depreciated. $35.5M Operating Income in this case is also razor thin, which tends to prove the owners' claims that basketball in general isn't doing well.

 

Well according to this website, we are spending 50 mill. Man, Juwan Howard is signed to forever. Mo Talyor is making some $$$. I don't think this is updated, didn't we sign T-mac to an extension?

 

OK.

Did you not read the rules of the board? "Posts must be made in English."

lol.

You'll have to explain what you just said. In particular: intangible assets, amortized and depreciated needs to be translated into dummy, for finanially challenged like myself.

 

According to http://www.**************/salaries.htm, Rox ranks the 20th on players' salary. So Rox is making money according to the forbes and hoopshype numbers.

 

hoopshype dot com.

 

Without going too far off topic, the skinny is, according to Generally Accepted Accounting Principles (GAAP), expenses should be matched to the revenue they generate. In this case, player contracts (and therefore their service) generates revenue (ticket sales, TV contracts etc). So they should be matched with those revenues.

The way they do this is allocate the entirety of the player contracts over the life of the contract. They do this so they can calculate the net income of each fiscal year.

There are two types of assets, tangible (one which you can touch physically, like a basketball) and intangible (such as a player contract, aka a promise, which you can't touch physically) which basically guarantees a right (in this case the guarantee of the service of the players we signed. Intangible assets are allocated through amortization.

 

Btw, the $35.5M is before income taxes. So assuming no below the line items, the Rockets' net income is only around $21.3M (assuming 40% tax rate).

 

Ok.....uh huh......I see........physical, yes....
....right......

I still don't fully understand. It doesn't matter too much, I'll take your word for it that Les is not making a killing.

Thanks MFW.

 

No matter what, Rox has 35.5mil as operating income. The league-leading Bulls has 36.8. Rox is right there with the leader.
All these numbers are on the same website.

 

True. However, they are certainly subject to an impairment test. In the case of Mo and Spoon, those intangible assets are SEVERELY impaired. Time for a write-down.

Debit Impairment Expense

Credit Intangible Asset

 

The Mavs has operation income -33.6 mil. No wonder Cuban didn't sign renew Nash's contract.

 

yall are completely missing the point of having a sports franchise.

its like buying stocks that dont give dividends. you aren't expecting money every year. as long as you break even your fine. lets say les sells the franchise in 3 yeras at 400 mil. in something liek 15 years he made a 500% profit. thats warren buffet numbers....

 

There is no guarantee that the value of sports franchises will continue to rise indefinitely forever. There is nothing wrong with expecting a positive annual income or cash flow from running your franchise.

 

Les IS making a killing. (Along with most other owners playing in taxpayer funded arenas where the owners keep the arena revenue.)

Regardless of whether his $35.5 million operating income is "slim" or otherwise (seems pretty healthy to me), the VALUE of Rockets has increased from the $85 million he bought it for, to $369 million today. That is over a 400% return on investment over 11 years. To put it another way, Les has made nearly $26 million a year on just the increase in the franchise value alone.

Les isn't close to hurting.

 

sports franchises dont make money annually. nothing significant. a 300 million dollar company netting you 15 mil a year isn't anything to write home about.