|
Originally Posted by Pirate
If? They sell out every game.
It's hard to break down all the details because there are so many revenue streams, but also so many expenses that eat up that revenue. But to an extent, someone else already does all the math, someone with a stake in making sure it all gets counted: the players.
The Players Association and NBA examine the revenue from all team resources (tickets, parking, merchandising, licensing, concessions, parking and so on). Then players and owners split it (via collective bargaining) using a formula, using ALL revenue, that sets a luxury tax line (designed to discourage owners from spending more) that still allows the owners to make $4-5M over the course of a season (41 home games) if they spend a dollar less than the tax line on salary. If they keep payroll below that, they make even more. And they get to decide if they want to spend very much or not.
But once they get to that tax line, it's not designed to leave a huge pile of profit left over, and if they still keep going and cross that tax line, they forfeit league-shared revenues, forfeit any share of tax revenues, and start paying tax themselves, so they have a hard time breaking even past that point.
All of that ignores playoff income, and insiders tell us those revenues (from all sources) net an owner about $1M per home game. So if an owner spends just below the tax limit, a deep playoff run will make way more money for an owner than the whole year does.
To use last year as an example, the Mavs went past the tax line so they forfeited their share of league revenues, and their share of tax receipts. They also paid tax, but with Finley's salary exempt it wasn't as much as you'd expect (about $7M). Finley's deal itself didn't cost them as much as you'd think either that year because the pay is spread over a jillion years (counting part of the pay from the prior year, and part from this, $2M is a good guess of the outlay that year). Unfortunately they didn't have much of a playoff run. Did they really make money? Very questionable.
Doing the math
With payroll just below tax line +$3 to +5M
Playoffs (3 games) +$3M
Loss of shared revenue -$3M
Taxable payroll above tax line -$7M
Finley non-taxable outlay -$2M
Tax on excess payroll -$7M
Those numbers may be a tad off but they're in the ballpark, because the players and their lawyers and accountants look at the revenues closely and make sure the margins are that thin.
I think I heard the same quote chum did when Cuban was asked what he made, and he gave a very slick answer that made it sound like he was saying he made money on the Mavs but I think he was deftly dodging the question with his wording. The man has something like 50 businesses, and even if the Mavs lose money he has his movie company and hd.net and all those others so he's not worried. I think they asked him if he was fed up with losing money with all the salary, tax, combined with not winning a title, and was he ready to bail out and buy the Cubs or something, and he vaguely but cheerily said something like "I'm doing all right, the fans don't need to worry" which ended that line of questions. And in all his businesses together I bet he does indeed make more money than he can spend - but I'd bet he lost a pretty good chunk on the Dallas Mavericks and related last season.
|