What will Teams earn

[GermanDunk]

For example the Mavs. What comes in if the sell out a game ?

[MavsX]

They earn money.

[bernardos70]

Do you mean how do teams earn money? Or how much they get for each sell out? I really can't tell you, but the bulk of revenues comes from TV contracts I would imagine, and licensed merchandise selling.

As an aside, Mark Cuban claims he loses money every year with the Mavs. Some believe it, some don't. I for one do believe him, I still believe he's operating on a loss, simply because of our huge payroll.

[Flacolaco]

Originally Posted by bernardos70

I still believe he's operating on a loss, simply because of Michael Finley.

fixed

[chumdawg]

If anyone believes the Mavs are operating at a loss, they are naive. First off, arena deals *are* a very large factor in ongoing cash flow concerns. Bad leases or bad arenas--see Portland and Seattle, respectively--can deal a severe blow to the financial statements. The Mavericks, luckily, have a sweetheart of a deal at the AAC. Not only do the Mavs and Stars collect all the revenues from their own games (while Portland gets next to none, I believe), but they split the revenues from every other event at the building as well. See, even if the "Dallas Mavericks basketball franchise" posts a loss, to know the real picture you have to consider what "Center Operating Corp." earns--the wholly-owned subsidiary of the Mavs and Stars that collects all the revenue from arena operations, including the lease payments (don't you figure those are favorable?) from the Stars and Mavs themselves.

But all that aside, ongoing cash flow is not the primary business concern for franchise owners. The big deal is how much the franchises are appreciating in value. Cuban has made a very, very pretty penny on his investment in the Mavs. He may be able to show a loss on paper, for the Mavs NBA franchise side of things, but he's profiting handsomely all told.

Then again, he did admit last year that the even the Mavs franchise showed a profit.

In short, all is VERY good in Mavsland when it comes to profits. (Why else would Cuban be buying up as much of the outstanding Mavericks stock as he can?)

[bernardos70]

I'd believe you, chum....... if you weren't so biased against Cuban. Not your fault, though, I understand. You could say the inverse is true in my case.

I will not say you're incorrect, it seems you're very well informed how operations work in Mavsland, but I can't trust you completely on the matter.

But does it answer our friend and thread-creator's question?

[GermanDunk]

Thanks a lot guys for the interesting answers.

The main point i wanted to pick out is: How much brings a sold out AAA ONLY looking at sold tickets ?

[chumdawg]

Originally Posted by bernardos70

I'd believe you, chum....... if you weren't so biased against Cuban. Not your fault, though, I understand. You could say the inverse is true in my case.

I will not say you're incorrect, it seems you're very well informed how operations work in Mavsland, but I can't trust you completely on the matter.

But does it answer our friend and thread-creator's question?

As for the OP's question, I don't know the specifics. Some of the gate goes to the visiting team, I do believe. But other than that, it's going to be hard to quantify exactly what dollars go to the home team. You are going to need to know what stake the home has in ticket sales, concessions revenues, parking revenues, and so on. And even if you assume they get 100% of it, still how are you going to know?

I'm not sure exactly what the OP is asking, in other words. However, it is safe that in the cases of most teams, the answer is "a lot more when they sell it out than when they don't sell it out."

[Pirate]

Originally Posted by GermanDunk

For example the Mavs. What comes in if the sell out a game ?

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.

[thereaper]

They haven't made a profit since Mark owned the team due to player payroll. Almost did in 2006 due to going all the way to the Finals, and certainly thought they would last year as they were expecting to at least get to WCF again, but as we all know that didn't work out so well...

If they make a long playoff run this year they might break even or make a profit, but not much. Mark doesn't run the Mavs as a moneymaking business, at least not on the basketball side of things. He wants the team to win first and foremost.

Chum is right about one thing though, Mark will make some money once he sells the team, whenever that is, and he and Hicks probably make some money off the COC deal, but not the Mavs entity itself.

[chumdawg]

The last NBA expansion franchise garnered, what, $350MM for the league? Just stop down and ask yourself why businessmen would pay $350MM for the right to lose money year in and year out.

That's really all you need to know, right there, if you will think about it. The NBA is a money-making operation, as of course you would expect it to be if you weren't held to a romantic notion of a diehard owner who wants a championship at all cost.

You can't sell franchises for $350MM if all those franchises are going to do is bleed money.

Let's use some common sense here.

[GermanDunk]

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.

Wow - this answer is great to read. Thanks for putting that effort in it.
I obviously didn´t really think over when i posted. Seems as if i opened something like pandoras box. My taxpayer.english is not yet conditioned enough to follow. But i got the main issues for sure. I have to translate to much words to get the key of al sentences. But i will do that an check out every line again.
So let me say thank you all helpers so far and let´s meet Detlef tomorrow.

[thereaper]

Originally Posted by chumdawg

The last NBA expansion franchise garnered, what, $350MM for the league? Just stop down and ask yourself why businessmen would pay $350MM for the right to lose money year in and year out.

That's really all you need to know, right there, if you will think about it. The NBA is a money-making operation, as of course you would expect it to be if you weren't held to a romantic notion of a diehard owner who wants a championship at all cost.

You can't sell franchises for $350MM if all those franchises are going to do is bleed money.

Let's use some common sense here.

People that have upwards of 1.6 B in cash don't deal in the same common sense world that you and I live in.

IMO - Mark still owns the team because he needs them for uses other than basketball. He considered selling the team back in '06 but didn't. Ask yourself why. If Mark sells the team who is he? Just another jackass with alot of money. Does Dancing With The Stars care about him if he's not that "crazy NBA billionare owner"? Does what he says on his blog carry as much weight? Do people still beg him for interviews?

This is why people buy sports franchises. The majority of them DON'T make money, and as was already mentioned, what you do make in profit gets partially shared with the rest of the league anyways.

Another thing to remember is that Mark doesn't own 100% of the team, so therefore if the Mavs post losses, he isn't the only one out of pocket.

[EricaLubarsky]

I've head that some teams themselves lose money. With the Mavs huge payroll I have no idea if the team itself earns money or burns it. I do know for a fact that arenas roll in the big bucks and Cuban is making a profit by having his finger in both.

[chumdawg]

Originally Posted by thereaper

People that have upwards of 1.6 B in cash don't deal in the same common sense world that you and I live in.

I think you'd be surprised. They didn't get to having so much money because they were fond of ways to piss it away.

IMO - Mark still owns the team because he needs them for uses other than basketball. He considered selling the team back in '06 but didn't. Ask yourself why. If Mark sells the team who is he? Just another jackass with alot of money. Does Dancing With The Stars care about him if he's not that "crazy NBA billionare owner"? Does what he says on his blog carry as much weight? Do people still beg him for interviews?

You are spot-on here. (Except for the part about considering selling the team.) But that still doesn't mean that he is losing money while he does it. Did PT Barnum lose money while he was making his name in the circus? Has Jerry Jones lost money on the Cowboys? Jerry Jones is spending, what, five or six times what he spent to buy the franchise on his new stadium? You think he's not doing alright with his NFL business dealings?

This is why people buy sports franchises. The majority of them DON'T make money, and as was already mentioned, what you do make in profit gets partially shared with the rest of the league anyways.

The majority of them don't make money? Then why was the NBA able to sell its expansion franchise for the healthy sum it received--to a group of investors, no less, not a megalomaniac who wanted an outlet for his media hunger?

I think you are pretty naive to believe that a league that commands billions of dollars in revenues is content to lose money in the process.

Another thing to remember is that Mark doesn't own 100% of the team, so therefore if the Mavs post losses, he isn't the only one out of pocket.

As I think I mentioned upthread, Mark Cuban has been steadily buying up as much of the Mavericks as he can. Now ask yourself why a guy who is losing money but getting all the benefits of ownership that you suggest would feel the need to lose even more money while still getting exactly the same benefits. This one comes right down to common sense, no matter how you want to look at it. Once Cuban had majority interest he had all the notoriety that you mentioned. The only rational reason for him to acquire additional interest would be that he saw it as a good investment.

[thereaper]

Originally Posted by chumdawg

I think you'd be surprised. They didn't get to having so much money because they were fond of ways to piss it away.

I think you'd be surprised at the things Mark pisses money away on...

The majority of them don't make money? Then why was the NBA able to sell its expansion franchise for the healthy sum it received

I didn't say they wouldn't make a profit - just not in day-to-day. Ask Perot Jr. how good an investment the Mavs were for him. (not even counting Victory)

I think you are pretty naive to believe that a league that commands billions of dollars in revenues is content to lose money in the process.

I think you're naive if you think the business of professional sports is run like business in the real world. Half of the company IS run like a regular business, but the other half (BBall Dept) is not.

As I think I mentioned upthread, Mark Cuban has been steadily buying up as much of the Mavericks as he can.

Yes, you mentioned him buying Maverick stock - which doesn't exist. When did he buy more of the team recently and from whom?

[Underdog]

I don't think a single professional sports franchise is capable of losing money... Maybe at the door, but the airtime sold on the networks & the merchandise sold to folks who think $85 is a good price for a shirt with someone else's name on it more than covers payroll... That's why you see so many eternally awful sports franchises - because owners know that they can tank season after season and still make money (how else can the Detroit Lions & LA Clippers still exist after their legacy of awful? If pro teams were capable of losing money, those guys would have gone out of business decades ago!)

[Dim499]

Originally Posted by chumdawg

The last NBA expansion franchise garnered, what, $350MM for the league? Just stop down and ask yourself why businessmen would pay $350MM for the right to lose money year in and year out.

That's really all you need to know, right there, if you will think about it. The NBA is a money-making operation, as of course you would expect it to be if you weren't held to a romantic notion of a diehard owner who wants a championship at all cost.

You can't sell franchises for $350MM if all those franchises are going to do is bleed money.

Let's use some common sense here.

I think the idea is to break even every year, with the franchise value going up every year. According to "Breaks of the game" in the sixties franchises were sold for $200,000, in 1980 Dallas bought in for the insane amount of $12 million. Today it's at $350 million, in only 10 years it might be $500 million.
So even with Cuban having more expenditures than income year to year, he's still making money, even faster than with real estate at stocks I would think.

[thereaper]

Originally Posted by Underdog

How else can the Detroit Lions & LA Clippers still exist after their legacy of awful? If pro teams were capable of losing money, those guys would have gone out of business decades ago!

Wins and losses do no not equate to profits and losses:

http://espn.go.com/nba/s/2003/0417/1540659.html

With the exception of Nash, Cuban (sometimes to his detriment) pays and keeps his players when their contracts are up, and in fact usually extends them before their contracts are up. The Mavs are going to be over the cap for the foreseeable future, so the question becomes how far do they want to be over and how far into the playoffs can they get to compensate.

[GermanDunk]

Originally Posted by Dim499

I think the idea is to break even every year, with the franchise value going up every year. According to "Breaks of the game" in the sixties franchises were sold for $200,000, in 1980 Dallas bought in for the insane amount of $12 million. Today it's at $350 million, in only 10 years it might be $500 million.
So even with Cuban having more expenditures than income year to year, he's still making money, even faster than with real estate at stocks I would think.

But the NBA is a real cash-cow. The profit for the teams must be enormous

[GermanDunk]

Originally Posted by Underdog

I don't think a single professional sports franchise is capable of losing money...

For example: Italien soccerclubs owe about 1 bn $

[nikeball]

maybe this is why Cuban gets so angry everytime we lose in the playoffs..

less money for him to collect in the postseason.../cry

[Silk Smoov]

Originally Posted by nikeball

maybe this is why Cuban gets so angry everytime we lose in the playoffs..

less money for him to collect in the postseason.../cry

You got it There is big money with the networks broadcasting games. Just look at the Yankees, they keep all the profit, because they own their own network. I wonder if Cuban will turn most of the Mavs games over to HD in the future?

[GermanDunk]

Originally Posted by Silk Smoov

You got it There is big money with the networks broadcasting games. Just look at the Yankees, they keep all the profit, because they own their own network. I wonder if Cuban will turn most of the Mavs games over to HD in the future?

So maybe Cuban can provide links for us...

[MavsX]

in the end, the NBA is a business. They are IN business to make money. Simple as that. If you aren't making money, then you're losing money. And if you're losing money, you sell you're shares, chalk up the loss and go a different direction....