RebKell's Junkie Boards

[ClayK]

So I talked to someone who has a closer connection to the real financial situation inside the league than anyone we usually talk to, but because it was an informal conversation I'm not going to say who or the connection involved. It was with someone far from their home base ...

1) Most teams lose "millions" a year. A couple break even, and one makes $500,000. The Sparks lose money.

2) The NBA and/or WNBA are encouraging NBA teams to start WNBA franchises, so there is support for the league.

3) Arena dates are important, but those NBA franchises that run busy arenas don't have the same need to fill 17 dates with WNBA games.

Conclusions:

1) Any new owner must be ready to lose $10 million in a five-year span, even with the ESPN money. That might not happen, but it's certainly possible.

2) The franchises do not have any value in the open market, given the financial outlook. The Liberty experience is further evidence of this, and it means that unlike with the bigger sports, owners cannot hope to offset annual losses with increasing franchise value.

Nothing new, really, but I was hoping for better ...

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Oṃ Tāre Tuttāre Ture Svāhā

[Randy]

Really curious about which one is making $500 k per year. I'd sort of guess either Phonix or Minnesota. Both have good box office numbers and seem to have sponsors as well.

This all kind of puts the question of player salary as % of revenue (about 20% v, 50% for the NBA) into perspective. It is quite likely that even if the players weren't paid anything most of the teams (at least the ones now losing millions) would still be losing money.

[pilight]

[calbearman76]

Even the question of how much teams make or lose is quite subjective. So many accounting questions go into that determination, and it is quite difficult to evaluate the assumptions being made. I do think there are a few very important takeaways which I would word somewhat differently from Clay but are on the same wavelength.

1) The WNBA is not yet financially viable as a moneymaking venture in and of itself.

2) There is (indirect) value to the WNBA that is recognized by many organizations, including the NBA, ESPN, Hotel/Casinos sponsors and owners who see sports ownership as a passion project, but whether that value can be sufficiently monetized to make up for the direct losses is not yet clear.

[wbj]

Clay is 110% correct - unfortunately. Without that ESPN money the NBA would be forced to more directly subsidize the league beyond the fact that it already provides heavy staff and legal support worth real money. The math was a lot worse before that TV deal (those of us who ran teams back then did not have that gift) but now at least NBA owned teams can see it as not so painful if they own their arena....but the flip side as Clay noted is that concerts and other events pay better and the NBA side is so valuable now that the W can also simply be viewed as a nuisance/distraction not worth the trouble if the owners do not care about the mission aspect of the league....

[pilight]

[myrtle]

[ClayK]

[Richyyy]

[root_thing]

If the Liberty really is such a big money loser, MSG should be happy to unload it at any price. Is that the case? The next question is why would anyone want to buy it? But from the rumors floating around, there seems to be genuine interest from at least one party and maybe more. So what conclusions do we draw from that? If WNBA teams cannot support themselves in the foreseeable future, and perhaps need to be supported in perpetuity, doesn't that resemble the non-profit institution model where benefactors fund organizations based on belief in a cause? Maybe WNBA teams should convert to non-profit status. We can treat them like museums, symphonies or ballet companies -- but with a populist twist. And while we're looking at business models, why do overseas teams have sponsors who are not only willing to support women's teams but also to pay players much higher salaries? We know they're pretty much footing the entire bill because a lot of these teams play in what looks like high school gymnasiums. Not much box office potential there. What tangible benefits do these companies and municipalities get from sponsoring a women's basketball team? Can anyone answer these questions? I think it's just howling at the moon to pretend we know what's going on.

As for writing off losses, it's pretty easy to put the team under another company or shell corporation. However, those tax losses just became less valuable since corporations have significantly lower rates under the new tax law.

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You can always do something else.

[ClayK]

The non-profit angle is a very interesting one ... the league could be non-profit, but the entities managing the individual teams could be paid for their work, and still be for-profit operations.

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Oṃ Tāre Tuttāre Ture Svāhā

[pilight]

[Bob Lamm]

[Bob Lamm]

[wbj]

It’s actual dollars. NBA teams can decide who loses the money (and they do benefit from sharing some personnel) but independent teams have no shell games and it is actual dollars. Significant actual dollars as previously stated. CT is more like a NBA team due to arena ownership....

[pilight]

[Shades]

The Liberty probably make a profit (but who knows... their front office is bloated), it's just not enough of a profit or a return on investment for a corporation that owes maximum profitability to it's shareholders.

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Nnekalonians 1:14 - Thou shalt not accept that which is not earned

[tfan]

I think that in terms of "losing real money" the teams that would definitely qualify for that are:

LA Sparks post-Lakers ownership [Carla Christofferson, Kathy Goodman] and [Paula Madison, Carla Christofferson, Kathy Goodman]
Houston Comets post-Rockets ownership
Sacramento Monarchs
Charlotte Sting
Cleveland Rockers
Portland Fire
Miami Sol

The Chicago Sky should also be in there, or else Michael Alter has to be lying. The Atlanta Dream had their first two owners bow out quickly so they don't seem profitable. The Tulsa Shock were moved (with a jersey deal), implying unprofitability. The Wings don't appear to have better attendance than the Shock and have no jersey deal. Have they found some other way to be profitable? The Indiana Fever owner was threatening to sell if some demand wasn't met (better attendance I think) which doesn't make it sound like they were profitable then. Their announced attendance last year was 7,538. They have only had 3 years with announced attendance lower than that [2006, 2007, 2015].

Found this article in looking for one of the Fever owner threatening to sell:
Former Fever star Tamika Catchings now owns Indy tea shop

The Liberty being sold as a "profitable but underperforming asset" would depend on how much they can be sold for and what MSG would do with the money otherwise. More likely a reason for getting rid of a "profitable Liberty" would be to get them out of MSG so more profitable events can be held there. (I suppose that rationale could be applied to any NBA-team that owns its' arena that folded). But if they are profitable there also needs to be an explanation for why Dolan would put them up for sale and say they are unprofitable and at the same time try and tout the foundation that has been built for a new owner.


But what happened to: in 2010 having Donna Orender announcing the "first cash flow positive team in league history - Connecticut Sun", then reports of a profitable Sun (if I remember right) and some other team, to having it be said (without names) that 6 teams in the league were profitable? When Joe Lacob was interviewed in January 2014 when he was willing to buy the Sparks he was asked: "Where is it (WNBA) successful, where is it making it?" He replied: "Well, I think actually, I think most of the teams actually make a little bit of money or break even."

[Randy]

When you get right down to it, paraphrasing Jim Cramer "WE KNOW NOTHING." We don't know gate revenue, we don't know sponsorship revenue, we don't know arena rentals, we don't know salaries for team admin staff, we don't know travel and living expnse, we don't know profit and loss, we don't know what taxes or aren't paid, and while we think attendance numbers are overstated, we don't know the actual numbers. About the only thing we do know is that salary must be between the league minimum team salary and the salary cap. We have one equation with many unknowns and it can't be solved.

My thought is - if owners make money or lose it, it is their concern - not mine.