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Financial incentive to win a title

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vj_74

Well-Known Member
This is a legit quetsion I have had for quite some time. For a lot of teams, especially the small market teams like the Jazz what is the financial incetive to win a title?
Cuban has spent all that money to win one, what does he get in return? Just the title of a champion and the fame /legend/label associated with it, or something more tangible?

Hypothetically say a team A makes the playoffs every 5 years and always loses in the second round or the conference finals in the playoffs. Team B makes the playoffs for 5 consecutive years too but breaks through one year and wins it all. Has team B really made that much more money than team A because of that one championship? (assume their market sizes are similar)

I am asking this because I really want to know if somebody like Greg Miller, a cold businessman, wouldnt think that he would be better off not breaking the bank and being a pereniial playoff team vs breaking the bank bigtime for just a solitary championship(not that breaking the bank guarantees a championship but say the Jazz have to go over the LT bigtime to get a player who they think can really help then win a title)
 
Greg Miller has been willing to spend money on the team. I don't understand the greg miller hate. People blame the teams problems on him just because he's not his father.
 
Aside from the Greg Miller derail, does anyone know the answer to the question? I am curious too.
 
The true answer would be subjective and hard to quantify.

I would guess that some owners spend significant effort and resources studying scenarios like this, but that the analysis is not shared with the public.

Certainly there would be many financial benefits to winning a championship.
First on the list would likely be a big boost in the resale value of the franchise.
 
I would think that most owners already have a lot of money, and they are in it for some sort of emotional rewards.
 
northeast said:
I would think that most owners already have a lot of money, and they are in it for some sort of emotional rewards.
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False. Why do you think there is a lockout pending? Other than Cuban and maybe Paull Allen most are either making money or are trying to.

Lakers spend a ton but still make a profit. Knicks too.
 
Ya, there's a financial incentive in owning a team... you can't flip a team like a house. But over time you are able to make a significant profit... I believe LHM bought the team for 27 mil and now the Jazz and their assets are worth 350 mil. Ya you have to pump money into it, such as arenas, players, employees, etc... but there is revenue... Forbes says the jazz made 117 million in revenue last year.

I assume that just like a business... the better the market the more worth of the team
the better the team, the more worth of the team (ticket sales and inferred profit)
the more prestige, the more worth of the team (the Lakers and the Celtics would be worth more than the Spurs)

I assume most owners make money in an average year when all is said and done...
 
The-Joker said:
I assume most owners make money in an average year when all is said and done...
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This is just wrong. Why would the league be pressing so hard for smaller salaries and a hard cap?

The league lost 300 million last year.

https://thestockmarketwatch.com/stock-market-news/recent-events/nba-loses-300-million-usd/7728

According to the Deputy Commissioner of National Basketball Association Mr. Adam Silver, out of the 30 league franchises 22 of them are expected to lose money this season.

On a related subject, it bothers me so much that players unions push so hard to maintain and increase their share of the pie. A professor of mine in college once worked for the Denver Broncos in their finance department. He liked to talk about how, outside of being an athlete or top level executive, working in sports didn't pay well compared to other industries. When over half of the revenue is dedicated to a small group of employees, what else can a company do? The only reason they can attract quality personnel is because of the fascination of working for a sports franchise.
 
I would think there are financial benefits. Off the top of my head:
-Increased revenue from ticket sales. Both during the playoff run (more games for that year) and the next season(s) ticket sales.
-Going along with the previous one is increased concessions sales (beer, pizza, hot dogs, soda, etc.) during all these games.
-Increased merchandise sales. How many championship T-shirts, hats, banners, get sold in the immediate aftermath of the championship? I would also assume jersey sales would go up.
There's probably more that I haven't thought of.
 
In the case of Larry Miller, wasn't he a car dealer? His association with the Jazz provided valuable publicity for his other business.
 
Here is the answer. This is the NBA Playoff Pool, published in the Knicks team PDF.

2011 NBA Playoff Pool
The 2011 NBA Playoff pool is $12 million and will be distributed to teams in the following manner:
Best Record in NBA ......................................................... $346,105 Teams Participating in First Round, $179,092 each .................... $2,865,472
Best Record in Conference, $302,841 each..................... $605,682 Teams Participating in Conference Semifinals, $213,095 each ... $1,704,760
Second Best Record in Conference, $243,411 each ........ $486,822 Teams Participating in Conference Finals, $352,137 each .......... $1,408,548
Third Best Record in Conference, $181,706 each............ $363,412
Fourth Best Record in Conference, $142,800 each ......... $285,600 Losing Team, NBA Finals ........................................................... $1,408,168
Fifth Best record in Conference, $118,990 each .............. $237,980 Winning Team, NBA Finals ......................................................... $2,125,137
Sixth Best Record in Conference, $81,157 each .............. $162,314 Total Playoff Pool ...................................................................... $12,000,000
Recent NBA Playoff Pools
1982 ............................ $1,500,000 1990 ............................ $2,400,000 1998 ............................ $7,000,000 2005 ............................ $9,500,000
1983 ............................ $1,500,000 1991 ............................ $3,200,000 1999 ............................ $7,500,000 2006 .......................... $10,000,000
1984 ............................ $1,750,000 1992 ............................ $4,000,000 2000 ............................ $7,500,000 2007 .......................... $10,000,000
1985 ............................ $1,750,000 1993 ............................ $5,000,000 2001 ............................ $7,500,000 2008 .......................... $11,000,000
1986 ............................ $1,750,000 1994 ............................ $6,000,000 2002 ............................ $8,000,000 2009 .......................... $11,000,000
1987 ............................ $1,750,000 1995 ............................ $7,000,000 2003 ............................ $8,750,000 2010 .......................... $12,000,000
1988 ............................ $1,750,000 1996 ............................ $7,000,000 2004 ............................ $8,750,000 2011 .......................... $12,000,000
1989 ............................ $2,400,000 1997 ............................ $7,000,000
Note: Players and coaches shared a pool of $50,000 during the 1951 Playoffs.
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https://origin.nba.com/knicks/media/2010-11_NY_Knicks_Regular_Season.pdf

Obviously this is not all, but it is the portion paid out by the league. I am sure extra revenue was generated from the extra games, media coverage, merchandising, etc.
 
AlaskanAssassin said:
This is just wrong. Why would the league be pressing so hard for smaller salaries and a hard cap?

The league lost 300 million last year.

https://thestockmarketwatch.com/stock-market-news/recent-events/nba-loses-300-million-usd/7728

According to the Deputy Commissioner of National Basketball Association Mr. Adam Silver, out of the 30 league franchises 22 of them are expected to lose money this season.
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Hmmm...do you think he is impartial? I'm a Finance guy. I understand there are a lot of ways to position a company and define profit and loss. I seriously doubt losses were that high. I'd like to see what a team of independent auditors would find. But the league and owners will NEVER allow that to happen. The NBA Is making money...tons of it. What IS a problem is that a group of small market teams are having difficulty. That's a revenue-sharing problem.

I hate a lot of the players; I hate most of the owners. But I love the game. I really don't care if the billionaires or millionaires win the fight. In the end, ticket, concession and League Pass fees will increase. The fans always get it in the end, so to speak.
 
Thanks for all the inputs. "Emotional" reward as someone mentioned here is a different thing altogether. There is the issue of prestige here. My question was purely in terms of $$$ incentives.


Loggrad, I have seen that data before, but I couldnt quite get a handle on the difference in $$, that a team makes by being a perennial playoff contender vs a team that breaks through one year to win it all. Thats the reason I started this thread.

If you go, say, 5-10 mil over the LT, to get that impact player who helps you win a championship. You end up actually spending 10-15 mil on him including the LT. Now for someone like Cuban it might be peanuts. But for a small market franchise is there enough of an incentive to go that far, was my thought. Is the ROI good enough? Maybe it is just difficult to speculate, unless there is some article somewhere where someone who is privy to such info has taken actual data from a team's balance sheet and done some math. For a small franchise team like the Jazz with a loyal fanbase I would think the merchandise sale would already be high enough if they were just making the playoffs every year and creating some noise.
 
catratcho said:
I would think there are financial benefits. Off the top of my head:
-Increased revenue from ticket sales. Both during the playoff run (more games for that year) and the next season(s) ticket sales..
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Like I said you can be a perennial playoff contender and keep losing in the second round or say the WCF. You just get revenue from 2 more rounds if you win the title , that's all
-
Going along with the previous one is increased concessions sales (beer, pizza, hot dogs, soda, etc.) during all these games.
-Increased merchandise sales. How many championship T-shirts, hats, banners, get sold in the immediate aftermath of the championship? I would also assume jersey sales would go up.
There's probably more that I haven't thought of
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Those are definitely there, but enough to justify say, a 10 mil luxury tax? Will be interesting to find out. I am sure quite a few people would have looked into this and done some math.I dont recall any articles on this specifically in recent times but with lockout looming there is a chance something on this gets out in some magazine or some sports site or the other.
 
Chad Feldheimer said:
What makes Greg Miller a cold businessman?
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I dont want to digress in this thread, but Greg IS a businessman and you know that. The "cold" comes from the fact that he is not the type of guy who would sit down and sob if AK leaves, like his dad would. His dad would have soaked several hankies when Sloan quit. This guy is just detached and bottomline-driven(not that his father was'nt but he was a different personality altogether). That and the fact what happened last year and the year before when we just like that dumped players for $$$, let go of several free agents. The payroll might have been still high,but that was mostly because of the AK contract which happened much before Greg Miller's time.
 
vj_74 said:
I dont want to digress in this thread, but Greg IS a businessman and you know that. The "cold" comes from the fact that he is not the type of guy who would sit down and sob if AK leaves, like his dad would. His dad would have soaked several hankies when Sloan quit. This guy is just detached and bottomline-driven(not that his father was'nt but he was a different personality altogether). That and the fact what happened last year and the year before when we just like that dumped players for $$$, let go of several free agents. The payroll might have been still high,but that was mostly because of the AK contract which happened much before Greg Miller's time.
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I think you're confusing cold with stoned.

So anyone have an idea what the average fan spends in beer, hotdogs, popcorn, etc. while at the game? With 20,000 fans I imagine a few extra rounds in the playoffs would amount to a good amount of money, not to mention playoff games are pretty sure to be sellouts and they charge more and more for tickets every round.
 
vj_74 said:
I dont want to digress in this thread, but Greg IS a businessman and you know that. The "cold" comes from the fact that he is not the type of guy who would sit down and sob if AK leaves, like his dad would. His dad would have soaked several hankies when Sloan quit. This guy is just detached and bottomline-driven(not that his father was'nt but he was a different personality altogether). That and the fact what happened last year and the year before when we just like that dumped players for $$$, let go of several free agents. The payroll might have been still high,but that was mostly because of the AK contract which happened much before Greg Miller's time.
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I don't see the problem. Larry was the strange one out of the two. How many owners do you see that cry like Larry did? Just because he doesn't sob doesn't mean he doesn't care. I haven't heard any complaints from players or frankly anyone (outside of a delusional fan here and there. Not accusing you) who think Miller is uncommitted to helping the Jazz as much as possible. Jazz made the mistake on Wes Matthews leaving. Blame KOC & Miller on that one. But even at the time I remember many Jazz fans saying they thought that was too much money for him. Boozer was a smart decision. The Bulls already regret that move. The payroll was high and then the Jazz went and acquired a trade exception(giving up a 2nd rounder) that they didn't have to use, but did to acquire Al Jefferson making 13 million. Putting them far into the luxury tax. That should prove that he isn't just about the bottom line. Of course he wants to make money. Everyone does. He wants to win too. Greg Miller has been less conservative than his father already. Letting Boozer walk, trading for Al Jefferson, trading DWill. If that ends up being a good or bad thing remains to be seen.
 
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