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View Full Version : The PBL, Let's Do the Math


dbaproball
08-28-2007, 09:52 AM
-8 teams announced (all with different ownership groups)
-perhaps a few more pending in next 2 weeks
-at least 2 national sponsors (US Army and Bud Light - from the PBL site)
-involvement by Kenny Smith? (A1, please tell us what this means. Advisor? Commissioner?)
-league travel subsidies (presumably funded from national sponsors) to ensure all teams have a legitimate shot of solid financial performance
-league run by a board of governors
-a real screening process
-all teams showing up an owners meetings
-an "international" strategy

The makings of a solid minor league?

The Magician
08-28-2007, 10:06 AM
The makings of a solid minor league?

It does seem like the PBL is gaining momentum ...

bdaly
08-28-2007, 11:41 AM
There are some very positive signs. The only real negative is that things are coming together somewhat late. But, as long as the schedule really hits in late September, I think they'll be in pretty good shape.

one way
08-28-2007, 12:30 PM
12 home games is not enough. And wher do you get quality players? Noone is going to leave the NBDL and the CBA to play for the PBL in Jan.

dbaproball
08-28-2007, 12:45 PM
12 home games is not enough. And wher do you get quality players? Noone is going to leave the NBDL and the CBA to play for the PBL in Jan.
I imagine that most PBL payrolls will begin around Dec 1 +/- and that there will have to be other incentives on the table for players.

What metric do you use to decide that 12 home games are not enough?

Sponsorships are the most important revenue stream in the minor league business (from the many budgets I have seen), and they will not likely change with a 24 game + playoff total schedule.

Keeping a manageable number of games keeps costs down, further enabling a good business case that has not been achieved by anyone in minor league ball. More of the same isn't going to work.

bectond
08-28-2007, 12:49 PM
12 home games is not enough. And wher do you get quality players? Noone is going to leave the NBDL and the CBA to play for the PBL in Jan.

For the kind of money the PBL is paying, guys will make the jump!!!
And the PBL with their deep pockets WILL PAY those buy outs!!!
I'm sure they have a buy-out sponsor as well.

psbf
08-28-2007, 01:58 PM
the PBL with what they are trying to do and the many teams they have attracted. But I'm still a bit skeptical about their pace. And I think it will be a bit hard for the league to attract players when the other leagues are already in action. I'm sure that the Xplosion(for one) will not be willing to part with any of their players without compensation.
I'm glad to see the two new additions to the league, but I'm wondering when their cutoff date is and they say no more teams will be accepted for this season. Otherwise they are in danger of looking like the ABA.

dbaproball
08-28-2007, 02:21 PM
the PBL with what they are trying to do and the many teams they have attracted. But I'm still a bit skeptical about their pace. And I think it will be a bit hard for the league to attract players when the other leagues are already in action. I'm sure that the Xplosion(for one) will not be willing to part with any of their players without compensation.
I'm glad to see the two new additions to the league, but I'm wondering when their cutoff date is and they say no more teams will be accepted for this season. Otherwise they are in danger of looking like the ABA.
Those are definitely points worthy of skepticism. Here's why I think it MIGHT work IF everything is wrapped up in the next couple of weeks (teams, schedules, etc.)

1. We just applauded the CBA for releasing their 10 team schedule the day after announcing the RGV team defected from the ABA. This was about 4 weeks ago. The PBL by all accounts will start 6 weeks later than the CBA, effectively giving them 2 more weeks to meet the bar. I do agree that time is short, but I don't think it is up yet.
2. There are some valid business "pro's" for the Jan 1 regular season start (and some "con's" that may be best debated after the reason). But the access to players who have committed elsewhere is the biggest issue that should be a concern now. At least for this season (since the league is unproven), the guys that are going to the D league or to Europe are going to the D league or to Europe no matter what the PBL or CBA does (with a small number of exceptions as always.) So, let's say the best 100 players not going to the Dleague or Europe are shooting for spots in either the CBA or PBL (and let's also say that the ABA won't be a legitmate factor for players that have done their homework). It is fair to say that with all things being equal (eg, $/month) that the CBA will get a good share of those players because they can make more total $ due to a longer season. However, many of those players may choose the PBL because of geographic proximities to their homes (eg, high concentration of east coast and upper midwest teams) and because of higher potential salaries per month for some players. Some players could end up making the same or more in fewer months of playing.

Bottom line is that in the end, if you really think through the dynamics and timing, the overall impact of the 6 week late start may be minimal. Only time will tell, but there is certainly reason to both doubt and be optimistic. It is an interesting discussion.

one way
08-28-2007, 03:01 PM
Do the math. What is their total budget, that's player housing, player salaries, insurance, advertising, leases, travel, etc. Now based upon a 12 home game schedule, who many people are going to have to come through those doors to help defray those costs? CBA and NBDL are roughly 24 home games, thats twice as many people. Also, for sponsorships, your season is so short, that will reflect on the cost of your sponsorship deal. And, I might add, many of these PBL teams are playing in college gyms which do not allow beer sales. Granted it is interesting, but time will tell.

bectond
08-28-2007, 03:35 PM
All jokes aside, the PBL will be able to draw from the NBDL and CBA wavier wire. If the PBL signs 2-3 guys waived from the 24 teams that play in those leagues, that is 60 guys right there. Plus they can cherry pick the ABA whenever they want. Last year D-League teams cut some really good well known players. There are more than enough players out there for 3 leagues. But the level of play in the PBL won't be as high as either the D-League or the CBA.

dbaproball
08-28-2007, 04:03 PM
All jokes aside, the PBL will be able to draw from the NBDL and CBA wavier wire. If the PBL signs 2-3 guys waived from the 24 teams that play in those leagues, that is 60 guys right there. Plus they can cherry pick the ABA whenever they want. Last year D-League teams cut some really good well known players. There are more than enough players out there for 3 leagues. But the level of play in the PBL won't be as high as either the D-League or the CBA.
Agreed on the Dleague maintaining a higher level of play. It will be tough for any other US minor league to compete with the league that is "one call away."

I don't give yet on the CBA, at least after the first year, mainly because of the player salaries that we have seen from the CBA compared to what I HEAR the PBL will pay the marquis players. Money talks. Yes, only time will tell.

One way, do you know off hand which PBL venues don't allow beer sales? I know of several that do and don't know of any that specifically don't. (It is a guess that Dallas/SMU wouldn't.)

Attendance numbers for many of the teams in the Dleague and CBA won't by themselves cover the increased costs of an extended season. The extended season will only increase the losses these teams are already incurring. The sponsorship commment is key, and how sponors view a 12 game home season (if they care at all) is ultimately what makes the shorter season a good or bad move. Gametime sponsorship opportunities are just part of the overall opportunity, and I believe that most sponsors understand that.

psbf
08-28-2007, 04:34 PM
in my previous post does it say anything about me kidding, Bectond? I'm being serious.

bectond
08-28-2007, 05:39 PM
in my previous post does it say anything about me kidding, Bectond? I'm being serious.

I made a joke, not you when I stated that PBL teams would have sponsors for buy-outs.

dbaproball
08-28-2007, 07:41 PM
I like it. I can hear it over the loudspeaker now:

"Starting at guard, brought to you from the CBA by your friends at Taco Bell......"

Paul S
08-28-2007, 08:15 PM
Which is close in content and miles apart in reality from the ABA games what they hear over the loudspeaker

" Starting at guard, brought to you from the ABA, a part time employee of Taco Bell......"

psbf
08-28-2007, 09:25 PM
Now that is funny(imo)

jamesaba
08-29-2007, 09:36 AM
I can't see how the PBL is going to "subsidize travel" (pay) for travel for all 10 teams, pay for all the owner's travel & hotel to the league meetings, pay 500-900k for each team's "marquee" player, etc etc

You're into the millions that the league is saying they will pay for the teams, essentially covering a portion of their operating expenses for them. This will be on top of all the start up costs of the league plus the salaries being paid to all the ex-Razorshark employees who are now managing the PBL (and other new hires - oh and Tom Doyle)....

And all of the revenue will be generated by the team's in only 12 home games?? Rochester in the ABA had 18 homes which generated 'X' in receipts, and now the new league you add dues and other costs but lose 1/3 of your sales....

And regarding the players. I spoken to former Razorshark players such as Troy Brown, James Reaves and also several MD Nighthawk players such as Spongebob, White Chocolate - just seeing them at the Rucker and other summer leagues - and all of the ones I have chatted with have said they aren't going back to their now PBL teams. Now I don't think they care if the team they play for is in what league, but I think sitting around waiting until January will cause them to lose alot of know marquee local franchise players - one's that their fans knew and liked.

tbayz1
08-29-2007, 09:54 AM
I think I saw that Rochester's Lazarus Sims went to be apart of the coaching staff at Syracuse!

dbaproball
08-29-2007, 10:04 AM
I can't see how the PBL is going to "subsidize travel" (pay) for travel for all 10 teams, pay for all the owner's travel & hotel to the league meetings, pay 500-900k for each team's "marquee" player, etc etc

You're into the millions that the league is saying they will pay for the teams, essentially covering a portion of their operating expenses for them. This will be on top of all the start up costs of the league plus the salaries being paid to all the ex-Razorshark employees who are now managing the PBL (and other new hires - oh and Tom Doyle)....

And all of the revenue will be generated by the team's in only 12 home games?? Rochester in the ABA had 18 homes which generated 'X' in receipts, and now the new league you add dues and other costs but lose 1/3 of your sales....

And regarding the players. I spoken to former Razorshark players such as Troy Brown, James Reaves and also several MD Nighthawk players such as Spongebob, White Chocolate - just seeing them at the Rucker and other summer leagues - and all of the ones I have chatted with have said they aren't going back to their now PBL teams. Now I don't think they care if the team they play for is in what league, but I think sitting around waiting until January will cause them to lose alot of know marquee local franchise players - one's that their fans knew and liked.
Just some follow up:

-I haven't heard that the league will pay outright for the travel...just subsidize it through their bulk purchase deals, which I would presume would be air and hotel. I don't know what those numbers are. They apparently will pay for 1 marquis, international player for each team. No details there yet either.

-Regarding the "only 12 home games" question.....this assumes that playing more home games actually generates enough revenue than the expenses generated by those games, which is not the case for most minor league bball budgets. Just taking a global look, the truth is more games = bigger losses. The key is to find that sweet spot of fewest home games without loss of sponorship dollars. 12 may be on the low side of that. Time will tell.

-Regarding players, players who were going to the Dleague or CBA this year were going no matter what the PBL start date. Players we have spoken with (interesting our list overlaps slightly with yours) are not deterred by the probable Dec 1 payroll date, especially considering the drama in the ABA and considering their overall pay is likely to be higher for a shorter period of time. You're right in that the team that they play for is most important to them if they have a relationship with the organization. Based on history of performance, many of the PBL teams have those good relationships and history. The PBL start date really becomes a problem in future years IF they are truly competing for the Dleague and CBA players. Again, they won't be this year. It will be interesting to see what happens in that 6 weeks b/w the starts of the ABA and PBL seasons.....will we see any player defections?

...as always, just some opinions and observations.

bdaly
08-29-2007, 10:08 AM
I see the number of games being tossed around a lot, but as DBA mentioned, it's simply a drain if you're losing money on them. There's no use cramming in 20 home games if it forces you to host a bunch of money-losing Tuesday games. If there's a way to expand the schedule and keep dates primarily on weekends, then it's another story.

Ultimately, we'll have to wait and get the whole story. The schedule may very well expand in 2009 (and they may start earlier). With things getting finalized in September, there's significant wisdom in not starting too early. December is a tough time to start, as the CBA found out last season.

Finally, yes, Sims left. It was no secret that he aspired to get into the coaching ranks. I'm happy for him--it's a great initial step in coaching, and his time helping lead the R-Sharks clearly didn't hurt him.

bectond
08-29-2007, 10:09 AM
The leadership of the PBL does not understand their actions but being Newmanist they really canít control themselves. Newmanist have an irresistible impulse to pretend they are more than they really are. They canít help themselves. All their years in the ABA have diminished their capacity for rational thought. They canít stop lying JamesABA, it is the centerpiece of the Newman doctrine. Please James, for all of us stop doing the math.

tbayz1
08-29-2007, 10:41 AM
Finally, yes, Sims left. It was no secret that he aspired to get into the coaching ranks. I'm happy for him--it's a great initial step in coaching, and his time helping lead the R-Sharks clearly didn't hurt him.


He will be a good coach!! Everytime Rochester came in town to play us, he did more coaching and time on the bench that he did playing! And when he was in the game he was still able to control the court and the tempo of the game!

dbaproball
08-29-2007, 11:02 AM
The leadership of the PBL does not understand their actions but being Newmanist they really canít control themselves. Newmanist have an irresistible impulse to pretend they are more than they really are. They canít help themselves. All their years in the ABA have diminished their capacity for rational thought. They canít stop lying JamesABA, it is the centerpiece of the Newman doctrine. Please James, for all of us stop doing the math.
I guess the PBL leaders' performance will determine whether they are worthy of the "Newmanistic" label given by bectond. Maybe that's a discussion for season's end.

If you look at the ABA teams that are now in the PBL, it is interesting that they average 1 yr in the ABA, which logically means that they were not willing to follow the doctrine after the 1st year. Now, if those teams deserve to be slammed for not doing their do diligence and joining the ABA in the first place, that would be a different thread.

bomp
08-31-2007, 12:35 AM
The MISL reduced to 15 games a season and the teams sell the hell out of those dates. They have small sales staffs but somehow manage to stay in business in the sport that has a very unstable history. They even have a few teams that make money! What a concept! :p

Hotels and travel can be taken care of through trade outs. Most professional sports teams do it that way.

bectond
08-31-2007, 10:20 AM
The MISL reduced to 15 games a season and the teams sell the hell out of those dates. They have small sales staffs but somehow manage to stay in business in the sport that has a very unstable history. They even have a few teams that make money! What a concept! :p

Hotels and travel can be taken care of through trade outs. Most professional sports teams do it that way.

You are 1000% correct, reducing the amount of games played is the right path to take. The MISL however is profitable due to the fact that it is no longer unionized and they are doing a better job of selecting their ownership groups. The MISL only plays on the weekend and I believe most of their teams are the no.1 tenant in their respective arenas. (Stockton now has a hockey team so that statement may not be a fact anymore) Most of the current crop of basketball leaques would be wise to follow their blueprint.

rams80
08-31-2007, 01:09 PM
You are 1000% correct, reducing the amount of games played is the right path to take. The MISL however is profitable due to the fact that it is no longer unionized and they are doing a better job of selecting their ownership groups. The MISL only plays on the weekend and I believe most of their teams are the no.1 tenant in their respective arenas. (Stockton now has a hockey team so that statement may not be a fact anymore) Most of the current crop of basketball leaques would be wise to follow their blueprint.

leaques? Didn't other posters make that rather odd typo?

Pounder
08-31-2007, 06:37 PM
MISL is not the picture of even relative stability characterized here.

Not to mention: Baltimore, main tenant. Philadelphia (they play in the Spectrum, right?), I believe the AHL team draws much better. Detroit... by default. Chicago... Shamrox. California... DEFINITELY the Thunder. New Jersey... Devils. Orlando... Magic. Monterrey... good question. Milwaukee... maybe.

Minor League Man
08-31-2007, 07:00 PM
MISL is not the picture of even relative stability characterized here.

Not to mention: Baltimore, main tenant. Philadelphia (they play in the Spectrum, right?), I believe the AHL team draws much better. Detroit... by default. Chicago... Shamrox. California... DEFINITELY the Thunder. New Jersey... Devils. Orlando... Magic. Monterrey... good question. Milwaukee... maybe.
The Wave got history on their side. I think it's between them and UWM basketball for top tenants.

Ken, Steelheads fan
08-31-2007, 08:30 PM
leaques? Didn't other posters make that rather odd typo?

Leaques is kindava inside joke now.

You are 1000% correct, reducing the amount of games played is the right path to take. The MISL however is profitable due to the fact that it is no longer unionized and they are doing a better job of selecting their ownership groups. The MISL only plays on the weekend and I believe most of their teams are the no.1 tenant in their respective arenas. (Stockton now has a hockey team so that statement may not be a fact anymore) Most of the current crop of basketball leaques would be wise to follow their blueprint.

Isiah Thomas emphasized that all the CBA teams were going to need their own arenas way back in 2000. In other words, the CBA teams needed to be the No. #1 tenants if they were to survive. However, Thomas is now only remembered as the man who ruined the CBA.

jamesaba
09-13-2007, 07:25 AM
If you're losing money on your home games then the league is doomed from the start.

And basically what you're all saying is that the PBL is going to rely on 'ABA defections' for their players?? I thought the play of this league was going to be superior to the ABA and I thought the ABA players were just "rec" players? Which one is it?

I don't think MD and certainly Rochester, weren't losing money on their home games. MD was drawing 700-1000 and Rochester was drawing 4,000. So the Sharks just lost 1/3 of their gameday revenue.

Again if the team's are losing money on their home games, what does that say about their operations?? They should have stayed in the ABA where the travel budget is less. And if their losing money on their home games, what does that add up to when you add the cost of their management salaries and road games/travel??

dbaproball
09-13-2007, 08:55 AM
If you're losing money on your home games then the league is doomed from the start.

And basically what you're all saying is that the PBL is going to rely on 'ABA defections' for their players?? I thought the play of this league was going to be superior to the ABA and I thought the ABA players were just "rec" players? Which one is it?

I don't think MD and certainly Rochester, weren't losing money on their home games. MD was drawing 700-1000 and Rochester was drawing 4,000. So the Sharks just lost 1/3 of their gameday revenue.

Again if the team's are losing money on their home games, what does that say about their operations?? They should have stayed in the ABA where the travel budget is less. And if their losing money on their home games, what does that add up to when you add the cost of their management salaries and road games/travel??
I'll give you two bold semi-scientific stats:

100% of the ABA teams last year (including Rochestor, MD, and Vermont) lost money last year (eg, they spent far more than they brought in.) 90%+ of all minor league teams in all minor league sports lose money every yr. There are however many other intangible fringe benefits to owning teams that frankly keep the minor league sports business alive despite this fact. Most of them involve the community and corporate relationships created that yield benefits elsewhere, specifically to the team owners' other businesses.

Most of the money in minor league basketball is spent in operations. Reduce games (home and away) and you reduce the major expenditure. Your sponsorship dollars won't change (within reason of course....the PBL schedule length looks appropriately college-like.) Reducing the schedule is a very smart thing that could be a start in changing the paradigm in minor league basketball. JamesABA, just curious, have you looked at many minor league bball budgets? I have looked at and been involved with many, which has formed the basis for this assessment.

one way
09-13-2007, 03:42 PM
let me ask one question, what is the average budget for a PBL team? if we are going to be doing the math and everything, lets look at the numbers. Black and white, what is the budget?

dbaproball
09-13-2007, 07:10 PM
let me ask one question, what is the average budget for a PBL team? if we are going to be doing the math and everything, lets look at the numbers. Black and white, what is the budget?
Well, obviously we'll have to take an educated guess at what they will be since no team has played a game in the PBL and there are reportedly some league paid services and perks that could have significant impact on the numbers. Based on what i know or have heard about the teams that have come from the ABA, they spent ~ 300k to 500k to operate +/-. in the ABA. Maybe we split the difference the difference and call it $400k as a place to start the exercise...then we could normalize it to go from a 36 game to 24 game schedule. It will be interesting to see what others come up with here, as presumably we all have experience with different teams. Team homework assignment??????

one way
09-13-2007, 08:55 PM
lets say a 400,000 budget. How much revenue do you think that these teams can earn with a 12 game home schedule. Please keep in mind, that some of these PBL teams do not even have more than one salesperson. You cannot use the arguement that less games equals a savings, because it was determined that there is a 400,000 budget. Do you honestly think that the Quad City team who drew flies, will make over 200,000 in corporate advertising? This guy will lose 300,000 in Quad City and another 300,000 with his other team. If the PBL team drew flies, and that is 30-100 per game in the ABA and then they jump to the PBL with the same selling philosophy, they will again draw 30-100 per game. That leads to the same problems that plagued them in the ABA. Now, I am not saying that rochester will not do well, they will continue on their path, but you are only as strong as your weakest links. Call some of these teams, ask about corporate advertising. If some one answers they will say someone will get back to you. Bad sign. Thats the numbers

dbaproball
09-13-2007, 10:40 PM
lets say a 400,000 budget. How much revenue do you think that these teams can earn with a 12 game home schedule. Please keep in mind, that some of these PBL teams do not even have more than one salesperson. You cannot use the arguement that less games equals a savings, because it was determined that there is a 400,000 budget. Do you honestly think that the Quad City team who drew flies, will make over 200,000 in corporate advertising? This guy will lose 300,000 in Quad City and another 300,000 with his other team. If the PBL team drew flies, and that is 30-100 per game in the ABA and then they jump to the PBL with the same selling philosophy, they will again draw 30-100 per game. That leads to the same problems that plagued them in the ABA. Now, I am not saying that rochester will not do well, they will continue on their path, but you are only as strong as your weakest links. Call some of these teams, ask about corporate advertising. If some one answers they will say someone will get back to you. Bad sign. Thats the numbers
Actually, I was hoping to do a true budget exercise here.....with input from others. Some of the real budget numbers at season's end I have seen from teams in a few different minor leagues. I am as curious to see if others mesh...I believe they will. And, let's not talk about PBL or ABA or D league, etc specifically because that draws bias.

Let's talk about the econonmics of minor league bball relative to the crowds that show up, real salaries, real sponsorship quotas, merchandising, and concessions. (I know nothing about your Quad Cities example I have to admit...but some of the others I have researched.) Use 1000 as a typical gate, just for grins. That's certainly lower than Rochestor, but falls in line with what I know about some of the other teams we're referencing. Let's also include the realities of how many seats are comp'd to sponsors and others. Let's put some real numbers to it and let everyone draw their own conclusions.

My point is that there is a sweet spot in terms of the right number of games to play to maximize profits (or minimize losses.) If you really go through this exercise with realistic assumptions, you will find it for your team/situation. It will likely not be a 40 game 5 month schedule. I do agree with you that many of these teams generally have a single sponsorship salesperson assigned, perhaps supplemented by some owner sales efforts. My opinion is that that can be enough in some of the smaller markets as long as you can recruit a few interns from the local college (sports marketing majors) to chase the nickel and dime sponsors. But, that's a different discussion. I want to see budgets from the armchair quarterbacks that show me where the sweetspot is!!! I'll respect (hell, i'll agree with) anything backed up with real facts and experience that is representative of the industry.

And, we must toss out for statistical accuracy the extreme under and over achievers (maybe Rochestor and Quad Cities, to follow your example.) Lastly, regarding this statement: "You cannot use the arguement that less games equals a savings, because it was determined that there is a 400,000 budget." I think I can use that argument. Or more accurately, validating that argument is the whole purpose of the exercise I propose. Part of the "budget" covers the additional costs and expenses of an extended schedule. I acknowledge the PBL has never played a game so the only known numbers we have are from the teams coming out of other leagues. Those need to be normalized. Again, I don't think calling out a particular league is important here. Also, "budget" and "what was actually spent" can have two different meanings. One you do up front and hope you're close, and the other you have the luxury of hindsight on. We need to concentrate on the latter. When I use the word "budget" in previous posts, i was more liberal, actually referring to what team's spent, which in almost every single case, in every single league, was more than they brought in.

jamesaba
09-14-2007, 07:13 AM
I'll give you two bold semi-scientific stats:

100% of the ABA teams last year (including Rochestor, MD, and Vermont) lost money last year (eg, they spent far more than they brought in.) 90%+ of all minor league teams in all minor league sports lose money every yr. There are however many other intangible fringe benefits to owning teams that frankly keep the minor league sports business alive despite this fact. Most of them involve the community and corporate relationships created that yield benefits elsewhere, specifically to the team owners' other businesses.

Most of the money in minor league basketball is spent in operations. Reduce games (home and away) and you reduce the major expenditure. Your sponsorship dollars won't change (within reason of course....the PBL schedule length looks appropriately college-like.) Reducing the schedule is a very smart thing that could be a start in changing the paradigm in minor league basketball. JamesABA, just curious, have you looked at many minor league bball budgets? I have looked at and been involved with many, which has formed the basis for this assessment.

dpaproball, actually I am a C.P.A. and have been studying minor league sports budgets for three years.

What you don't mention is that franchises like Vermont, Quebec City, & Rochester - lose money 'on purpose'. That is, they are paying salaries to many more administrative, marketing, & management personnel that most ABA other franchises. They are doing this to build their business over a 3, 5, & 10 year plan. Their plan calls for increasing attendance, sponsorships, and auxiliary revenue sources each year until they exceed break-even. Further, they are trying to create value in their franchises from start up to exit.

Do you know that many NBA teams 'lose money'? Yes, and with the exception of the Seattle Sonics, they lose money 'on purpose'. The D-League teams mostly bleed money. The difference between them and the ABA is that the investors in the NBDL know they are going to lose money for 'x' amount of years...its in their plan - whereas the average ABA investors are clueless and think they will make money right away.

And what you also failed to account for in your summary was that these teams all pay their players, coaches, owners, administrators, and management - on SALARY! Yes so the players get paid the SAME whether they play 24 games or 36! The admin/overhead staff all get paid their weekly or bi-weekly checks regardless of how many games are played.

So if Rochester, as a example, has a fixed overhead budget of say $360,000. On an 18 game home schedule, the first $20,000 in revenue would be allocated to cover that. If they play only 12 home games, then the first $30,000 in revenue would be needed to cover it. This is a FIFTY PERCENT INCREASE in the overhead recovery burden placed on each home game!

The PBL is also playing these 24 games over the same 4 month time period that the ABA is (not like the 9 week USBL or IBL/WBA), and they've stated the salary cap to be the same as the ABA at $125,000 So again they are placing more burden for revenue on each home game played because there are less of them.

And given these factors, it is easy to see that those three franchises MADE MONEY at their home games. Vermont was drawing 1,600 a game at at an average ticket of 10 bucks...that's $16,000 plus concessions plus merchandise. Probably a $20,000 night x 18 games = 360,000...plus sponsorships and kids camps. Quebec was sold out every night and their avg ticket price price was $20.00 each. Rochester was averaging I believe 4,000 fans a night.

Why do you think Quebec threatened to sue the league after they found out their home playoff game was being taken away? They wanted that money from the sellout they would have and all the Molsons Ale they were gonna sell!! Their overhead and player salaries would've been the same had been sent on the road in the first round, but they felt they deserved the home game and wanted the MONEY!

Now the above doesn't apply to teams like Newark who paid their players 50 bucks a game...but all the legit franchises paid their players a monthly salary.

Also it doesn't apply to the teams who were truly losing money on a home game(ie; couldn't cover the gym rent + refs + game day staff)...such as Hollywood, Arkansas, Quad Cities, Hammond Rollers, and probably the Minnestota Ripknees (and 80% of ABA teams)....those teams want to cut any games to avoid losing more!

So from a standpoint of this being called the "Premiere" Basketball League, I'm going to assume that their franchises will all pay salaries and have the requisite staff to properly promote their teams. But do have only 12 events that generate money is not a good sign.

dbaproball
09-14-2007, 09:45 AM
dpaproball, actually I am a C.P.A. and have been studying minor league sports budgets for three years.

What you don't mention is that franchises like Vermont, Quebec City, & Rochester - lose money 'on purpose'. That is, they are paying salaries to many more administrative, marketing, & management personnel that most ABA other franchises. They are doing this to build their business over a 3, 5, & 10 year plan. Their plan calls for increasing attendance, sponsorships, and auxiliary revenue sources each year until they exceed break-even. Further, they are trying to create value in their franchises from start up to exit.

Do you know that many NBA teams 'lose money'? Yes, and with the exception of the Seattle Sonics, they lose money 'on purpose'. The D-League teams mostly bleed money. The difference between them and the ABA is that the investors in the NBDL know they are going to lose money for 'x' amount of years...its in their plan - whereas the average ABA investors are clueless and think they will make money right away.

And what you also failed to account for in your summary was that these teams all pay their players, coaches, owners, administrators, and management - on SALARY! Yes so the players get paid the SAME whether they play 24 games or 36! The admin/overhead staff all get paid their weekly or bi-weekly checks regardless of how many games are played.

So if Rochester, as a example, has a fixed overhead budget of say $360,000. On an 18 game home schedule, the first $20,000 in revenue would be allocated to cover that. If they play only 12 home games, then the first $30,000 in revenue would be needed to cover it. This is a FIFTY PERCENT INCREASE in the overhead recovery burden placed on each home game!

The PBL is also playing these 24 games over the same 4 month time period that the ABA is (not like the 9 week USBL or IBL/WBA), and they've stated the salary cap to be the same as the ABA at $125,000 So again they are placing more burden for revenue on each home game played because there are less of them.

And given these factors, it is easy to see that those three franchises MADE MONEY at their home games. Vermont was drawing 1,600 a game at at an average ticket of 10 bucks...that's $16,000 plus concessions plus merchandise. Probably a $20,000 night x 18 games = 360,000...plus sponsorships and kids camps. Quebec was sold out every night and their avg ticket price price was $20.00 each. Rochester was averaging I believe 4,000 fans a night.

Why do you think Quebec threatened to sue the league after they found out their home playoff game was being taken away? They wanted that money from the sellout they would have and all the Molsons Ale they were gonna sell!! Their overhead and player salaries would've been the same had been sent on the road in the first round, but they felt they deserved the home game and wanted the MONEY!

Now the above doesn't apply to teams like Newark who paid their players 50 bucks a game...but all the legit franchises paid their players a monthly salary.

Also it doesn't apply to the teams who were truly losing money on a home game(ie; couldn't cover the gym rent + refs + game day staff)...such as Hollywood, Arkansas, Quad Cities, Hammond Rollers, and probably the Minnestota Ripknees (and 80% of ABA teams)....those teams want to cut any games to avoid losing more!

So from a standpoint of this being called the "Premiere" Basketball League, I'm going to assume that their franchises will all pay salaries and have the requisite staff to properly promote their teams. But do have only 12 events that generate money is not a good sign.
JamesABA...interesting I have a similar tenure and experience in minor leagues sports, though less from a pure accounting role, and more from a business development perspective.

A few rebuttals and comments:

1. Let's leave "ABA" and "PBL" out of it. That draws too much bias. Let's look at the real numbers relative to a 6 to 8 week shorter season (Jan to March), which is what has been proposed to my understanding. Let's assume it is so for the purposes of this discussion. I probably should have started this thread under general basketball.
2. Your Rochestor and Vermont examples are statistical outlyers. (You have said "does not apply" to all of the other teams basically!) I also believe that your assumptions about them are liberally high, but we need to talk about what happens in the average market to these teams. Rochestor is a "crazy-good" minor league sports town. We need to be talking about a reasonable average gate of 1000 in the first year, with reasonable growth and assumptions for comp'd tix, etc. Let's run the numbers from there.
3. I disagree with the notion that players, coaches, and management staff cost the same no matter the length of the season. Players and coaches can be paid per month. Marketing and management services can be contracted. Team owners generally have other businesses from which resources (business, legal, accting, marketing, general mgt, etc) can be allocated (and appropriately accounted for.) The stated league "salary caps" are irrelevant here because that assumes that most teams pay all the way up to the cap. I have been told that neither Vermont or Rochestor paid up to the cap, by the way.
4. Just a friendly jab - "a 3, 5, and 10 yr plan" in minor league basketball!!!????? While that makes sense in most businesses, it doesn't here. The average lifespan of a team is less than 2 yrs. There is NO stable enough league infrastructure in any league to support anything beyond that right now.

The reason for that is a whole different discussion, and it goes way beyond clueless owners and under funded teams. It has more to do with understanding what you are actually doing and providing when you are in the business and understanding what you are pretending to be. Philosophically, we can go alot of different places with this discussion. I would contend that a minor league sports business is first and foremost a marketing entity, not so much "designed to lose money", but designed to be a cost center that supports or supplements other core businesses, one of which could eventually become marketing the team "brand" itself, but you can't hang your hat on that until you can TRULY get to that 5 or 10 yr mark that you mention.

My point is that for the average team in the average minor league market, "more" games does not add up in a business sense. There are always a few exceptions, but there are very few in this case.

one way
09-14-2007, 12:44 PM
If you own your arena or have a good arena lease, the more dates the better. Thats more parking money, more concessions money, more everything. If you do not own your arena, less may be better. But lets look at this in simple terms. The PBL says that it has 120,000 in player salaries. Lets say tickets are 10.00 ( easy for the math). How many tickets must they sell to break even on player pay? 12 thousand. Over just 12 home games, that 1000 paying customers per night. These guys are not doing that. Not even close. I know that you might have other revenue streams coming in, but that has to pay other expenses. I know that this is way to simplistic, but it does show how much selling has to go on. Believe me, these guys are not doing it.

Pounder
09-14-2007, 12:55 PM
Has the NBA learned yet that their model doesn't work for the D-League?

I believe I know why "intentional losses" are mentioned... those "losses" include depreciation of player salaries, which creates a healthy tax benefit. It's also, up until now, been provided as "proof" to cities that they would theoretically fall behind in "competitive balance" unless the city paid for and gave the team a new building with all the bells and whistles.

That's not worked in the D-League (how many players have multi-year contracts, anyway?), from what I can tell. I get the sense the NBA thought the smaller cities would think this to be attractive, but the politics of such cities are far different.

Of course, owners also expect to make their money at the other end... just like owning a house, it's the resale, baby. I wonder if the current economy gives people pause. I wonder if the sports bubble has burst.

bectond
09-14-2007, 05:44 PM
You guys are missing a few points, first there is a correlation between sports and tourism. Sports play a large role in regional development. New Orleans is using the Saints and Hornets as key components of their reconstruction effort. Sports teams put cities on the map, the more popular the league the better. The real value of a sports team is the perception it gives to a city and its owner. Cities and Suburban area that lack a national identity make for the best expansion towns. The owners of teams placed in the right town at the right time are rewarded handsomely as well, if the league is stable. Major league teams use farm teams for a number of reasons. The NBA cherry-picked the CBA due to the region most CBA teams played. People in the great plains generally donít know anything about the NBA, putting minor league teams in that region helps expand the influence of the NBA. I have read many responses on this board from people in those areas. They have no idea how big the NBA is in the Northeast and West coast (where basketball is the top sports in all the major cities). Placing teams in those areas will allow the NBA to attract basketball fans that normally only watch NCAA basketball.

For example, Japanese baseball fans are more interested in MLB because of the amount of Japanese players in the Majors, the quality of the games and their overall interest in baseball. The NBA has established D-League teams in the mid-west that will host NBA pre-season games in which former D-League stars will return to small mid-western towns on NBA pre-season rosters. People in those areas will be able to attend NBA games for the first time and see first hand that the NBA brand of basketball is second to none. If some former D-League players make it onto an NBA roster, those fans will watch NBA regular season games to see how their favorite players are progressing. Once the watch the games, they will appreciate the overall quality of the players and the games. Tthe D-League and the CBA will last for far longer than 3, 5, or 10 years. Why would any sensible business man that purchased a team not have short and long range goals?
Who goes into business with a 1 year plan?

Now as far as the PBL is concerned I donít see any justification for itís existence. I canít make out a clear cut purpose and Iím not going to waste my time doing any math on the subject. That said, the ABA is a complete mess. No one with a half a grain of sense would stay in that leaque because of the fact that you canít resale your team. If the league can put multiple franchises in a single metro area and selling multiple teams in the same market for the same low rate of $10,000 a club, why would someone buy an existing franchise for more than $10,000? The goal in sports is to find an even bigger sucker. If you buy a team for $250,000 the goal is to sell it to somebody other clown for 10 mil later on, just like Pounder said. The problem with the ABA is that Newman is beating all the existing suckers!@#, excuse me - owners to the punch.

If the PBL were to somehow merge into the basketball food chain then maybe their owners would be able to reap some awards. Playing 24 games is a great idea if salaries are decreased (which they are not) and regional play was increased (which the PBL has also failed to do) and management is localized (again they failed on this issue as well).

However, in their defense, kids canít make it out on week nights so why waste time renting an arena for a Tuesday night game during X-mas season. If the PBL were a beer league than Iíd agree, more games would equal more revenue. But these guys are Newmanist, they are attempting to attract the suburban young nuclear family crowd. Those types only attend rec. leaque games in high numbers on Sat or Sun. Mon-Fri are for hard core fans or those that enjoy alcoholic beverages. (The PBL does not have any hard core fans outside of A1 sports and high schools gyms canít serve liquor).

P.S.- these ex-ABA teams donít have $400,000 budgets. Iíll never believe that figure, I have read to many stories about life in the ABA to believe these teams are spending a buck more than $250,000. They donít fly, donít have front office staffers, donít pay their players and most play in Junior College or High School gyms. They donít pay league dues or fees and they donít provide insurance. How on earth could their budgets be $400,000 or more?

one way
09-14-2007, 07:15 PM
that about sums it up. I agree. Becond, your the man

dbaproball
09-14-2007, 08:00 PM
that about sums it up. I agree. Becond, your the man
Really? Although there is certainly a valid perspective that Becond brings with some of his comments (I agree with some) he speaks in terms of too many absolutes....certainly his right on this forum, but many of us have direct contrary evidence to some of the statements.

I'm not defending any league, but let's make sure we're in the know of the facts if we state them as absolutes. There are teams in the ABA that have had 300k to 500k budgets. Some of those teams are now in the PBL. Some are left behind in the ABA, and most of us know who they are on both sides. (Think Rochestor, Maryland, Wilmington, Vermont, Jacksonville.) There are teams with 75k to 100k budgets too in ABA. I don't THINK those teams are in the PBL, but I will allow myself to be corrected as I do not know what their expansion teams will do. Some ABA teams did have insurance (although not driven by the league, but rather by state laws.) I am told that PBL is requiring insurance, as well as league fees for non charter teams.

Everybody is entitled to their own opinions for sure, but not their own facts.

Ken, Steelheads fan
09-16-2007, 02:28 PM
dpaproball,
You're absolutely right about bias. None of these leagues are impressive to me. Although I think you and bectond tend to over-analyze minor league basketball. It's simple. I'm a firm believer in K.I.S.S. As a matter of fact, it's mainly common sense. one way is right (this time 8) ). None of these teams are going to average 1000 paid fans at $10, but I'll take it a step further. None of these teams in ANY minor hoops league is going to average 1000 paid fans at $10 a pop. It's common sense. Not too many teams are going to turn over their books to you for review, but you will understand this statement to be true by the rapid-fire folding of basketball teams in ALL leagues.

...Sioux Falls is an obvious exception. I don't pretend to understand what's going on over there. Their basketball team has been packing the place night after night for years, but their baseball team can barely draw flies. BTW, I also follow minor league baseball. If your statement about 80% to 90% of minor league teams losing money includes baseball, then I think you need to follow the grand old game a little closer. The baseball team here in Gary and most of the Northern League teams are wildly successful. Once again, no one has turned-over their books to me, but I just might talk with some of the Gary owners from time to time and I haven't been lied to yet. Those guys have never lost a dime since they entered the league. You can actually see the revenue streams (and feel them in your wallet) when you're at a ballgame. It's all simple to figure out.

On another note: Who said minor league sports was affordable entertainment?!? Last week I spent $20 on two beers and a bucket of stale popcorn at the concession stands during a rain delay. TWENTY BUCKS!!! Of course, I always tip at the concession stand, but my point is that it's not cheap to attend minor league games (or at least it shouldn't be)...but, that's another long winded post. Maybe someday I'll post about a rain-out during the week where fans stayed at the ballpark until the wee hours partying--DURING THE WEEK to address the Ken, you're a moron because Rockford fans had to get up and go to work the next day. 8)

psbf
09-16-2007, 02:47 PM
it's going to be expensive if you buy beer. I don't drink alcohol, but I know that many do because it's popular.

bectond
09-16-2007, 06:39 PM
There are teams in the ABA that have had 300k to 500k budgets. Some of those teams are now in the PBL. Some are left behind in the ABA, and most of us know who they are on both sides. (Think Rochestor, Maryland, Wilmington, Vermont, Jacksonville.)

Everybody is entitled to their own opinions for sure, but not their own facts.

I don't believe this statement, Unless I see some facts to support this claim i'll file this statement I my unbelievable file. Rochester may have a budget that is higher than the other ABA teams due to the fact that they play in a real arena. Therefore, their budget may be $300,000 plus. However, the rest of the teams you listed are ALL low budget operations. Most pay their players $50 and a can of SpaghettiO's each game and hey play in High school or JC gyms. Remember, these teams are in the PBL because they don't have any money. If they had cash they would be in the D-League or the CBA.

USBL teams played 28 games per year and USBL teams had $250,000 budgets. The USBL also required teams to pay league fees and dues, which the PBL won't require their teams to pay.

Most USBL teams were 10x more professional than the most professional ABA teams and I believe it was because of their elevated budgets. Jacksonville does not travel, has a former JV high school coach as their head coach and you want me to believe their budget is over $400,000. Dude, I was not born last tuesday. You don't spend $400,000 on a team and give the keys to a JV coach.

Despite what my buddy Ken says, the NBDL and CBA are professional leagues, the PBL is a semi-pro leaque. (No bias, just a FACT) That 7'8" dude that was the most popular player in the ABA last year played for free. Why, because the Nighthawks total budget is most likely under $150,000 per year and they most likely could not afford to put him in a nice hotel room and pay him a salary at the same time. Real pro teams can afford to pay their number one drawing card......Geez.........

The NBDL and CBA have issues but they are far superior leagues, the teams that started the PBL most likely had $150,000 to $300,000 (Rochester)budgets last year. The vast majority of teams that remained in the ABA most likely have $60,000 yearly budgets. (Vermont, the Rochester Fire and Jacksonville may have $250,000 budgets). However, CBA teams have $800,000 budgets and NBDL teams have $1,100,000 budgets. The PBL is not in their league.

Ken, Steelheads fan
09-16-2007, 09:45 PM
it's going to be expensive if you buy beer. I don't drink alcohol, but I know that many do because it's popular.

The lemonade at Gary's ballpark is $3.50, bottled water is $3.00, and the Nachos are $4.25 (and please tip the poor lady at the concession stand). Trust me on this one. It's expensive as all heck to hangout at minor league ballparks.

psbf,
I'm not (much of) a beer drinker either. You've never had a Sam Adams Octoberfest brew?!? You don't know what you're missing. Although, you just illustrated another point I've made several times. Minor league hoops often attracts the wrong type of crowds. No beer?!? How is a team (or arena) supposed to make a buck off of someone like you? Bring in the partying hockey fans and kick-out those cheap skate basketball fans. Rockford, all over again and again and again... 8).

heavesrock
09-16-2007, 10:19 PM
Alex Wolff said his budget was $400,000 for last season. And Jacksonville coach was Steve Tucker last year, a pretty well known coach.

psbf
09-16-2007, 10:37 PM
going to say that that's expensive for bottled water, until I remembered that it's the same here. This is why I now get coffee($2) with my hot dogs($2.50) at X games. I'm sure there are enough fans who drink beer where the beer companties won't have to worry about making a sale off me lol I can enjoy a sport fine without it(or any alcoholic beverage for that matter). I personally don't see why fans need beer to enjoy a game. In my view, it is just an excuse to get drunk or intoxicated. Others have different opinions I'm sure.