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  #1   IP: 65.96.58.206
Old 05-03-2007, 08:21 PM
jamesaba jamesaba is offline
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Default ABA to NBDL Case Study

Anybody know how many fans the Rimrockers were averaging in the ABA during the 2004-2005 season? I know they had at least a sellout of 15,000 people in the regular season and for the championship game - so I'd imagine it was around 4,000 a game - right??

What do you think are the reasons they could only draw 1,300 a game in the NBDL? ((And their expenses had to be much, much higher in the NBDL than when they were in the ABA))



*NBADL team out as lease at Alltel Arena takes toll

BY CHRIS GIVENS

Posted on Thursday, May 3, 2007

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Arkansas is without a professional basketball team again.

Arkansas RimRockers owner Larry Crain is spending today in La Crosse, Wis., meeting with various investors interested in moving the NBA Development League franchise to La Crosse.

Even if the proposed move to Wisconsin does not play out, Crain said, the RimRockers’ threeyear reign in Arkansas is over.

Crain said financial problems with the organization, largely due to an expensive lease with Alltel Arena, are the main reason the RimRockers are leaving Arkansas.

“It just could not work,” Crain said. “If I’m going to spend that kind of money, well, there are other ways I could that would be more productive to the community and other organizations. It’s a little bit heartbreaking to remove it, but I just don’t think there’s any other alternative.”

The Rim-Rockers just concluded their third season, and second as a NBA Development League franchise. They played all three seasons at the 18, 000-seat Alltel Arena, which is significantly larger than nearly every other NBADL arena.

The Los Angeles D-Fenders, who are owned by the NBA’s Lakers, play in the 18, 900 seat Staples Center, where the Lakers play, but no other arena in the NBADL seats more than 11, 500.

Other owners in the league were all attending a league meeting and unavailable for comment, but sources said the RimRockers ’ lease with Alltel was likely the most expensive in the league.

According to Crain and Michael Marion, general manager of Alltel Arena, the RimRockers were paying between $ 10, 000 and $ 12, 000 per game for the 24-game home schedule. That included $ 7, 000 rent, $ 1, 500 to run the video board, a $ 1-perticket facility fee and 10 percent tax. There were also assorted extras, such as fees for telephone service and firefighters.

The RimRockers did receive a $ 2 refund per ticket when the drop-count attendance, or actual people in the arena, rose above 2, 000. But Marion said that refund rarely kicked in because the RimRockers’ drop-count average last season was 1, 311.

That was down 31 percent from the 2005-06 season, when the average attendance was 1, 902. Marion said the RimRockers simply did not draw enough to make them a viable tenant for Alltel Arena.

Crain and Marion had a meeting last week during which Crain asked Marion to restructure the contract to a flat fee of $ 5, 000 per game. Marion said that would have resulted in Alltel Arena losing money every RimRockers game, and he couldn’t change terms.

“We wish they were successful,” Marion said. “If it is true they are not coming back, we are disappointed that is the case. We are disappointed that they didn’t get the kind of support needed to maintain a financially feasible relationship with Alltel Arena.”

The Arkansas Democrat-Gazette placed calls to several other NBADL teams and arenas, but none that was reached was willing to disclose the specifics of its agreements.

Messages left for NBA Development League officials, who were also at out-of-town meetings, were not returned Wednesday.

Crain said when Marion told him Alltel Arena could not lower its lease offer, he had to look to other venues. He said Barton Coliseum, because of its location, would not be able to draw the business crowd he was seeking. Crain contacted UALR Athletic Director Chris Peterson about the possibility of using the Stephens Center, the 5, 600-seat home of the Trojans, but that was not going to work, either.

That left Crain with two alternatives — move or fold.

Enter Ron Ekker.

Ekker is a longtime coach, having spent 11 seasons in the NBA with Dallas, Cleveland and Orlando as an assistant.

He also moved the Continental Basketball Association’s Louisville, Ky., franchise to La Crosse in 1985, where the La Crosse Catbirds began a successful nine-year run at 6, 000-seat La Crosse Center.

Ekker is living in Cleveland but said he wants to get back into coaching. He knew he wanted to be a head coach, and the best way to do that would be to buy and move an existing team.

Ekker, through his contacts in La Crosse, found an investor interested in bringing in an NBADL team.

“It was kind of lucky,” Ekker said. “I felt we were going to have trouble getting a new team in the D-League, so I wanted to look for an existing team interested in selling. I just scoured the league, and started at the A’s.”

Crain isn’t interested in selling completely. He said he wants to retain about 75 percent ownership and allow the La Crosse investors to put up the money for next season’s operating costs, which would result in the other 25 percent ownership. Crain also said he would insist on La Crosse keeping the name “RimRockers.”

Crain said that if the league accepts his proposal, which he expects they will with the local ownership, the RimRockers would begin play, with Ekker as coach, in La Crosse this November.
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  #2   IP: 72.95.231.212
Old 05-03-2007, 11:03 PM
psbf psbf is offline
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Default That's sad

to see. I wonder how much promoting they've done since they switched leagues.
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  #3   IP: 132.49.221.25
Old 05-04-2007, 11:19 AM
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Hold on, everyone.

This was illuminated to me when Vancouver WA interests were trying to build a hockey arena. They even created a four-year projection that showed dropping attendance every single year.

These owners ALWAYS seem to burn their marketing budget earlier than they project. Please excuse my cynicism here, but it seems that half of anyone selling anything posseses the ability to lie about costs (and especially hidden costs), and that includes media, suppliers, etc.

I consider this death to be mostly due to a large arena, and otherwise of natural causes. It doesn't surprise me in the least.
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  #4   IP: 70.22.65.127
Old 05-04-2007, 04:00 PM
bectond bectond is offline
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Quote:
Originally Posted by jamesaba View Post
Anybody know how many fans the Rimrockers were averaging in the ABA during the 2004-2005 season? I know they had at least a sellout of 15,000 people in the regular season and for the championship game - so I'd imagine it was around 4,000 a game - right??

What do you think are the reasons they could only draw 1,300 a game in the NBDL? ((And their expenses had to be much, much higher in the NBDL than when they were in the ABA))
:
Come on dude, are you trying to imply that the ABA would have been a better long-term answer? The NBDL in Little Rock can't work, but the ABA is only a short term fix, in the end everybody that deals with the ABA gets burned. He has corrected his mistake, he is moving the team. The rent was 300,000 per year in Little Rock and it is only 35,000 a year in LaCrosse. That man is saving himself 265,000 a year. Your implying his leaving is some kind of failure. I'm saying he wake up and smelled the coffee. The ABA is a joke, he paid 10,000 for the franchise, made some money and got out while the going was good. He parlayed his ABA bet into a D-League franchise which appears to have lost money to laymen like yourself. I however, know that he only paid 400,000 for that franchise and he is selling 25% for 250,000. That means his franchise is now worth 1 million. How much would the Rimrockers be worth if they stayed in the ABA? answer: nothing. In ten years that franchise will be worth 10 million, how much will the Strong Island Storm sell for in 2017? answer: nothing. He will earn a profit in LaCrosse and his childrens children will be able to sell the team for multi-millions in the future.
Wise people invest their money in things that appreciate. Appreciation is the reason people buy D-League franchises. People buy ABA franchises because they don't know any better.
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  #5   IP: 147.9.180.226
Old 05-04-2007, 05:08 PM
rams80 rams80 is offline
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Quote:
Originally Posted by bectond View Post
Come on dude, are you trying to imply that the ABA would have been a better long-term answer? The NBDL in Little Rock can't work, but the ABA is only a short term fix, in the end everybody that deals with the ABA gets burned. He has corrected his mistake, he is moving the team. The rent was 300,000 per year in Little Rock and it is only 35,000 a year in LaCrosse. That man is saving himself 265,000 a year. Your implying his leaving is some kind of failure. I'm saying he wake up and smelled the coffee. The ABA is a joke, he paid 10,000 for the franchise, made some money and got out while the going was good. He parlayed his ABA bet into a D-League franchise which appears to have lost money to laymen like yourself. I however, know that he only paid 400,000 for that franchise and he is selling 25% for 250,000. That means his franchise is now worth 1 million. How much would the Rimrockers be worth if they stayed in the ABA? answer: nothing. In ten years that franchise will be worth 10 million, how much will the Strong Island Storm sell for in 2017? answer: nothing. He will earn a profit in LaCrosse and his childrens children will be able to sell the team for multi-millions in the future.
Wise people invest their money in things that appreciate. Appreciation is the reason people buy D-League franchises. People buy ABA franchises because they don't know any better.
D-League franchises won't be worth multi-millions decades down the road unless inflation gets out of control.

LaCrosse was "supposed to be" an expansion team, but it turned into yet another move (one of the D-League's favorite tactics). The D-League's rate of market burnout, and staggeringly low attendance, strikes me that the NBA still has trouble figuring out the appropriate business model. That said, LaCrosse should be a good market.

I'm not sure he's taking the approach of "build the team, then sell it for a profit to someone else". Not many do.
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So I'd rather spend a quarter of an ABA franchise to repair my car, as opposed to spending a franchise and a half to get a new car that might have some planned obsolescence that causes it to break down 5 days after the end of the warranty period.
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  #6   IP: 70.22.65.127
Old 05-04-2007, 06:42 PM
bectond bectond is offline
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Quote:
Originally Posted by rams80 View Post
D-League franchises won't be worth multi-millions decades down the road unless inflation gets out of control..
Dude, this franchises value has gone up 250% in two years ! These teams will be worth 10 million in ten years easily.

Quote:
Originally Posted by rams80 View Post
LaCrosse was "supposed to be" an expansion team, but it turned into yet another move (one of the D-League's favorite tactics). The D-League's rate of market burnout, and staggeringly low attendance, strikes me that the NBA still has trouble figuring out the appropriate business model. That said, LaCrosse should be a good market...
Stern's first plan was azz backwards and every team failed, which was a good thing for the market, league wide subsides were not the answer, it only allows teams to function without being profitable. He just shot himself in the foot with that first model.

As for low attendance, this was the first year he operation made half a grain of sense, it will take time for funs to get excited, I don't like the NBA's practice of absorption, it contributes to market failure. Rather than competing directly with his competitors, he swallowed it whole. Which is an admission of weakness. Besides that, his new plan makes sense to me, I don't really care if LaCrosse was supposed to be an expansion team or not.
The Rimrockers owner made the smart move of the month by gettting his team the hell on of Little Rock.

Quote:
Originally Posted by rams80 View Post
I'm not sure he's taking the approach of "build the team, then sell it for a profit to someone else". Not many do.
That is the only reason to buy a sports team. Write this down- You make your profit on the sale! I read a post that stated the Strong Island Sound is subsidized by the ABA (100,000 per year). Even if the Rimrockers loss 300,000 a year for 10 years there owner is still making more money than the Sounds owner in the long run because if his teams continues to appreciate at its current pace the Rimrockers would still be worth more than the Sound.
purchase price $400,000
2nd worth 400,000*2.50=$1,000,000
4th yr worth $1,000,000*2.50=$2,500,000
6th yr worth $2,500,000*2.50=$6,250,000
8th yr worth $6,250,000*2.50=15,625,000
10th yr worth $15,625,000*2.50=$39,000,000
$39,000,000 (minus $300,000 x 10 yr = $3,000,000)=$36,000,000-$400,000 purchase price=$35,600,000 (i'll round this down to $10,000,000)

The Sound cost $10,000, they will earn $100,000 for 10 years=$1,000,000 (minus $10,000)= Total salary earnings $990,000 (and this is assuming the Sound don't loss money operating the franchise)
Franchise net worth= Zero (the team and the league will be a distant memory by 2017).

Advantage: NBDL
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  #7   IP: 65.9.80.14
Old 05-04-2007, 07:38 PM
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teqkng teqkng is offline
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Easy there big fella keep in mind that anything is only worth what someone is willing to pay for it...
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  #8   IP: 65.96.58.206
Old 05-05-2007, 10:10 AM
jamesaba jamesaba is offline
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Quote:
Originally Posted by bectond View Post
Dude, this franchises value has gone up 250% in two years ! These teams will be worth 10 million in ten years easily.



Stern's first plan was azz backwards and every team failed, which was a good thing for the market, league wide subsides were not the answer, it only allows teams to function without being profitable. He just shot himself in the foot with that first model.

As for low attendance, this was the first year he operation made half a grain of sense, it will take time for funs to get excited, I don't like the NBA's practice of absorption, it contributes to market failure. Rather than competing directly with his competitors, he swallowed it whole. Which is an admission of weakness. Besides that, his new plan makes sense to me, I don't really care if LaCrosse was supposed to be an expansion team or not.
The Rimrockers owner made the smart move of the month by gettting his team the hell on of Little Rock.



That is the only reason to buy a sports team. Write this down- You make your profit on the sale! I read a post that stated the Strong Island Sound is subsidized by the ABA (100,000 per year). Even if the Rimrockers loss 300,000 a year for 10 years there owner is still making more money than the Sounds owner in the long run because if his teams continues to appreciate at its current pace the Rimrockers would still be worth more than the Sound.
purchase price $400,000
2nd worth 400,000*2.50=$1,000,000
4th yr worth $1,000,000*2.50=$2,500,000
6th yr worth $2,500,000*2.50=$6,250,000
8th yr worth $6,250,000*2.50=15,625,000
10th yr worth $15,625,000*2.50=$39,000,000
$39,000,000 (minus $300,000 x 10 yr = $3,000,000)=$36,000,000-$400,000 purchase price=$35,600,000 (i'll round this down to $10,000,000)

The Sound cost $10,000, they will earn $100,000 for 10 years=$1,000,000 (minus $10,000)= Total salary earnings $990,000 (and this is assuming the Sound don't loss money operating the franchise)
Franchise net worth= Zero (the team and the league will be a distant memory by 2017).

Advantage: NBDL
All I was saying that the Rimrockers were averaging somewhere around 4,000 fans a game in the ABA and now they are averaging 1,300. I don't blame that on the arena.

And if you think the Rimrockers (or any NBDL team) will be worth 39,000,000.00 in 10 years - you're out of your mind.

And for the record the Sound don't get any subsidy from the ABA...where on earth did you come to that conclusion???
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  #9   IP: 75.33.229.182
Old 05-05-2007, 12:35 PM
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Ken, Steelheads fan Ken, Steelheads fan is offline
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Alltel Arena was relatively new when the Rimrockers came on the scene. The fans were excited about attending pro basketball games at Alltel just to see the place. The novelty wore-off (as it always does) and the reality that this pro basketball wasn't the NBA finally sunk-in.

ABA/NBADL doesn't matter. Neither was going to work there. The University of Arkansas at Little Rock has that area covered.

...as for La Crosse. Teams fold for a reason and that fact should always be remembered when another team moves into that same market.
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  #10   IP: 76.17.230.182
Old 05-05-2007, 01:13 PM
DWizards DWizards is offline
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Didn't the Rim Rockers have University of Arkansas legends like Scotty Thurman, Kareem Reid, Todd Day, Pat Bradley, etc. True the U of Arkansas is the "main" show in Little Rock, but I think at first the Rim Rockers were just a way to see former college stars play basketball and win against weak ABA teams. Eventually peole would have gotten tired of watching Todd Day and Scotty Thurman play in a rec league. I'm also guess ticket prices were a lot more in the D-League than the ABA.
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