Blog Entry

Sixers sold after owners lost 'a lot' of money

Posted on: September 19, 2011 9:19 pm
Edited on: September 20, 2011 7:35 pm
 
Posted by Ben Golliverlockout

Getting rich people to brag about their investment wins? Not all that hard. Getting rich people to talk about their big losses? Significantly more difficult. 

That's what's made the back-and-forth concerning the NBA's overall financial landscape so confusing. The players have pointed to hard numbers showing record revenues while the owners have made vague, sometimes disputed, references to their losses and refused to open their books for an independent inspection by the media.

One team long assumed to be struggling financially was the Philadelphia 76ers. The Sixers were a bottom-6 team in home attendance last season, haven't advanced out of the first round of the Eastern Conference playoffs since 2002-2003, have finished above .500 once in the last eight seasons and haven't had a true star or box office draw since Allen Iverson was traded to the Denver Nuggets in 2006.

Earlier this summer, Comcast-Spectacor, the Sixers ownership group, agreed to sell the team to a group headed by Joshua Harris, a co-founder of Apollo Global Management, an investment firm. Ed Snider, Comcast-Spectacor's chairman, explained why in an interview with the Associated Press.
"It was mostly economics," Snider said of the decision.

Losing money?

"A lot," Snider said, declining specifics. "We felt that we had given it our best shot and it was time for someone else to take over."
Snider's company still owns the Wells Fargo Arena, where the Sixers play, and the National Hockey League's Flyers, who are also a tenant. Peter Luukko, Comcast-Spectacor's COO, was quoted by the Associated Press explaining the new situation.
Comcast-Spectacor COO Peter Luukko said the Sixers were on the market because the sports and entertainment company decided to reallocate its capital and focus on expanding its facility management, food services, and ticketing subsidiary endeavors.

"It's not like teams are big moneymakers these days," Luukko said. "At the end of the day, it's not like we're losing the team because we still have the team on a long-term lease. It's the best of both worlds. It gives somebody an opportunity to be an owner and put their stamp on the team. For us, we'd love to have them as a tenant."

The NBA has claimed throughout the lockout that its financial model is broken. Snider's frank comments and the circumstances surrounding the franchise -- the arena and the NFL team -- seem to reinforce that point.

It's one thing for current owners to cry poor but continue to operate in the so-called broken financial model. It's another for an owner to explain his departure by bluntly saying he was taking too big of a hit, while his company continues to operate in other related industries.
Comments

Since: May 17, 2008
Posted on: September 20, 2011 11:42 am
 

Sixers sold after owners lost 'a lot' of money

How can you sell a team that is losing real money?  Easy, because there is always somebody out there who (1) wants to own a professional sports franchise and (2) thinks that they will be the ones who can "turn it around" and actually make money.  The Sixers may be losing money now, but it wasn't always so and so there is always the possibility of re-building them into a successful and profitable team again.  They may not be making a profit now, but there is still tens of millions of dollars in revenue, maybe hundreds of millions, per year...with more to be earned if you attract better players, win games and get the resulting boost in attendance, concessions and merchandise sales as well as better media revenues.  Fact is, companies that are losing money are bought and sold every day --either in pieces on the stock market or outright buyouts because the new buyers think it will "turn around" and become profitable.



Since: Mar 15, 2011
Posted on: September 20, 2011 9:47 am
 

Losing Money?

How can a franchise be sold for hundreds of millions if they are "losing money?" (real money, not doctored up accounting losses)???


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