To match Interview NBA/STERN

Report: How NBA owners turn profits into paper losses

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UPDATE July 2, 11:10 am: We need to make you aware of some flaws in the accounting used by Deadspin (and repeated here) in their original post that was the basis of this one. However, I don not believe it changes the overall theme that completely legal and widely accepted general accounting principles allow an NBA team to inflate losses or even hide small profits, with the losses all being paper.

To the corrections. First, the loss on player contracts cited in this article of $25.1 million almost certainly was a buyout of Dikembe Mutombo. A legitimate loss to write off. That said, the RDA that allows owners to write off players depreciation is in place, legally allowed and used.

Also, the NBA does not include the amortization of losses on buildings in its figures. Finally, it should be noted the Nets owners at the time were forced to take out loans that year to cover the losses.

The examples used here turned out not to be ideal ones. But as anyone who has dealt with accounting like this before will tell you, there is a lot of way to move money around on paper — the Nets claimed losses of more than $100 million over a couple years, ESPN’s accountants looked at it and found closer to $24 million in actual losses. Still, those are actual losses, you understand the owners concerns about the financial system the game has been using. The point that one should be cautious with the claims of ownership about the size of the losses they incur remains valid, however. But we strive here to be accurate.

June 30, 2:36 pm: It simpler to explain cold fusion than to explain the finances of an NBA team.

But Deadspin has gotten its hands on the books of the New Jersey Nets — from 2003 to 2006, so they are not new — and while they are outdated they also shed some light on how accountants for teams can turn small profits from teams into losses on paper.

Which would allow someone like David Stern to talk with a straight face about how 22 of the 30 teams are losing money, when in fact what you and I would consider the real numbers tell a different story in a number of those cases.

Deadspin’s Tommy Crags explains how the Nets lost $27.6 million in 2004:

That’s not a real loss. That’s house money. The Nets didn’t have to write any checks for $25 million. What that $25 million represents is the amount by which Nets owners reduced their tax obligation under something called a roster depreciation allowance, or RDA.

Bear with me now. The RDA dates back to 1959, and was maybe Bill Veeck’s biggest hustle in a long lifetime of hustles. Veeck argued to the IRS that professional athletes, once they’ve been paid for, “waste away” like livestock. Therefore a sports team’s roster, like a farmer’s cattle or an office copy machine or a new Volvo, is a depreciable asset….

If we’re trying to arrive at some idea of how much money the Nets really made in 2004, we’ll need to do a little crude math. Knock out the $25.1 million RDA — a paper loss, remember — and add the $9.1 million in tax savings. Suddenly, that $27.6 million loss becomes a $6.6 million profit.

It gets more complex when teams are sold, as the Nets were, because the new owners get to write off part of the purchase price. Larry Coon does a good job explaining this over at ESPN. And then there are the other businesses tied to this an NBA team owner may also own — if he owns the building you can charge rent or not, do all sorts of things to move the money around on paper. There are countless other examples.

Nobody — not even the players — are arguing that some markets are not hurting and that the system does not need adjustments. It does. More than the players want to admit. Owners in the NBA should have a fair opportunity to turn a profit — but if you put a bad product out on the floor and do a poor job marketing, you should not be guaranteed a profit. Like any business, you should need to earn it.

What we’re saying here is don’t take the owners word on what they are losing as fact. It’s very complex and there are plenty of ways to hide profits on paper — all legally, under generally accepted accounting principles — and make things look worse than they are.

It’s a trend: Russell Westbrook posts video of him singing two more breakup songs

LOS ANGELES, CA - DECEMBER 21:  Russell Westbrook #0 of the Oklahoma City Thunder and Kevin Durant #35 discuss play during the first half against the Los Angeles ClipperLos Angeles Kingsat Staples Center on December 21, 2015 in Los Angeles, California.  NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this Photograph, user is consenting to the terms and condition of the Getty Images License Agreement.  (Photo by Harry How/Getty Images)
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At this point, there is zero chance Russell Westbrook‘s posts are a coincidence.

First. he posted a video of himself singing along to Lil Uzi Vert’s “Now I Do What I Want.”

Then came the shoe ad that was another little jab at now Warriors Kevin Durant.

Now comes Westbrook’s return to karaoke posts, this time singing Taylor Swift’s “We Are Never Getting Back Together” and Katy Perry’s “Wide Awake.”

Apparently, Westbrook and Durant are having one rough teenage breakup.

Fun throwback video: Paul George vicious dunk on LeBron’s Heat

Indiana Pacers' Paul George goes up for a dunk during the second half of an NBA basketball game against the Brooklyn Nets, Friday, Dec. 18, 2015, in Indianapolis. Indiana won 104-97. (AP Photo/Darron Cummings)
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One of the great stories of last season was the return of Paul George to All-Star level form (then to watch him be crucial to the USA winning gold this summer).

It was a great story because vintage Paul George was so great. Watch this throwback video of him blowing by LeBron James and dunking over Chris Andersen from a few years back — this is vicious.

@ygtrece to the rack in the #NBAPlayoffs! #NBAvault

A video posted by NBA History (@nbahistory) on

By the way, if you’re not following NBA history on Twitter and Instagram, you’re doing it wrong.

Chris Bosh on if he’s working out: “Yes, I’m hooping. I’m a hooper.”

CHARLOTTE, NC - APRIL 25:  Chris Bosh #1 of the Miami Heat watches on from the bench against the Charlotte Hornets during game four of the Eastern Conference Quarterfinals of the 2016 NBA Playoffs at Time Warner Cable Arena on April 25, 2016 in Charlotte, North Carolina.  NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement.  (Photo by Streeter Lecka/Getty Images)
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Chris Bosh wants to play basketball this season. Of that, there is no doubt.

The question is will the Heat let him after he missed the end of the last two seasons due to potentially life-threatening blood clots? If so, will he have minutes or travel restrictions?

Bosh is working out to get ready for the season — he posted a video of it Monday on Snapchat, showing off his handles, and put it this way: Ues, he’s hooping.

The Heat and Bosh need to come to common ground on this before training camp opens. Bosh is on blood thinners for his condition, the team and he need to decide if he can come off them on game days or if there is another protocol that works for everyone.

The Heat would be a vastly better team with Bosh on the court this season, but that didn’t motivate them to bring him back during the playoffs last season (even though he wanted to). Whatever happens, Bosh wants to play.

Former Nuggets coach Bernie Bickerstaff talks when Mahmoud Abdul-Rauf sat for Anthem

15 Mar 1996: Point guard Mahmoud Abdul-Rauf of the Denver Nuggets stands in prayer during the singing of the National Anthem before the Nuggets game against the Chicago Bulls at the United Center in Chicago, Illinois. Abdul-Rauf came to an agreement with
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Twenty years before Colin Kaepernick made his stand by sitting for the national anthem during preseason games — something he has every right to do: if we are going to force compliance in our rituals of allegiance how are we different as a nation than the countries we rail against for forced indoctrination? — the NBA had Mahmoud Abdul-Rauf.

For those that don’t remember, Abdul-Rauf was a good NBA guard and a member of a Denver Nuggets in the mid-1990s. He had converted to being a Muslim during his playing career. As his faith and beliefs grew, he came to view the flag as a symbol of oppression. In the middle of the 1995-96 season, he told the NBA he would no longer stand for the anthem. Everything was kept quiet for a while, but when the PR storm hit it led to a few strange days — the league suspended him at one point — before was a compromise where he would stand for the anthem but pray into his hands during it.

Bernie Bickerstaff was the coach of the Nuggets at the time and went on SiriusXM NBA Radio Monday to talk about those days. His first reaction was that of virtually every coach who has heard or talked about Kaepernick.

“Distractions,” Bickerstaff said. “It caused a lot of distractions, and you know at that point the number of media members was not quite as resounding as it is today. But still, it was a distraction.”

Bickerstaff said he was blindsided byAbdul-Rauf’s decision, and he said they scrambled to deal with the fallout. He said he and the brain trust of the team eventually had a meeting with the guard and told him if he wanted to be on the team he had to stand for the anthem.

“We had him come in, to sit down and have a conversation, and the conversation was about, the one thing that we have in this life is freedom of choice, and with that choice comes consequences. And my conversation with him was simply that one of the guys I probably admired most at that time was Muhammad Ali, because not only did he make a decision not to step forward but it was the part of it, the things that he gave up, and our message basically to (Abdul-Rauf) was ‘Hey, that’s the guy I admire. If you really feel that way then you go home, and you give us a call and let us know you’re willing to walk away from that contract, and then I can really, really, respect that…

“When he got home, we got a call and he said ‘I think I want to be on the trip.’ And that’s our understanding, if you’re on the trip, then you’re standing.”

The NBA came in with a more fair compromise.

If this were to happen again with the NBA, it would be interesting to see how Adam Silver would handle this compared to the heavy-handed David Stern.