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has gotten its hands on the books of the New Jersey Nets — from 2003 to 2006, so they are not new — and while they are outdated they also shed some light on how accountants for teams can turn small profits from teams into losses on paper.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

Report: After fining Wizards, league issues memo warning teams on bench etiquette

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The NBA league office fined Washington Wizards assistant coach Sidney Lowe $5,000 — and the team an additional $15,000 — for his role in distracting a New York Knicks shooter during a game this last week.

Now, the league has issued a warning to teams: make sure you’re practicing good bench etiquette, or we’re coming for your wallets.

According to ESPN’s Zach Lowe, the NBA sent a memo to all 30 teams on Saturday reminding them to remain on their own bench in accordance with league rules. Obviously that means no stepping onto active basketball courts:

So what are coaches needing to confine themselves to?

Official NBA rules state simply:

The coach’s position may be on or off the bench from the substitution box line (closest to the coach’s bench) to the baseline. A coach is not permitted to cross the midcourt line and violators will be assessed an unsportsmanlike technical foul immediately. All assistants and trainers must remain on the bench. Coaches and trainers are not permitted to go to the scorer’s table, for any reason, except during a dead ball.

Like we see with preseason points of emphasis, it’s possible we see additional fines in the weeks to come. Several coaches enjoy toeing the line (literally) to see what they can get away with and how far out on the court they can stand. Tom Thibodeau immediately springs to mind.

Or, it could go the other direction. Perhaps we see more coaches sitting back, respecting their distance?

Hopefully we just don’t see any more of them trying to close out on opposing shooters.

Joel Embiid wants the center position to return to the NBA All-Star ballot

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The NBA got rid of the center position on the All-Star ballot starting in 2013, thanks in part to some positional confusion around former San Antonio Spurs star Tim Duncan. But just a handful of years later, Philadelphia 76ers big man Joel Embiid says it should make a comeback.

Embiid — who finished third in the Eastern Conference for forwards in All-Star fan voting — told CSN Philly that due to the plethora of talented big men in the NBA, the position should return.

Via CSN Philly:

“There’s a lot of talented big men in the league, especially at the center position,” Embiid said. “That’s something the NBA should think about, putting the center back on the All-Star ballot.”

There has been a resurgence of talented and burgeoning centers that have entered the league and are performing at a high level. Embiid is one of them, and so too is DeMarcus Cousins, Karl-Anthony Towns, Nikola Jokic, Hassan Whiteside, Clint Capela, Rudy Gobert, DeAndre Jordan, Andre Drummond, Steven Adams, and Jahlil Okafor.

Adding the center position back might be a tough sell as having it doesn’t reduce eliminations from the roster. It’s much more free-flowing now, and there’s nothing keeping great centers off the All-Star team.

It would also be a little strange if center was added back but there wasn’t a point guard spot, too. ESPN’s Zach Lowe has suggested three categories for the roster in point guard, wing, and frontcourt. That idea is as good as adding the center position, perhaps moreso to many folks in the NBA.

I don’t think adding the center position will make a comeback any time soon. Meanwhile, we’re all just waiting to see if Embiid makes the All-Star reserves.

Magic’s Aaron Gordon skies for reverse alley-oop jam (VIDEO)

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Is Aaron Gordon a three or a four?

That’s a debate for another day. What we all know he can do is leap out of the building, and he showed off how that can be useful during a game Friday night — Jabari Parker actually defends this fairly well, Gordon can just go over the top of him and get it. With that, we get a highlight.

The Magic upset the Bucks 112-96, behind 20 from a resurgent Elfrid Payton. Parker had 25 for the Bucks.

 

Warriors embrace/struggle through yoga

OAKLAND, CA - JUNE 05:  Draymond Green #23 of the Golden State Warriors reacts in the second quarter of Game 2 of the 2016 NBA Finals against the Cleveland Cavaliers at ORACLE Arena on June 5, 2016 in Oakland, California. 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 Thearon W. Henderson/Getty Images)
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OAKLAND, Calif. (AP) — Anderson Varejao lowered his 6-foot-11 frame into a runner’s lunge and raised one arm high into the air to add a twist, demonstrating after a recent shootaround the new yoga pose he just learned.

Then, he took it up a notch and attempted an airplane balancing pose on one leg with his arms spread wide.

The Golden State Warriors have become yogis.

Coach Steve Kerr is committed to changing things up, and he gave Golden State a day off from the practice floor one day last week so the players could practice yoga instead. In the middle of a prolonged stretch at home with a more regular routine, the schedule allowed for some improvising.

“I really liked it,” Varejao said. “I’m going to do more.”

Doubt you’ll see Draymond Green or Klay Thompson doing downward-facing dog again soon – though Green might be talked into another try eventually.

“I’m bad,” Green said. “Yoga isn’t for everybody. I think it’s a great thing, I just don’t think my body is made for all of those different positions. I did well at a few of them. It’s hard, it’s tough. My body really isn’t cut out for yoga.”

The very next night after the group class, during warmups for a home game with the Pistons, player development coach Bruce Fraser pulled his foot to his opposite inner thigh for an impromptu tree pose. He laughed as an amused Shaun Livingston watched from the baseline.

Andre Iguodala is an experienced yogi who can really cat-cow and is considered top on the team, often taking classes. Center Zaza Pachulia also can forward fold with the best of them. They took prominent positions in the class led by Lisa Goodwin, Golden State’s director of corporate communications and also a yoga teacher, at a Berkeley studio – a first for Kerr taking the team away from team headquarters for a yoga session.

No surprise, two-time reigning NBA MVP Stephen Curry can bring it on the mat, too.

“We’ve had some optional yoga sessions at our facility. This is the first time we took everybody and made it mandatory,” Kerr said. “It was good.”

The temperature was about 92 degrees for the hour-long power vinyasa class, so it was steamy.

Everybody was drenched in sweat by the end for final resting pose, or savasana.

“My muscles felt good,” forward James Michael McAdoo said, rubbing his stomach where his core got a workout. “It was fun. It was hot in there, like working in a sauna. I told our strength and conditioning coach, `You got to step up your game. Lisa embarrassed us.'”

“It’s awful, it’s pitiful,” Thompson said of his own yoga ability. “It’s something I worked on and it’s something I actually enjoy. More than just being physically challenging, it’s an incredible mental workout. It tests your pain tolerance and your ability to push yourself mentally. That’s why I like it. It was really good. I think it helped a lot of us – everybody, even the coaches.”

Along with the experienced yoga veterans, there were some first-timers.

A few found it extremely tough.

“I’m not the most flexible,” acknowledged player development coach Chris DeMarco.

Assistant coach Mike Brown described his debut as “terrible.”

“For me, it was really hard, but it was fun,” he said, later adding, “I nearly passed out.”

Ron Adams, another assistant who focuses on preparing Golden State’s defense, happened to work out in the hottest corner of the room for his first time practicing in that high temperature.

“It’s such a cleansing exercise,” he said.

The Warriors aren’t the only ones doing it.

Detroit coach Stan Van Gundy has scheduled yoga time for the Pistons, saying: “It’s got its value, no question about it. Would I consider doing it with them? Probably not.”

Kerr goes whenever he can fit it in, typically taking an hour-long class during the lunch hour on game days when the schedule – and his body – allows.

It’s a time he can focus on taking some deep breaths, literally, away from the pressure-packed NBA workload and just be just another yoga student for 60 minutes out of his day.

This weekend marks one year since Kerr formally returned to the bench last Jan. 22 against Indiana after a lengthy leave of absence to deal with complications from a pair of back surgeries. Current Lakers coach Luke Walton led the way during a record 24-0 start and went 39-4 before Kerr’s comeback on the way to winning Coach of the Year after an NBA record 73-9 finish.

While the 51-year-old Kerr still has some discouraging, physically challenging moments dealing with pain and headaches, he considers himself fortunate to be on the sideline doing what he loves.

“I guess normal is a good way to say it. He seems like his old self,” Curry said. “You know he’s been through a lot just physically trying to recover from the surgeries he’s had. I can’t imagine the frustration, how long it took and things he had to do and all the doctors he’s met with. His whole story is crazy. We’re obviously happy to have him back but not only that, you see him with energy and his presence like he wants. It’s been good to see.”

Whether Kerr will take his team back to yoga any time soon, time will tell. The Warriors are at the season’s midway point and the “dog days” of January as Kerr has put it. Golden State was home for all but a night from Dec. 26 until leaving for Houston on Thursday for Friday’s game against the Rockets, with just a quick bus ride to Sacramento as the lone road trip in a 10-game stretch during that span.

Because there was so much time to practice, the yoga day was a nice change of scenery.

“Just to get away and go do something else,” Green said. “We’re still together doing something productive. But, it’s not for me.”