To match Interview NBA/STERN

Report: How NBA owners turn profits into paper losses


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has gotten its hands on the books of the New Jersey Nets — from 2003 to 2006, so they are not new — and while they are outdated they also shed some light on how accountants for teams can turn small profits from teams into losses on paper.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

Hawks retire Dikembe Mutombo’s No. 55

Dikembe Mutombo
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ATLANTA (AP) The Atlanta Hawks retired Dikembe Mutombo’s No. 55 jersey Tuesday night to honor the longtime shot blocker’s Hall of Fame enshrinement.

Mutombo signed as a free agent in 1996 to make Atlanta the second stop on an 18-year career he spent with five other teams.

“I don’t think I ever thought my jersey would be retired,” Mutombo told reporters after his jersey was hung from the arena rafters in a halftime ceremony. “My name will stay forever.”

The 7-foot-2 Mutombo was a four-time NBA Defensive Player of the Year, an eight-time All-Star, and he ranks second on the league’s career blocked shots list and 20th in rebounds.

Through his foundation, Mutombo, 49, built a hospital that has served 140,000 in his native Congo. He twice won the NBA’s J. Walter Kennedy Citizenship Award and now works for the league as a global ambassador.

Mutombo was enshrined in the Naismith Memorial Basketball Hall of Fame two months ago.

Warriors make NBA history as first team to start season 16-0

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OAKLAND, Calif. (AP) The defending champion Golden State Warriors set the record for best start in NBA history at 16-0, as Stephen Curry had 24 points and nine assists in a 111-77 rout of the Los Angeles Lakers on Tuesday night.

With their coach sidelined, the Warriors surpassed the 15-0 starts by the Washington Capitols of 1948-49 and 1993-94 Houston Rockets.

Confetti streamed down when the final buzzer sounded and Golden State’s players barely celebrated.

Kobe Bryant shot 1 of 14 for just four points, matching the worst-shooting performance of his career in a game where he had at least one basket. The Lakers dropped to 2-12 with the second-worst record in the NBA.

Draymond Green added 18 points, seven rebounds and five assists as the Warriors extended their franchise-record home winning streak to 27 games with coach Steve Kerr watching from behind the scenes while recovering from complications following two back surgeries.

Interim Luke Walton is leading the way, and it might have been a little sweeter to set the record against the Lakers franchise he helped win two titles.

Golden State became the sixth team in NBA history to win 20 consecutive regular-season games, a streak dating to last season. The Suns have the next shot at stopping this incredible start when the Warriors visit Phoenix on Friday night.

Curry only had to play 30 minutes, taking a seat for good with 6.5 seconds remaining in the third to huge cheers from a sellout crowd of 19,596 that was really closer to 20,000 with all the standing-room only tickets sold.

Bryant went 1 for 7 from 3-point range in 25 minutes as Los Angeles lost its fourth in a row and eighth in nine.

He also finished 1 for 14 last season against San Antonio, according to STATS.

Klay Thompson had 11 points but missed his first seven shots and, as has been the case in a handful of these wins, the Warriors took a few minutes to get rolling – and then they were off and running.

Golden State missed five of its first six shots before Curry’s 3-pointer from the left wing at 8:28. The Warriors knocked down five of their first 12 from long range to build a 27-9 lead with 1:41 left in the opening period.


Former Warriors shooting guard Jason Richardson couldn’t believe the fortunate timing: Golden State honored him Tuesday and he got to be at Oracle Arena to see his old team make history. He received a framed jersey from Adonal Foyle in a presentation after the first quarter.

“Even though I didn’t retire a Warrior, you guys make me feel like a Warrior for life,” he told the crowd.

Richardson, part of the 2007 “We Believe” team that reached the second round of the playoffs after ending a 12-year drought, has been a big supporter of Green, who took a similar path from Saginaw, Michigan, to Michigan State to Golden State. Green wears Richardson’s No. 23.

“I think Draymond shocked everybody besides himself,” said Richardson, Golden State’s first-round pick taken fifth overall in the 2001 draft.


Los Angeles coach Byron Scott was part of his share of special teams with the Lakers, too. He recalls when they were winning nearly every night.

“I think once it’s all over, you look back and realize how much fun it was,” Scott said. “One thing Riles (Pat Riley) wouldn’t let us do is live on what we did the last night.”


Lakers: The Lakers were outscored 35-17 in the third and have lost eight of 11 at Oracle. … Chasing a loose ball in the first, Bryant slid right into the courtside area by owner Joe Lacob, who gave him a safe sign. … Nick Young borrowed ex-Warriors guard Gilbert Arenas’ black and gold shoes.

Warriors: Golden State has won six straight at home against the Lakers for its longest streak since seven in a row from 1993-95. … The Warriors have scored 100 or more points in 43 consecutive home games, longest since the Nuggets did so in 47 straight from Feb. 1, 1990-Feb. 23, 1991. … Walton confirmed before the game his car was stolen last week in Oakland and he credited authorities apprehending and charging a suspect. “That’s part of life,” he said. “They did a good job.”


Lakers: At Portland on Saturday.

Warriors: At Phoenix on Friday.

Kristaps Porzingis grew up a Kobe fan. Still is one.


When you hear player comparisons for Knicks rookie, the most common is Dirk Nowitzki — a European big with ridiculous shooting range and potential to embarrass anyone.

So did he grow up idolizing Dirk? Not so much.

Rather, like many of his generation, he grew up idolizing Kobe Bryant, he told Mike Francesa of WFAN.

“My favorite player growing up was Kobe. The Lakers were my team and I still love him.”

There is an entire generation of NBA players — and just fans — who would say the same thing.

In the interview, Porzingis laments his missed shots and turnovers, he thinks he can be a lot better. That is exactly what you want out of a rookie. It’s a huge adjustment playing at the NBA level, the speed of the game and IQ is a leap from Europe (or college). Recognizing the challenge is part of it.

There’s a lot to like in Porzingis. He could be special (we don’t know yet, we see only the potential). But idolizing Kobe — and if you understand the work he put in, the passion for the game — can be a good start.

(Hat tip NBA reddit)

Warriors’ interim coach Luke Walton’s car stolen

Luke Walton

If you’re looking for a “when are things going to go wrong for the Warriors” moment, we have one for you. But it may not be what you had hoped for.

Warriors’ interim head coach Luke Walton — the guy on the sidelines for the 15 (soon to be 16) game winning streak — had his car stolen during a crime spree, reports

One of the cars stolen during an Oakland Hills crime spree belongs to Golden State Warriors coach Luke Walton, Alameda County District Attorney Nancy O’Malley said late Monday.

Walton’s Mercedes Benz was stolen Tuesday by two suspects, who police believe are also responsible for a violent attack on a 75-year-old woman outside her home on Thursday. The suspects also took the woman’s car during the attack, according to police.

Yikes. That’s serious.

I’m sure Steve Kerr has like 14 cars, he can loan one to Walton.