Tag: Dan Gilbert


About the owners losing money, it’s really complicated


There are NBA owners who have wondered if player endorsements should not be money in the basketball related income pool — those players wouldn’t make their money if not for the teams.

But what about the other side of that coin — money the owners make on other businesses because they own and NBA franchise as well. Owners have complex finances and there are other projects they have that directly or indirectly feed off the NBA teams. For example, Cavaliers’ owner Dan Gilbert has casinos he got a sweetheart deal to build based on his NBA team’s popularity during the LeBron era, for example. That’s not money the Cavs make, but it’s money the owner would not have gotten without also owning the Cavs.

Which brings us to the Brooklyn Nets, the name they will take on next season. Bruce Ratner owned the team until he sold last year to Mikhail Prokhorov and it is one of David Stern and the owners talking points about how Ratner sold the team at a loss.

But Malcolm Gladwell tells a different, more complex story at Grantland. One that involves Ratner making a lot of money on his Atlantic Yards real estate deal — where the new arena will be central to new housing and retail — and needing the Nets to make sure the city and many residents were behind him taking over an existing neighborhood to get this built.

Ratner has been vilified — both fairly and unfairly — by opponents of the Atlantic Yards project (where the Nets new home is going up). But let’s be clear: What he did has nothing whatsoever to do with basketball. Ratner didn’t buy the Nets as a stand-alone commercial enterprise in the hopes that ticket sales and television revenue would exceed players’ salaries and administration costs. Ratner was buying eminent domain insurance. Basketball also had very little to do with Ratner’s sale of the Nets. Ratner got hit by the recession. Fighting the court challenges to his project took longer than he thought. He became dangerously overextended. His shareholders got restless. He realized had to dump the fancy Frank Gehry design for something more along the lines of a Kleenex box. Prokhorov helped Ratner out by buying a controlling interest in the Nets. But he also paid off some of Ratner’s debts, lent him $75 million, picked up some of his debt service, acquired a small stake in the arena, and bought an option on 20 percent of the entire Atlantic Yards project. This wasn’t a fire sale of a distressed basketball franchise. It was a general-purpose real estate bailout.

Did Ratner even care that he lost the Nets? Once he won his eminent domain case, the team had served its purpose. He’s not a basketball fan. He’s a real estate developer. The asset he wanted to hang on to was the arena, and with good reason.

This is essentially what AEG did with Staples Center (minus the eminent domain) — they got a piece of the Lakers and were able to build a new, modern arena around which they have now built the L.A. Live complex — home to shops, restaurants, condos, the Nokia Theater, hotels and the West Coast headquarters of ESPN. AEG made a lot of money off all that, something that would not have been possible without the energy of Staples and particularly the Lakers. Frankly, Kobe Bryant should be getting a check from L.A. Live.

Which all comes back to how complex figuring out whether a team made or lost money can be. Did Ratner lose money on the Nets in the real sense of the word? If an NBA owner has control of both the arena and the team, there is a lot of ways money can be moved around. Remember, only 40 percent of in-arena sponsorship money is counted by the league as “basketball related income,” but if the owner also owns the building he gets the other 60 percent, too.

NBA finances are a complex web. No doubt the recession has hit the owners and NBA franchises, but be careful about believing everything the league tells you about money lost.

Cavs owner Gilbert denies labor charges in his own way

Dan Gilbert

You couldn’t make up someone like Dan Gilbert. No matter what font you used.

We told you yesterday of a report that Cavaliers owner Gilbert and Suns owner Robert Sarver torpedoed progress at the labor negotiations Tuesday between the owners and players. That report comes from a trusted source in Dave McMenamin of ESPN. That said, we also told you to take it with a grain of salt because there are a lot of people interested in defining the owners as divided when they may not be. Also, David Stern denied that is how the talks went down.

Which brings us to Gilbert’s tweet Thursday night.

Some of these NBA ‘bloggissists’ flat-out make stuff up and then try to dupe readers into believing their fiction is real. Sad & pathetic.

I don’t know what ‘bloggissists’ are exactly, but in this case I’ll defend them.

First, as noted above this report came from an ESPN reporter who before that worked for NBA.com. McMenamin is a lot of things — including honorable — so I have no doubt that reliable sources gave him that story. Now, do his sources have an agenda? Yes, anytime you read something from an anonymous source that source has an agenda. Otherwise they wouldn’t be leaking it anonymously.

As for ‘bloggissists’ and the rest of the Web picking the story up — yes, we did. First because it passed the smell test — after how Gilbert reacted in the post-LeBron era it is not hard to see him as a hardliner who is vindictive and intent on busting the union. It is not hard to see him as someone wanting to make the players feel some pain out of these negotiations. That is not a massive leap of faith.

But we expect that you readers of this blog to have a shred of common sense. We pass along the reports like this and we note in our version some words of caution about believing it. After that, it’s up to the reader to decide what “the truth” is (as if there is one simple truth, which is another myth for another time).

You as the public gets to make choices about what you choose to read and believe — which is a much better situation than a few decades back when the media got to play gatekeeper on the information that got to you. Now you get to play gatekeeper, but that means you need to be educated and think about where stories come from and why.

You can decide for yourself if Gilbert and Sarver crushed a deal, or if they raised the points of other small market owners in that meeting and the union leaked the story just trying to bolster its case in the court of public opinion. You are the gatekeeper now.

Report: Owners of Cavs, Suns killed potential labor deal

Dan Gilbert

UPDATE 10:19 pm: David Stern called this report “incorrect and fictional” in his press conference following Thursday’s Board of Governor’s meetings.

You can take that as the gospel truth or you can take it as Stern covering the backside of his owners. We all know this was the only thing Stern could say, he had to shoot it down. Decide for yourself what you want to believe, as Agent Mulder always told us “the truth is out there.”


6:49 pm: Right now, the hardliners among the NBA owners are driving the labor negotiations bus — they want a larger share of the overall basketball related income, they want revenue sharing and they want a hard salary cap. All of it.

The bigger point is that right now the heavyweight, veteran owners are not blocking them (see the Lakers and Jerry Buss).

Which brings us to this account of Tuesday’s big negotiating session in New York between the owners and players, as reported by Dave McMenamin at ESPN. (Hat tip to I am a GM.)

Owners and players initially found reason for optimism during Tuesday’s meetings. Commissioner David Stern and Peter Holt, the head of the owners’ executive committee, felt that the players’ proposal to take 52 or 53 percent of basketball-related income, compared to 57 under the previous agreement, was basically fair, sources said.

Owners were seriously considering coming off of their demand for a salary freeze and would allow players’ future earnings to be tied into the league’s revenue growth, a critical point for players. The owners also were willing to allow the players to maintain their current salaries, without rollbacks, sources said.

But when the owners left the players to meet among themselves for around three hours, Cleveland’s Dan Gilbert and Phoenix’s Robert Sarver expressed their dissatisfaction with many of the points, sources said. The sources said that the Knicks’ James Dolan and the Lakers’ Jerry Buss were visibly annoyed by the hardline demands of Gilbert and Sarver.

Now, let’s start by taking all this with a little salt. The public relations battle of the day is an effort by the players to paint themselves as unified and the owners as divided and in the way of the deal. They did it after Thursday’s union meeting, they did it in Derek Fisher’s letter. McMenamin is a good reporter (and a friend of this blog), and I don’t know his (or ESPN’s Chris Broussard, who is named in the story) sources, but if the report paints the owners in a bad light, you can guess it came from someone with the players’ interests at heart. That does not make it objective truth.

A second point — Sarver and Gilbert speak for other owners. They are speaking from a small market perspective, and while we can easily say “they are stopping progress” for them this bit of progress is not the end goal. They may want to go too far, but right now who is stopping them? And some of their points may be valid.

That said, it’s not hard to visualize this playing out pretty much like this. And it’s easy to point out the irony that if Gilbert still had LeBron James in Cleveland he would view all of this very, very differently.

The players have their lines in the sand, too — and keeping salaries tied to league revenues is one of them. As it should be — the league is expected to get massive new television deals in the coming years (local now and national in 2016) and the players should not be totally shut out of all that new money flowing into the league. This should be a partnership.

There no doubt are differences in owners’ opinions. No doubt they will paint themselves as unified but the disagreements and differences are there. And as long as the hardliners are allowed to drive the boat with key owners sitting back, as long as a radical overhaul is the demand, then the lockout will drag on.