Pittsburgh screws the Bucks… and other thoughts

One of the more disturbing, disillusion-inducing stories of the last year in sports came out last week when Deadspin, the usually ribald but occasionally brilliant website, uncovered some infuriating secret documents that show that baseball’s Pittsburgh Pirates and Florida Marlins, two teams that have been sucking out of the public troughs like elephants on a hot summer day, were using baseball’s revenue sharing programs to line their wallets.

Why is it so infuriating?  Because teams who are actually trying to win and still losing money, like your Milwaukee Bucks, have just seen any hope of enhanced revenue sharing streams dry up.  And that new Bradley Center wasn’t likely anyway.  Thanks, Pit Rats.

How do I know the Bucks lost money?  I don’t.  But Professor Berri points out in his post that the information Deadspin uncovered was already known.  Forbes Magazine had projected each team in the black long before Deadspin proved it.  But without the smoking gun provided by Deadspin baseball was able to pull a Sammy Sosa when it came to Forbes projections (“I’m sorry Senator, but my client temporarily lost his ability to understand English“)

The point is, given the recent revelations, Forbes Magazine’s sports financial projections have earned a certain foundation of credibility.  And what they say about your Milwaukee Bucks is disturbing, indeed. 

According to a Forbes projections from last December, the 2009 Milwaukee Bucks had a lower EBITDA than the Memphis Grizzlies

May I repeat that?  The Bucks had a lower projected earnings before interest, taxes, depreciation, and amortization than the Grizz.  Ouch.  How is that possible?  (Is trying to win, especially via overspending, even worth it?). 

Even more disturbing, Forbes considers the Bucks the lowest valued NBA franchise.   30th in the Association.  Dead last.  Behind Memphis and New Orleans.  And, thanks to Anderson Cooper and Geraldo Rivera and Brian Williams and any other reporter that could breath and operate on location, I learned last week that New Orleans is still recovering from some bad storm that hit there a while ago or something.  (Did you hear any of that mentioned on the news last week?) 

 But the real point of this post is, the Milwaukee Bucks probably aren’t necessarily lining their pockets, and if they were hoping to stay viable inthe Milwaukee market, they were probably hoping at some point to get a little subsidy and maybe a little “fat financing” on a new arena from the good people of Milwaukee (to quote Bud Fox).

Fat chance, now.  Thanks, Pittsburgh.  Kudos, Jeffrey Loria.  But the coffee’s probably still good in Seattle.

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3 Responses to “Pittsburgh screws the Bucks… and other thoughts”

  1. Chicago Tim Says:

    The Bucks still should be able to get a subsidy from the public coffers if they play their cards right — unfortunately, that might involve threatening to move, or actually moving. And just to be clear, I’m not in favor of such subsidies.

    The real good news is that there are lots of incompetent GMs and coaches out there, so despite its handicaps Milwaukee has a good chance to remain competitive, although no one is competitive with Miami right now.

  2. tywill33 Says:

    Chicago certainly doesnt need any subsidies. Wow. I knew they drew well and did well, but did you see their numbers?

    And one other point. While the value of teams seems in line with what we’d expect, operating incomes are not. You see Portland takes a huge bath… and that’s despite having that Northwest market all to themselves.

  3. Chicago Tim Says:

    I hadn’t looked at the link until you suggested it, but I’m not surprised. Reinsdorf has run the Bulls very, very profitably in a prime market, employing mostly players on rookie contracts and refusing to ever pay the luxury tax.

    However, many fans question Reinsdorf’s commitment to winning. Even this year, Reinsdorf has avoided the luxury tax. Granted, there’s no reason to pay the luxury tax if you don’t have to, but Reinsdorf’s reputation may have something to do with the decision of Wade and James to go to Miami instead.

    If Reinsdorf had gambled on Pau Gasol or Garnett when those players were available he might have built a championship team and built a reputation that would have attracted Wade and James, while still profiting handsomely. Of course, if he had gambled unwisely on players not worth the max contract he could have hurt his profits and his reputation like the Knicks have done, so arguably he has made the wise business decision. But the Lakers demonstrate that Reinsdorf could have built a championship team while still maintaining and even growing profits.

    Note that operational profits are not the only benefit of owning these teams. They also appreciate in value over time, pretty steadily.

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