Why are the Cavs losing money?

[BRHornet45]

and sons many of you like to hate on N.O., Orlando, San Antonio, Indiana, and other small market teams. Cleveland has the biggest star in arguably all of sports and is still losing $20M per season....

http://www.nydailynews.com/sports/basketball/2010/04/17/2010-04-17_bad_bounces_for_the_nba_with_league_claiming_lo sses__players_crying_foul_lockout.html#ixzz0lbhTEz 7x


In seven seasons in the NBA, LeBron James has done everything you could ask of a player who came in directly from the high school ranks. He's taken the once down-trodden Cleveland Cavalier franchise to its first NBA Finals, played in six All-Star Games, won a regular-season MVP award, is favored to win his second-straight MVP and has led his team to the best record in the NBA for the second straight season.

If he only had the Midas touch when it came to making his team money, James would be even better than advertised.

Despite all that James has done to turn Cleveland into a winner, the Cavaliers have been losing upwards of $20 million per season over the last two seasons, and are projected to lose anywhere from $10-$15 million this season, according to league sources with knowledge of the team's finances.

Not that the Cavs are alone. They're one of many of the 30 NBA teams expected to lose millions — and supply the league's owners with what they see as an iron-clad case for changing the current economic model when the labor agreement expires after next season.

[Darthkiller]

because it's cleveland..

[Thunder Dan]

because they are like $40,000,000 over the cap, they have reasonable ticket prices and they chose not to increase ticket prices each of the last 2 years. They knew they would have a playoff run to get into the black.... good business if you ask me. Spend the money to keep the reason your franchise is worth so much, worry about making a profit in the playoffs. If you count your money you make during the season, you risk losing your franchise.

Remember that the Cavs are Dan Gilbert's toy...not his source of income. He makes his money elsewhere

[FalleNxWiZarDx]

:(

[D2Procon]

Because Cleveland is full of factories......

[Thunder Dan]

CLEVELAND, Ohio -- On Monday night, the Cavaliers sold out their 79th consecutive game.

It was a premium game, too. With increased playoff ticket prices and without having to pay the players additional salary for the postseason game, the Cavs earned seven figures on the event for their coffers. This is the reason why the playoffs are often the difference between making money and not in a season.

It will be for the Cavs, too.
Additional coverage

Two league sources familiar with the Cavs' finances said the Cavs have a chance to make money this season if they advance to the Eastern Conference finals. That is despite a payroll that will exceed $100 million, including luxury taxes, ranking them fifth in the NBA.

Last season, the Cavs, who paid out in excess of $100 million in salary, finished just below the break-even line, sources said.

Most league executives will explain that the bottom of the balance sheet depends largely on how the accounting is performed. The Cavs, which also profit from concerts and events at The Q plus parking revenue from Gateway garages, include arena operating earnings plus payments on the debt Dan Gilbert took on when he bought the franchise when calculating their bottom line.

Some teams who have been owned by the same groups for decades don't have the same debt load as the Cavs, which Gilbert purchased for $375 million in 2005.

So far this season, the Cavs' operating revenue is indeed in the red, sources said. They are part of the heavy losses in the NBA that will cause the salary cap to decrease for the second year. In February, NBA Commissioner David Stern said the league this season may lose $400 million -- a number the Players Association has disputed.

Everything is in dispute between those parties these days as they dig in for what could be a protracted and hostile negotiation for a new labor contract when the current one ends after next season.

So while the Cavs are a success story, the team is also an example of the problem within the league.

This season, the Cavs are expected to set a team record for revenue, with ticket sales and suite sales up from last season. They also have one of the top five highest-paying local television deals in the NBA, a product of a huge offer from Fox Sports Ohio four years ago after that network lost the Indians' rights to SportsTime Ohio.

Most of that money flows in because of LeBron James, who is a major television and gate draw and is a bargain at his $16 million salary. But to surround James with talent in hopes of re-signing him this summer, the Cavs have made a series of investments, including a $25 million practice facility and more than $300 million in payroll over the past four seasons.

After never paying the luxury tax in team history, the Cavs will do so for the third consecutive season. It is a punitive tax, charging a team a dollar for every dollar it spends over the $71 million tax line.

The problem is the Cavs need all of that revenue just to break even. The Los Angeles Lakers, meanwhile, reportedly earned in excess of $50 million last season.

That is why midmarket teams such as the Cavs are pushing for a change in how the money is distributed. Gilbert is on the committee that is negotiating a new labor contract.

"They don't use revenue sharing in this league," Memphis Grizzlies owner Michael Heisley told AOL Fanhouse earlier this month.

"If they want small-market teams to compete, you have to find another way. You have to hit the jackpot and get LeBron James. Then you have to surround him with players, and you have a $100 million payroll and you don't make money."

At the end of the day, Gilbert has told confidants and members of the team's front office that he is committed to continue spending -- even if that means losses and even if it takes 60 wins and a deep playoff run to squeeze out a profit.

http://www.cleveland.com/cavs/index.ssf/2010/04/nba_playoff_run_necessary_for.html

[eisfeld]

Isn't the city of Cleveland cursed?

[endrity]

BR, you still here?

I told you man, go get an education. With a brain like yours (or lack thereof) you have more important issues to take care of than writing in a bball forum.

Lol, innocent till proven guilty!!!

[BRHornet45]

BR, you still here?

I told you man, go get an education. With a brain like yours (or lack thereof) you have more important issues to take care of than writing in a bball forum.

Lol, innocent till proven guilty!!!

lol son you sissy cuck you ... show me proof of your claim and I'll show you mine! that is all I ask!

[dmavs41]

becuz of joakim noah

[Ghazi]

A more intriguing question is why is Chris Paul such a whiny flopping injury prone faggot?

:lmao 121-63
:lmao 37-45
:lmao thinking Thornton/Collison are pillars of a bright future
:lmao Hornets

[BRHornet45]

lol son and yet another intriguing question would be how can a cab driver afford to pay $250 for a hand job? Ghazi plz explain.

[TheRealCB]

:lmao thinking Thornton/Collison are pillars of a bright future



They are,stop being a faggot..

[mogrovejo]

Because the CBA negotiations are 1 year away so suddenly franchises who were making money are now bleeding it because Stern wants to have the public favour in case he needs to go for a lock-out and he knows suckers like you guys will believe that franchises are paying too much in players salaries even though players salaries have been capped at 57% of part of the revenue for years and that part of the revenue has been stable - meaning that lots of teams have suddenly decided to start spending millions and millions of dollars in the last 2 seasons in something else than players even though we're in the middle of an economic crisis.

[ChrisRichards]

lol son and yet another intriguing question would be how can a cab driver afford to pay $250 for a hand job? Ghazi plz explain.
:lmao:lmao:lmao

[LnGrrrR]

because it's cleveland..

[jack sommerset]

I heard tourism is down.

[Pelicans78]

A more intriguing question is why is Chris Paul such a whiny flopping injury prone faggot?

:lmao 121-63
:lmao 37-45
:lmao thinking Thornton/Collison are pillars of a bright future
:lmao Hornets

Collison/Thornton >>>>>>>>>>> Terry/Roddy

[Pelicans78]

A more intriguing question is why is Chris Paul such a whiny flopping injury prone faggot?

:lmao 121-63
:lmao 37-45
:lmao thinking Thornton/Collison are pillars of a bright future
:lmao Hornets


LOL Dirk settling for jumpers. Hate to say it, but he's just a taller, slower, softer version of David West.