OT Bill Simmons Predicts NBA Expansion in Las Vegas With LeBron James as Face of Ownership

Discussion in 'Portland Trail Blazers' started by BigGameDamian, Mar 1, 2022.

  1. BigGameDamian

    BigGameDamian Well-Known Member

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  2. SlyPokerDog

    SlyPokerDog Woof! Staff Member Administrator

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    Notice they're talking about expansion vs moving an existing franchise.

    The rumored expansion fee is $2.5 billion. Or $5 billion for two teams.

    That would mean the current owners would each get a check for $167 million.

    They would get nothing if an existing franchise moved to either of those locations.
     
  3. SharpesTriumph

    SharpesTriumph Well-Known Member

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    It is true there could be a financial benefit to expansion. But it is not the simple $167 million you list.

    The owners are giving up 2/32 of future revenue. So this year with $10 billion of revenue that is $625 million the old owners would not get. Multiple that by revenue growth and every future year forever, and its a huge sum.

    It might come down to if Seattle and Vegas teams will increase the revenue of the league enough to account for splitting the pie in more slices forever, then adjust for the expansion fee.
     
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  4. illmatic99

    illmatic99 formerly yuyuza1

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    Given the losses they incurred from COVID, expansion is a no-brainer. And there's actually enough talent buried on benches now to not dilute the overall product too much.
     
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  5. SharpesTriumph

    SharpesTriumph Well-Known Member

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    All the NBA ownership groups are well capitalized or could get enormous bank financing if needed. I don't think COVID has any impact on this.

    If it's a large financial benefit to expanded they will do it.

    However if splitting the pie additional ways hurts in a similar amount to the expansion fee they won't.

    Depends how much additional revenue they project from Seattle and Vegas.
     
  6. SlyPokerDog

    SlyPokerDog Woof! Staff Member Administrator

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    Healthy expansion will increase the overall NBA fanbase and resulting TV ratings. It will also result in increasing TV revenue in future contracts.
     
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  7. SharpesTriumph

    SharpesTriumph Well-Known Member

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    Well of course revenue will increase. But will it increase enough to lose 2/32 of revenue forever? $600 million per year is $6 billion in only 10 years, more than the expansion fee. Plus revenue growth likely makes that amount larger, and the years go on forever. Plus the opportunity cost will be lost for expansion.

    I still think it will likely ultimately make sense for the NBA to go through with this type of expansion plan. Just pointing out its not as simple or profitable as grabbing a free $5 billion.

    At least the NBA doesn't have to split with the Silna brothers any longer. They ultimately made $800 million by 2014, for selling a team for $1 million less in 1976.

    https://huddleup.substack.com/p/the-greatest-business-deal-in-sports?s=r

    Agreeing to give up future revenue can be way more costly than it appears today.
     
  8. SlyPokerDog

    SlyPokerDog Woof! Staff Member Administrator

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    Wouldn't make even more sense for the league to file bankruptcy and then reform with only the Knicks and Lakers? Imagine how much money those owners would make if the pie was only cut in half instead of 30 slices.
     
  9. oldmangrouch

    oldmangrouch persona non grata

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    Here's a question for you. If The Blazers did move to Vegas, would Portland get a new expansion team?

    Disclaimer: I'm not convinced they actually intend to put a team in Seattle either.
     
  10. calvin natt

    calvin natt Confeve

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    Is this the real math? It seems a little too simple and if it were accurate there is no way ever they would expand. Doesn’t seem like it tells the whole story, namely increased revenue.
     
  11. SlyPokerDog

    SlyPokerDog Woof! Staff Member Administrator

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    If there were an ownership group that wanted to pay the $2.5 billion, sure.

    Even better...

    I will make you the following promise:

    If the Blazers move to Las Vegas, you guys start a GoFundMe and if you get me $2.49 billion, I will an expansion team and place it in Portland.
     
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  12. oldmangrouch

    oldmangrouch persona non grata

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    That isn't so much going out on a limb as it is clinging to the trunk with all 4 paws and your willie in a knot hole! :cheers:
     
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  13. BigGameDamian

    BigGameDamian Well-Known Member

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    If we lost the Blazers I wouldn’t be surprised if we got NHL before another NBA team. There are a couple of teams that will be looking to relocate in the next few years. Portland has been rumored for NHL for years now.
     
  14. SharpesTriumph

    SharpesTriumph Well-Known Member

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    No the math, it's not complete or perfectly accurate, just general numbers. Youd have to know the incremental revenues increase from 2 expansion teams, and more data. My main point is it's not as simple as owners getting a free 2.5 billion fee.
     
  15. handiman

    handiman Well-Known Member

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    But for an owner looking to sell (cough, Jody, cough), that's a nice perk on top of the sale price, when they don't have to worry about diminished future revenue as a result of the additional sharing.

    The diminished shared portion of revenue might be why the league has pushed so hard for overseas expansion. That way, teams are fighting over a bigger pie, rather than carving up smaller slices of mostly the same pie.
     
  16. SharpesTriumph

    SharpesTriumph Well-Known Member

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    But even if Jody is looking to sell, would a new owner be willing to pay the same full price after Jody just pocketed $167 million and they now only have a lower share of revenue? You might have a potential new owner willing to buy for an extra $300 million more if they can get the team prior to expansion fees. Or maybe not, its hard to know.

    I think you are right on overseas expansion, that could potentially bring much more revenue than just one more US team. Travel just seems like it would be a nighmere. It would probably have to be 2-4 teams if in Europe. Asia just has too much of a time difference. Mexico doesn't seem like it would be enough additional revenue.
     
  17. oldmangrouch

    oldmangrouch persona non grata

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    The issues surrounding putting a team in any major city in Mexico would overwhelming.
     
  18. handiman

    handiman Well-Known Member

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    I suspect future projections like that wouldn't have much impact on a franchise's current valuation. And with it being a seller's market when it comes to pro franchises, prospective buyers aren't really in a position to make a fuss about that.
     
  19. Fairly-Hard

    Fairly-Hard Former Member Gone New!

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    They simply add a couple more games to the season. This is mitigated quickly. Plus you add Vegas and Seattle. Think about that?
     
  20. SharpesTriumph

    SharpesTriumph Well-Known Member

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    If adding games helped revenue the NBA could do that now. Its an independent action and independent result of expansion fees.

    Yes Vegas and Seattle incremental revenue would need to be factored into the analysis. I have stated that in other posts.
     

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