What we know about Celtics’ financial situation
|07.21.11 at 4:10 pm ET|
In case you haven’t heard, NBA owners have locked out their players, and the outlook appears grim, as Celtics owner Wyc Grousbeck is among a group willing to lose the entire 2011-12 season over the labor dispute.
Grousbeck and the rest of the ownership group purchased the Celtics in late 2002 for a then-record $360 million, taking on $180 million in debt. Forbes.com valued the franchise at $452 million after their near-title 2009-10 season, a 65.0 percent increase in value since the 2001-02 season.
Before we put how much the Celtics have made — and stand to make — from their new TV deal into perspective, let’s take a year-by-year look at how the Celtics have done financially since the current owners took helm …
- Value: $452 million
- 1-year value change: 5 percent
- Debt/value: 40 percent
- Revenue: $151 million
- Operating income: $4.2 million
2008-09 BOSTON CELTICS
- Value: $433 million
- 1-year value change: -3 percent
- Debt/value: 42 percent
- Revenue: $144 million
- Operating income: $12.9 million
2007-08 BOSTON CELTICS
- Value: $447 million
- 1-year value change: 14 percent
- Debt/value: 40 percent
- Revenue: $149 million
- Operating income: $20.1 million
2006-07 BOSTON CELTICS
- Value: $391 million
- 1-year value change: 6 percent
- Debt/value: 46 percent
- Revenue: $117 million
- Operating income: $18.3 million
2005-06 BOSTON CELTICS
- Value: $367 million
- 1-year value change: 4 percent
- Debt/value: 49 percent
- Revenue: $111 million
- Operating income: $15.7 million
2004-05 BOSTON CELTICS
- Value: $353 million
- 1-year value change: 5 percent
- Debt/value: 51 percent
- Revenue: $110 million
- Operating income: $8.4 million
2003-04 BOSTON CELTICS
- Value: $334 million
- 1-year value change: 15 percent
- Debt/value: 54 percent
- Revenue: $104 million
- Operating income: $25.4 million
2002-03 BOSTON CELTICS
- Value: $290 million
- 1-year value change: 6 percent
- Debt/value: 62 percent
- Revenue: $97 million
- Operating income: $25.6 million
2001-02 BOSTON CELTICS
- Value: $274 million
- 1-year value change: 25 percent
- Debt/value: 66 percent
- Revenue: $96 million
- Operating income: $17.4 million
Grousbeck & Co. have taken home a mere $148 million — an average of $16.4 million per year– since they took over the franchise during the 2001-02 season. Of course, it should be noted that Celtics veterans Kevin Garnett ($195.6 million), Jermaine O’Neal ($139.8 million), Ray Allen ($130.6 million) and Paul Pierce ($119.3 million) have all made similarly ridiculous salaries in that same time span.
Obviously, not every team makes as much money as the Celtics and not every player earns like Garnett, O’Neal, Allen or Pierce. But is it outrageous for Hall of Famers (with the possible exception of O’Neal) — for whom the fans pay to see and buy jerseys — to make as much during the prime of their careers as the ownership group does in that same time period? I don’t think so.
The problem arises when owners start doling out a crapload of money to a crapload of crap (that might be the best phrase I’ve ever written). A total of 17 teams lost money during the 2009-10 season, according to Forbes.com, but figuring out why isn’t all that difficult. Even for someone like me. Here are 17 quick fixes …
- Orlando Magic (-$23.1 million): How about not paying Rashard Lewis and Vince Carter a combined $34.1 million — both more than the franchise’s cornerstone, Dwight Howard?
- Charlotte Bobcats (-$20.0 million): When an NBA city fails, don’t grant them another one two years later. And don’t pay Boris Diaw and DeSagana Diop a combined $15.0 million.
- Indiana Pacers (-$16.9 million): Think you could cut $17 million from the $40.5 million you doled out to the likes of Troy Murphy, Mike Dunleavy, T.J. Ford, Jeff Foster and Jamaal Tinsley?
- Denver Nuggets (-$11.7 million): Kenyon Martin made $15.6 million for a few million dollars worth of production, once again proving injury-prone players shouldn’t get seven-year deals.
- New Jersey Nets (-$10.2 million): You know you’re in rough shape when Yi Jianlian looks like a good deal at $3 million compared to Bobby Simmons ($10.6 million) or Tony Battie ($6.3 million).
- Sacramento Kings (-$9.8 million): Kind of hard to make money when you’re paying Kenny Thomas and Shareef Abdur-Rahim a combined $15.0 million not to play for your team.
- Dallas Mavericks (-$7.8 million): Erick Dampier made $12.1 million that season. Enough said. Not that Mark Cuban cares about losing that $7.8 million.
- Atlanta Hawks (-$7.3 million): Everybody makes a big deal about Joe Johnson‘s six-year $119 million deal last offseason, but he wasn’t even worth the $15.0 million he made in 2009-10.
- Minnesota Timberwolves (-$6.7 million): What’s worse: Mark Blount for $8.0 million, Darko Milicic for $7.5 million, Antonio Daniels for $6.6 million or Troy Hudson for $5.0 million? Take your pick.
- Miami Heat (-$5.9 million): Taking on Jermaine O’Neal‘s two-year, $44.3 million contract a year after he missed half the season due to injury probably isn’t the smartest move.
- New Orleans Hornets (-$5.9 million): Would you rather have a second-round draft pick that costs zero dollars or Peja Stojakovic for $13.4 million? They chose the latter.
- Washington Wizards (-$5.2 million): Where to begin? Their top-five salaries: Gilbert Arenas ($16.2 million), Josh Howard ($10.9), Mike Miller ($9.9), Mike James ($6.5) and Randy Foye ($3.6). Ouch.
- San Antonio Spurs (-$4.7 million): Two words: Richard and Jefferson. They actually wanted his $14.2 million contract from the Bucks. Is $40,000 per field goal a bargain? I think not.
- Utah Jazz (-$3.9 million): I don’t know if Andrei Kirilenko actually held an AK-47 to their heads, but they paid him $16.5 million to come off the bench.
- Memphis Grizzlies (-$2.6 million): What’s more surprising: a) they paid Steve Francis $18.4 million, Antoine Walker $9.1 million and Mark Jaric $7.1 million, or b) they only lost $2.6 million.
- Milwaukee Bucks (-$2.0 million): How quickly did Michael Redd sign that six-year, $90 million contract in 2005? 0.2 or 0.1 seconds? That’s how you end up paying him about $1 million per game down the road.
- Philadelphia 76ers (-$1.2 million): Elton Brand played eight games for the Clippers in 2007-08, so what do the Sixers do? Trade for the remaining five years and $80 million left on his contract.
Ken Burns could do an epic documentary series on the number of insanely asinine contracts in the NBA. But whose fault is that? If you’re Brendan Haywood, and the Mavericks offer you $55 million, what are you supposed to say? “Sorry, Mr. Cuban, I don’t think I’m worth half that much.” When Gilbert Arenas is the voice of reason, you know the NBA owners are doing something wrong. Here’s a synopsis of a series of tweets from Agent Zero:
I read an article yesterday that said I’m the poster boy for what the owners are complaining about. I’m going to explain it in everyday terms. If I put a $100 shoe on eBay and two people push the bid to $200, don’t get mad at the shoes — get mad at the bidders.
So, 28 owners say I’m worth $50 million, but two owners start trying to outbid each other, and now I’m worth $85 million? One bad contract sets the playing field for future free agents. Instead of attacking the free agent, go after the real problem: The bidders.
If someone wants to give me $85 million, but I’m only worth $50 million, the 29 other owners should pull out their rolled up newspapers and say, “Bad dog!” But they don’t. They want to make it seem like we’re walking in there, taking their checkbooks and signing our own deals. Rich people can’t control rich people, so they attack the workers. If they come together and stop overspending on players, then we wouldn’t need a lockout. If I offered you guys $100 million right now, 100 percent of you would say, “Hell yeah!”
Make smart business decisions, make money. Pretty simple concept. When you see that the Celtics made $4.2 million during their finals run in 2009-10 and $18.3 million during the dismal 2006-07 season, you start to realize why the owners might be upset. Hey, like millions of other Americans, they didn’t make as much money in 2009-10 as they did in 2006-07!
The Celtics should be lauded for exceeding the salary cap, paying a total of $37.2 million in luxury taxes and putting quality teams on the floor ever since Garnett and Allen arrived on scene four seasons ago. But there are rewards for that, like a championship banner and $37.2 million of income from 2007-10. Another reward will reportedly come in the form of a 20 percent ownership stake in Comcast SportsNet New England that has been compared to a deal between the Lakers and Time Warner Cable that nets Jerry Buss & Co. $200 million a year for similar TV ratings.
While a large percentage of the additional $20 million per season in media rights fees that is expected to come from this CSNNE deal will be subject to revenue sharing, that 20 percent ownership stake is not considered basketball-related income, according to Forbes.com. That means Grousbeck & Co. will pocket the tens or hundreds of millions of dollars that flow annually from a deal that should be finalized after the lockout.
Now, I’m not saying a resolution to the NBA lockout is a simple one, and I’m sure there are a lot more issues at stake than whose fault it is that someone like Darius Songaila has made $25.3 million in his career, but David Stern‘s claim that the players need to slash their salaries by 36 percent (or $800 million) is just as dumb as the contracts above. How about getting your owners to stop spending money like M.C. Hammer in the 1990s?
All of which begs the question: Why is Grousbeck among the owners who are willing to lose the entire 2011-12 season when his ownership group is one of the minority that have actually made (boatloads of) money every season they’ve owned the team — especially when the current crop of successful Celtics have a shorter shelf life than banana pudding?
Well, I guess that CSNNE deal only runs through 2038, so even if the C’s owners take home one-fifth of what the Lakers make on their regional sports network stake, they’ll make a billion dollars by the end of the contract. Now, how is Grousbeck — who will be in his mid-70s by then — supposed to retire on that?