How Much Money is Paul Allen Willing to Spend? (A must read)

by 123_G.O._RipCity on Jul 24, 2008 4:42 AM PDT

I researched this information after reading Dave’s The Changing Paradigm post tonight. There are a lot of fanposts and comments stating the Blazers should not sign a max contract free agent next off-season because we will be over the luxury tax once we re-sign our big three. It got me thinking, just how much does the luxury tax matter to PA?

During the 2002-2003 season our payroll was $104,321,823 and the luxury tax was set at $52.9 million. That means the Blazers (PA) were paying $51,421,823 in luxury taxes (If I owned the Clippers that year I would have been sure to thank PA for the 1,773,166 dollars he gave me). That money was on top of the $100+ million in salary we were already paying.

We must also consider PA is #41 on Forbes Billionaires list, he drops 3 million on draft picks like they are going out of style, and the Blazers have been over the luxury tax every year since its inception. Looking at all this I think it is safe to say KP will have no reservations about Spending Paul Allen’s Money next off season.

Sources

http://www.sportscity.com/NBA/Salary-Cap/#history

http://www.usatoday.com/sports/basketball/nba/2002-2003-nba-salaries-western-conference.htm

http://www.forbes.com/lists/2008/10/billionaires08_Paul-Allen_1217.html

Extra words: paper, cha-ching, Benjamin’s, bling bling, SPAM

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However, in recent years...

Paul Allen has been more conservative with his general spending and investments after a number of disastrous business decisions earned him the nickname “the accidental billionaire.” Will this trend carry over to his basketball investments as well? Until that question is answered we simply don’t know if Paul Allen will be willing to go deep into the luxury tax to sign a guy who is only a minor upgrade at any given position.

by erastus25 on Jul 24, 2008 5:48 AM PDT 0 recs

Right. And ...

... the Blazers were nearly sunk as a franchise a few years back because of massive fiscal trouble. I think Paul learned a thing or two then. He’s watching the purse a little closer now.

Lewis & Clark got nothing on these boys next year.

by Y5k on Jul 24, 2008 6:44 AM PDT up 0 recs

BUT

He loves the team and I think he gets attached to players like us fans. He’s NOT going to let go of LMA, Oden or Roy over a few million dollars. No way does he put away his pen…..

Witty Unpredictable Talent and Natural Game

by iDea on Jul 24, 2008 8:06 AM PDT up 0 recs

LMA, Oden and Roy

are all going to get paid once they finish their rookie deals. I don’t think that this is really under debate. The real question is how much is it going to cost to sign players to play around those 3. Simply going into luxury tax land to resign your own players eventually causes you to lose your roster flexibility, thus rendering yourself unable to make the needed changes when your team starts to get old/expensive. Perhaps this is the long term goal of KP buying so many draft picks, so that he always has some cheap talent to package with expensive talent to maintain some semblance of flexibility

by tingeyga on Jul 24, 2008 10:47 AM PDT up 0 recs

Yes, but...

The luxury tax is not the only thing that was capsizing the Blazers. For one 2002-03 was the first year the luxury tax was implemented, it was also the last year we went to the playoffs, and the year that fans lost interest in the jail blazers.

Dose anyone remember the song 123 go Rip City?

by 123_G.O._RipCity on Jul 24, 2008 10:37 AM PDT up 0 recs

paul will spend if we are winning

but we wont be handing out retarded contracts just couse paul likes to give. he wants to help people, but I dont think he likes it if he catches the bird as a thank you. fortunatly, kevy has an insight into quality of talent, skill, and charictor, and that will let paul feal safe having fun with his team again. I think the rumors were that he was getting rid of the team there for a while. nothing on that front for a while now.

nobody will be signing blank checks. as long as tptb are winning, players will be paid, but we will probably not be at the tip of tarded any more. but over all I pretty much agree that paul will ctc

when i was young, I would spend ridickulus amounts of mony on the women in my life. I’m still just as generous, if not more so, but also considerably more discerning. I think paul will continue to be generous, the true nature of a man is essentually unchanging, but his generousity will be tempered with expirience.

Non of this should matter to us. This is the team that Pauls been waiting to love.

"As long as Yao is in the league, Greg Oden will probably never start in an all-star game, because he doesn’t have 1 Billion people voting for him."
silkybrown

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by ptwnblzr on Jul 24, 2008 7:03 AM PDT 0 recs

a few thoughts

02-03 was the first year of the luxury tax if I recall, Portland had a huge payroll for years before it, and those portland teams along with a few others might have been the reason the luxury tax was put in to begin with. But anyway, because that was the first year of the tax, and because portland was already on contract with its players, there was really no way to get out of paying the tax that year. When the on court production I am sure PA would have if he could have.

And second, PA was Top 10 in the world for richest person back in the early 2000’s. Now he is down to 41st, think that being so far over the cap was one of the man bad decisions he made to drop that much cash so fast? I do.

by usmcr3049 on Jul 24, 2008 8:50 AM PDT 0 recs

The luxury tax was conceived in 1999

Even though the first year was 2002-03 the luxury tax was agreed upon in 1999. The Blazers could have let several contracts expire, or tried to dump salary the way Memphis has been this season if PA was concerned.

I’m not saying we are going to go back to trading and or signing knuckleheads, or dishing out blank checks. What I am saying is that if we are winning (which we are going to) and selling out (which we already are) then PA will certainly go into the luxury tax. How far into the luxury tax we will have to wait to see.

Dose anyone remember the song 123 go Rip City?

by 123_G.O._RipCity on Jul 24, 2008 10:32 AM PDT up 0 recs

The Blazers are PA's hobby...

............................ and if hobbies are fun, people will spend lots and lots and lots and lots of money, time, and energy on them.

When hobbies degenerate into dumping millions of dollars in the pockets of ingrates like CTC Wallace and Bonzo Wells, ad infinitum; and when the whole country points and laughs, they start being unfun really quickly. Then it’s time to get a new hobby…

Paul Allen is having lots and lots and lots of fun now. No worries.

"He shoots....................... he scores!!!"

by timbo on Jul 24, 2008 9:10 AM PDT 0 recs

His net worth is $16 bil

It is cracking me up seeing all the comments (not just here, but other posts) about how “fiscally responsible” PA may or may not be. Think about this. If you have some cash in the bank, some equity in your house, maybe a few investments, your net worth might be about $160,000. That’s not bad. I know plenty of people who make well over six figures and have a net worth far below that. Most people’s net worth is well into the negative (at least in their 20s).

Well, $50 million to PA (which would be a ton of luxary tax to pay) is the equivalent of $500 to a person with a net worth of $160 Gs. Would you drop $500 on a hobby in a given year? Most people would either say yes, or they would be lying.

And the idea that the luxary tax dropped him from top 10 to 41st is amazing. You’d have to pay a $50 million luxary tax for 20 years (with no ROI) to blow a billion dollars. And that may or may not move you down a spot or two on Forbes list. These people are dealing in billions, not millions.

Bayless isn't the second coming of Jordan.
Jordan was the first coming of Bayless.

by KP Corleone on Jul 24, 2008 9:33 AM PDT 0 recs

It is our hobby too.

I am sure most people here spend more than $500/yr on our little Blazer’s hobby: tickets, concessions, paraphernalia, etc.

by clonigro on Jul 24, 2008 9:46 AM PDT up 0 recs

let me be clear

I do not believe that paying the luxury tax alone is what caused PA to drop from top 10 riches to 41st. However decisions like that, did, id: poor decisions. Paying that much tax is just not smart, because you don’t have to pay it to win it. Sure a few million in luxury tax may be needed, and I have no doubts that PA will gladly pay it when the time comes. That doesn’t mean he is going back to the trader Bob days and just throw money away on aging players. It is obvious to me that KP and PA have a plan on how to spend money effectively when it comes to the Blazers.

Just because you have alot of money, doesn’t mean you have to spend alot of money on bad ideas, and decisions. PA has shown that he is capable of making horrible decisions, (space shuttle, cable company, etc…) and losing a ton of money doing so. However he has also soon some great decision making by hiring both KP and Mr. President, (from Nike can’t remember his name) who are both doing a great job so far.

And trust me when I say this, when you have to pay $50 million for basically nothing, it doesn’t matter if you have $16 billion more, it doesn’t make you happy. Just think of all the belly aching we hear from professional sports players when they get fined for $10k, even though they just signed a contract for $50 million. It is still alot of money.

by usmcr3049 on Jul 24, 2008 9:49 AM PDT up 0 recs

His fall net-worth wise...

Has much more to do with the price of Microsoft stock (which as of 2004 was approximately 1/4 of his wealth) being essentially flat for the last 7+ years. When you’re not even keeping up with inflation and cost of living increases investment-wise, it tends to negatively impact your net worth. Per MSN Money:

However, 41st richest person in the world still is a pretty rarified club.

by DonkeyShins on Jul 24, 2008 11:19 AM PDT up 0 recs

damn.

taken it to the hoop with a chart and all that.

Lewis & Clark got nothing on these boys next year.

by Y5k on Jul 24, 2008 11:31 AM PDT up 0 recs

But what about the dividends?

Does he reinvest? Doest MSFT even give out dividends?

by tingeyga on Jul 24, 2008 11:40 AM PDT up 0 recs

Yes MSFT does give out dividends, but I have no clue what PA does with his.

by usmcr3049 on Jul 24, 2008 1:40 PM PDT up 0 recs

Well if PA gets so much of his wealth from MSFT

wouldn’t he be subject to all of the insider trading laws and have to announce when he buys/sells MSFT stock?

by tingeyga on Jul 24, 2008 2:36 PM PDT up 0 recs

Answer to my own question

As he is neither an officer or director at MSFT and he doesn’t own more than 10% of the equity in the company, he doesn’t need to disclose it publicly
Source

by tingeyga on Jul 24, 2008 2:53 PM PDT up 0 recs

to know what he did

with all his money read:
http://en.wikipedia.org/wiki/Paul_Allen
Also this one, it is a bit older, but goes into more detail of what PA did during, and after Microsoft.
http://www.smh.com.au/news/business/poor-little-rich-man/2005/12/23/1135032184307.html?page=fullpage

http://www.businessweek.com/magazine/content/04_18/b3881106_mz020.htm
Is also a great article on him.

Basically he has sold off much of his Mircosoft stock, owning, “only” about $3 billion worth now. He lost billions, (reports of up to $12 billion) dollars between Charter communications, Spaceship one, and a few other tech companies that bombed out in the early 2000’s. He has also given away almost a billion to different charities threw his foundation, however that money is not figured into his estimated $16 billion net worth.

by usmcr3049 on Jul 24, 2008 2:01 PM PDT up 0 recs

over six figures is seven figures

well over seven figures is… a lot.

Just saying.

Ford: Bill, you're claiming victory already? Have you had a "Mission Accomplished" banner printed yet?

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by ratbastird on Jul 25, 2008 12:24 PM PDT up 0 recs

50M

That’s an awful lot of scratch, regardless of how much money he’s got. For many teams, that number represents their payroll. It’s almost $10M OVER Memphis payroll for the coming season.

Witty Unpredictable Talent and Natural Game

by iDea on Jul 24, 2008 10:27 AM PDT 0 recs

during that same year

The PTB lost over $100 million. That is alot of red ink.

by usmcr3049 on Jul 24, 2008 2:02 PM PDT up 0 recs

wat about when we have to pay trout ,martell ,bayless,and even rudy
will we still have enough money

by blazerholic5 on Jul 24, 2008 10:31 AM PDT 0 recs

I think...

It will depend on how much they are worth. When a team is winning, their bench players have a tendency of becoming more valuable to other teams (James Posey). While veterans (PJ Brown, Cassel) become more interested in the opportunity to win and are willing to play for less money.

No doubt keeping the core intact is the primary concern. I do hope we can keep the players you mentioned, it will be a lot easier to do that if the player(s) we sign in 2009 is/are on a 3 or 4 year contract that expires around the same time we re-sign Rudy and Bayless.

Dose anyone remember the song 123 go Rip City?

by 123_G.O._RipCity on Jul 24, 2008 10:54 AM PDT up 0 recs

NBA Salaries

I just finished reading that last season was the highest total player earnings ever (big suprise, eh), with the total bill ringing up to 2B. PA could fund every player in the league a few times over…......

Witty Unpredictable Talent and Natural Game

by iDea on Jul 24, 2008 10:53 AM PDT 0 recs

Team revenue comes first

The talk here sounds like PA is just writing checks out of his personal bank account. Seems to me you have to factor in TV rights, radio rights, merchandise rights, then concession profits, attendance profits, parking, etc before we can figure out exactly what he’s forking over out of pocket.

The marketing pork barrel is in place for a decade. Not to mention it’s about net gain. What he might lose in NBA, he’s got that padded by NFL. But I would be extremely surprised if he loses money on the NBA regardless of luxury taxes and what not.

Go Fo Broke!

by eknpdx on Jul 24, 2008 1:14 PM PDT 0 recs

team report

I seem to remember each year, a report coming out from Forbes about how each franchise did the past year, did they make money, lose money, etc… The last couple of years, the Blazers have been bleeding red Ink, hopefully this last year they were able to break even at least with all of these sell outs and buying the garden back.

by usmcr3049 on Jul 24, 2008 2:04 PM PDT up 0 recs

other factors than profit

PA undoubtedly has the financial ability to pay extreme amounts of luxury tax for several seasons. Will it trim down his net worth? Probably. Will it affect the profitability of the PTB? Absolutely. Is he willing to pay that much tax? That’s the real question.

I honestly think the last run around paying the luxury tax, PA learned an important lesson. Overspending and spending freely on players inhibits your ability to win. You get stuck with players good or bad. What happened in the Jailblazers era was PA was willing to spend tremendously and he had a GM who didn’t value character or chemistry. Trader Bob believed talent was by far the most important thing. The PTB quickly became a team full of untradeable, bloated contracts where very few players really cared about the franchise or the city. Many people began to really show distaste for PA and how is actions were ultimately disgracing Portland.

So….he was spending a ton of money which resulted in a non contending team that nationally was a joke and locally was a disgrace. He was ultimately operating a franchise that was losing a ton of money and he was personally losing money with the team and other ventures. What was the reward for all this? Ridicule, embarrassment, disgrace and local outrage. I would consider selling the team after such a disaster also.

I believe PA will pay a ton of luxury tax if it fits into a long term plan for a long window of championship contention. What happened in the Jailblazer era? PA spent a ton of money for 2 years of contention and than a few years of 1st round playoff exits. Not a good plan. If KP builds a team with a realistic 5-7 year championship window and an organization that is respected and valuable to the Portland community, I think PA will spend (and lose) a great deal of money to win championships and concurrently earn respect and admiration.

Gimmicks don't make dynasties

by WarEaglePDX on Jul 24, 2008 5:01 PM PDT 0 recs