Paul Allen's Money Trouble
by Ben Golliver on Feb 24, 2009 1:16 AM PST
Email
PrintIt's a touchy subject.
Exactly what shape are the Blazers in financially given the economy's downturn?
The surface indicators are positive:
- Attendance is maxed out at every home game and season-ticket sales this year were way up.
- The team is most likely headed to the playoffs and will earn additional revenue they have not seen in previous years.
- The team enjoys a very profitable, albeit controversial, cable deal with Comcast.
- Larry Miller has a global vision for the team and took the the troops on a corporate retreat to Arizona.
But the past few months have been full of bad -- really bad -- financial news for Blazers Owner Paul Allen.
In short order:
- Charter Communications, the cable company that Allen is said to have a 50% stake in, has filed for bankruptcy, after not making interest payments of $73 million dollars. The bankruptcy reduced the company's debt by 8 billion dollars. Reportedly, Charter had 21 billion dollars in long term debt. For a look at Charter's stock price free fall, click here. Allen did receive some much-needed good news regarding Charter in the form of President Obama's stimulus bill -- which should net him some tax savings.
- Last month, Paul Allen reportedly laid off 50 employees at Vulcan, 9 percent of the total staff.
- Here's Microsoft's stock price history. As recently as April 2008, Microsoft was trading at 31. Today, it trades at 17. According to the most recent report I could find, Paul Allen owned 136 million shares of Microsoft stock as recently as 2006. Obviously this number could have changed dramatically in the last 3 years. But that stake, at last April's stock price, would have been worth roughly 4.2 billion dollars. Based on today's stock price, that holding would be worth roughly 2.2 billion dollars.
- On Valentine's Day it was announced that Paul Allen sold off his remaining stake in DreamWorks Animation Studio, ending a fifteen year business relationship.
The 15 teams can use the money for any purpose, but covering operating losses may be high on the list.
As recently as 2007, Portland reportedly posted the second largest operating loss in the league (25.1 million dollars). According to 2008's Forbes survey, the team's financial picture is much healthier but the team still operated at a loss.
Given Paul Allen's recent losses and the team's past operating losses, it is possible that, despite being owned by the league's richest owner, the Blazers could be one of the 15 teams looking to tap into the NBA's financing offer.
As the Sports Business Journal noted, capital is hard to come by in today's "illiquid" credit environment and the league's negotiated interest rates were considered very good. Asked last Thursday why a hypothetical team might tap into that money made available by the league, Blazers Assistant General Manager Tom Penn stated, "Sometimes it's just smart business to want the money because the cost of getting it is so low. I think that was part of the reason for the league-wide financing. They were pooling all that borrowing power to get an awesome interest rate. So that made it just smart business to go borrow it."
Importantly, Penn noted, "I think it would be inaccurate to think that everyone that is borrowing money from that or any other debt source is doing it because they need money." In other words, one shouldn't assume that teams need the financing simply to make ends meet; there could be many motivations for a team to tap into the financing.
Asked if he knew of any specific teams that would tap into that financing (other than Orlando which was mentioned by name in the SBJ article), Mr. Penn said he did not.
In response to direct questions about the organization's response to the league's recent financing offer, a member of the Portland Trail Blazers communications staff told me yesterday, "no comment - we will pass on the financing questions."
This caught me by surprise because, as recently as last June, I had an hour long-plus conversation with the team's then-COO, in which "no comment" was not uttered a single time.
Although Kevin Pritchard stated last Thursday that "if the economics get worse, that might be better for us" due to Allen's wealth, one can't help but wonder, given the recent series of hard knock news for Paul Allen, if that is really the case. On Courtside tonight, Pritchard admitted that "We still have to run [the Blazers] as a business because I want this team to be here for 50 years... I feel a responsibility to that." And on Thursday Penn acknowledged, "the overall financial crunch, the recession, could affect business, all businesses, including ours. [The recession] could affect player transactions" around the league.
Has it already affected player transactions here in Portland?
Don't be too quick to dismiss the Blazers' non-trade of Raef LaFrentz's Expiring Contract as a basketball decision determined primarily by locker room cohesion and on-court productivity. And don't underestimate the financial importance to the team of avoiding the luxury tax.
And whatever you do, do not sell short the financial implications of Darius Miles's salary being added back to the team's books. You can see why an email or two might have been sent if it meant potentially saving millions of dollars and/or increasing the team's financial flexibility in an economic environment that has possibly caused a 10 figure hit to Allen's net worth.
Lastly, definitely don't assume, like I did last week, that because this summer will be a bigger buyer's market than the trade deadline, that the Blazers will necessarily be buying. In fact, it's probably prudent to temper your expectations for the team's activity this summer. On Courtside, Pritchard assured Blazers fans that "when the time is right, [Paul Allen] will go for it."
At this point, Blazers fans can only hope. And wait for the "right time." Because it could be awhile.
-- Ben (benjamin.golliver@gmail.com)
180 comments
|
8 recs |
Do you like this story?
Comments
Thanks, Ben ..
Wow … you must have been doing a lot of research on this. This financial situation is worth thinking about. We really need to keep the core together. My hope is that Paul Allen has always been one to support his “hobbies” —meaning the things he’s personally interested in (SETI, space plane, rock museum). I hope the Blazers are at the top of his list.
The problem
is that lack of cash means that things are less a hobby and more and investment. That means a return on the investment is required.
The goal is not to be better, the goal is to be the best.
with the right attention, the Blazers could pay off, small market or not
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
I suggest....
That it already is…with the progression from the BW era, through the SN phase (maybe necessary it so FUBAR), to the current KP era. Just sayin without elaboration.
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
It pays off
if you invest wisely. Yes. Big splurges do not always a wise investment make.
The goal is not to be better, the goal is to be the best.
this team can very well prove to be a sound investment
no stupid mistakes, and we’re fine
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:33 AM PST up reply actions
Great work Ben
I imagine its tough to get any info on this. Your effort is appreciated. Something to chew on, for sure.
Boomshakalaka
Whoaaa
who ever said bloggers aren’t journalists? Nice job Ben. Except I kind of hate you for this. I feel like every good article is one step closer to ESPN or somebody plucking you away haha.
Until then though, good stuff yo. I had the same thought but hadn’t really taken the time to consider how big of a hit Paul Allen has taken.
I would say that in reality, we’ll spend like always. Salaries are in the millions of dollars range and this dude has billions. 10 million a year for a veteran is pennies. It doesn’t matter to Paul if we’re spending 60 million or 120 million a year. The difference is not worth worrying about if you’ve got a winning team.
Want more aggressiveness? Try less Baylesslessness.
Reverse that Whoaaa!!!
It never ceases to amaze me as to (1) how willing most of us are to spend other peoples’ money, especially when those others have a lot more of it than we do, and (2) the incredible naivete, if not stupidity, most of us implicity assign to the rich. It’s as if we all assume that the wealthy got that way through blind luck or on easy terms and, moreover, since they have so much money, they are readily willing to spend it on such frivolities as basketball teams.
The reality is far different. Most successful wealthy people get that way by dint of extraordinary intelligence or hard work, or both, and most of them spend a great deal of their time optimizing the returns they can achieve on their assets.
Last July, I posted two lengthy analyses questioning just how many “chips” the Blazers really had to play, and positing the likelihood that luxury tax considerations would go a long way to negating the value of what chips Blazers Edge readers perceived that Paul Allen possessed; most specifically, that the tax would significantly reduce the likelihood that the RLEC contract would ever be traded. Most of the replies centered on the usual argument that Paul Allen had so much dough he would be more than willing to spend more tens of millions on extra long-term salary and luxury tax. The amazing thing is that after the events of the last week, a lot of BE readers apparently still believe this canard.
by blazerwizard on Feb 24, 2009 4:23 AM PST up reply actions
Apples and Oranges
Raef wasn’t dealt on the trade deadline because the Blazers needed round pegs and the league was only selling square pegs with blotted contracts and they wanted too much back in return.
The Blazers are Paul Allen’s restored hot rod. He’s going to sell his boat, his rental property, his collection of Nazi plates and cancel a vacation before he gets rid of his favorite toy. If spending will help the Blazers win a championship, Paul Allen will spend.
I da man!
by Dragline on Feb 24, 2009 4:35 AM PST up reply actions 1 recs
Yes, you never let your endorphins source dry up in times of drought.
Sergio + Rudy = 16
Sergio + Bayless = 16
Batum 8+8=16
If you really think he's that stupid
he’ll never lead us to a championship.
by blazerwizard on Feb 24, 2009 4:56 AM PST up reply actions
I'm not sure who you are talking about
I didn’t say KP or Paul Allen was stupid. I think KP is smart and he’s building a championship caliber team. I think Paul Allen is smart and he will spend money if it will bring him a championship.
I da man!
by Dragline on Feb 24, 2009 5:20 AM PST up reply actions 1 recs
Then again, Balzac wrote that "behind every fortune lies a crime."
Most successful wealthy people get that way by dint of extraordinary intelligence or hard work, or both
Why is Channing Frye still here? Anybody??? Anybody???
indubitably
Want more aggressiveness? Try less Baylesslessness.
by prezofdeath on Feb 24, 2009 12:54 PM PST up reply actions
Most, not all, fortunes are made thru screwing over others (legally or otherwise)
But that doesn’t mean all or even most rich people are thieves. Many rich people inherited the money.
"We don't back down to nobody." --Joel Przybilla
As for Paul Allen, I'm no expert
But my assumption is that he more or less lucked into his fortune. He loved computers, had a knack with them, and was in the right place in the right time. No crime in that.
"We don't back down to nobody." --Joel Przybilla
Glad you're enjoying the fruits of a "rich man's" crime
Being an NBA fan n all
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
120 million over 10 years
1.2 billion. When you were worth 30-60 billion and now you’re worth half that, suddenly those billions and millions are important. People with large incomes also tend to have large expenses. Maintaining yacht, maintaining ball club, and so on. If your dollars are cut, you have to cut back. That means you drop things or your hobbies become profitable and can return the dollars thrown at it.
The goal is not to be better, the goal is to be the best.
and as was pointed out below by you
he’s dropped to 15 billion and now he’s possibly at 8 billion. If it were me, that’d scream “time to take care of the money!!!”
The goal is not to be better, the goal is to be the best.
How's your 401k doing?
Tons o’ tons o’ peeps like that these days.
Yeah a couple of years ago PA looking to ditch the RG, cut costs..in a good economy, but his product sucked! His hobby was a severe drain…and maybe, not very fun??
I don’t hear any serious speculation about defaulting to creditors, natch, selling the team, which I used to hear haynes speculate abot in the Trib…
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Sorry on an iPhone
Hate typing on this thing
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
skrew ur iphone, I'm stealing my connection, lol
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
I want that!
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Ironically
My 401k is doing great. Most economic issues can be seen from a mile away and I adjust accordingly. Knew the market was going to tank when the first foreclosure issues came up and the government chose to “let the market correct” instead of doing something about it. thanks for asking :)
The goal is not to be better, the goal is to be the best.
lol
Most economic issues can be seen from a mile away and I adjust accordingly
I’m assuming then, that your a highly successfull broker with a ton of really happy investers?
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:31 AM PST up reply actions
When you have more money invested
you have more to lose in the market. Everybody’s net worth is down. PA is no exception. Yes he has been losing money hand over fist in th elast ten years. Bu then again he has not been your typical billionaire either, in that he was spending boatloads of money without the intent of trying to make more money. No he doesn’t want to lose his shirt, but many of his investments are personal toys: the Blazers, the Seahawks and the x-plane project are fine example. THose personal toys are not to be total losses but some losses are acceptable as long as he gets enjoyment from them. That means winning.
the xplane has a greater capacity for good to humanity then the Blazers
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
Also, I know good closing lines are hard to come up with
but I think this one could be better
On Courtside, Pritchard assured Blazers fans that “when the time is right, [Paul Allen] will go for it.”
At this point, Blazers fans can only hope. And wait for the “right time.” Because it could be awhile.
I think we all know the right time is this summer. We’ll be going for a championship run for the next few years—Mr. Allen will spend if Pritchard and Penn think money needs to be spent. Bottom line.
Want more aggressiveness? Try less Baylesslessness.
Mr. Allen will spend if Pritchard and Penn think money needs to be spent. Bottom line.
well im glad you’re sure. because im not.
by Ben Golliver on Feb 24, 2009 1:39 AM PST up reply actions
as of last year on 3.5.08, according to
Forbes, his net-worth was 16 billion.
Let’s imagine this economic downturn has wiped out a whole FIFTY percent of his worth….he’s still an eight billionaire.
Look at this list from 2004-2005.
Most of the owners in the league weren’t even in the billionaire club. Let’s say they did really well and made tons of money up until the recent economic crisis—made fifty percent on their investments. Well guess what—now they’re down 50%….just like Allen.
All these little shrimps worth a billion or less just lost a quarter or a third or half of their net worth….they’re the ones hurting more than anyone.
If you’ve ever played board games, you might understand this analogy.
When we play Union Pacific, you get paid money at the end of each round. The money is really pointless (you can’t buy anything with it), so at the end of each round we all throw away a certain amount of our money just to keep it from piling up. An equal reduction in wealth doesn’t change the game at all.
The same thing is happening here. Allen is either THE or one of the top dogs in the NBA. Who cares if he lost 8 BILLION dollars (Well, I’m sure he does)….because Mr. Shrimpy down at 15th richest owner lost a similar percentage as Allen did most likely, so he’s hurting just the same. If everyone loses 50%, then nothing really has changed.
What does it mean? ALL owners are going to be paying less…..Allen is still the top dog. He’ll spend the money we need because it won’t be significant in light of his 8 billion net worth because it WILL be significant to owners who have a net worth of only one billion (or less). When you are EIGHT TIMES richer than most of the rest of the league, you have that luxury.
Want more aggressiveness? Try less Baylesslessness.
the league’s other owners do not make investments the size of mr. allen’s and therefore are not subjected to some of the risks that he is subjected to. allen has probably lost more on charter than many owners’ entire net worth.
to say that he will continue to invest in his team to the degree that he has in the past given these losses and unknown potential future losses, in an uncertain economic climate, is dubious and goes against his recent actions (raising capital, missing interest payments, filing for bankruptcy, laying off employees) and recent statements (spending the team’s money wisely, running the team like a business, etc).
by Ben Golliver on Feb 24, 2009 2:04 AM PST up reply actions
Is there a list compiled somewhere of each current NBA owner's net worth?
just curious.
and for perspective:
http://en.wikipedia.org/wiki/Octopus_(yacht)
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
dunno.
you wouldn’t believe how many blog posts are out there suggesting he should try to sell that thing.
by Ben Golliver on Feb 24, 2009 2:15 AM PST up reply actions
Octopus for LeBron
Take it or leave it Danny Ferry (needs to resign too).
Karma
by Sabonis4Ever on Feb 24, 2009 2:17 AM PST up reply actions
lol very nice.
how many gm’s in the league if in ferry’s position do that deal? probably 20+.
by Ben Golliver on Feb 24, 2009 2:20 AM PST up reply actions
There is a list on Hoops Hype
but I don’t know how current it is.
They list Allen as being worth $20 billion, but Forbes has him at a mere $16 billion
A good point....
the league’s other owners do not make investments the size of mr. allen’s and therefore are not subjected to some of the risks that he is subjected to.
true, but everyone is invested somewhere—rich people have money in investments. I don’t know of any investments that haven’t gone down hugely as of late.
Allen is losing more PURE dollars, but percentage wise it probably isn’t too much different than the rest of the owners in the league.
If you can, with a straight face, tell me Allen is not richer than 95% of the league, then I’ll think he might be cutting costs when it comes to who to sign and for how much.
If not, then realize that in comparison to losing 377 million or w/e in Dreamworks and millions/billions in Charter, a few more millions on free agents isn’t going to break his pocketbook.
You have to remember, player contracts are going to be lower now. The economy hits EVERYONE, not just the owners. Don’t be surprised if the max contract is all of a sudden 16 million instead of 20 million. Players aren’t going to get paid as much as they are right now, especially with the lowering of the salary cap.
Want more aggressiveness? Try less Baylesslessness.
Allen is losing money on Charter. How exactly do you lose money on a virtual monopoly or at least in an oligarchy?
If things like that happen, all is not well in all corners of the Allen empire. And as I’ve said before, I have seen him first hand run good businesses into the ground because he had lost interest and/or made wrong decisions.
http://www.blazersedge.com/2009/2/19/764575/back-to-earth-the-aftermat#12343793
http://www.blazersedge.com/2009/2/19/764575/back-to-earth-the-aftermat#12355967
a) Mr. Allen is not completely isolated against the economic troubles
b) The Blazers budget however is very isolated against Mr. Allen’s budget. You can be sure that his order to Larry Miller & Co. on this is to be profitable on their own.
Ben has done an admirable job of pointing that out with his research.
Brandon is one of those quiet assassins. - Chris Paul
thanks buddy i appreciate that.
re: prez….
the questions is not really not about his relative worth compared to other owners but about his approach in the face of adverse economic conditions. if losses (big losses) mount up, as they apparently already are… at what point does that change his mentality towards his franchise? you might read their recent actions and statements differently but in my opinion Paul Allen is not running this team in the same “deep-pocketed manner” as he has in years past.
by Ben Golliver on Feb 24, 2009 2:46 AM PST up reply actions
I think we have a very good young team and we can get better by development too, besides by trade.
That´s the first reason why I´m not worried about the economic issue.
The second is I think Mr Allen has better times watching the Blazers than anywhere else, with maybe a few exceptions.
The third reason is I don`t like the Blazers running this team in the "deep-pocketed manner".
Sergio + Rudy = 16
Sergio + Bayless = 16
Batum 8+8=16
by amlmart1 on Feb 24, 2009 4:07 AM PST up reply actions 3 recs
This dude da man
…maybe a tie with Dragline, but it’s close!
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Word up
I feel like Paul Allen WILL spend good money to make or keep a good team, and I don’t worry about any penny pinching like goes on with the Suns or whoever.
He enjoys the team, watches/goes to every game he can, and now that we’re exciting and fun he’s as committed as ever.
Even so, I don’t want us to waste money again, just because we can, because that is a recipe for disaster. Ya gotta spend prudently, which we have done— we coulda’ overpaid Outlaw or Blake or Webster like we used to do, but instead gave them fair contracts for both sides. Now we can keep some good role players we like, without their deals hamstringing us.
And when it comes time to re-sign Roy, LMA, Oden, and whoever else solidifies their spot on the team, I don’t worry about the financial troubles of the world preventing us from doing so.
It’s not that I don’t worry about all the money PA is losing, it’s just that I don’t think it’ll prevent him from making a good, but expensive, move for the team.
VC was not that move. That would be the old Blazers, getting a talented (but not exactly what we needed) player just because… we can. If the financial crisis makes us stop making moves like that, it’s all for the better.
I doubt very, very highly his losses will prevent us from keeping who we want to keep, or getting who we REALLY want to get. It just maybe, sorta kinda, makes us re-evaluate the “maybe it might sorta help us” additions that, in the past, we woulda’ just gotten because we could.
We can still take advantage of being so much richer than everyone else, but spend the money prudently and wisely. No more spending like a drunken sailor, like in the 90’s/early 00’s. Anything that helps us think through what we REALLY want, will likely be good for the team.
Mortimer
the assumption is that the Blazers are at least as important to Allen as we like to think they are
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:04 AM PST up reply actions
Great job Ben
The very second the trade deadline passed I thought to myself “Maybe Paul Allen is not as willing to spend money as we all thought.”
Karma
Nice post, Ben
That’s a bit sobering. But the good news is that even after losing as much as 1/2 of his personal wealth, Paul Allen is pretty dang rich. And he’s still a basketball fan.
So my hunch is that, when the time comes that the Blazers are one player from contending for a championship and KP comes to Paul with that deal, Paul will OK it. Wouldn’t you if you were in his place?
"We don't back down to nobody." --Joel Przybilla
I can see them tightening up a little,
and only doing the deal if they really think its going to have long term positive effects on the team and not bothering with anything less then ideal concerning the trade or free agency market. As is, we still have more talent then any other team in the league. We are young and add another two or three years and we could be rediculously good. No real need to change anything. I’m not worried at all.
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:13 AM PST up reply actions
Several points
1. The sale of Dreamworks hardly equals bad news. Rich people change their investments all the time. It might mean bad news, or it might mean that he thinks that investment had run its course as far as being useful going forward. Don’t read too much into that by calling it bad news.
2. Paul Allen still has bucketloads of money to invest somewhere. Right now, this team is performing better financially than most of his other investments. His losses elsewhere could be significantly bad news for the Blazers if it was actually leaving him struggling. Since that isn’t the case, his losses elsewhere could cause him to see the team as a relatively recession-proof investment — if we are championship contenders, ticket sales, etc, are going to roll in despite the recession. So you may be overstating the problem on this point as well.
3. I said at the time, and it has been pretty much confirmed, that the Darius email was all about money. Paul Allen is not money-insensitive. You are absolutely right about that.
4. Buy low, sell high. That’s how you make money. If Paul Allen has an opportunity to buy low, he has the resources to do it. He just has to be convinced that the cost/benefit analysis pans out. The analysis about opportunities being even better this summer is still sound. The idea that Paul Allen will just throw money around isn’t.
I do think it’s kind of silly to use as a title, “Paul Allen’s Money Trouble”. The dude does not have money trouble. More like “Paul Allen Getting Cost-Sensitive?”
When I rule the world, everyone will know how to use Excel.
by jscot on Feb 24, 2009 2:26 AM PST reply actions 2 recs
rec
my thoughts exactly…everyone is getting “cost-sensitive” but by noooooooo stretch of the imagination does PA have money troubles. He’s still the richest owner in the league and probably one of the biggest FANS. Allen loves this team. He and Mark Cuban are probably the two biggest fans of their respective teams. A lot of other owners see their teams as a business. Allen and Cuban are FANS, so they are willing to put out money that might not make business sense because as fans they want their team to succeed.
Want more aggressiveness? Try less Baylesslessness.
Agreed on the title
Sorry Ben for critiquing your otherwise great post, but the title may be misleading, IMO, unless you know PA has money troubles, insomuch that he can’t pay his bills, etc.
Virtually everybody is taking a hit in net worth in this environment. Including me and everybody I know.
Otherwise, the piece is good. Great summation of what is known about teams owner’s finances.
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Well,
He did sell the Rose Garden a couple years ago.
Karma
by Sabonis4Ever on Feb 24, 2009 4:28 AM PST up reply actions
That was then
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
I haven't taken a hit!
Of course, that’s because I need to pay off loans before I can bother investing in anything.
Heh! Understood :-)
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
You're taking a hit, too
Deflation may make it more expensive over time to pay off your loans, instead of inflation making it easier….
The only people not taking a hit are those who had T-bills and cash (in bank accounts).
When I rule the world, everyone will know how to use Excel.
True, but...
I saved a lot more on my new car and TV thanks to the crashing market than I could lose on my loans. (You could say I didn’t “need” either of those, but I disagree!)
Car loans with 0% interest weren’t available when I graduated college. A year later they are. If the interest was even 2.9% (pretty good) I’d be paying an extra 1200 dollars on my 3 year loan.
So, lack of inflation might cost me a few hundred bucks on my student loans.
But the bad market got me a new car a few thousand dollars less than I would have gotten a year ago.
Yeah
It looks like an opportunity for those who aren’t too indebted, and so can take advantage of the good deals on offer.
How well off would someone be who was looking to buy a house but decided to put the money in the bank for a year while saving more for a larger down payment?
When I rule the world, everyone will know how to use Excel.
Loving life
A co-worker of mine is in just that situation. She was looking to buy a house last year, but the deal didn’t go through. She kinda lost her drive for house hunting after that and waited a while before looking again.
She got a similar house about 6 blocks from the other one for 45k (or 55k I forget) less than her first buy and she more to put down too. Not a bad deal.
1. dreamworks held a particular place in his portfolio as it was his baby from inception. and because it was performing relatively well. the brief analysis i’ve read suggests he sold primarily because it was a ready supply of cash although he has been selling off in sections over the last few years.
2. only PA can know the degree to which he is struggling. i don’t think i overstated his troubles other than listing recent actions he has taken. the main point is that he is “struggling” more than most know and that it seems to have changed the way that he and management team are planning team decisions.
3. agree
4. agree
5. any time a company as large as charter declares bankruptcy that qualifies as money trouble in my book regardless of the man bankrolling it — missed interest payments, layoffs, etc. that adds up to troubles to me. but if i had to had to do name it over again i do like your suggestion.
by Ben Golliver on Feb 24, 2009 2:39 AM PST up reply actions 1 recs
and i should have started that with thanks for the feedback j scot (and everyone) and if you find any additional info please let me know.
it’s late my time.
by Ben Golliver on Feb 24, 2009 2:51 AM PST up reply actions
it's late my time too
I’m going to bed, but I will say I loved the post dude. I rec’d it first thing as soon as I read it.
I think PA will spend big when the time comes, but I totally see your side and respect your thoughts. You’ve got good research. Good stuff all the way around. Definitely gets a thumbs up from me.
Want more aggressiveness? Try less Baylesslessness.
im not saying he won’t. as you know, of course i do hope he does. let’s be clear on that.
i’m just saying it’s more in doubt now in my mind than at any time since, perhaps, he took over the franchise.
by Ben Golliver on Feb 24, 2009 2:56 AM PST up reply actions
Basically, we could say
that the evidence is strong that he’s going to be more rigorous in his cost-benefit analysis than he might have been in the past.
“Benefit” will be measured not just by profitability, though. A championship team is worth something in satisfaction, so that will factor in (unlike with some team owners who can’t afford to factor it in).
Perhaps the proposed Carter deal told us something. If the rumor was right that we could have done it, but insisted on that G.S. draft pick, then we have a window on the thinking. That would have been a very expensive deal for P.A., but would have brought tremendous strength to the team in the short and long run, probably. It might have been the difference between a first round exit and going to the WCF this year, which would reap a lot of financial benefits, but probably wouldn’t begin to cover the financial hit.
So if that deal was offered to the Nets, then we can pretty well assume the money will be there for the right deal.
When I rule the world, everyone will know how to use Excel.
by jscot on Feb 24, 2009 4:36 AM PST up reply actions 1 recs
Oh, one other thing
When I rule the world, you’ll submit the titles of your pieces to me for consideration.
When I rule the world, everyone will know how to use Excel.
rekt for the first sentence
thats basicaly the truth of it. Paul will be more considerate of his spending, but will probably not hesitate to pull the trigger on the right deal, thats been thoualy examined by the Blazers brain trust.
I’m suddenly currious, I wonder how many owners go to every game like Allen does. Probably most, but I still wonder.
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:25 AM PST up reply actions
A Kings fan called KHTK this morning
and complained that the Maloof brothers are never at games anymore. The host noted that Joe Maloof has some health problems right now, but fans do like to see owners at games.
by MiledAnimal on Feb 24, 2009 10:36 AM PST up reply actions
Oh, Ben, one other thing
How much did they pay you to write this story? Just wondering….
You see, KP’s negotiating position is stronger if people think PA doesn’t want to spend. Don’t believe me? Walk into a car dealer and tell them, “I really like that car, but you see, I’ve arranged financing with my bank for $15K. Here’s the paperwork right here. And I know you are selling it for $17K, but look, this is all I can do. Any way we can make this work?”
If you can convince them you’ve got a limit, if they are motivated, they’ll try to fit under your limit. There’s a reason you are getting “no comment”. Never let the other guy know exactly how much you are willing to spend. Never.
When I rule the world, everyone will know how to use Excel.
Flagged
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:26 AM PST up reply actions
It was nessassary,
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:53 AM PST up reply actions 1 recs
I think we're reading too much into the Charter issue...
PA pretty much lost his money there over the past several years. What was a $25/share stock 6 years ago has plummeted. The stock has traded at a dollar per share or less for the past year, and is at 2 cents per share today. The brankruptcy (which has been prenegotiated with lenders) will still result in PA being the largest shareholder. He may actually come out of this ahead.
Charter was laden with a HUGE debt load and pretty unfavorable repayment terms. Frankly, it is my expectation that PA emerges from the Charter mess pretty much the same way he did with the Rose Garden. It was painful for us fans for a couple of years, but he ended up with what he wanted on terms that were improved.
Personally, this info on possible (and yes, it’s just possible, not probably and most certainly not definite) Blazer financial problems will make life easier for KP come summer. If other teams think (mistakenly) he has a weakened hand, he will be negotiating from an even more powerful position.
That’s my 2 cents, and yes, I am comfortable with a contrarian position.
by antediluvian on Feb 24, 2009 10:55 AM PST up reply actions
Good Call at 2 cents a share, there's really only one way to go.
Maybe in the renegotiations following the bankruptcy they’ll pick up the CSN channel. A little insight into why they’re loosing so much money as a company. I switched my TV service to Charter about a couple months ago I’ve yet to receive a bill.
"I've learned one thing, and that's to quit worrying about stupid things. You have four years to be irresponsible here. Relax. Work is for people with jobs. You'll never remember class time, but you'll remember time you wasted hanging out with your friends. So, stay out late. Go out on a Tuesday with your friends when you have a paper due Wednesday. Spend money you don't have. Drink 'till sunrise. The work never ends, but college does" - Tom Petty
by Work?nah... on Feb 24, 2009 11:39 AM PST up reply actions
Sign me up!
I hear free is a very good price….
by antediluvian on Feb 24, 2009 12:07 PM PST up reply actions
Nice writeup, really like this site
But you might want to look up what “begs the question” means. No offense, but it you use that term correctly you’re ahead of 90% of sports journalists.
(hint) It doesn’t mean “raises the question”
A writer friend of mine has the same pet peeve
He says everyone misunderstands the meaning of this phrase. Best advice: steer clear.
"We don't back down to nobody." --Joel Przybilla
I'm not worried
KP and his ragtag group of friends has consistently not done what everyone said they will or “has to” do. Many people thought there would be a huge trade last year at the trade deadline, then at the draft, and again at this year’s trade deadline. If KP and company have done anything consistently, it has been to do the unexpected. If there is someone out there who will make the team better, fits the chemistry and time line, and are available, then they will be a Blazer this summer.
I da man!
by Dragline on Feb 24, 2009 3:32 AM PST reply actions 1 recs
Yeah, KP listens music to have his lion look intensity.
Sergio + Rudy = 16
Sergio + Bayless = 16
Batum 8+8=16
You da man
Want more aggressiveness? Try less Baylesslessness.
by prezofdeath on Feb 24, 2009 11:30 AM PST up reply actions
It all comes down to one thing
Are the Blazers winning?
Look, Paul Allen is not going broke anytime soon. I don’t care how bad the economy is, it is simply impossible to run out of money once you hit a certain number. Paul has long since hit that number. If Paul is in such bad shape financially that he can’t operate at a loss then we will have much bigger things to worry about (like who we are going to eat next).
On the other hand, does it make sense for PA to take big losses if the team is not performing? Why pay for mediocrity? But will PA pay if the team is winning? I absolutely believe so.
Look at Roman Abramovitch at Chelsea. Billionaire, bought a major team, spent an obscene amount of money and was glad to do it while he won back to back Prem titles. However, the economy started to tank and the team started to lose. He started thinking, “what exactly am I paying for here?” The team has since cut costs and is looking to rebuild a more conventional way. And PA is richer than Abramovitch, and his money is way more secure.
We have nothing to worry about here.
by AndrewD on Feb 24, 2009 5:43 AM PST reply actions 1 recs
Russian guy
Was worth 13 billion and lost all but like 200 million or something. This is still a ton of money, but not enough to run a basketball team at a loss. So no, it’s not impossible to run out of money once you hit a certain number.
Prime of example of the “eggs in one basket” issue. Allen wasn’t dumb enough to do that, although all of his baskets seem to be losing some eggs.
lol
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:30 AM PST up reply actions
lol rec'd for this line...
If Paul is in such bad shape financially that he can’t operate at a loss then we will have much bigger things to worry about (like who we are going to eat next).
Want more aggressiveness? Try less Baylesslessness.
by prezofdeath on Feb 24, 2009 11:31 AM PST up reply actions
I cannot find the article but charter communications is going down quickly If Mr. Allen truely owns 50% of that company he should be extremely frugile,. they could take upwards of a 21Billion doller loss by 2013.
Nice read, but things are not as rosey as they seem at the rose garden.
I try to help with everything," Fernandez said. "If the coach says go rebound, I go rebound. I work for the team.
""If I'm playing this game to get media and attention, I shouldn't be here," Aldridge said. "I'm here to play basketball, and do what I can do to help this team win."
that sux
I’m trying to get a job in sales there. :-(
Please hire me Paul, I promise to spend on the Blazers if you do.
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:34 AM PST up reply actions
I shudder to think about how close we were
to losing Mr. Allen as the owner of the Trail Blazers a few years back. At the time it seemed like every media outlet was trying to run him out of town. If it wasn’t for the Rose Garden lease and the fact that Mr. Allen loves this team, things might be quite different here in River City.
2-4 the who
Now do the financials for all the other owners.
Just sayin’. PA is fine, relatively speaking.
Blazer Fan
by leeroyjenkins on Feb 24, 2009 6:41 AM PST reply actions 2 recs
every blogger and his mother are saying
oh no!
I’m worried if I’m Phoenix or New Orleans, not if I’m Cleveland or Portland.
Want more aggressiveness? Try less Baylesslessness.
A lot of owners are in real estate
A lot of owners, ain’t doing so well in real estate right now.
I doubt the Cavs owner, he of Quicken Loans, is doing much loaning right now either.
I ain’t no damned economistical bookworm, but everyone (including lil’ ol’ Mortimer) is gettin’ shafted at least a little bit. PA’s shaft is just a much bigger one that he has to take, since his investments and expenses are other worldly.
One of the nice things about being richer than God, is that you can ride out some of the storms God gives us financially. Things will get better, PA and the other owners will ‘get back on their feet’, and in the meantime PA can, if it’s the right deal, “take advantage” of another team’s owner eating it financially a little harder because he isn’t richer than God.
The numbers are HUGE, but relative to pretty much every owner, the numbers are the same. Everyone is eating it.
IS there an owner doing BETTER than he had been, right now? Even one? Or one who is just staying the same, financially? I’m asking that honestly because I can’t think of every single owner.
Mortimer, naive and ignorant.
Man
Someone on the Internet was telling me GWB gave us this storm. Now you are telling me it was Someone Else.
I thought it was mostly foolish people spending money they didn’t have, and foolish people loaning them the money to do it.
Life is confusing. I think I’d better start ruling the world soon and sort it all out.
When I rule the world, everyone will know how to use Excel.
It ain't as confusing as you think
If GWB gave us this financial crisis, and I say God is giving it to us, logically it should follow that George W. Bush IS God.
God told people to loan and spend money when they shouldn’t. Through Bush, that is. Who is God.
I’m not sure exactly how it works; I haven’t nailed down all the details. W’s body may be a vessel of sorts for God, or just a living embodiment of God’s works. I’m pretty sure W was a virgin birth (ain’t no straight man getting close to Barbara’s bush, dat’s for sho’), which I think means he has a lot of midichlorians, which caused thousand of mortgages to be defaulted…? Like I said, there’s some details in my factual theory that are “missing” (for lack of a better word), but we can all agree it is pretty much correct.
It’s like the movie JFK… stuff may be “wrong” (for lack of a better word), but it FEELS right.
Jscot, just get in charge and make people stop driving slow in the fast lane and the rest will sort itself out.
Mortimer
I agree
If PA lost half his fortune at a time when all the other rich guys were doing fine, then he’d probably be more affected. But practically everyone has taken a hit, and, in time, anyone who can afford to be patient (that leaves me out!) will get much of his losses back.
"We don't back down to nobody." --Joel Przybilla
till hell freezes over we'll wait ben....
cuz we’re stupid like that ;)
The Faith don't panic, the faith freaks out burns out farms and torchs small villages in the name of The Faith.
stupid is as stupid does
count me in that group ;-)~
Want more aggressiveness? Try less Baylesslessness.
I think you forgot a supplimental source of income
My Life as a Billionare: The new album by Paul Allen.
He has a recording studio in his house that costs him a lot of money, since he keeps it fully equipped and staffed at all times :)
Brandon is one of those quiet assassins. - Chris Paul
can't wait to jam down there
waiting for my invite Paul…. :-)
"..[Travis Outlaw] could jump, grab a rafter, eat a sandwich, and then dunk.."
tmundal 12/30/07
A couple of things you missed, Ben:
Losses aren’t really bad news for Billionaires. They need tax write-offs, too. Charter’s losses (and the Blazers losses) have significantly reduced his tax liability (it is quite large for a Billionaire and his investments).
Paul’s investments are far more diversified than simply owning Dreamworks, Charter, the Blazers, and Microsoft. Some of it has even returned good money – such as oil (not futures) and gold (bought 5+ years ago).
I maintained in my posts that PA took the RLEC savings himself because financially it made sense.
Koponen - PG of the future. For Italy, that is. Book it.
Not playing the now-expired RLEC chip is interpretable three ways...
(1) The theory that no appropriate players were offered at a reasonable price.
(2) The theory that KP worships chemistry and didn’t want to do anything to mess it up, which an in-season trade might do.
(3) The theory that Paul Allen wanted to stick the cash in his wallet himself rather than take on future contracts that would cost even more loot.
(4) The theory that the team had specific moves planned for the near future and did not want to lose future financial flexibility by taking on additional salary now.
These are not mutually exclusive and, indeed, all might be partially right.
I said previously, when I was growling and muttering and screaming about the inaction of KP, that even billionaires are scared and feeling it with world capitalism circling the toilet bowl and I think that’s true. Poverty is relative. If Paul Allen went from (I am just making this up, don’t quote me) let us say $20B to $10B in the last year, he would not be feeling like a megarich dude, but rather, like a cash-strapped dude on the ropes. l thing Ben’s approach here is not only valid, but has some significant merit.
Remember that when PA build the Rose Garden, he didn’t write a check, he borrowed gobs of money at a quite unfavorable rate (10%, as I recall). This would seem to indicate that he and Vulcan are not as cash-rich and liquid as many people imagine.
Good work, Ben. Keep it up. You’ve now posed the question, see if you can find the answer…
Why is Channing Frye still here? Anybody??? Anybody???
Whoops, predictable FOUR ways -- I can count, really I can!
Why is Channing Frye still here? Anybody??? Anybody???
I really hate not being able to edit posts. Grrrr.
Why is Channing Frye still here? Anybody??? Anybody???
Want more aggressiveness? Try less Baylesslessness.
by prezofdeath on Feb 24, 2009 11:33 AM PST up reply actions
yeah
I wonder if Paul Allen asked KP “can you make a move that makes us a title contender this year?” and when KP said no, PA decided to save the RLEC money himself.
Boomshakalaka
I think it was a little of that and a lot of what Timbo said
He just paid Raef a lot of money for three years to do nothing. He’s paying Miles a lot to not play for him. Then he was given the option of getting some guy for $14 or so million for several years while giving up someone like Batum or Bayless for second round exit instead of a first round exit.
Also, like two years ago KP said that PA really wanted to play with cap space. He’s never had the opportunity to go after the big fish because he was always over the cap. That could mean that they really never planned on trading Raef from the get go.
I da man!
Allen isn't afraid to spend money
but he also hates to spend it unnecessarily. Remember, he laid-off 80 Blazer employees a few years ago.
Whether Allen spends to bring-in another player or two is not as important in the current economy as it used to be. This team will continue to improve if no trades are made or new players added. Meanwhile, rival teams like the Hornets will drop players and cut costs, making the Blazers relatively stronger.
Ultimately, I think it comes down to one big question: is the current team capable of making the playoffs.
It makes sense in all sorts of ways to pocket the money now, rather than to lose flexibility in taking on an imperfect player at an imperfect price and risk messing up chemistry — IF — the current squad is capable of getting into the playoffs. That was KP’s big bet, regardless of the degree each factor weighed on the decision.
For myself: I was (prior to the deadline) very bearish on the team as it sat and sits — although I will say that Phoenix and Denver are both showing signs of great weakness, which makes me feel a little better…
The Blazers have holes and the big fizzle still might happen. But I now think KP’s big bet has a chance of being a good one.
Why is Channing Frye still here? Anybody??? Anybody???
Cash rich
This would seem to indicate that he and Vulcan are not as cash-rich and liquid as many people imagine.
Rich people don’t get richer by being cash-rich. They get richer by making investments that bring them more money. Cash doesn’t have a great rate of return.
Lots of very wealthy people aren’t cash rich.
When I rule the world, everyone will know how to use Excel.
Leverage???
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Not just leverage
Equities, etc.
It’s the classic risk/reward thing. Rewards will be low unless you take successful risks. No risk, very low reward. Rich people can afford to take higher risk, and if they choose those risks well, they can therefore accummulate wealth faster, not only in absolute terms but also in percentage terms, than those who are less wealthy.
But that’s actually a good thing, because risk makes an economy go, as people invent things and develop new ideas. The poor guy who can’t afford the risk won’t make any money on those new inventions, and the rich guy will, but since the new invention is improving lifestyle/creating jobs, it’s not a bad thing to have him take that risk and benefit from it.
The problem is when they use the wealth in other ways to hurt people. But investments that make them richer aren’t necessarily a bad thing.
When I rule the world, everyone will know how to use Excel.
by jscot on Feb 24, 2009 10:04 AM PST up reply actions 1 recs
good call
You’ve now posed the question, see if you can find the answer…
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:41 AM PST up reply actions
"Collars" on Microsoft stock
According to an article on Allen written by tech journalist Robert X. Cringely (which is a pseudonym for two different tech writers…don’t ask), Allen a long time ago took out transacations known as “collars” on his MS stock, which if I understand it tend to counteract changes in value, making his net worth less dependent on the performance of MS.
That said, I don’t know details of this sort of transaction; and it’s entirely possible that such a financial instrument has been compromised by the recession somehow…
There is no charge for awesomeness. Or attractiveness.
That dude('s) been around forever.....
I’m gonna go find that when I have time. Thanks Engineer! I haven’t read Cringley in years…
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Collars, straddles, strangles
That essentially means you buy/sell a put option (expect market to go down) and a call option (expect market to go up) on the same asset (here MS stock) that expire at the same time. You can do that for the same “strike price” (the price at which you can use the option, i.e. buying or selling the underlying security like a stock) or different ones above and below the price you expect the stock to have at a specified time in the future (expiration date).
One problem is: You can use these strategies to reduce risk (e.g. a long straddle, buying both options for the same strike price and then having the freedom to let the one that is not beneficial to you expire unused) which Mr. Allen probably had his brokers do to hedge his risks in a volatile market. In that case all you can lose is the money you paid for the unused option. Since this is usually just a fraction of the total investment you had already made it’s a good investment strategy, and that’s what options and futures were initially invented for, so that e.g. a farmer could secure himself against a bad weather year for his crops and not risk losing everything.
But you can also use these strategies to highly increase your risk through speculation especially if you don’t already own the underlying asset like a stock (then e.g. a “naked call” carries virtually unlimited risk) once the market becomes volatile in either direction or just in one direction depending on the options you own :)
A lot of investors/speculators did that in the past (going broke in the Asian and Russian market crisis in the late 90s) or right now (e.g. a famous German businessman recently killed himself after his family empire vanished over a weekend due to such option speculation on VW stock).
See here for more info: http://en.wikipedia.org/wiki/Collar_(finance)
http://en.wikipedia.org/wiki/Options_strategies
Brandon is one of those quiet assassins. - Chris Paul
so um, what don't you do?
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
I'm not a broker, I just finished a finance course last year :)
Brandon is one of those quiet assassins. - Chris Paul
lol, my finances were finnished just last year!!
we have so much in common =)
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
OT sort of: hey Norsk, see the significant announ ements from Micron and Spansion within the lay 24 hours?
Fortunately, my MCHP has not resorted to such drastic measures as of yet, but who knows.3 weeks furlough a quarter is nothing to sneeze at, but no layoffs. Not even selective. Suggests to me da CEO dude trying his hardestest to be positionedhenever this thing does turn around…by the way, he was openly heckled by analysysts last year for barely missing the numbers at the outset of this thing…he called it actually, but not quite this bad…I do feel somewhat fortunate…compared to a lot I my peers in the industry, I’m dpi g relatively well. I have an income and all, albeit significantly reduced. Hate to go look for another source right now though…
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
I really apologizefor all the typos
Downturn or not I need to go get a phone with a tactal keyboard!
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
I'm sorry.
Not good news at all. I have to take 5 weeks off a quarter starting, uh, now. 3 are for sure unpaid. Can use VAC /Pa if ya wanna burn it for two of them…..
Fellow Blazer Fan, I certainly wish the best for you.
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Yep.
There has to be some budgeting at work…the days of PA throwing unlimited money at the issue are over. When you really break it down, not trading RLEC because “we can do better this summer” just doesn’t add up.
We’ll have fewer options and less cookies to offer other teams this summer. With ~$6M of cap room, you can get a $10M player if you find a willing trade partner to take just Outlaw in exchange for a clearly superior player.
At the deadline, the Blazers could have offered trade partners RLEC and Outlaw to acquire a $10M player and eat a $6M bad contract. The trade partner would have saved $3M this year from the RLEC insurance payment, the entire future difference of Outlaw’s contact vs. the $10M player, and the entire future value of the bad contract. This summer, the trade partner just saves the difference of Outlaw’s contact vs. the $10M player.
When operating below the cap, which we will now be trying to do, the game changes significantly.
Perhaps...
…PA realizes that “the days of throwing around unlimited money”, didn’t work anyway. I painfully remember this era not too long past…
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
But
there wasn’t intelligent player evaluation then. KP + money circa 2000 would be optimal.
by Free Bayless on Feb 24, 2009 9:49 AM PST up reply actions
No way of knowing. Point conceded.
KP does appear to be “The Scout’s Scout”. The buck always stops at the next level of management though, unless dealing with either incompetence (bankruptcy, and it got close!) , or criminals….Typing on an iPhone which I hate. Only ask you to contrast and compare the big pic.
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
ugh, so what was your previous screen name?
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:49 AM PST up reply actions
WOW, just wow.
Ben, I’m sure you could care less, but in my eyes at least, your fully legit. This was amazing to find when I logged on, and I’m more impressed then ever before. What a great idea for an article. I hope that this expirence lands you a lagitamate paying gig somewhere, but only after we’ve had the chance to follow your muzings through at least one championship. (maybe you could replace quick, that would be outstanding)
On the off chance that you read this, I’m curious what exactly was your inspiration for this? Do you have any motivation for any kind of further investigation? WHATS NEXT??? Inquiering minds want to know.
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
I was a little curious as to the financial
standing of Dreamworks and Paramount Grp. and the seperate Dreamworks Animation
The most recent filings they have on the site is the 2007 earnings. They had a year of significant growth in 2007 and if you check the various financial statements you will notice this.
Perhaps Mr. Allen’s financial advisors reccomended selling off this particular asset b/c they are still doing pretty well. You know, buy low sell high? It may be a pet project for him but he is about his money.
If one simply looks at Dreamworks from the movie point of view, what big time movies do they have ? I mean Shrek and Madagascar franchises have basically run their course. According to their websit they have some human and animation features coming out which dont normally perform very well. Plus the movies look dumb…
I bet PA was capitalizing on one of his more liquid assets at the time he and his team felt they would get the most for their money.
Also Paramount which owns dreamworks and is affiliated w/ dreamworks animation is doing really really bad. I mean, bankruptcy bad. So maybe they are anticipating this having an effect on dreamworks animation, i dunno.
Ben, i do think this post was one of your better stories , analytically speaking.The research is on point and you have really given credence to your main point, which i think is : Paul ALlen is going broke. I really think that with more research Paul isn’t going broke. He’s certaintly suffering losses like everyone is and he’s making smart and seemingly proactive business decisions in order to make the impact less ,well, impactful.
You also implied that the team could be one of the 15 asking for bailout money however nothing really is there to substantiate that other than the assumption that b/c you got an answer that can be perceived as shady. I am not certain they will or will not be one of the teams receiving financial assistance, but in the event that the blazers do, is that bad? This organization is still in the red, and by alot. No amount of Paul’s money NOW is going to completely fix that unless he’s stupid, which he definitly is not.
Sophia
Though patience be a tired mare, yet she will plod. - William Shakespeare
Roses are red
violets in bloom
Sophia’s in love
with Nicholas Batum
-Bow4Meow
Re: shady answer been got
When before it was free flowing….
Maybe the times are a changin’…and the response is for sound business reasons. I mean, if you talk to Ben, he does have this little broadcast thingy called a blog…I absolutely the points you cited about Ben’s piece are on, I.e. The research is outstanding, onpoint, etc. I don’t know if I can agree with the title or the suggested conclusion…just my ₩¥£€$0.02.
Nice response from you too Ms. S
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Dang it!!!!! Ben, not "been"
I hate this thing to type on
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
yeah no one can really know why the office is not answering questions
it could be a whole slew of reasons only one of which being what Ben is suggesting. That is all I was trying to point out.
Also , how many recessions have occured within the last 25 years? I am certain if Paul makes it through those and the last one while still being the richest owner he will be fine now.
Sophia
Though patience be a tired mare, yet she will plod. - William Shakespeare
Roses are red
violets in bloom
Sophia’s in love
with Nicholas Batum
-Bow4Meow
I'm a little older
This one is pretty bad…stuff starting to melt down…not pretty. Big picture. Hopefully something turns around soon. However, Im fairly reserved about the relative demise of PA, until more compelling evidence is forthcoming. Just me.
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
i dont doubt the severity of
this recession. Depending on several factors, most things are going to get worse, not better.
Sophia
Though patience be a tired mare, yet she will plod. - William Shakespeare
Roses are red
violets in bloom
Sophia’s in love
with Nicholas Batum
-Bow4Meow
i wouldn't say "scary"
i think things will be much different than what they have been. The housing market is the main thing that hasn’t really bottomed out. I cant envision any way it gets better quickly. That will take lots of time and as well it should.
Though patience be a tired mare, yet she will plod. - William Shakespeare
Roses are red
violets in bloom
Sophia’s in love
with Nicholas Batum
-Bow4Meow
Well, it's scary for me
because I was laid off yesterday and there aren’t a lot of jobs available.
Watching your bank account dwindle to nothing is definitely scary.
It's all relative ain't it brother?
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
i dunno
i refuse to blame the government for my financial failure. I usually am broke when i spend too much on shoes. But really, i save every penny possible, keep health insurance try to stay healthy and work hard. If i get laid off, i will happily flip burgers part time at mcdonalds and some other part time entry level position if I have to just to have money.
i work in an industry that deals w/ your situation all the time. I think a HUGE problem w/ this recession is the fact that people are losing the ability to APPEAR financial successful. So many years of imitating a life of luxery and spending more than we are actually worth has in some ways caused this. That goes for everyone up and down the board.
Now dont get me wrong, there are tons of people that work hard each and every day then are laid off such at the Auto Workers Union members and so forth and im sure like you and I dont think the fault is ever with the person totally but if you are getting laid off,(not you specifically mind) and you dont have 3 months income saved up b/c you have 10 credit cards and 2 mortages in a house you cant afford, that is no one’s fault but your own, you get my drift?
I think it’s mostly scary in that there is an unknown element to all this. What is the worst , will we all be rushing to bofa and withdrawing our money b/c it could be non existent tomorrow? Or will millions more lose their jobs and houses and things even out at a lower level albeit while people become accostomed to a more frugal standard of living? No one knows really b/c every “famed economist” is predicting something different. Also there are less and less of a safety net these days. Funding for several crucial fed and state aid programs is down in almost every state and it just makes it that much more difficult for those struggling.That to me is the most scary part.
I am really sorry you were laid off though. It’s difficult for sure and i wish you the best of luck.
Regards,
Sophia
Though patience be a tired mare, yet she will plod. - William Shakespeare
Roses are red
violets in bloom
Sophia’s in love
with Nicholas Batum
-Bow4Meow
by BlazerFan1 on Feb 24, 2009 3:12 PM PST up reply actions 1 recs
rec
This is why I fear the pending zombie apocalypse more than ever.
I da man!
by Dragline on Feb 24, 2009 6:50 PM PST up reply actions 1 recs
omgosh i'm going for my shotgun right now
zombies aren’t taking me alivE!
Want more aggressiveness? Try less Baylesslessness.
Superb post
I think there’s quite a bit of pain to go. And I would guess that it just isn’t going to get better until that pain has been felt. It could all come pouring in over the next 6 months, look like total and complete meltdown, and then start to turn around, or we could have 3 years of slow decline before things start to turn.
The governments around the world are trying to slow down the decline, but that may actually be a mistake. Sometimes, it is just better to get it over and done. I don’t know. They fear a panic could actually cause a total meltdown, and even more, civil unrest/rioting. If that comes, it will be totally unproductive and just make things worse, but when people are angry, they don’t often think about that — and some won’t care.
As to why the office isn’t answering Ben’s questions, I still think it is for the reason I said above — they want people to think PA wants to limit his spending, because that lets KP drive a harder bargain. You never let the other guy know how much you are willing to spend, if you want the best deal possible.
When I rule the world, everyone will know how to use Excel.
Great post Ben.
A few things that put my mind at ease.
1. PA is still going to A LOT of blazer games, indicating he still loves this team. When he stops going to games I’ll get worried.
2. I think the team is better off with him not just throwing money at trades, FA signings, and egregious extensions a la Whitsett. We’ve been there tried that, and it didn’t work.
3. We didn’t trade RLEC for an impact player, which some people see as a mistake, but we didn’t do a Marcus Camby / Tyson Chandler type straight salary dump either. This makes me think PA is still committed to spending money the right way on this team.
4. Billionaires ARE able to whether economic crises better than everyone else because they have real, tangible assets you can touch and see; property, yachts, stocks, beach houses, companies, all which can be used to borrow money against. PA is more likely to get a loan than just about anyone else.
5. As someone pointed out above, losses can be manipulated to get ENORMOUS tax write offs. I bet PA does better on his taxes this year than he ever has in his life probably.
6. The blazers probably have a brighter financial future than a lot of his other investments. They are looking at at least 5-8 years of consistently making the playoffs, young budding stars to get jersey sales, increased national attention, and possible / probable championships. Money spent on making the team better will reap future rewards.
dont forget the international market
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 10:52 AM PST up reply actions
yeah that's part of the problem
Though patience be a tired mare, yet she will plod. - William Shakespeare
Roses are red
violets in bloom
Sophia’s in love
with Nicholas Batum
-Bow4Meow
maybe, but maybe its part of the solution
granted, france and spain arn’t the hotbed of NBA fan love, but it never hurts to have a country or two in your pocket
Man, we should forfeit before roy’s hammy explodes, knocking him into LMA’s ear who loses his balance and hits Greg’s knee… - HurraKane212
http://www.nba.com/news/miles_10_080919.html
by maid tu rek on Feb 24, 2009 12:58 PM PST up reply actions
If the NBA's model is broken there are no future rewards
Not sure where to post this thought, and this seems as good a string as any…
Ben’s link above “highest-profile NBA agent is stating that the NBA’s financial system is broken.” is very interesting. If the NBA is in for a major financial reconstruction in 2011, it would make the most sense to hold steady on investments until this is sorted out – particularly when you have a pretty good team with quite a few good contracts. With the likelihood of change that will help owners at that time, it’s possible that what today would be considered a “good investment” from a talent perspective could become quite bad once the new CBA is in place.
It makes all the sense in the world to hold steady and see how this group does, and make modest (and short term) investment until after the new CBA is ratified.
Nice work Ben
That’s some serious investigative shimm. The blogfather caught on quick
The other thing about RLEC is that we’re getting a bunch of that money back from insurance, another sign we are looking to stabilize what we’re doing rather than spend freely…
"Rudy’s flashy passes had the place whispering to each other like we were in junior high" ~BlazermaniacAndy
by courtsideerrandboy on Feb 24, 2009 10:51 AM PST reply actions
Is it me?
Or does the link thing never work? This is the TrueHoop link: http://myespn.go.com/blogs/truehoop/0-38-228/The-Deepest-Pockets-in-Sports.html
"Rudy’s flashy passes had the place whispering to each other like we were in junior high" ~BlazermaniacAndy
by courtsideerrandboy on Feb 24, 2009 10:52 AM PST up reply actions
Paul Allen has made
some terrible financial decisions over the years and is pretty much coasting on his Microsoft money. However, he is a huge Blazers fan. I think his pimp palace has a basketball court done up in the Blazers theme. You don’t do that unless you are a serious fan which is good for the rest of us fans. Mark Cuban is like that and it’s good for the league to have passionate owners.
As others have pointed out, the title is a misleading. Allen’s investments are down just like the rest of ours, but remember, it’s not an actual loss until you sell. Until then it’s just movement on paper. Semantics, but something to remember.
I think the Blazers are in pretty good shape with an exciting team that is gaining national recognition and one that should be competitive for years to come.
I agree about his financial decisions
Isn’t that the nature of investing though? I think he has made some pretty conservative investmentsthough that will ensure he doesn’t go “broke”.
Im not one to sit around and tout conservative policies, but outside of deregulation and this notion of “small government” that most conservatives spew, i think Paul is smart and the practice of keeping his long term bonds/investiments and such that are technically “illiqid” as Ben would say now , will help maintain his wealth over the next 20 years while making the impact of his other bad choices (dreamworks, cable companies et al) relatively small.
Sophia
Though patience be a tired mare, yet she will plod. - William Shakespeare
Roses are red
violets in bloom
Sophia’s in love
with Nicholas Batum
-Bow4Meow
I think it goes back to a comment from above
that said that rich people can afford to take big risks. Allen can invest in a struggling cable company because he’s still rocking billions with a b. Maybe he knew it wasn’t the greatest idea, but was willing to take the risk.
I just hope he uses better sense with the Blazers. I will storm his house and eat his liver if he does anything that bankrupts the team or causes it to relocate.
I like liver
Hopefully it doesn’t come to that. Little chance of relocating though. He’d have to pay the city of Portland a lot. It’s on paper somewhere. Forgot how much it was off the top of my head.
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Here's the biggie though
If Aldridge and Oden continue to develop into the 2nd and 3rd parts of our “big three”, will PA be willing to shell out max contracts if necessary to keep all three players even if it meant going into luxury tax?
Remember there will ha e to be another buyer ....
Are the lakers n knicks gonna buy up the whole league? What, they go to Greece? …. PA got a lot of chits to compete with in this game
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
Another aspect of Allen's holdings that hasn't been mentioned
is that Allen owns the Seahawks. The NFL is facing what looks like a even trickier labor situation than the NBA is. I wonder how much that is influencing his fiscal decisions as well.
FTW!
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
For the sake of argumet
Why has PA laid off workers a the home office, and unspecified “projects”, but not his sports franchises, or his real estate office? Hmmmmmmmmm
"The match in Los Angeles is a good opportunity to begin to demonstrate that we want to make war." Rudy Fernández (translated)
I'm always grateful
to have Paul Allen as the owner. People don’t give him enough credit for negating the disadvantages that our small market would normally have with his wealth.
by neutroticblazerfan on Feb 24, 2009 1:45 PM PST reply actions
if this is considered money trouble
then I want what Paul Allen is having.
One last point (hard to see if it was made above):
Trade RLEC for a big contract, what do you get? Luxury tax payments that put money in other owners’ pockets at a time when they need it. Instead, take the tax savings yourself, try to avoid the luxury tax, don’t give the other guys money (which increases your position of strength).
Koponen - PG of the future. For Italy, that is. Book it.
by Blazerholic on Feb 25, 2009 12:12 AM PST reply actions 1 recs
Comments For This Post Are Closed
Secondary Sidebar
User Tools
FanPosts
Community blog posts and discussion.
Recommended FanPosts
Recent FanPosts
FanShots
Quick hits of video, photos, quotes, chats, links and lists that you find around the web.
Recommended FanShots
Recent FanShots
In Association With
Ball Don't Lie - NBA - Yahoo! Sport
- Days of NBA Lives: Wherein Roy Hibbert tap-dances to Maine
- Grizzlies Valentine’s Day cards are the key to love
- Kevin Love would like the NBA to take the MLB’s approach on All-Star games
- Kobe Bryant fires a few hilarious salvos at Jeremy Lin
- Brandon Jennings states the obvious regarding his 2014 free agency, everyone goes nuts
Certain photos copyright © 2012 by Associated Press or Getty Images. Any commercial use or distribution without the express written consent of Associated Press and Getty Images is strictly prohibited.
