I wanted to comment on this so I’m glad you posted a fanpost.

What I noticed is not very long ago, around the draft, I’m thinking, KP was saying “when it comes time to make moves to improve the team, Paul is going to be ready to make moves” (not an exact quote). The obvious implication being that Paul would go way into luxury tax territory to make the Blazers a contender.

Well, here we are, its time to open the wallet and make the Blazers a contender, and instead we are seeing the exact opposite: Paul is dickering with his franchise player in contract negotiations. This seems wildly inconsistent.

The conclusion: something MUST be going on. Something has changed or there is some inconsistency within the organization about how to run the franchise. That is why the speculation re “is PA sick?” or “has PA lost more money than we realilze.”

Anyway, at this point it seems like there isn’t any solid information to go off of. My personal guess is that the organization does want to be financially disciplined, but not because its strictly necessary. They just see it as good business practice, and that the organization as a whole will be more successful if they are disciplined not only on the court, but in the boardroom as well.

I agree though that is seems like the CBA is bound to be renegotiated, because that is what a lot of league insider/agent types are saying. Maybe that is the whole thing. Still, it seems a bit odd. Why not shell out a couple extra mil for your franchise savior?

The situation is so out of control. Conspiracy theories galor.

I can assure you this. Paul Allen has plenty of dough. And if some guy who owns auto dealerships is willing to go well into the luxury tax to match our Milsap we probably shouldn’t worry about a guy worth 10B to pay up. We proven our ability to spend many times before and always for assets that were not as obviously valuable as Roy

I think Dave is 100% right on this one. People need to stop freaking out.

Thanks for the chuckle

Short answer: No

Long answer:

As a billionaire, Paul Allen doesn’t have money problems like you or I, if he sees something he likes, maybe a new car, or a classic Guitar, he buys it. He doesn’t stop to think if it is worth it, if he should spend the money, or even which card he should put it on. He doesn’t buy his own food at the store, he might not know how much a gallon of milk even costs today, he has a cook that does that for him, both at his house, and on his yachts, (ya he has more than just the one).

Now, does he have “money problems” as a billionaire? First think of how much money that is, 1 billion is 1 thousand millions, and Paul Allen even a conservative estimates is worth over 10 billion. Here is something I found to help us all realize how much this really is,

A billion minutes ago, Jesus was alive.
A billion hours ago, our ancestors were living in the Stone Age.
How long would it take to count to one billion?
If you count one number a second without stopping until you reach a billion. That task would take you 31 years, 259 days, 1 hours, 46 minutes, and 40 seconds.

link

Okay, so Paul Allen is worth alot, but does he have a ton of cash sitting around that would make Scrooge McDuck envious? Well no one but Allen and his personal finance people know this, but we can speculate based on what is public knowledge.

Many people know about Charter Cable, or SpaceShip one, or other Allen investments that not only didn’t give him a good return, but lost most of the cash he put into them. But few may know that Allen and his investment firm Vulcan have made a ton of money with other investments, and that some of his “bad” investments, like Charter Cable, were not as bad as advertised. Lets look at charter first, the Cable company filed for chapter 11 bankruptcy, and is trading somewhere around 3 cents a share, leaving Allen’s majority stake worth only about $11.5 million. But Lance Conn, who Allen hired in 2004 to oversee Vulcan, has made some very crude moves to turn this investment from dead weight on the books to useful for Allen. According to CNET news the Charter bankruptcy will net Allen $175 million in cash, with an additional $20 million in management fees going to Vulcan. More importantly, a report in the Wall Street Journal states that,

Since Mr. Allen’s stake in Charter is around 50 percent, his partnership share of the debt forgiveness could be as much as $4 billion. Assuming an effective tax rate of 25 percent, the new law could spare Mr. Allen the necessity of paying as much as $1 billion in taxes…at least until 2014.

So while Allen invested a reported $7 billion in Charter over the years, he was able to recoop a large amount of that thanks to some savy bankruptcy negotiations.

Some other investments of Allen’s have actually paid him really well, in 2004 he invested $700 million in Dreamworks SKG, which returned $1.5 billion to him, that is a little over 100% return on his investment. His investment into the Oxygen channel made him about $150 million, and his stake in the Plains All American Pipeline has risen about $125 million since his first investment.

You can read through some of the sources I linked at the bottom if you want to know more, but it is safe to say Allen isn’t having money issues, at least not enough that would keep him from spending on the Blazers if he wanted to. Afterall the guy still gives about $30 million away through his foundation every year, if you have money trouble, that might be one of the first things you see go out the window.

As for the Blazers being a losing money business, I don’t think it is black and white. The Blazers can win and be competitve for a NBA championship and still break even or even make money if they are handled right. In the past that has not been the case, with SPAM, and bad player and executive decisions playing a major role in while the Blazers lost money even this last year. According to some minor research I did via www.google.com, the Blazers gross sales last year were around the $115 million+ area, but that doesn’t include every nickle and dime they get from both the league and sponors, it could easily be $150+ million. Obviously the majority of that goes to player payroll and executive/coach pay but even all of those don’t add up to $90 million, which leaves $25-60+ million to cover the costs of running the arena, (which by the way gets more income than reported here, as this only includes Blazer related income, while the arena gets money from holding other events) paying the support staff, the medical insurance for players/coaches/executives/cleaning ladies/etc, paying the marketing department, paying for advertising, and promotional products, and the list goes on and on.

The Blazer can make money and be competitive, once they get out of some of the bad contracts they signed that they are still paying on, but are not on the books, deferred payments to ex-players, ex-coaches, ex-executives, just plain ex-employees.

Sources:
CNET News article
2009 Forbes list
Wall Street Journal