clock menu more-arrow no yes mobile

Filed under:

Portland Trail Blazers COO Sarah Mensah Reacts To Forbes Valuation

Earlier this week, I noted the Portland Trail Blazers' annual valuation report from Forbes, which appeared about as rosy as this type of financial report gets. According to the magazine, the Blazers increased their team value by roughly $18 million since the 2009 valuation and posted decade-best numbers in operating income and revenue while also posting a decade-low in player expenses.

Given that the Blazers are an organization that sends out press releases when its players donate large quantities of dog food, for example, it was more than a little surprising not to hear a single word from One Center Court regarding the astounding progress the financial report seemed to represent. Shouldn't this be a pretty big deal?

On Thursday, I checked in with Blazers COO Sarah Mensah, who said that while the Forbes numbers are "estimations" and that the team "generally hasn't commented" on the valuations, they are accurate enough to warrant some discussion. Mensah also wanted to make it clear that the numbers are already outdated, as they reflect last year's numbers rather than the current state of the franchise. You might have heard: It's been a tough fall. Brandon Roy is out indefinitely, Greg Oden had season-ending microfracture surgery and the Blazers are no longer the hottest ticket around or the team poised to contend for a championship like they appeared last year.

So the message from Mensah wasn't about throwing a party like you might expect a corporation to do when it has a strong quarterly earnings report. Instead, it was more reflective of an ongoing commitment to making prudent and smart financial decisions on and off the court. 

Perhaps there's no better measure of the organization's development than revenue, which Forbes reported increased for the fifth year in a row in 2010. Since 2006, the revenue figure has jumped from $77 million to $127 million, steadily increasing each year. That growth, Mensah said, is part of a "very positive story, one where the things that are done on the court, starting with hiring Nate [McMillan] as the right coach. Making some really smart choices in the draft. Getting players like LaMarcus [Aldridge] and Brandon [Roy], having Brandon turn into a 3-time All-Star and Rookie of the Year. The ping pong balls helped out on court.

"That helped the franchise build some on-court momentum and at the same time there were some really strategic things being down off the court as well. Things like working on our staff, making sure that our staff was one of the best-trained, most-proficient in use of CRM (Customer Relationship Management). All of those things came together over time and at the right time. That helped us be in the right position when the right on-the-court moves were happening to be able to take advantage of it." 

The 2010 valuation period also reflected a time in which Portland had perhaps its most favorable salary cap situation in recent memory, as Roy and Aldridge were still on their rookie deals and the last of the truly heinous contracts had been scuttled. Effective salary cap management is at the top of Mensah's list of financial goals for the franchise and at the top of the list of explanations for the Forbes figures as well. "No question that cap management is really tricky, it's difficult, it's not for the faint of heart. It's a very, very important part of running your business and running your business right. I think the team has put a lot of focus and effort into doing that, when you build through the draft it's easier to have a good cap because of rookie contracts." 

Mensah also pointed to the team's merchandise sales and in-arena food and beverage sales as important drivers of growth but said that "by far the largest pie in any team's revenue development comes from the sale of tickets and suites followed closely behind our broadcast or sponsorship revenue." Both ticket sales and sponsorship revenue were tabbed as "huge growth areas" boasting "really great momentum."

Another important factor for Portland's revenue figure: Being below the luxury tax line during the valuation period. Mensah said that the relationship between the team's payroll and the tax line is something the franchise monitors on a daily basis, although she pointed out that the organization doesn't feel, like some franchises do, that it needs to stay under the luxury tax line no matter what so that it can collect a check at the end of the season. "It's definitely something that you have to manage. I don't know if we have a particular philosophy related to [avoiding the tax], although it's all just part of the management of your overall decision-making day in and day out." 

The mantra continues to be, then, as it has been for a few years now: If spending will lead to a championship, there is to be no cap on spending. "Nothing has changed relative to our commitment to fielding a team that will be in position at some point to win a championship," Mensah said. "We're hoping that's sooner than later. That's the dynamic, that's the challenge and that's the commitment." 

In that same vein, Portland's payroll looks quite a bit different this season compared to last season, as extensions for Roy and Aldridge are now on the books, as well as an eight-figure per year extension for veteran center Marcus Camby and a large, front-loaded, five-year mid-level contract for guard Wesley Matthews. If you're looking for reasons why the organization isn't celebrating the Forbes numbers, it's because they've already spent a ton of money that will make next year's numbers look quite a bit different. And it's money, arguably, that didn't bring them any closer to their stated goal of contending for a championship.

"Every year is different, every year is a new page," Mensah said. "Every year has a new set of challenges. We signed Camby, we brought on Wes Matthews, prior to that the signing of Brandon and LaMarcus, those are all significant investments that Mr. Allen has made to this team."

Given all the hits the organization has taken this fall, I expressed surprise that, as Chief Operating Officer, she wouldn't at least take some joy in the public acknowledgement of progress that the Forbes numbers represent. Mensah went all Brandon Roy on the question. "We're always going to stay humble and hungry. We're always going to be working, we're never going to be satisfied. There's always going to be new opportunities, new innovations we're looking at that will help the franchise be more successful. That's definitely what the folks who work with me are always looking for new ways to innovate and new opportunities to drive revenues for the franchise. That's not going to change. I think Rich Cho and his team are the same way on the court. They're not going to be satisfied until explore every avenue that they can to make this team better."

Asked how close the organization was to achieving President Larry Miller's goal of turning a true profit, Mensah said she couldn't answer the question. "I can't give you specifics. I can't give you specifics."

At that point, just before tip, she hinted that while the franchise had a positive operating income according to Forbes, the valuation's numbers might not be painting the total, complicated financial picture behind a professional sports organization. Forbes notes that its figures might not include things like large obligations related to the Rose Garden and/or other sources of auxiliary debt and related interest.

Mensah did offer this as her parting message: "We've made some extraordinarily positive strides in five years and I think everybody is proud, but we're not done."

As if on cue, minutes later, reserve point guard Patty Mills took a microphone to center court to address the Rose Garden crowd before a nationally-televised game against the Boston Celtics. Mills's audience included some empty seats and plenty of green and white.

His message? A request that fans to "Stay United" and renew their season tickets. The sales work is, indeed, never done.

-- Ben Golliver | | Twitter