↓ Login/Logout ↓
Schedule/Results
↓ Roster ↓
Salaries
↓ Archives ↓
↓ About ↓

Fred Zollner, former Pistons owner, explains the NBA’s financial losses

Via Gerald Astor of Sports Illustrated. In 1955.

Sportsman Fred Zollner views the situation this way. “I’m a teetotaler by choice. For me basketball also takes the place of golf or bridge. If we lose money I regard it as a normal deficit for value received—spreading an odd name like Zollner around.”

What Zollner, the Pistons’ former owner who died in 1982, said then is just as true today. Some owners lose money, in the most simplistic level of scrutiny, on their basketball teams, but they gain fortune in related realms because they own a team. If they’d admit and account for that, the lock out would be over. Instead, they want the players to sacrifice enough salary that their teams become profitable – on top of their ancillary gains.

6 Comments

  • Sep 27, 20112:33 pm
    by tarsier

    Reply

    This article does a great job of showing how good the money is in basketball even for owners that are “losing money.”

    http://www.grantland.com/story/_/id/7021031/the-nets-nba-economics

  • Sep 27, 20113:04 pm
    by oracle

    Reply

    What about “ancillary gains” that players receive for being NBA players, which heightens their own name recognition (the only reason I know names from the euroleagues is because there’s a chance they might become NBA players) and in the form of endorsements.

    The argument that an NBA franchise is a luxury good and one should expect losses is ridiculous.  Especially when other sporting leagues (NFL, MLB, etc.) which receive the same “ancillary gains” are profitable. 

    • Sep 27, 20116:19 pm
      by tarsier

      Reply

      How do players’ ancillary gains translate to financial gain? Except for superstars who are underpaid by the NBA anyway if you consider how much they make teams.

      There are a lot of revenue splits that would make sense in that they would make owners money and give good jobs to players. And anywhere in the range that accomplishes that would be a decent arrangement.

      It’s not that it is wrong for owners to want to make more. It’s that none of them are probably losing money by having a team even if the team itself is losing money. Moreover, if they are, they can sell. There will always be more buyers than sellers for professional sports teams (which basically makes it a luxury good).

      • Sep 28, 201112:18 am
        by Oracle

        Reply

        A luxury good is a good which people demand more of the more expensive it gets.  I don’t believe that to be the case with an NBA franchise, otherwise sales would not be so prolonged.  And how can someone possibly calculate the “ancillary gains” that owners or players receive?  It’s not possible, and so it’s not fair to penalize owners who can show that the business isn’t profitable.  I really don’t get the whole “oh, but their name gets out there so it’s worth losing money” argument.  No other league faces this argument.  NFL, MLB, NHL… No owner losing money says “yeah, but it’s a great advertising tool.”  When GM was going bankrupt, ownership didn’t say “yeah, but it’s really helped springboard my other ventures.”  No company believes that.  And lots of people get a lot of fame by owning businesses.  Particularly when the business does well and makes money. This argument is nothing more than wishful thinking by those who support the players.

        Also, it’s impossible to argue that the players are getting a raw deal here, outside of the elite talents.  NBA players make the most on average over every other pro league in the US.
        Meanwhile, it’s probably what?  The 4th most popular sport?  If I were an offensive lineman in the NFL I would laugh in Derek Fisher’s face about his complaints.

        • Sep 28, 20119:11 am
          by tarsier

          Reply

          A) Where did you get that definition? I realize that luxury is a poorly defined term and there are lots of definitions out there. But the typical economics one for a luxury good is one for which demand increases disproportionately as income increases (not as price does).Socioeconomically, it is something which derives a significant amount of its value from being a status symbol. B) Your suggestion that heads of other successful businesses reap similar amounts of fame is absurd. Heads of sports franchises don’t need nearly the success to be famous. Also, out of the heads of all the fortune 500 companies, I doubt very many Americans could name more than 5. C) You’re right about ancillary gains being tough to measure. Whether it’s fair to the owners that their franchises lose money is another question (define fair, Show that they are actually losing money–payments on the cost of buying don’t count unless selling prices are also counted in, etc). But more importantly, this is only really a problem if the owner cannot make “fair” money selling the franchise. As long as there are more people out there who want to buy than sell, there is little for an owner to complain about. If they don’t like their possession, costs and all, sell it to someone who would. D) I’m pretty sure it’s the third most popular (of the big leagues in the US that is, I don’t think NHL is ahead of it). But yeah, NBA players make a ton more than say NFL players. But that’s for an obvious reason. There are 82 games in an NBA season to 16 in an NFL season. There are about 14 players per team as opposed to about triple that in the NFL. So even if every NFL game netted 10 times as much as every NBA game, the salaries for NBA players would make sense to be higher than those for NFL players. If the NFL players don’t like it, let them push to have more games/season and not so many players/team. E) I have no problem with the NBA players making less money. Like I said before, there is a wide range of money splits for which a CBA could benefit everyone. I particularly think the “rank and file” of totally interchangeable players a la Derek Fisher should be payed less. And the superstars should honestly be  paid more because they are bringing in to the league so much money. Mostly, I just want something to be worked out s that play can resume. The main reason I’m more sympathetic to players is that they are more honest. What do they want: as much of the money as they can get without destroying the league. What do the owners want: supposedly to treat their teams like normal businesses. But there is a ton of evidence to show why that is preposterous: the luxury goods/aesthetic value argument, the ancillary gains argument, and most importantly that an owner can sell if they want to and get out of the NBA. If they are just looking for straightforward profit, there are better businesses to invest in. They know that. They are after all, businessmen. They chose to be in the NBA though, and they continue to choose to do so. They should just come out and say they want to milk every dime out of the players that they can feasibly get. That’s how a real business works.

  • Sep 27, 20115:48 pm
    by DSV

    Reply

    I think it’s a luxury good. Most players do not get any ancillary gains that amount to much. At least not in comparison to the owners.

  • Leave a Reply

    Your Ad Here