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Wednesday, July 6th, 2011 at 9:00 am  |  7 responses

NBA Refutes Forbes’ Report

Claims it contains inaccurate information.

by Marcel Mutoni@marcel_mutoni

Coming off of one of the most intriguing NBA seasons in League history, it remains hard to fathom that a lockout in now in place.

It’s one of the reasons people have a hard time wrapping their heads around the idea that the NBA team owners are bleeding money, which has led to a number of publications disputing those claims (and, to be fair, some pretty strong rebuttals.)

The NY Times published the most damning piece to date yesterday, basically accusing the NBA of having lied about its financial picture (largely based on calculations done by Forbes.)

And last night, the League released a long statement in an effort to fight back:

The information from Forbes that serves as the basis for this article is inaccurate and we do not know how they do their calculations. Forbes does not have the financial data for our teams and the magazine’s estimates do not reflect reality. Precisely to avoid this issue, the NBA and its teams shared their complete league and team audited financials as well as our state and Federal tax returns with the Players Union. Those financials demonstrate the substantial and indisputable losses the league has incurred over the past several years.

The analysis that was posted this afternoon has several significant factual inaccuracies, including: “(The NBA) is a fundamentally healthy and profitable business” • The league lost money every year of the just expiring CBA. During these years, the league has never had positive Net Income, EBITDA or Operating Income. “Many of the purported losses result from an unusual accounting treatment related to depreciation and amortization when a team is sold.”

• We use the conventional and generally accepted accounting (GAAP) approach and include in our financial reporting the depreciation of the capital expenditures made in the normal course of business by the teams as they are a substantial and necessary cost of doing business. We do not include purchase price amortization from when a team is sold or under any circumstances in any of our reported losses. Put simply, none of the league losses are related to team purchase or sale accounting.

This labor war will be fought by accountants and finance majors, and this is only the beginning.

The NBA Players’ union has yet to issue a response. They’re apparently content to let bloggers fight the PR battle on their behalf for now.

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  • Overtime

    Would be so much more interesting if the dispute was over what type of post-dunk celebrations should be allowed or something

  • http://slamonline.com Allenp

    Read the New York Times article for yourself and make your own judgments.
    It’s obvious what is going on. The green eyed monster is active.
    If baseball, with no salary cap and $250 million salaries is more profitable than the NBA, then it raises questions about whether player salaries are the problem, doesn’t it?

  • http://slamonline.com Allenp

    As I noted in another venue, NBA owners claiming they used “generally accepted accounting practices” is like Gaddafi claiming he used generally accepted tyranny practices…
    The bar is pretty freaking low.

  • ripslam

    So post your own statistics then. Don’t give us some pathetic bullsh*t, be transparent.

  • http://slamonline.com nbk

    I have read an extensive amount of information on the lockout – The owners are trying to turn this into a did we break rules or didn’t we when reporting our numbers issue. That’s not what it’s about, nobody said they reported their false numbers illegally, they said they found loopholes, like tax credits from losses due to the depreciation of assets. Meaning the teams get money back around tax time for filing that their players are getting older, and thus less valuable. — Teams don’t however get penalized for getting younger in a fiscal year, they also get the same tax breaks, as their assets have “depreciated” – This is just the owners using fancy language to try and muddy the perception of this lockout & any financial numbers not being reported by them.

  • seriousblack

    While I agree that Forbes–with their lack of access to real financial records–may not be the best source, it’s clear that the league is dramatically overstating losses. When you’ve got scum like Donald Sterling helping lead negotiations, the league can count on the players receiving the public’s support.

  • bike

    Will public support for the players make any difference whatsoever? If the owners are in a position to wait this thing out much longer than players needing to be paid with neither side really caring about the fans, this becomes an isolated dispute between players and owners. Unless the owners are doing something illegal. Then this thing needs to go to court.

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