Guest 50centdollars Posted May 30, 2014 Posted May 30, 2014 http://www.latimes.com/sports/la-sp-sn-clippers-sale-ballmer-20140529-story.html
Palantir Posted May 30, 2014 Posted May 30, 2014 Did you guys really think retirement would stop this guy from blowing billions on random vanity acquisitions? ;D YEAH BABY WHOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!! I LOVE THIS TEAM YEAHHHHHHHHHHHHHHHHHHHHHHHH
Guest 50centdollars Posted May 30, 2014 Posted May 30, 2014 I don't understand how the clippers are worth that much? According to forbes, the cowboys are worth 2.3 billion. Ballmer way overpaid http://www.forbes.com/teams/dallas-cowboys/
saltybit Posted May 30, 2014 Posted May 30, 2014 I wonder what his new chant will be these days... http://www.youtube.com/watch?v=8To-6VIJZRE&feature=kp
Parsad Posted May 30, 2014 Posted May 30, 2014 Can you imagine this every time the team warms up? I think they are going to have to call the Forum "The Madhouse"! Cheers! http://www.youtube.com/watch?v=wvsboPUjrGc
Orange Posted May 30, 2014 Posted May 30, 2014 The price that the Clippers sold for is high, but for good reason. Next year they will be a heavy title contender. They were probably the 4th best team in the league this year. They've got one of the best coaches, two franchise players, including a 25 year old who is already MVP caliber, and a pretty solid bench that includes the 6th man of the year. They are stealing a lot of fans and attention from the Lakers, and this will continue, as the Lakers will probably suck for at least another couple of years, while the Clippers will improve. They are in a huge media market. Elite NBA players in Los Angeles get lots of endorsement deals and national attention. LA is a city that big name free agents generally want to play in. If they can win a championship in the next 4 or 5 years (which is a real possibility), the stigma of their losing past will be lifted. If that happens, I can see them becoming one of the leagues more popular teams. Ballmer didn't get a bargain, but I don't see this as grossly overvalued either.
Parsad Posted May 30, 2014 Posted May 30, 2014 The price that the Clippers sold for is high, but for good reason. Next year they will be a heavy title contender. They were probably the 4th best team in the league this year. They've got one of the best coaches, two franchise players, including a 25 year old who is already MVP caliber, and a pretty solid bench that includes the 6th man of the year. They are stealing a lot of fans and attention from the Lakers, and this will continue, as the Lakers will probably suck for at least another couple of years, while the Clippers will improve. They are in a huge media market. Elite NBA players in Los Angeles get lots of endorsement deals and national attention. LA is a city that big name free agents generally want to play in. If they can win a championship in the next 4 or 5 years (which is a real possibility), the stigma of their losing past will be lifted. If that happens, I can see them becoming one of the leagues more popular teams. Ballmer didn't get a bargain, but I don't see this as grossly overvalued either. True, but it's the highest price ever paid for an NBA team...it can't be a good deal. With multiple bids well in excess of what most people thought it would go for, Sterling is making a killing. I believe the original estimate just a month ago was that he MIGHT get $1.2B. $2B blows through that number! Heck, Ballmer could have bought Beats for a little more and actually made regular profits, while working out a deal with MSFT to sell the headphones. ;D Cheers!
Parsad Posted May 30, 2014 Posted May 30, 2014 Although, if Gates had bought the team with Ballmer, I certainly think fans would have loved videos like this before games. Incidentally, I think it works because of Gates...he's got a pretty good sense of comedic timing ever since he started hanging out with Buffett. Cheers!
BTShine Posted May 30, 2014 Posted May 30, 2014 I think buying a professional team has some similarities to buying a rare piece of jewelry or a piece of art. There's a limited supply, the investment might not be justified based upon the earnings of the item/team and much of the value is likely derived from the joy of owning it. How good do you feel looking at your Monet, your wife's 15 karat diamond ring or your team? This is just one perspective.
augustabound Posted May 30, 2014 Posted May 30, 2014 I think buying a professional team has some similarities to buying a rare piece of jewelry or a piece of art. There's a limited supply, the investment might not be justified based upon the earnings of the item/team and much of the value is likely derived from the joy of owning it. How good do you feel looking at your Monet, your wife's 15 karat diamond ring or your team? This is just one perspective. I agree. I think in rare instances these guys buy a team for an ROI (at least not a large one). But here in T.O., Rogers bought the Jays and then Skydome for next to nothing. They've successfully vertically integrated the game, in their building and broadcast on their TV and radio stations. Some say Ted was building his empire before he passed away but even if he was it looks like a pretty good move. Rogers shareholders may have a different opinion though. ;D
Gamecock-YT Posted May 30, 2014 Posted May 30, 2014 It's really all about the new TV deal, the current one expires in 2016. Clippers currently get $25 mm a season, in comparison the Lakers have a deal of $3 billion over 20 years (or $150 mm a season). The Dodgers earlier this year got $8.35 billion over 25 years (also the team sold for a cool $2.1 billion) Sure he probably overpaid, but probably not by too much.
Liberty Posted May 30, 2014 Posted May 30, 2014 Ballmer way overpaid So it's entirely in character for him, then :)
yadayada Posted May 30, 2014 Posted May 30, 2014 Lol i can see the first conversation between their coach and steve 'now steve just because they can all play basketball better then you is no reason to fire them'
fareastwarriors Posted May 30, 2014 Posted May 30, 2014 When one is buying a sport's team, value is not the first thing that comes to mind. Own the team first and if you make money then that's just gravy.
adesigar Posted May 30, 2014 Posted May 30, 2014 Ballmer way overpaid So it's entirely in character for him, then :) I get that this is a value investing board but its not always about the money. How many of you have bought a useless/worthless pieces of carbon and paid thousands or even tens of thousands?
rkbabang Posted May 30, 2014 Posted May 30, 2014 Ballmer way overpaid So it's entirely in character for him, then :) I get that this is a value investing board but its not always about the money. How many of you have bought a useless/worthless pieces of carbon and paid thousands or even tens of thousands? I was going to reply that it was about the scale of the purchase, but I just looked it up and Balmer is worth about $20B, I bought my wife a 1/4 carat ring when I was in college and it was considerably more than 10% of my net worth at the time. So you make a good point. $2B seems excessive for a vanity purchase to many of us simply because we are not worth $20B.
vinvestor2010 Posted May 31, 2014 Posted May 31, 2014 Anyone has useful information on how sports teams are valued. For example it would include a value decomposition i.e. the different components and how they would be valued Also a list of Mr Ballmers most expensive purchases would be great... (he is the kind of guy who buys used underwear on Ebay for $10000 bucks) but never mind
Guest 50centdollars Posted May 31, 2014 Posted May 31, 2014 I don't know how ballmer valued the clippers. They don't even own the arena they play in so they will not get anything non-basketball related, which includes concession stands, parking, and the corporate suites.
ukvalueinvestment Posted May 31, 2014 Posted May 31, 2014 This is how he valued it: He asked his investment banker what the highest bipd might be. He added half a billion to ensure he got it. When you've spent 35 years building one of the great businesses, you can allow yourself a vanity purchase. Ellison's had a few as well.
Palantir Posted May 31, 2014 Posted May 31, 2014 Why are you guys assuming that the 2 Billion price was based on a "valuation" of the team? Ballmer, I believe, has never thought along those lines, if he sees an asset that is strategic to his plans, he will pay what he thinks he can afford. My understanding is that his bid of 2B was designed to be well above any other bids and it would force a sale, even from an unwilling seller like Mr. Sterling.
Tim Eriksen Posted May 31, 2014 Posted May 31, 2014 Why are you guys assuming that the 2 Billion price was based on a "valuation" of the team? Ballmer, I believe, has never thought along those lines, if he sees an asset that is strategic to his plans, he will pay what he thinks he can afford. My understanding is that his bid of 2B was designed to be well above any other bids and it would force a sale, even from an unwilling seller like Mr. Sterling. He's a tech guy, they constantly get price to earnings confused with price to revenue. I agree with you Palantir on the thinking. I am sure he also realized that the team currently makes about $11 million according to Forbes. The new national tv deal in a couple of years is expected to add another $30 million annually, as will a new local tv deal (currently $30 million). It is possible the local deal ends up much higher based on what the Dodgers and Lakers ($150 million average over 20 years) are getting. It is my understanding that he can deduct goodwill for taxes, which will be about $100 million annually, the earnings are all tax deferred.
ERICOPOLY Posted August 12, 2014 Posted August 12, 2014 Article says Clippers were purchased in 1981 for $12 million. 33 years later... $2b. wow, that's 17% annually compounding returns! I wonder what earnings were pulled out by the owners over the years... that 17% is just the capital gain. http://www.cnn.com/2014/08/12/us/sterling-nba-clippers-ballmer/index.html?hpt=hp_t2
krazeenyc Posted October 6, 2014 Posted October 6, 2014 NBA gets $24B tv deal over 9 years.... http://www.cbssports.com/nba/eye-on-basketball/24739554/report-nba-set-to-announce-new-television-deal-worth-24-billion I would guess that this is part of the reason Ballmer paid so much for the Clippers. $87M per team... wow nice to have that kind of income without doing a thing. $2B doesn't seem quite as nuts anymore.
ERICOPOLY Posted October 27, 2014 Posted October 27, 2014 He gets $1B in tax benefits: Ballmer makes slam dunk on Clippers deal http://www.ft.com/intl/cms/s/0/67215cd2-5d00-11e4-9753-00144feabdc0.html?siteedition=intl#slide0 Steve Ballmer stands to gain as much as $1bn in tax benefits as a result of his $2bn purchase of the Los Angeles Clippers basketball team, helping to explain why the Microsoft billionaire paid a record price for the club.
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