Deadspin has an analysis of the NJ Nets’ books from 2003 to 2006 with some interesting tax law and business strategy aspects. For instance, NBA teams are allowed to take depreciation on players as well as writing off their salaries. This allows the teams to take a loss on taxes. Then the teams can then take advantage of pass-through to apply their owners’ other businesses.
Teams can then use those losses to beg politicians for new stadiums and land deals that they otherwise couldn’t get. Case in point, Bruce Ratner, who is building the Atlantic Yards project in Brooklyn:
[T]he best explanation for why a buccaneering real estate developer like Ratner might buy a middling franchise like the Nets in the first place. As Neil deMause, co-author of Field of Schemes, explains: “If Ratner had gone to Brooklyn politicians and said, ‘Hey, I want to build offices and residential buildings on public land,’ they’d have hung up on him. But when he says, ‘I’m going to bring professional sports back to Brooklyn,’ suddenly here’s [Brooklyn Borough President] Marty Markowitz holding press conferences and sobbing about the Dodgers. [Buying the Nets] helped him get a foot in the door with Brooklyn politicians.”
An interesting and cynical look at the business of sports.