Thursday, June 30, 2011

Bad but Recommended

This article is bad but I recommend it anyway.

The subject is interesting, important, under-covered, and timely. He discussed the two sides of the NBA Players Union and NBA Owners collective bargaining talks and explains why there is a lockout starting tomorrow. He also explains the key argument the players have leveraged in the talks: that the owner's claim to be losing $370 million is a bunch of bullshit due to cooked books.

The problem with the article is that he doesn't explain why the owners see their accounting as legitimate, simply stating that its a standard accounting technique.* The rest of the story makes the players look like the good guys, making it puzzling when he ends by saying that the truth is that both sides are a little right and a little wrong.

* - The issue that owners are putting down amortized costs of buying the teams and interest on their debt down as expenses, while the players don't think these should count. The rationale is that the amortized cost of buying the team isn't a real expense--no money leaves the franchise--and the debt isn't their fault. I think they are wrong on both points. The owners did spend a lot of money to buy the teams and the right way to add up profits is with net present value over the whole stream of payments. Furthermore, the players might as well argue that they aren't responsible for bad marketing, poor pricing strategies, or any other fiscal folly, but they don't.

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