There goes Wade, Johnson, Bosh, Stoudemire, Nowitzki, Yao, James, etc.

Thomas dupes some other team into giving him $11-12 million; Bulls don’t match.

Bulls miss the playoffs this year by one or two wins.

Let’s guess (this is scary), that Rose isn’t a superduperstar. He’s a different Ben Gordon. Instead of a shooter, becomes a driver, passer. Very efficient on offense but nothing astounding, little-to-no defense. Noah continues to improve; Deng stays healthy. Who’s playing SG, who’s playing PF? That team isn’t making the playoffs for the foreseeable future.

OTOH, they keep Gordon so they’re into the luxury tax. They might as well have tried to re-sign Thomas this past off-season for $6-$8 million this past summer. If he doesn’t take it, they can still negotiate with him next off-season. I’d say they almost guarantee themselves a playoff appearance.

Now let’s say they strike out on a sign-and-trade, but now they have Gordon and Thomas with the previously-described improvements by Rose, Noah and Deng. You have two very efficient offensive guards with complementary skill sets with little defense, but you have some of the best defense in the league at the 3, 4 , 5 positions. And the average starting age is 24.6. You have Hinrich, James Johnson, Taj Gibson, Omer Asik backing up. Plus Xavier Henry or some other rookie SG or Anthony Parker or whomever on a MLE or something. That’s a young team, but it’s experienced (as if Noah wouldn’t be a clear-cut leader by next year) and “playoff-tested.” I guarantee you it wins at least 45 games a year, probably closer to 50 and only improving as the guys get into their primes. Your oldest starter’s skill is one (along with ball-handling and passing*) that diminishes last.

And since I think re-signing Gordon hurts their chances to sign a FA on one hand, but helps in another, I’m for the course that ensures being good and makes the most money in the long-run. I actually think it’s a poorly thought out financial decision by Reinsdorf due to his lack of basketball analysis and probable irrational dislike of Gordon. I think he thinks Gordon and Thomas or useless on the court because they’re not consistent and therefore, they’ll never be good if they have them on the team.

*I think I read this somewhere, but I can’t be sure. Don’t take that statement as truth if you don’t want to.

I don’t know whats going on with this blog.

And the NBA’s ownership is filled with guys who were self-made. So again, in that sense, most every NBA owner is a “shrewd businessman” compared to the average schmuck off the street.

However, it’s probably instructional to look at the business shrewdness that made his fortune and enabled him to buy his teams and contrast them to other guys.

Like I said, there are plenty of self-made NBA owners who made their fortunes by doing remarkable things. Mark Cuban and Paul Allen came from working or middle class backgrounds and developed computer software used by hundreds of millions of people. Jerry Colangelo was the definition of “sweat equity”. He started in the basketball world as an assistant coach and worked his way up to owning the Suns and Arizona Diamondbacks. THAT is shrewdness.

In contrast, Jerry Reinsdorf didn’t really make a fortune inventing a great product people were willing to pay for, skillfully managing basketball teams, or even really managing and developing real estate (like Jerry Buss, who did a fair amount of actual development and management while starting out with very modest means). Instead, he became a millionaire by going to work for the IRS, learning how to take advantage of the tax code, and then setting up tax shelters to help folks dodge their earnings. Interestingly enough, the primary tax shelter vehicle by which he did this was made illegal by an act of Congress some 25 years ago. Factoring in the leveraged public funding he received for the White Sox and recently, the Phoenix Coyotes (itself part of a pretty large and shady set of govt subsidized real estate transactions, the safer conclusion about Reinsdorf is that he is, in fact, a government made man.

Again, this isn’t to say he’s stupid or anything. I never claimed he was. But the fact is he made his fortune largely by taking advantage of the system, not producing a damn thing of value to anyone else. So much so that the primary means by which he took advantage of the system has been outlawed.

Now, on to the NBA. I did a quick calculation of the basic ROI an investor could expect from the Bulls. I used 2000-2009 and took, as a rough guess, the sum of operating income and the starting and ending team values. That is, suppose you bought the Bulls, or X% of the Bulls under Reinsdorf’s ownership in 2000. They were valued at $314M. The 2008 value was $466M. Over those nine years, the Bulls generated $423M in operating income. So add together those “dividends” with the $190M in “capital appreciation” you’d get if you sold at the 2008 price, and you’ve got yourself a $613M gain on that initial investment of $314M. That’s $195% total, or an average increase of 22% per year.

Pretty cool, huh? It is. Again, I’m certainly not saying the man can’t turn a profit. But if we’re looking at the Bulls as an investment, we ought to look at other NBA teams as investments as well. And when I run the same calculations for other teams, I get pretty similar numbers. I didn’t bother to do them for all the teams, and I’d imagine they get smaller for the really small market teams, or really pathetically run teams. But anyway:

Pistons 22%
Clippers 20%
Lakers 17%
Celtics 20%
Suns 20%
Spurs 20%
Rockets 24%
Cavs 25%
Jazz 10%
Wiz 13%
Nuggets 10%
Heat 13%
Kings 14%
Knicks 8%
Mavs 10%

Yes, the Bulls have been a very good investment over the last several years. On the other hand, successful teams and lucky teams have been tremendously and similarly profitable. So has similarly close to the vest loser Donald Sterling and his Clippers. Even teams that have spent and occasionally lost outrageous sums of money have generated what we’d consider very good returns from the stock market.