Basketball in Europe Explained
OwnMyTeam is focusing on the IBL minor leagues here in the United States, but in the future members could add another franchise to the mix. Each year membership dues are collected to add to our operating budget which includes sponsorships, season ticket sales, and various other revenues. Down the line the members may become interested in adding a winter team in Europe to our portfolio. Adding a team overseas would also mean a larger pool of prospective members to contribute to our budget.
The franchise purchased in Europe would largely depend on our membership pool and yearly operating budget. The premise of OMT is to have affordable membership dues, so drastically raising membership dues doesn’t seem fair. $60 is a bargain and affordable to basketball fans from all walks of life. I would suspect that the process for purchasing an organization in the future would involve a member vote. The first vote would be to decide if OMT wants to add a franchise from Europe. Then the OMT front office staff would work with a broker (similar to a real estate broker) to find teams that are for sale.
The OMT front office would meet with the broker to figure out the best deals to present to the members for a vote. Then the members would have several options to vote on and they would also have budget figures and financial data to help make the decision. To complete the purchase a cash infusion would be needed to buy the organization outright. My thoughts are to have a one time buy in fee for members who want to participate in running the European team. I would suspect this one time fee would depend on the total amount of members involved. By my math (and this depends a lot on the particular organization) we could purchase an organization based on a $15 to $50 dollar one time fee. Current members would not be obligated to pay this one time fee as they can still participate in the IBL ownership, but for those that pay the fee they could have full access to the European club as well. This one time fee would be applied to all new members that join after the club is purchased as well (assuming they want to participate in the European club). This is just one example that I have thought of to expand OMT in the future. Hopefully this example will get members thinking about the future.
I have some budget figures from the top teams in Europe that I thought we should go over (I found these at ballineurope.com). Your average NBA team has a total yearly budget of around $100 million. This includes salaries and all team expenses. If OMT bought a team in Europe we’d already have a staff in place, so that would really help out in keeping costs down. The European team would need a local marketing/sponsorship staff, game day operations staff, and a coaching staff.
Below is a list of team budgets for the coming year in Europe (in USD).
Baltic:
Zalgiris Kaunas (Euroleague) 7,000,000
Lietuvos Rytas (Euroleague) 11,000,000
Turof (Polish team) 5,460,000
Alba Berlin 9,360,000
Dynamo Kiev 11,000,000
Adriatic:
Montepaschi Siena (Euroleague) 17,160,000
Virtus Bologna (Euroleague) 14,000,000
Lyon Villeurbanne 7,500,000
Cibona Zagreb (Euroleague) 4,680,000
Olimpia (Euroleague) 3,120,000
Spain:
Real Madrid (Euroleague) 39,000,000
FC AXA Barcelona (Euroleague) 34,320,000
Tau Vitoria (Euroleague) 31,200,000
Badalona 12,480,000
Unicaja Malaga (Euroleague) 28,080,000
Russia:
CSKA Moscow (Euroleague) 50,000,000
Kimki 18,000,000
Dynamo Moscow 20,000,000
Unix(Russian) 14,000,000
Dynamo Moscow region 14,000,000
Balkans:
Panathinaikos Athens (Euroleague) 42,120,000
Olympiakos Piraeus (Euroleague) 35,880,000
Aris TT Bank (Euroleague) 12,480,000
Partizan Belgrade (Euroleague) 4,680,000
Red Star Belgrade (Euroleague) 3,120,000
Asia:
Maccabi Tel Aviv (Euroleague) 16,000,000
Hapoel Jerusalem 5,000,000
Efes Pilsen (Euroleague) 12,000,000
Fenerbahce Istanbul (Euroleague) 11,000,000
Besictas Istanbul 6,000,000
Yes, CSK Moscow’s budget is half of an average NBA team’s budget. These numbers may have really opened your eyes, but I see these budgets as good news. These budgets aren’t for an average first league team in Estonia (or even France for that matter). There are Euroleague teams (which is the top league in Europe) that are operating on just over 3 million USD a year. That is terrific news for OMT. This means we could purchase a team in a top league in any country in Europe. The franchise’s purchase price would vary greatly depending on the team and the country. A club in Iceland would likely cost less than a club in France. However, the top club in Iceland still has the opportunity to play in EuroCup and become the best team in Europe down the road.
The purchase price of a team would depend on our membership size and the dollar amount each member contributes towards the purchase. I would suspect we would be looking at purchase prices between $500,000 and $10 million USD. For this example I will use Ukraine. The top team in Kiev has a budget of around $11 million USD, so let’s say we purchase BS Odessa. Odessa is on the southern coast of Ukraine with a population of around 1.2 million in the area. Their arena seats 3,500 people. Upon purchasing the team members will probably want to work with Odessa to renovate the facility and create more capacity. BC Kiev has a venue that seats 7,000 people. Members also will want to make sure BS Odessa is focusing on local sponsorship sales and making sure they have a solid TV/radio contract in place. On top of that OMT’s marketing department could likely bring in some sponsors from the United States.
I believe Ukraine allows 5 import players, so OMT wouldn’t have to fight the league to allow more imports (that is great news). However, the OMT members would be wise to push the league for a salary cap for players. To my knowledge there isn’t a player’s union (at least not a strong one) in Europe, so getting a cap should not be difficult. Kiev has the largest operating budget, so I would suspect they might be resistant to a salary cap. Many of the largest budget teams lose big money each year and are not profitable. I would be surprised if BC Kiev was turning a profit. Many owners believe it is their duty to give back to the community, so they overspend on players and operate in the red each season. For basketball to prosper teams need to operate in the black. I’m certain OMT could convince the league to develop a salary cap for the Ukraine.
Kiev’s actual salaries are likely to be less than that 11 million dollar figure. Travel costs and an expensive front office and coaching staff likely inflate the number. I think a soft cap would make sense. For example Ukraine could set a cap figure of around $ 4 million USD (for player salaries) and give BC Kiev a couple years to get within that figure. The other Ukrainian clubs won’t have a budget that big, so BC Kiev would still have a big advantage. Ukraine should also focus on profitability. Teams operating in the red for multiple years should be forced to reduce their salaries until they can maintain budgets at breakeven.
Some clubs may resist this idea at first, but it will force all clubs to be fiscally responsible and make for a much stronger league. This salary cap idea would be copied by many countries I would suspect. Bostjan Nachbar just signed with Dynamo Moscow for 14.3 million USD over 3 years. A salary cap would end these ridiculous contracts. Personally, I don’t see any reason why players in Europe should make over 2 million USD. If I was a club owner I would be pushing for a 15 million USD salary cap for Euroleague Clubs (soft cap). This would still allow the best teams to spend the most without budgets turning into the New York Knicks. I like the luxury tax system as well. When teams spend over 16 million USD (player salaries) I think each dollar over should be taxed and redistributed to the other teams in the league. How does a team spend over the cap? Just like the NBA I think European teams should be allowed to resign their young players and fill open roster spots with salary cap exceptions, so it would be possible for teams to have budgets of 17 or 18 million USD.
I also believe we should focus developing our youth. That means supporting a cadet/junior team in our community (Odessa for this example). That means signing the top 16 and 17 year old players to long term contracts. I’d go as far as trying to make their deals similar to restricted free agents here in the United States. I’d be in favor of giving 17 year old kids 3 and 4 year deals, but I would expect to have the opportunity to match other team’s offers down the line.
Brandon Jennings is a talented high school point guard who committed to the University of Arizona. He was trying to improve his test scores to get into college while wondering if he should play in Europe. Jennings recently inked with Pallacanestro Virtus Roma for $300,000 USD. Personally, I would be in favor of recruiting high school and junior college athletes. Depending on the team we buy I would estimate our first year budget would be between 1 and 2.5 million dollars. I wouldn’t actually suggest going after a top 5 lotto lock like Jennings. Let me give you and example of what I would suggest.
Craig Brackins is a (6’10 235lbs F/C) sophomore playing for Iowa State. I project him as a first round pick in either 2009 or 2010. We could offer Brackins a 3 year deal worth $300,000 with a 4th year team option of $150,000. Of course we would include an NBA buyout clause in the contract for $450,000. An NBA team can contribute up to half a million dollars to buyout a contract in Europe. Basically we could pay Brackins 200,000 USD for two years before he goes to the NBA. Then the NBA team would give us $450,000 to buyout the rest of his contract. Yes, we’d actually make money in that deal. Brackins already is built like an NBA player. He has nice low post moves and a jump shot out to the college 3 point line.
Another example would be Shawn Taggart from Memphis. Taggart was a main cog off the bench for the Tigers. He will replace Joey Dorsey in the lineup next season. Like Brackins, Taggart (6-10, 230lbs F/C) has a jumper out to the college three point line. Taggart is not currently in popular mock draft projections. Taggart will be a junior next year. Personally, I project him as a second round draft pick in 2010. OMT could offer Taggart a 3 year deal for $200,000 with a team option ($100,000 for a 4th year). The contract could have an NBA buyout for $300,000. If he got drafted this would be another net positive financially. Based on my example, OMT could actually sign two quality prospects and actually make money. This is due in part to the NBA age limit, but also because the NBA doesn’t have a minor league system like major league baseball.
The members at OMT will certainly be focused on winning games, so signing a big time scoring option would be vital. Let’s use France ProA star Brandon Heath for this example. Heath is a big time scorer out of San Diego State. We can splurge on Heath because we have NBA buyouts to look forward to. We could offer Heath $250,000 USD and have a team option on that contract of $300,000 USD for the following year. If both of the above players get bought out in a year or two this would cover most of this contract.
We would need another guard to pair with Heath so let’s look at Cory Carr (Texas Tech, Chicago Bulls) who is playing in Israel. For this example we would offer him $175,000 for the year and $225,000 as a team option for the following year. Those are three out of the 5 Import players allowed (Carr has permanent residency in Israel). For the fourth player we will continue to be cost oriented and sign a rookie out of Alabama A&M. Mickell Gladness is a (6-11, 205lbs) center that averaged 10.3 ppg, 8.8 rpg, and 4.5 bpg. Gladness is a big time shot blocker out of a small school. Gladness could go to the D-League for around 32,000 USD, so we could offer him a 2 year deal worth 125,000 USD and a team option of 85,000 for the third year.
For the 5th spot we could sign Tamar Slay who was a 2nd round NBA draft pick and is currently playing in Italy. Slay is a 6’9 guard/forward who has proven himself in Europe. He would be helpful on both the offensive and defensive end. We could lock Slay up for 3 years by offering $900,000 for his services. I’d also suggest putting a NBA buyout of 500,000 on the deal along with a team option for 400,000 USD. Slay would be the largest contract on the books.
In addition to those import players OMT would need to budget for domestic players and other Euro (Bosman) imports as well. Serbia, Croatia, and Bosnia have a lot of talent so I would suspect OMT would sign a few. OMT should budget $200,000 for a couple of Bosman players. On top of that OMT should budget $200,000 for a few domestic players as well (from Ukraine for this example). On top of that they should budget for development and younger players even if they are loaned to 2nd division teams for playing time.
All together we should plan for around 15 players including youth that could be loaned to other clubs. This would include 5 Americans (plus Cory Carr in this example), 3 Bosmans, 4 domestic player, and 3 youths. Now lets look at a potential first year budget estimate.
Craig Brackins- 100,000
Shawn Taggart- 66,000
Brandon Heath- 250,000
Cory Carr- 175,000
Mickell Gladness- 62,500
Tamar Slay- 300,000
3 Bosmans- 200,000
4 Domestics- 200,000
3 Youth- 100,000
Total Salaries: 1453500
Coaches, etc: 150,000
Game day, etc: 60,000
Travel, lease, etc: 400,000
Total Budget: $ 2,063,500 USD
Potential Buyout of Brackins/Taggart: $750,000 USD
Lowest Possible Budget: $1,313,500 USD
This budget and entire article has been designed for illustrative purposes to get members thinking. The figures used are wide ranging ball park figures to get the conversation started, so don’t focus highly on the budget and figures listed.
Join OMT to discuss this today!
Related posts:
Leave a Reply
You must be logged in to post a comment.