Former NBA great Magic Johnson was the keynote speaker at the opening of the AFP conference. Although I am a big NBA basketball fan, I was only lukewarm interested in attending his speech. With crisis brewing all around, the last thing I needed was to hear Magic describe how his no look passes always hit their man. Was I in for a surprise. Magic has got to be one of the most interesting business success stories going and the kind of role model urban youth need.
I always knew that Magic had launched a few move theatres after he retired from the NBA, but I never realized he is a mogul.
He owns 119 Starbucks, a bunch of 24 Hour Fitness operations, he supplies beef to half the Burger Kings in the United States and he raised a billion dollars just before the markets turned down, so he has a billion dollars cash on the sideline waiting for further declines in real estate, before he plunges in.
The billion dollar money raise was probably the most fascinating story Magic told. He actually had commitments for two billion, but felt he only had enough interesting projects for a billion dollars, so he turned the other billion down. "It's not often that a black man gets to turn down a billion dollars," said Magic.
Key to the billion dollar money raise story was the journey leading up to it. Although he was successful with his Magic Johnson Movie Theatres, he couldn't get funding for his real estate project. Magic said he was turned down by all 10 banks he approached. "They sure did want my autograph and to take pictures with me, but they weren't giving out any money," said Magic.
Finally, he found one finance source that after four meetings financed him to the tune of $50 million. He successfully managed that money and was then able to raise $200 million. His return on that money was over 30% annualized, which then got him $800 million that he returned over 20% annualized, which then led to the billion dollar raise.
Magic claims that his secret is to over deliver. He certainly did it as far as his speech was concerned. Watching him on stage was like watching him in his LA Laker days. He has a command of the stage, equal to that of his command of the basketball court.
Towards to the end I was thinking, you know he isn't telling just a series of jokes like Bill Cosby, he isn't doing any singing like Sammy Davis Jr. once did, but somehow he has elevated his speech to the degree that he has the audience at peak interest. By the time he walked off the stage, he had an audience of cheering fans. This is one special guy.
Showing posts with label NBA. Show all posts
Showing posts with label NBA. Show all posts
Monday, October 20, 2008
Thursday, October 16, 2008
Are NBA Tickets A Capital Good or Consumer Good?
The immediate reaction by many would be that it is a consumer good.
But, this isn't the correct answer.
The NBA is eliminating about 80 jobs in the United States, the first major American sports league to announce layoffs because of the worldwide economic turmoil.
This makes a lot of sense.
Commissioner David Stern told The Associated Press last month the league would cut staff in anticipation of the downturn. He said Sunday the figure would be about 9 percent of the American work force, and the league confirmed the number of jobs the next day.
“My guess is that by the time we tip off in a week or so, we will be down modestly in season tickets. … We think we’ll be up in revenue, but I just can’t say for sure whether we’ll be up or down in attendance because it’s just so touch-and-go, because sports tickets are very much disposable income,” he said. “So, we’re not going to see a huge impact, but I dare say we will see some impact.”
According to ABCT, there is a movement in spending from the capital goods sector to the consumer goods sector during the re-adjustment period following a central bank money inflation induced mal-investment period. So why might there be a downturn in sales of NBA tickets?
Because not all buyers of tickets fall into the same category.
If you and the boys are headed out for a night on the town that includes an NBA game, that would be a consumer purchase. The same applies if you are taking your son to a game.
On the other hand, if the tickets are bought by a corporation for the purpose of developing a long term bond with a client or potential client, this should be classified as a capital goods purchase.
My guess, then, is that during a downswing in the business cycle, the NBA will see an increase in family type purchases of tickets and a downswing in the types of tickets corporations favor, e.g. season tickets and suites.
There is also a probably a difference between different sports. I once had a conversation with a Los Angeles Clppers season ticket salesman, who once held the same position with the Los Angeles Dodgers baseball team. He told me that there was a tremendous difference in the clientele between the Dodgers and Clippers, with Clippers season ticket sales being much more corporate and Dodger season tickets being purchased by families or groups of guys splitting up a season.
To the degree this fact holds throughout the leagues, the NBA is likely to be more impacted by a recession than Major League Baseball.
So are NBA tickets a consumer good or capital good? The answer is Wenzel's Observation #2. The same good may be either a capital good or consumer good, depending on POP, the purpose of the purchase.
But, this isn't the correct answer.
The NBA is eliminating about 80 jobs in the United States, the first major American sports league to announce layoffs because of the worldwide economic turmoil.
This makes a lot of sense.
Commissioner David Stern told The Associated Press last month the league would cut staff in anticipation of the downturn. He said Sunday the figure would be about 9 percent of the American work force, and the league confirmed the number of jobs the next day.
“My guess is that by the time we tip off in a week or so, we will be down modestly in season tickets. … We think we’ll be up in revenue, but I just can’t say for sure whether we’ll be up or down in attendance because it’s just so touch-and-go, because sports tickets are very much disposable income,” he said. “So, we’re not going to see a huge impact, but I dare say we will see some impact.”
According to ABCT, there is a movement in spending from the capital goods sector to the consumer goods sector during the re-adjustment period following a central bank money inflation induced mal-investment period. So why might there be a downturn in sales of NBA tickets?
Because not all buyers of tickets fall into the same category.
If you and the boys are headed out for a night on the town that includes an NBA game, that would be a consumer purchase. The same applies if you are taking your son to a game.
On the other hand, if the tickets are bought by a corporation for the purpose of developing a long term bond with a client or potential client, this should be classified as a capital goods purchase.
My guess, then, is that during a downswing in the business cycle, the NBA will see an increase in family type purchases of tickets and a downswing in the types of tickets corporations favor, e.g. season tickets and suites.
There is also a probably a difference between different sports. I once had a conversation with a Los Angeles Clppers season ticket salesman, who once held the same position with the Los Angeles Dodgers baseball team. He told me that there was a tremendous difference in the clientele between the Dodgers and Clippers, with Clippers season ticket sales being much more corporate and Dodger season tickets being purchased by families or groups of guys splitting up a season.
To the degree this fact holds throughout the leagues, the NBA is likely to be more impacted by a recession than Major League Baseball.
So are NBA tickets a consumer good or capital good? The answer is Wenzel's Observation #2. The same good may be either a capital good or consumer good, depending on POP, the purpose of the purchase.
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