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Message: [QUOTE="HooperScooper, post: 5298852, member: 10"] I helped analyze the Celtics deal a little when the current owners bought the team in 2002. The cash flow numbers don't make any sense to the purchase price no matter what assumptions you make. The IRR was good if you assumed the team sold for double what you bought it for after 10 years. Which at that time didn't seem possible but sports franchise values just keep going up at a tremendous rate so buyers probably project that will continue. The IRR on a 10 year hold was about 80%, if I remember correctly, due to the residual sale value so the cash flow didn't help the IRR much. Obviously after 22.5 years the franchise value of the Celtics increased almost 17 times. Quite an investment. The managing general partnership group takes a 3% or 4% management fee of total annual revenue. So that helps your return on equity. Also, there are accounting benefits for owners who have a lot of active personal income such as real estate investments for real estate developers. I don't totally understand it but I was told you can depreciate the players' salaries over the life of their contracts, and since the majority of operating expenses of a team is the players' salaries, there is a lot of depreciation to use. I keep getting told that sports franchises are almost always bought for ego. There just aren't that many of them. And there are even fewer iconic franchises like the Celtics and Lakers. Rich people with egos want to own those. [/QUOTE]

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