Why is Abe Pollin willing to pay the luxury tax?
First and foremost, he wants to win now, not later … the guy doesn’t have much ‘later’ left.
Second, the Wizards are relatively financially stable, ranked 15th in the NBA by Forbes in franchise value, 14th in revenue and 10th in operating income. The rankings could be better considering that D.C. is the 8th largest media market in the U.S. (in 2006). Then again, being in such a large media market helps bring in revenue from other sources.
Finally, there is hope in the Nation’s Capital that if you build it, they will come. If Ernie Grunfeld constructs a contender, then the fair-weather transients around the DMV area will show up amongst the bars, restaurants, and museums of Chinatown to see a winner in the Phone Booth.
CBSSports.com has a story called, “Class Warfare Index: Comparing haves and have-nots.” It’s an interesting read that includes the NBA’s top five and bottom five rankings in the areas of ticket revenue, pricing power, total tickets sold, and actual attendance. The Wizards only show up once in the listed rankings (as the full NBA rankings are not given).
In 08-09, the Wizards were tied with the Clippers for fifth worst “drop count percentage” in the NBA at 71.9%. Drop count is how many people actually show up to games, contributing to the team’s income with over-priced beer and hot dogs, over how many tickets were sold (or given out in promotions, etc.).
It’s hard to gauge exactly what the 71.9% number means without the full NBA rankings and historical team reference. With a league average drop count of 81% and the top five as following: Lakers 92.2, Warriors 90.7, Celtics 90.5, Cavaliers 90.3, Rockets 90.3, groans over “announced attendance” contradicting empty seats tend to be a league-wide epidemic.
The Wizards are currently slated to be $8 million over the luxury tax threshold. Now, this doesn’t mean they will be paying the entire dollar-for-dollar $8 million tax back to the NBA at the end of the season just yet. A cost cutting trade, perhaps one that’s been suggested by Mike Prada of Bullets Forever, could bring some relief to Pollin’s pockets after the 09-10.
But to remain contenders past this season, the Wizards will likely be in luxury tax territory in 2010-11 as well, and perhaps beyond with the predicted shrinking salary cap. With the state of the economy, and the District of Columbia’s unique condition of lobbying dollars spent on entertainment drying up because of more strict regulation, paying extra becomes harder and harder for Mr.Pollin to swallow.
This is an important of a year that the franchise has had in a while. Not only is a bounce back season on the court imperative for the psyche/morale of the players and fans, but a surge at the gates and concessions will help determine if the franchise can financially remain in the upper echelon of the league for the next several seasons.
A lot of hope is being put in the architecture skills of Ernie Grunfeld. With depth, the team is built to withstand bumps in the road, but any disastrous occurrences will only bring mediocre drop counts, tighter pockets, and future misery. Grunfeld has built it, now the onus is on Flip Saunders, Gilbert Arenas, Caron Butler, Antawn Jamison and company to put butts in seats and make them stay.