Or maybe they just found more deductions

Of course, the owners claim they are losing money. But I think we all know that claim depends on narrowly defining which monies count and which don’t. AEG owns the Kings, the arena they play in, the neighboring real estate, and (I assume) dozens of related business entities in downtown LA. When the Kings are said to be losing money, does this include the fact that the Kings (AEG) pay AEG (AEG) rent for using Staples (AEG)? Does it include the appreciation of the asset that is “The Los Angeles Kings” (which I believe is now worth at least a hundred million more than AEG paid for it)? Does it include the profits from businesses around Staples, for LA Live, for any of the ancillary profit that occurs as a result of the Kings playing at Staples? I’m not an accountant, and I should also say that I don’t have any inside knowledge regarding how AEG categorizes its assets or how it defines “The Kings” when it talks about whether “The Kings” make money or not. But I think it’s pretty obvious that when they say they’re losing money, it’s because they need to say they are losing money in that moment, so they find a way to “account” for the money such that it turns out they are losing money.

I assume it’s the same accounting that led, several years ago, to Paramount Pictures declaring that Forrest Gump, a movie which at the time had grossed nearly a billion dollars and cost $60 million to produce, was still in the red. 

Puck Daddy (Ryan Lambert) – Yeah the NHL is totally losing hundreds of millions of dollars every year

So the National Hockey League, in its continuing bid to annoy the hell out of its fans and try to justify to them that there is a need for another lockout despite mountains of evidence to the contrary, launched another hilarious salvo into the debate on Tuesday.

[…] [A] league source [says] the NHL is losing money by the barrel, shedding some $240 million over the last two seasons. […]

Losing an average of $120 million in both of the last two years seems, well, shocking. To say the least. […] [League] revenues [are] at about $3.3 billion last season — and [the] salary cap [is] tied directly to that number […]. […] Player costs have risen about 30 percent at most since the last lockout, accounting for as much as $1.9 billion. And because we know revenues are $3.3 billion, the costs beyond what players are paid […] climb to $1.52 billion, given that the league […] lost about $120 million last year. That’s simple math.

So what on earth, then, are teams spending $1.52 billion dollars on that [is] not covered by hockey-related revenues? The Levitt Report, which was based on data from the 2002-03 season, defined “other costs” as: those related to additional player costs outside salary, bonuses, and benefits; operating costs including everything from what they pay other people associated with the team (front office staff, coaches, trainers, travel, etc.); minor league players, coaches, scouts, etc.; arena and building costs; and additional staff like legal, finance, marketing, and so forth. […] [All] those things combined, league-wide, cost about $770 million in 2002-03. And so now […] “other costs” have skyrocketed to just about double the money required nine years ago? […]

We’ve been told all along that the reason for this impending lockout […] is [that] player costs are simply too high to justify. But [the figures above show] they’re paying more to keep the lights on and operate organizations than they’re paying the players.

So how do they go ahead and blame the players for that, exactly? […]

The ploy comes off as being exactly what it is: A last-ditch effort to cry poor and save face ahead of this inevitable lockout, the second in seven years and third in 18.



  4 comments for “Or maybe they just found more deductions

  1. September 5, 2012 at 10:53 AM

    This is precisely why I asked on JftC if anyone knew how much pull AEG has within the owners’ club. It seems to me that Kings’ ownership has quite a lot to lose from long lockout, since they are an important part of a profitable overall plan for the Staples Center area, even if you can jigger the books to pretend that the team itself is not running a profit.

    • September 5, 2012 at 12:24 PM

      Or else they’re protected by the sheer number of events at Staples other than the Kings. And that’s 40+ nights they can fill with other acts.

  2. Kings of Hockeywood
    September 5, 2012 at 9:50 PM

    Hollywood accounting is hilarious. To this day, 20th Century Fox claims that Return of the Jedi hasn’t made its money back. Return of the Jedi! One of the top 15 ticket-sellers of all time. But it lost money. Yeah, and the NHL is losing money too…

  3. USHA#17
    September 5, 2012 at 10:23 PM

    Once had someone tell me my business wasn’t making any money. Of course each year there were numerous expenses (which served keep taxes low and the pluses of being in business high). Seems there just wasn’t that much left over profit. Poor AEG, having the burden of nursing a club filled with dead weigh millionaires.

    If only the Kings would go away, the share holders of AEG would have more time to travel.

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