Will Robert Sarver be in a financial position to keep owning the Suns by the time this pandemic ends? That's today's Tin Foil Tuesday question. Sounds crazy, right? Let's consider some facts.
The 2017 NBA Financial Report - In 2017, a confidential NBA financial report was leaked to ESPN showing that nearly half of the league's teams lost money in 2016-17 despite "a flood of new national television cash." The Suns were one of those teams. They may have made up for it with revenue sharing, but the fact that that they were in the red at all suggests their local TV revenue, and gate sales, aren't all that robust. Remember - in 2016-17 the Suns were under the salary cap by $9.1 million, and their highest-paid player was Eric Bledsoe at $14 million.
But, has Robert Sarver really been losing money? He could stand to going forward, but probably didn't in the past. Most owners can afford to operate at a deficit - even if revenue sharing doesn't cover all their losses - because they make enough money with events held at their arenas.
Talking Stick Resort Arena Revenue - Sarver doesn't own Talking Stick Resort Arena, the city of Phoenix does. The Suns, however, have it leased through 2037. Presumably, all revenue generated through events (like concerts and magic shows) at TSRA go to Sarver, or at least the Suns. Remember, the Suns lost money on basketball operations in '16-17, which doesn't include outside revenue. Here's the problem: Those revenue-generating non-basketball events may not be taking place for a while. According to its website, the next event scheduled to be held at TSRA is a Five Finger Death Punch concert on October 23rd. Arizona will presumably remain open until then, but will TSRA and the band be willing to accept liability that comes with hosting a live audience during what may still be a pandemic? I doubt it. Trial lawyers are waiting eagerly for someone to contract coronavirus at one of these events - and sue the hell out of the venue. Will the public even be ready to pack into a concert? That remains to be seen. Bottom line, Sarver could long be missing a vital revenue stream that makes up for the lack of revenue produced by his basketball team.
Gate Revenue Loss - Adam Silver recently stated that the NBA garners 40% of its revenue from game-day ticket sales and concessions. That may be less or more for the Suns, but it's a ballpark figure. If the Suns already lose money, what will their balance sheet look like without that ballpark 40% from gate receipts? What will the NBA's revenue-sharing program look like without the 40% the rest of the league earns from game-day sales? Will it be worth it for Sarver - who's notoriously frugal - to maintain ownership of the Suns if there are no fans in arenas until the 2021-22 season?
Sarver's Net Worth - According to the Google machine, Robert Sarver is worth $400 million. I doubt that's accurate. Some rich guys have a very clear net worth based on shareholdings - such as Steve Ballmer ($50 billion net worth based on Microsoft holdings) - but Sarver's personal wealth is murkier. He started a state bank, sold it, bought another state bank, sat as the CEO of another, and co-founded a real estate development company. All impressive compared to the general public, but not exactly tech money. So, for a man who may not be a billionaire, is it worth taking a personal loss just to own a basketball team as we enter what could be the worst economy in decades?
That's our Tin foil Tuesday Question.