It will be interesting to see how this plays out.
I am obviously not privy to the Trailblazers financial info, but there is no doubt they are losing money and have been for a number of years. Of course there is a big difference between losing money, and having a negative cash flow. Many pro teams have a taxable loss, but generate positive cash. I don't believe that is the case with the Blazers though. They are losing money, and I think lots of it. I am not crying for them, just stating the obvious.
The present situation I think is to a certain degree about playing chicken. The Blazers easily have the worst lease in all of pro sports. They get no revenue from Suites, Concessions, Courtside or Premium Seats, or Parking, and while still paying rent to the Rose Garden owner. Based upon that it is quite clear that they cannot generate enough revenue to support a large payroll, even a moderate payroll.
Of course, that was also the situation when Paul Allen's group owned the Rose Garden. The Blazers didn't get those revenues then, that is why those revenues went with the arena when Oregon Arena went bankrupt, and we didn't hear this stuff about the Blazers going bankrupt. Obviously Allen is positioning for a better lease, or the opportunity to regain control of the Rose Garden.
All that aside though Randy is right that both Allen and Whitsett deserve blame in this, and the idea that the taxpayers of Oregon may have to bail them out is ridiculous. Now if the People's Republic of Portland wants to bail them out, and leave me out of it, then I guess that would be par for the course.
Allen obviously had the right of final call on all these decisions, and he must bear ultimate blame. At the same time there were many others who did not do even basic due diligence on some of these moves.
First and foremost among those others has to be Bob Whitsett. He spent like a drunken sailor, overpaid over and over again, and there is really no way he could have done basic financial due diligence when making the moves he made.
Looking back to the early years of the Rose Garden, before the 2 trips to the WCF, the Blazers were easily profitable. Then came some very fateful and unbelievabely bad decisions. The first was the radical increase in payroll, from the $35-40 million range, to $100 million in 2002-03. With that $100 million payroll came another $30 million in tax. With an increase in costs of $100 million you better get some seriously better revenue streams or forget about making it work.
The first major bonehead was the development of the cable channel ASCN. It operated for only 1-1/2 years, and never was on more than 30% of the Portland cable systems, because everybody wanted to put it in as HD, and ASCN wasn't set up that way. This is mind blowing. How can you not do the basic due diligence, and have those contracts in place before you start dropping big bucks. Previously the Blazers had Blazer Cable which was not a channel, just a deal for broadcasts. It was a much lower cost operation, and they were able to retain most if not all the revenues. From the start ASCN lost millions upon millions in a year and half, and then you have no option but Fox Sports Net, and they have you over a barrel. While the rest of the league was getting increasing amounts of local TV revenue, the Blazers were getting less, while at the same time their costs had increased by $100,000,000.
The final straw was Whitsett's seemingly oblivious approach to PR. His arrogance made the media an enemy, and his tin year had him doing so many stupid things. He did not see that the fan base was getting fed up, and he just kept on bringing in the same kind of players. With just a couple of moves in 2001 and 2002, he could have changed the tenor of the team, without destroying it, and the fans would have responded. But he instead kicks out a fan who puts up a sign "Fire Whitsett", says he was a sports major not a chemistry major, doesn't do much of any discipline, and makes moves without talking it through with his coach. He never took responsibility for much of anything, and even now is pointing the finger everywhere but at himself.
We will see how this all works out, I am not making any predictions. No doubt the financial model is no longer working in Portland, and something significant has to happen. They can't leave, lease won't allow it, but they could go bankrupt. tha would suck, but there are worse things in this world.
