The NBA lockout fascinates me and Gladwell's article about how the New Jersey Nets used eminent domain to secure a lucrative piece of property in Brooklyn made it even more interesting. I highly recommend reading the whole article.
Another thing not discussed in any of the NBA Lockout articles is how the salaries players receive are subject to advantageous tax depreciation rules - meaning those salaries become huge write-offs and can shield a lot of income from affiliated businesses. This has profound net present value implications for buying a franchise. Buy a franchise and sign a star player to a big contract and between the interest expenses on the acquisition financing and depreciation expenses from the player salaries, you aren't paying much in taxes. It's a great business if you are trying to shield other income and you get an asset for very little cash down that has a long track record of appreciating in value.
"Bruce Ratner's original plan for the Atlantic Yards site called for 16 separate commercial and residential towers and a basketball arena, all designed by the superstar architect Frank Gehry. The development would be home to roughly 15,000 people, cost in excess of $4 billion, total more than eight million square feet, and make his company — by some calculations — as much as $1 billion in profit. To put that in perspective, the original Rockefeller Center — one of the grandest urban developments in American history — was seven million square feet. Ratner wanted to out-Rockefeller the Rockefellers.Ratner knew this would not be easy. The 14 acres he wanted to raze was a perfectly functional neighborhood, inhabited by taxpaying businesses and homeowners. He needed a political halo, and Ratner's genius was in understanding how beautifully the Nets could serve that purpose. The minute basketball was involved, Brooklyn's favorite son — Jay-Z — signed up as a part-owner and full-time booster. Brooklyn's borough president began publicly fantasizing about what a professional sports team would mean for his community. The Mayor's office, then actively pursuing an Olympic bid, loved the idea of a new arena in Brooklyn."
