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The Economic Case for Chris Bosh

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There have been many posts made about the possibility of the Wizards trading for Chris Bosh. Basketball wise, it makes tremendous sense. Assuming the Wizards would not have to give up any of their core players (Arenas, Butler, Haywood or Jamison); a Wizard's team with Chris Bosh would immediately put them in contention. Not just contention in the Eastern Conference, but on a par with the best teams in the Association; including Boston (with KG), Cleveland and the Los Angeles Lakers.

Basketball-wise, the move would make sense; but can it work economically?

Everyone knows that this is a transient city. You have the die-hard, core fans.... and then, for lack of a better phrase, the "front runners". You know the ones I'm talking about. They would only attend a Wizards game if there was a "buzz"; if it were "THE place to be".... The ones that are there to "be seen". The way to increase the team's revenues is to increase the attendance. (duh !) For Washington, more than any other city, that means the Wizards have to bring in the "front runners". If they win, those "front runners" will show up.

If the Wizards were to trade for Bosh, let's make some further assumptions:
1. The Wizards would NOT trade any of their "core" players (Arenas, Butler, Jamison or Haywood)
2. The Wizards average home attendance would increase.... from the current 82% capacity (16,612 per game) to 96% capacity (19,947 per game) *
3. Let's assume the average ticket at the Verizon Center is $50.00  (I couldn't find an actual number, but that should be close)
4. Not too hard to assume that the Wizards would instantly become a deep Playoff team; at least getting to the Eastern Conference Finals
5. By trading for Bosh, the Wizard's salary situation for 2009-2010 remains the same. (Trades have to match, salary-wise after all)
6. Let's assume the Luxury tax is set at about $69 Million for the 2009-2010 season. That's the number I've seen thrown around.
7. Assume the Wizards sign their 1st round draft pick (Max $4.1 Million salary); and either trade the 2nd rounder, or draft-and-stash.
8. Wizard's total salaries will be approx $80 Million  (Currently they have $75.9 Million committed + $4.1 Million Rookie draft choice)

* Note: When they started winning, the Washington Capitals saw an increase their ticket sales. The capacity rose from 82% in 2008 to 96.9% in 2009; so this assumption has some basis in current facts. I personally believe that the Wizards could sell out every game if they were to trade for Bosh.

The Wizards current salary situation, if they were to trade for Bosh, would mean they would be approximately $11 Million over the Luxury tax; and Abe Polin would have to pay the $11 Million to the League. Not only that, but they would be over the Luxury Tax limit for the forseeable future as well.


Can Abe make that up somehow?


Well, an increase to 96% capacity means an additional 3,235 fans per night at the Verizon Center... X $50 per ticket X 41 home games = $6.6 Million in increased revenues.
Add at least 9 sell-out Home Playoff games... X 20,674 X $50 per ticket X 9 games = $9.3 Million in increased revenues.

Worst case scenario: Exit in round 2 of the Playoffs = $12.8 Million more in revenue
Most likely scenario: Get to the EC Finals = $15.9 Million more in revenue
Best case scenario:  Get to the Championship series = 19 Million more in revenue

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I believe I am being fairly conservative in my estimates here. I have not included parking, concessions or other sales in any of the numbers. Nor have I included any non-basketball related income. I've made the assumption that the Wizards will NOT increase ticket prices... (although, with Bosh, I could definately see that happening). I assumed a conservative 3 Home Playoff dates for each series - there could conceivably be 1 fewer or 1 more home dates, depending on home court advantage, how long each series lasts, etc...

There's a reason that teams like Boston, Los Angeles and Cleveland are the BEST teams in the League. They paid big bucks to have three or four of the best players on their teams; and then filled in around them with role players and minimum contract guys. In this League, it's the Stars that win games.

Boston has $55 Million tied up in three players - Allen $18.7M, Pierce $19.8M, and KG $16.4
Los Angeles has $64.6 Million tied up in four players - Kobe $23M, Gasol $16.4M, Bynum $13.8M and Odom $11.4M
Cleveland has $50.1 Million tied up in four players - James $15.8M, Wallace $14M, Ilgauskas $11.4M and Williams $8.8M

If the Wizards made a trade for Bosh, they would even the playing field... or perhaps even, tilt it a little their way:
Washingon would have $53.3 Million tied up in four players - Bosh $15.8M, Arenas $16.1M, Butler $11.6M and Jamison $9.8M

Bottom line? YES - the trade works economically. Abe Polin could definitely make back all of the $11 Million Luxury Tax... and then some. Even if they didn't get past the 2nd round, the Wizards would STILL do better than break even on the Tax issue. And best of all, the team would be in contention for several years... Even after re-signing Butler and Haywood to moderate increases, the Wizards would still be above break even on the tax . Each year, paying the tax, but more than making up for it by raking in the extra gate receipts and Home Playoff revenues.