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Chicago is Worth Money

TrueHoop reader Nick emails:

On Friday you said the Bulls weren't going to win any awards for best run franchises.

If you analyze the numbers in the Forbes report there was one that stood out to me. As a business student I am constantly learning how to read financial reports. The Bulls have a operating income of 59,000,000. The next team closest to them is Detroit who is at 39,000,000 respectively. That's a twenty million dollar difference!

Looking at Operating Income is an easy way to look at a company's overall health. Operating Income = gross profit –minus operating expenses. Not that you don't know that, but the Bulls are a very well run franchise. (I do realize that Deng, and Gordon are still in their rookie contracts and the difference would have been over twenty million dollars if both of them got extended.)

In my opinion, this has allowed John Paxson to run the team the way he wants (ie pick character guys who love to play the game, and want to get better on their own). If the Bulls weren't as successful at running their business operations would there be more pressure to bring in a star, and boost jersey sales and other figures comparable to increasing revenue? Would John Paxson feel more pressure to trade pieces of his core for a more marketable player?

Coming full circle: John Paxson seems to have the perfect business plan for the perfect market. Yes the Chicago fans have always wanted to win, but when the business side of a franchise is run correctly it allows for patience. Patience is important because in the NBA mediocrity is a curse. Look at the T'Wolves and the KG era. Just good enough to make the playoffs. Not bad enough to get any better.

Having a team in a major market is a major advantage. It has allowed John Paxson to execute a plan that might not have worked in other markets. But having a good business plan and sticking to it also allows latitude that other teams should take note of. Do teams in major markets really need that star? Or is it the teams in smaller markets that really need them?

There are a lot of points here.

First, let me clarify why I said the team was not well run.

In a phrase: the Ben Wallace contract. It runs into 2010, but he's an undersized guy who excels when he plays like his hair is on fire. But because of age or attitude or something, his hair very much does not seem to be on fire at the moment. Meanwhile, the team not only needs to re-sign all their good players (made tough by Wallace's deal) but they also need to be adding bits and pieces, which will be tough on the fly.

You could also make the case that LaMarcus Aldridge would have been a better pick than Tyrus Thomas. And at the moment, I'm sure there are those doubting the length of Kirk Hinrich's deal.

This is not one of those hindsight is 20/20 hackjobs. I do not intend to impugn John Paxson's decision making. I picked this team to win the East this year, and at the time of all of those moves, I saw merit in each of them.

My point is just that value here clearly derives more from a large and motivated fan base than one good front office move after another. Like any executive, Paxson has had his stumbles -- including on his biggest contract. Yet still his team is, reportedly, raking it in.

You know who should be proud of that? First and foremost, Bulls fans. That's your money they're raking. Well done loving that team so much.

Also, the business organization of the Bulls, which has clearly figured out how ticket sales, marketing, and all that.

And finally -- could it be that the city's love of this team is still deepened, informed, and spurred on by memories of one Michael Jordan? Is it just easier to believe in that city? The NBA, Nike, Gatorade, Hanes, the Wizards for a little while -- does Jordan deserve a chunk of the credit for the success of one more business?