Tuesday, October 18, 2011
Dan Gilbert's Cavsino
By Henry Abbott
Back before The Decision, when the Cavaliers were incredibly popular, owner Dan Gilbert made one of the boldest business plays of his bold business life: He entered the casino business.
Ohio voters had rejected casinos four times, but this was an offer from the man behind the team that had captivated a state. On a fall night in 2009, after LeBron James and Shaquille O'Neal earned their first win as Cleveland teammates, Gilbert and his co-investors threw a party to celebrate the referendum that some estimate may have won them a billion dollars in future earnings, thanks to control of Ohio's first casinos.
One of them will even be attached to the arena where the Cavaliers play. Brian Windhorst writes:
When it is completely finished it will literally be attached to the Cavs. A walkway will connect the arena and the casino, where fans will be able to park and walk to the game past the gaming tables and slots. The more fans that attend Cavs games, the more people there will be in the casino on game nights.
Park in the casino, have dinner there, walk into the arena past the slots and blackjack tables, stop at a bar in the casino for a nightcap on the way out after you walk past the slots and tables again. Or stop by before or after watching the Cleveland Indians, who play next door. You don't need an MBA to understand the business plan.
As Malcolm Gladwell has established with his dissection of Bruce Ratner's land deal, the full picture of costs and gains for NBA owners is, in some cases, far more complex than what's on the team's balance sheet. If the Cavaliers help Gilbert get a casino referendum passed, and if they bring a steady stream of high-rollers to his casino, well those are benefits of owning teams that are not counted in the NBA's reports of $300 million in annual losses.
And don't forget that Gilbert has long maintained that the financial benefits of owning a team extend far beyond the team's own profits and losses.