Belkin Owes $26 Million for Past Cash Calls

In today's AJC article, owner Michael Gearon leaves the door open for Steve Belkin to remain a minority partner with Atlanta Spirit. It is true Belkin has been involved in meeting where budgets are authorized and trades approved. However, from the outside it seems to me that this particular legal dispute was rather personal. This was not one of those uncontested divorce cases where everyone is still on good speaking terms, this was a "screw you guys" sort of separation.

I have had a very hard time imagining everyone playing nice and going back to status quo ante after spending millions on attorney's fees. There have also been persistent rumors about the ownership looking for new investors--something Gearon confirmed publicly:

Gearon also dismissed rumors that the Thrashers are for for sale, insisting that the Spirit is simply "looking for other investors," the same way Falcons owner Arthur Blank did recently.

I think the Atlanta Spirit has probably advanced past the "looking"phase by now. They have had a lot of time to think about how they pay Belkin in they won the court case. They have had time to examine potential investors. I suspect that if Belkin emails them tomorrow saying "I want out" we might see changes occur with surprising alacrity.

How Much Has Atlanta Spirit Really Lost?

In court documents it was claimed that the two sports teams lost $174 million over four years. The documents did not place a value on the operating income generated by Philips Arena--one of the top concert venues in North America. Since the Arena gets a portion of parking and concession there is always the potential for accounting shell game where the team show losses but the Arena has a nice tidy profit.

So what has been the trend for the overall Thrashers + Hawks + Philips Arena? Well Gearon's comments give us a little peek behind the financial curtain. He says that Belkin would be required to contribute $26 million representing his 30% share of missed cash calls during the lawsuit.

What are "cash calls" exactly? They are infusions of money into the operating budget to ensure positive cash flow when projected expenses are running ahead of actual revenues. So doing some very rough math, Belkin's $26 million times 3 and round up = $80 million total cash calls since 2004. That's probably a much more realistic estimate of the true losses that have been incurred by the combined ownership of Atlanta Spirit.

I'm assuming that includes a substantial sum required to cover expenses for the Thrashers during the lockout when there was zero operating income but ongoing expenses for things like front office, hockey operations, insurance, etc. How much did the lockout cost? Honestly, I don't know but $15-25 million is a crude guess.

Now of the three components of Atlanta Spirit I assume that Philips Arena is highly profitable, the Hawks are a money loser but NBA TV money makes their loss smaller and the Thrashers are a big cash drain. I wrote an entire "how to build a contender" series about how to turn the Thrashers around, but fundamentally they need to win to re-draw the fans who packed the building in season one and two (when the team was turning big profits on an annual basis). The next 12 months could be very interesting for Thrasher fans both on and off the ice.

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