In professional sports, there are often financial incentives tied to winning. How much are they and how do they relate to figures like a team’s valuation, star salaries and revenue generation? The Lakers provide a good case study.

The Los Angeles Lakers, who won their 16th NBA championship, get to take home the Larry O’Brien trophy for the second time in as many postseasons. The team also gets to take home a little pocket change: $2,125,137 in playoff bonus money. In fact, even the losers of the NBA Finals are winners in a sense. The Boston Celtics get to split a $1,408,168 pool, or roughly two-thirds of the Lakers’ take.

In the NBA, there is no championship prize money – just a $12 million bonus pool split by the playoff teams. “Like most professional sports leagues, there is a pool of playoff money generated from a portion of home gate receipts that is allocated to players on playoff teams,” said Patrick Rishe, Director of Sportsimpacts and associate professor of economics at Webster University in St. Louis, MO. “The team amount earned escalates as one’s team advances in the NBA playoffs.”

Considering the relatively high salaries of professional athletes, and considering the fact that we just witnessed one of the best rivalries in sports, the NBA bonus pool isn’t an earthshaking amount.  But it’s hardly chump change either.

The Lakers’ $2.1 million bonus will be split according to each player’s relative value or contribution to the team, but every player comes out looking like a winner. The playoff pool is icing on the cake. The monies come with a year’s worth of bragging rights – and the potential to earn tens of millions of dollars in product endorsements.

“It’s kind of the old saying: ‘to the victor goes the spoils,’ and I think that does translate individually to players in helping them get individual sponsorship deals,” said John Black, director of communications for the L.A Lakers.

In addition to the Lakers’ and Celtics’ share, the $12 million NBA playoff pool is distributed to teams as follows:

Best Record in NBA:  $346,105
Best Record in Conference, $302,841each (for $605,682)
Second Best Record in Conference, $243,411 each ($486,822)
Third Best Record in Conference, $181,706 each ($363,412)
Fourth Best Record in Conference, $142,800 each ($285,600)
Fifth Best record in Conference, $118,990 each ($237,980)
Sixth Best Record in Conference, $81,157 each ($162,314)

Teams Participating in First Round, $179,092 each ($2,865,472)
Teams Participating in Conference Semifinals, $213,095 each ($1,704,760)
Teams Participating in Conference Finals, $352,137 each ($1,408,548)

The playoff bonus is “extra pay” for postseason work. “For a player making more than $1 million a month, and there are some players making $3 million a month, this is a nice chunk of change,” said Bob Myers, sports agent with the Wasserman Media Group who represents, among others, Kendrick Perkins, the Celtics’ six-foot-10-inch, 280 pound center.

Winning the NBA championship increases the earning power not only for players but for the team. The playoff run added $20 million to the Lakers’ revenue in 2009, according to Forbes.com.

When the playoff drags out to seven games,the NBA and the teams make a killing. It results in higher ticket revenue, higher local media revenue, greater licensing and merchandise revenues, and higher response/ad rates from arena signage and web space.  And when the teams are bitter rivals, audience interest hovers at peak levels.

In fact, when the Celtics lost game 6 after having trounced the Lakers in game 5 in Boston, it only fueled speculation that the longer the playoff, the better it was for all concerned.

“The Celtics went into game 6 and should have won the championship in LA, but they didn’t even look like the same team,” said Hugh Lewis, former sportscaster and sports talk show host in Austin, TX. “As a result, [they went to game 7] and revenue kept pouring in. That made a lot of people very happy.”

The NBA Finals was a ratings bonanza. Game 6 had 13.9 million television viewers, according to Nielsen.  Before game 7, average audience levels were up by 2.1 million viewers overall compared to last year, when the Lakers defeated the Orlando Magic in five games. The TV ratings for game 7 marked basketball’s biggest ratings in 14 years.  Final numbers are not yet tallied, but it is thought that as many as 25 million people watched the game.

In the end, winning the championship can benefit players tremendously. “The public appreciates winning, so if you can be associated with a winning product or labeled a champion, it certainly can add to your attractiveness to a company,” said Myers. “Guys like Peyton Manning, Derek Jeter – guys who have won championships – are consistently winning in commercials, in advertisements, and endorsing products.  If you are able to win a championship, it garners more interest from corporations, from companies looking to use athletes to endorse products. It’s a clear positive to win a championship in whatever sport you’re playing.”

NBA players are paid among the best-paid athletes in professional sports. The median NBA salary is $3.1 million. In other words, players earn $37,804 per game – and there are 82 games per season.

Financial incentives abound. A rule of thumb might be: the more games a player wins, the more he is likely to earn. “In my estimation, 10-15% of players have what you’d call playoff bonuses in their team contract,” said Myers. “For a lot more players probably you’d find [bonuses] in their shoe contract” – meaning Nike, Adidas, Reebok, etc.

Kendrick Perkinshas incentives built into his four year, $4.25 million team contract and his shoe contract according to Myers. “The total number surpasses six figures,” he said.

Thursday’s win, his fifth NBA championship, put Kobe Bryant atop the basketball heap.  In fact, he may be the king of basketball. With his three year contract extension, signed in April, he will join the sports megastars. He is destined to become basketball’s second $30 million man.

Bryant is slated to earn $31.5 million in 2013-14 season. Michael Jordan, the only other NBA player to make that much, earned $30.1 million in 1997 and $33.1 million in 1998.

By the time it’s all said and done, Bryant will have been paid $280 million by the Lakers. And that’s just his salary.  He makes many millions more in product endorsements. In 2008, Bryant earned $45 million, ranking No. 10 on Forbes’ list of powerful celebrities.

Is he worth it?  His statistics say so. For the 2010 playoffs, Bryant averaged 29.5 points, 5.6 rebounds, and 5.6 assists. “People want winners on their team,” said Myers. “People want winners endorsing their products. It’s all tied together.”

Winning will almost certainly earn Lakers coach Phil Jackson more if he decides to return next year. Jackson is a virtual franchise, having won more NBA championships, 11, than any single team except for the Lakers and the Celtics.  And he earns more than any other coach in sports history. He is the NBA’s $10 million man.  He earns $3 million more than the second highest paid coaches – NFL Super Bowl winners Bill Belichick and Mike Shanahan.

NBA players costs have skyrocketed.  Including bonuses and benefits, they increased to $2.3 billion during 2008-09 season, from $2.2 billion the previous year. The Lakers have the highest team payroll in the NBA – at nearly $91.4 million annually, versus the Celtics’ $86.5 million.

But the Lakers are the league’s most valuable franchise. The team’s current valuation is $607 million, and its 2008-09 revenue was $209 million, with operating income at $51.1 million. The New York Knicks ranked second, valued at $586 million with revenue of $202 million. The Celtics ranked as the league’s eighth most valuable franchise, at $433 million, with revenue of $144 million.  By way of comparison, the average overall revenue for the league’s 30 teams was $126 million last year.

At the beginning of this past season, the Lakers held the record for having the most wins (3,000), the highest winning percentage (61.8%), and the most NBA Finals appearances (31).

“For the past few seasons, the Lakers have sold out every game, giving us an average attendance of 18,997,” said Tim Harris, the Lakers’ senior vice president for business operations and chief marketing officer. “Average ticket prices for the 2009-10 regular season were $143.69.”

Courtside seat ticket holders are willing to cough up $107,500 for the season. The renewal rate is around 97-99%. “The last few years, we have enjoyed rates in that range.  I am assuming we will do the same this summer but won’t know for sure until we get through the process,” said Harris.

With the priciest tickets in the NBA, each game generated $2 million in revenue for the Lakers’ owners last year, according to Forbes.

Kobe Bryant is the team’s main attraction. And he can afford to be a grateful champion. In 2008, he bought $9,000 Swiss watches for each of his teammates. It was his way of saying thanks for helping him win his first MVP award. So now the question is, what will he buy them this year – a car?

Apparently, there’s a global oil scam making Bernie Madoff look like a petty thief.

If serial entrepreneur and Seeking Alpha columnist Philip Davis is to be believed, the world is being scammed out of $2.5 trillion, 50 times greater than the sum Madoff took from the duped investors.

According to Davis, the scam starts in 2000 with the formation of the ICE – the Intercontinental Exchange. The ICE – founded by Goldman Sachs, Morgan Stanley, BP, Total, Shell, Deutsche Bank and Societe Generale – is an online commodities and futures marketplace that exists outside the US and operates free from the constraints of US laws.

After a Congressional investigation into energy trading in 2003, the ICE was found to be facilitating “round-trip” trades. This is where one firm sells energy to another, and then the second firm sells the same amount of energy back to the first company, at the same time and at the exact same price, as told by Davis.

No commodity ever changes hands

Quite shockingly no commodity ever changes hands, but the transactions still send a signal to the market, artificially boosting company revenue. Angry yet? There’s more.

Because the trading is unregulated by Washington, its difficult to gauge the scale on which “round-trip” trading takes place.

But when DMS Energy were investigated by Congress, the company admitted that 80 percent of its trades in 2001 were round-trip trades. This means 80 percent of all trades in that year were false trades. Not a drop of oil changed hands, but the balance sheets showed increased revenue.

The idea is to hike up commodity prices. For example, according to Davis, after the ICE turned commodity trading into a “speculative casino game where pricing was notional and contracts could be sold by people who never produced a thing, to people who didn’t need the things that were not produced”, Goldman Sachs were able to triple the price of commodities in just five years.

ICE can create artificial shortages and drive speculative demand

The beauty (or rather the horror) of the scam outlined by Davis is that because they control the oil markets, the ICE can create artificial shortages and drive speculative demand in order to charge consumers an extra dollar per gallon of gas. And whereas this may not seem like much, this $1 soon becomes $50 billion A MONTH as global drivers consume 1.7 billion gallons of gas every single day.

Whereas, at this stage, it would not be accurate or indeed wise to suggest what Philip Davis claims is either true or false, one cannot ignore the issue. There have been concerns for may years that global markets are controlled by a monopoly of mega-organizations, but there could be a strong case for suggesting the ICE is close to becoming just that – a super-organization with the power to push oil prices up or down.

Good luck Washington, you might just be getting a deluge of mail demanding answers.

The slide show below comes from SlideShare.net and gives a breakdown of the global oil scam.

Comparison of both economic and financial indicators between the two countries.

Recent news articles have brought to light the fact that almost 47% of households in the US currently have zero or negative federal tax liability. We take a closer look at this lack of liability across each income level, highlighting the percentage in each range that will not pay any taxes. Also shown is a full breakdown of who is paying the bulk of all taxes collected by the Federal Government each year.

Personal Finance
Software – Mint.com

New research shows the economic importance of home-based businesses: They account for more than half of all U.S. businesses and employ more people than venture-backed companies.

Stephen Labuda, 35, is planning to hire a fifth employee for the Web development firm he runs from his home in Cambridge, Mass. CARBONARO PHOTOGRAPHY

More than half of all U.S. businesses are based at home. These companies often are dismissed as quaint hobbyist ventures, but new research suggests that’s a mistake. An estimated 6.6 million home-based enterprises provide at least half of their owners’ household income. Together these “homepreneurs” employ one in 10 private-sector workers, and by many measures they’re just as competitive as their counterparts in commercial spaces.

Ask Stephen Labuda, the 35-year-old president of Agency3, a Web development firm he runs from his home in Cambridge, Mass. A former programmer at Deutsche Bank (DB), Labuda started building Web sites as a side job in 2003 and took the venture full time three years later. Agency3′s revenue is in the millions, and Labuda is about to hire his fifth employee, who will work remotely, like the rest of the staff and the slew of contractors he taps. “I’m not intending to go rent office space,” he says.

You can trace the rise of home-based businesses to the early days of telecommuting in the 1980s and the mass adoption of the Internet in the 1990s. Cloud computing, online collaboration, and smartphones have accelerated the trend, and recent research clarifies the economic significance of companies like Labuda’s. “We’re seeing more and more home-based businesses that are real businesses,” says Steve King, who coauthored the new report with his wife, Carolyn Ockels. (The couple runs Emergent Research, a small research and consulting shop, from their home in Lafayette, Calif.) The pair analyzed U.S. Census data and Small Business Administration research, along with data from the Small Business Success Index, a survey of 1,500 companies sponsored by Network Solutions and the University of Maryland’s Robert H. Smith School of Business.

WIDE ACCEPTANCE AND LEGITIMACY
Here’s more of what they found: The 43% of home-based businesses that provide at least half of the owners’ household income are, on the whole, smaller than non-home-based companies. Only about 35% have revenue above $125,000, compared to 75% for non-home based businesses. But they measure up to other small companies on key aspects of doing business, including access to capital, benefits to workers, marketing, and innovation. On average they have two employees, including the owners, and together they employ more than 13 million people—more, King notes, than venture-backed companies. (Venture-backed companies employed 12.1 million people in 2008, according to the National Venture Capital Association.)

In some of these companies, the operations are concentrated in the owner’s home. Others use their residence as a headquarters but do most of their work at clients’ homes or offices. The variety of home-based businesses cuts across industries, but the top sectors are business and professional services, construction, retail, and personal services.

A few trends are driving the growth of sophisticated home businesses. First, technology has made it easier to start and run a business from anywhere. But just as important, there has been a change of consciousness in the business world to recognize home-based enterprises as legitimate.

Labuda has seen that shift at Agency3. “When I first started, I really felt compelled to go rent an office. I felt like in order for me to be taken seriously as a business, I had to have an office that my clients could come to,” he says. It didn’t matter—clients didn’t want to visit him. Labuda meets most of them at their businesses or at coffee shops. He also uses on-demand office space, where he can rent a conference room by the hour, if needed.

LOWER COSTS ARE A COMPETITIVE EDGE
Now, Labuda never feels that his working from home damages Agency3′s credibility. Instead, it’s a selling point. “It’s reflected in our pricing that we don’t have the same kind of infrastructure costs and fixed costs that some of our competitors do,” he says.

Indeed, the most obvious financial benefit for home-based entrepreneurs is lower operating costs. A 2006 SBA study compared tax returns of sole proprietors who deducted home-office expenses with those who deducted commercial rent. That analysis found that home businesses, on average, had lower sales and net profits than companies in commercial spaces. But profitable home-based ventures retained a greater share of their total receipts as net income: 36%, vs. 21% for non-home-based businesses.

King predicts that as large companies try to reduce their fixed costs by outsourcing business functions, small home-based enterprises will play an even larger role in the economy. “Over the next 20 to 30 years, you could see the percentage of people who are self-employed and home-based double, potentially,” he says.

[Via: BusinessWeek]