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Deadspin’s Craggs exposes New Jersey Nets’ use roster depreciation write-off to manipulate profits, losses

Columbia Journalism Review’s Ryan Chittum writes, “Gawker’s sports site Deadspin got hold of some New Jersey Nets financial statements from a few years ago and uses them to report on how tax law gives multimillionaire ballclub owners egregious benefits.

Tommy Craggs does a good job showing how the Nets could earn $7 million but report a $28 million loss in 2004, or as he aptly puts it, ‘how a team makes money and how it pretends not to be making any money at all.’

The Nets benefit from a writeoff called the roster depreciation allowance that allows pro teams to depreciate their assets, which in this case are workers:

The underlying logic is specious at best. As Fort points out, a team’s roster at any given moment isn’t actually depreciating. While some players are fading with age, others are developing and improving. But the Nets don’t have to pay more taxes when a player becomes more valuable. And in any case, the cost of depreciation is borne by the athletes themselves, when they pass their primes and lose their personal earning power.”

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