Loss on empty seatsMarch 21 2005 at 9:22 AM
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Response to You are correct
I'm an accountant and the answer is no. You can't take a deduction for revenue you didn't receive, because by the very nature you didn't receive it, it becomes it's own deduction because there is no income to report. However, if you still have to pay lease on those seats, that would be an deduction.
It's also an urban myth that when a company loses money it gets a tax refund equal to the loss. It gets a tax break equal to the amount of loss X the company's tax rate. I.E. a $1,000,000 loss equals $380,000 of tax relief. The owner is still out the other $620,000, so losing money never makes sense.
I've done some quick calculations and Brodsky is making money. It is also a good point he has created employment for two family members. Chances are if he didn't have the Cougars, he'd have to support them out of his own pocket, so he probably doesn't even consider them an expense.
What has baffled me is additional revenue after all fixed costs are paid, is almost all pure profit. I can't understand why he wouldn't lay out say $250,000 to attract a top GM and Coach, and try and get another 1000 season ticket holders, which would be $400,000 of revenue, leaving him an extra $150,000. I wonder if the city gets a share of the gate. If so, that may be affecting his decisions.
- I should clarify - The Pucks on Mar 21, 2005, 9:34 AM
- Not too many changes - mule on Mar 21, 2005, 11:56 AM
- One posibility....... - P.G.Fan on Mar 21, 2005, 3:21 PM
- Re: One posibility....... - Jerry S. on Mar 21, 2005, 3:40 PM
- Re: One posibility....... - Yogi on Mar 21, 2005, 6:35 PM
- PGhas had tons of good hockey players here and where are they now? - bob on Mar 22, 2005, 8:10 AM
- Bob, you can count on it... - Puckster on Mar 22, 2005, 9:06 AM