Full opinion text
TABLE OF CONTENTS Findings of Fact 1. Background ......................................................857 2. Summary of the Parties’ Respective Damage Theories .............858 3. Proper Approach to Measuring IBI’s Compensatory Damages ......858 4. The 1982 Fair Market Value of the Chicago Bulls NBA Franchise . 861 A. The 1982 Value of the Chicago Bulls Basketball Assets .......861 1. Comparable Sales .......................................862 a. Transactions Considered .............................862 b. Computation of Sale Price ..........................863 c. Closeness of Comparability ..........................865 1. Size of City .....................................865 2. Population Growth ..............................866 3. Market Interest in Basketball ....................866 4. Existing Versus Expansion Franchise ............866 2. Trend in Value .........................................867 3. Profits and Losses of NBA Clubs, and Trends of Profits and Losses .................................................. 867 4. Profits and Losses of the Bulls .........................869 5. Testimony of NBA Franchise Owners ....................869 6. Tax Law ...............................................870 7. Pay TV ................................................870 8. Arenas .................................................872 9. Free Agent Rules .......................................872 10. Other Assets of Comparables ............................873 B. The Value of CPSC’s Other Assets ...........................873 C. Value of Liabilities ..........................................873 D. Adjustments for IBI’s Costs and Expenses in Owning and Operating the Franchise ............................................874 1. Overview ................................................874 2. Litigation Expenses and IBI Lower Purchase Price ........874 3. Arena Expense ..........................................874 4. Differences in Executive Compensation ....................875 5. Interest Expense .........................................875 E. Cost of Capital .............................................. 878 F. Invested Capital .............................................879 G. Summary of Yardstick Measure of Damages — The Value of the Chicago Bulls NBA Franchise ................................879 5. Disregard of IBI as Plaintiff ..................................... 880 6. Plaintiff Marvin Fishman’s Damages .............................. 883 7. Equitable Relief ................................................. 885 8. The Settlement with the NBA Defendants ........................ 886 9. Punitive Damages ................................................ 886 10. Incorporation of Conclusions ...................................... 887 Conclusions of Law 1. The Legal Measure of Plaintiff’s Damages ........................ 887 2. Opportunity Cost ............................................... 890 3. Equitable ¡Relief ..................................................891 4. Abatement of Punitive and Treble Damages Upon Death ..........892 5. Summary ........................................................ 892 MEMORANDUM OPINION AND ORDER ROSZKOWSKI, District Judge. Before the court is an action brought by plaintiffs to recover damages resulting from the acts of defendants which prevented Illinois Basketball, Inc. (“IBI”) from purchasing the Chicago Bulls basketball franchise in 1972. After extensive discovery and disposition of numerous pretrial motions, this case was brought to trial February 28,1979. This court ordered bifurcation of the trial, and after 8 weeks of testimony the liability portion of the trial was completed on April 20, 1979. The filing of post-trial briefs and proposed findings of fact and conclusions of law was completed by the parties on March 18, 1980. On October 28, 1981, this court entered judgment in favor of plaintiffs on Counts I, II, III, V, VI, VII, and VIII, and in favor of defendants on Count IV. The judgment for plaintiffs included judgments on six counts for violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and one count for violation of Illinois common law (tortious interference with business or economic advantage and tortious interference with contractual relations). After extensive unsuccessful settlement negotiations, the.damages portion of the trial was conducted February 22 through March 8, 1983. Post-trial briefs, proposed findings of fact and conclusions of law, various motions and other materials were submitted to this court, the last of which was received February 1, 1984. The following are the courts’ findings of fact and conclusions of law on the remedies to which plaintiffs are entitled. ' FINDINGS OF FACT I. BACKGROUND The Findings of Fact entered by this court on October 18, 1981 are incorporated by reference herein. Those findings included the following findings as to the injury to plaintiff IBI: ■The acts of the defendants, in causing and participating in the refusal to deal, the Stadium boycott, the NBA conspiracy,- and the interference with contractual relations and plaintiffs’ prospective business advantage, directly caused injury- to IBI’s business and property by excluding IBI from the relevant market and destroying IBI’s valuable property rights. Further, IBI was a foreseeable victim of the defendants’ acts; and indeed, IBI was the target at which the defendants were aiming and was within the target area of defendants’ acts. More specifically, IBI suffered injury and damage in the following manner: It was prevented from closing its contract to acquire the Chicago Bulls from the Rich group and thus prevented from realizing the benefits for which it had bargained. That contract was a valuable property right. It was prevented from entering the business of presenting professional basketball exhibitions in the Chicago metropolitan area through ownership of the Chicago Bulls and, thus, prevented from enjoying all the anticipated economic benefits of doing so. (Opinion of October 28, 1981 at 52, 53). The October 18, 1981 order also included the following finding concerning the injury to plaintiff Fishman: The acts of the defendants also directly caused injury to Marvin Fishman, who was a foreseeable victim of defendants’ conduct and was within the target area of the defendants’ acts. More specifically, Marvin Fishman had a contract to be the chief executive officer of IBI for a minimum of three years, which contract provided that Fishman would receive -a substantial salary for his services. (Opinion of October 28, 1981 at 53). II. SUMMARY OF THE PARTIES’ RESPECTIVE DAMAGE THEORIES Plaintiffs contend that the damages for IBI’s injury are to be measured by the “lost appreciation in value” of the Chicago Bulls franchise, measured as of May 31, 1982. Plaintiffs calculate these damages through the use of their “basic yardstick measure of damages.” Essentially, the “yardstick” measures the difference between the appraised value of the assets of the Chicago Bulls as of May 31, 1982, and Chicago Professional Sports Corporation’s (“CPSC”) costs and expenses of purchasing and operating the Bulls since 1972, with certain adjustments to reflect IBI’s hypothetical ownership of the Bulls. (PI. Post-Trial Memorandum at 19; PX 647). Plaintiffs also contend that IBI is entitled to the basketball assets of CPSC in exchange for $4.3 million, the sum of CPSC’s purchase price for the stock of the Bulls and the liabilities that CPSC assumed in 1972. (PL Post-Trial Memorandum at 34, 55-56). Plaintiff Marvin Fishman seeks $318,000 in damages, representing the . salary that he allegedly would have earned as chief executive officer of the Bulls between 1972 and 1982 had IBI acquired the franchise. Finally, plaintiffs week a trebling of those sums and an award of punitive damages, as well as costs and attorneys fees. Defendants submit that plaintiffs’ damages properly are measured by the lost benefit of plaintiffs’ bargain as of 1972, i.e., the difference between the fair market value of the Chicago Bulls’ stock in 1972, and the 1972 purchase price IBI had negotiated for the stock. They dispute the legal validity and applicability of plaintiffs’ “lost appreciation in value” theory, but offered rebuttal evidence concerning the proper calculation of damages pursuant to that damage theory. Defendants also offered evidence relating to their contention that damages on plaintiffs’ “lost appreciation in value” theory should be awarded solely to Fishman and not to IBI, and should be limited to 20% of any appreciation proved in order to prevent an unjust windfall to Fishman. In addition, defendants contend that Fishman lacks standing to maintain a claim for lost salary. In rebuttal, they contend that this claim for lost salary is overstated, but, in any event, is completely mitigated by his earnings since 1972. Finally, defendants assert that divestiture is not permissible in this case, and that an award of punitive damages is not appropriate. III. PROPER APPROACH TO MEASURING IBI’S COMPENSATORY DAMAGES By their unlawful conduct, defendants precluded, plaintiff IBI from acquiring the Chicago NBA franchise in the summer of 1972 and from enjoying the anticipated economic benefits of owning and operating that business. Rather, certain of the defendants have had the opportunity to enjoy and exploit the very same business over the past 10 years. ' In the circumstances of this case, it is appropriate to use the actual financial experience of defendant CPSC as a ‘yardstick” to measure the damage of plaintiff IBI. The measure of damages proposed by defendants would not fully compensate plaintiffs for.their losses. Because IBI’s investment objectives were similar to CPSC’s investment objectives, and because CPSC subsequently acquired and operated the very same business sought by IBI in the very same geographic market from 1972 to date, it is just and reasonable' to use CPSC’s actual experience in order to estimate IBI’s damages. In particular, in owning and operating the Chicago NBA franchise over the past 10 years, defendant CPSC has enjoyed substantial financial gain as discussed further below. Moreover, there is no indication that this gain was attributable to any special skill or resources contributed to the business by CPSC. Under the ownership of CPSC, the Chicago NBA franchise underperformed the average NBA franchise in playing performance, which, in consequence, substantially reduced gate receipts. It won fewer games than average, seldom made the league “play-offs” in recent years, and generally did not appear to be a “contender” for divisional championships. Other defendants also received certain collateral benefits from CPSC’s acquisition of the Chicago NBA franchise, including benefits from concessions contracts for home games, fees earned from making travel arrangements for the team, revenues from parking facilities near the Chicago Stadium, and revenues from renting of.fice space to CPSC. Because plaintiffs have failed to show that they would have received any such collateral benefits had they obtained the team and have not listed-a claim for such benefits in their damages computation (see Pl.Reply, Ex. A), however, these collateral benefits are not considered by the court in computing damages. Certain individual defendants also have enjoyed substantial benefits from CPSC’s acquisition of the Chicago Bulls. During the past 10 years, each of them have enjoyed the “ego” satisfaction (and publicity) inherent in the ownership of a major league sports franchise for the City of Chicago. This fact, in itself, has substantial financial value; indeed, it accounts, in part, for the premium prices such franchises command. Also, the individual defendants have enjoyed their pro rata share of net tax “losses”. The fact that the individual defendants have enjoyed ego and tax benefits during the period in which IBI should have owned the club does not, however, affect the computation of damages in this case. The only plaintiffs in this action are IBI and Fish-man. IBI, as a corporation, cannot enjoy “ego” satisfaction and, therefore, cannot have been damaged by having been deprived of the ego benefits of team ownership over the past 10 years. Nor can IBI have been deprived of tax shelter benefits. Fishman, the only individual plaintiff in this case, has not sought damages for deprivation of ego satisfaction or of tax shelter benefits; moreover, there was no proof that he could have utilized the large amount of tax benefits enjoyed by the individual shareholders of CPSC. Consequently, neither the deprivation of ego satisfaction nor the tax benefits experienced by CPSC shareholders are considered in computing . plaintiffs’ damages in this case. The financial benefits specifically realized by CPSC flowed (i) from the increasing going concern value of the business and (ii) from the cash generated from operation. These are the same sources that NBA owners generally attempt to exploit and are the sources IBI specifically intended to exploit. The total financial gain of CPSC from August, 1972 to May 31, 1982 can be measured by determining the net value of CPSC’s business as of May 31, 1982 {i.e. market value of assets less liabilities) and subtracting from that business value the net amount of all monies contributed to CPSC by its shareholders (i.e. all monies contributed less all monies distributed). The result measures the amount of CPSC’s financial gain during the 10 year period. IV. THE 1982 FAIR MARKET VALUE OF THE CHICAGO BULLS NBA FRANCHISE A. THE 1982 VALUE OF THE CHICAGO BULLS BASKETBALL ASSETS Introduction Since damages are to be measured as of 1982, it is first necessary to determine the present value of the Chicago Bulls assets. This court heard the expert testimony and considered the report of Michael Megna, plaintiffs’ appraiser, that the fair market value of the basketball assets of the Chicago Bulls was $15,000,000 in 1982. (PX 711) In rebuttal, defendants offered the expert testimony and report of Paul Much, that the value of these assets was $8,250,000 in 1982. (DX 423) In addition, the parties offered a substantial number of exhibits bearing on this issue. The chart below summarizes the respective positions of the parties as to the appropriate calculation of the value of the franchise in 1982. Plaintiffs Defendants* Basketball assets $15,000,000 $8,250,000 Other assets current assets 465,983 465,983 receivable from NBA 130,612 130,612 notes receivable-players 346,601 346,601 investment securities 224,406 ' 224,406 $ 1,167,602 $1,167,602 16,167,602 9,417,602 Liabilities current liabilities 1,825,650 1,825,650 deferred compensation 1,063,081 3,137,837 settlement due NBA players association 29,862 29,862 2,918,593 4,993,349 Net assets of CPSC 13,249,009 4,424,253 Less invested capital 4,310,000 5,160,000 8,939,009 (735,747) Add: Fishman litigation expense 1.190.281 1.190.281 IBI lower purchase price 50,000 50,000 1.240.281 1.240.281 Subtract: Additional arena rent disregarded 1,182,000 Opportunity cost on equity, at prime plus 3% disregarded 8,600,000 Basic yardstick measure of damages $10,179,290 ($9,277,466) * These calculations differ from defendants’ damage calculations because they do not include any' adjustment for IBI’s increased interest rate and are based solely on CPSC’s actual borrowings. A number of factors are considered by this court in placing a value on the assets of the Chicago Bulls. First, and most important, is the value indicated by actual sales of NBA teams. To the extent that the clubs sold are comparable to the Bulls, these sales provide the best evidence of asset value. Other factors may .also be probative of value. These factors include: (1) the trend in value of NBA clubs as shown by past sales. (2) profits and losses of NBA clubs, and the trend of profits and losses. (3) profits and losses of the Bulls, and the trend of profits and losses. (4) testimony of NBA owners and other experts. .(5) changes in tax laws making ownership more or less desirable. (6) recent developments in pay TV. (7) changes in availability of arenas. (8) changes in free agent rules. These factors are entitled to greater weight in determining value if the number of sales of NBA clubs is small and if the differences between the clubs are great (thereby diminishing the closeness of their comparability). Because there were a number of sales of NBA clubs in recent years which were similar in many important respects to the Bulls, this court relied most heavily on the values indicated by these sales in determining value. Because the number of club sales was not large, because not all sales occurred immediately prior to the May 31, 1982 date upon which the court values the team, and because there were important differences between the Bulls and those clubs which are considered comparable, however, the other factors affecting value are considered. The differences between the Bulls and the comparables are discussed under the heading “Comparable Sales.” Each of the other factors is discussed below under a separate heading. The court is aware that these other factors may already have been taken into account by the buyers and sellers who entered into the comparable transactions, particularly in the most recent transactions' 1. Comparable Sales a. Transactions Considered There have been approximately sixty transactions since 1965 in which 10% or more of an NBA franchise has been sold. (DX 426) Not all of them, however, were appropriate for use as comparables in a quantitative analysis. Some involved sales of minority interests. Others involved a swap of debt of uncertain value for ownership of. the franchise; thus, the price would not necessarily be indicative of the value of the franchise. (DX 423 at VI-6; D.Tr. at 642-43) The remaining transactions were not equally relevant comparables for valuation purposes. More recent transactions, for example, are more probative because they reflect changes in the economic attractiveness of NBA franchise ownership. Defendants’ expert, Mr. Much, testified that the following were the eight most comparable sales of NBA teams since 1978 for use as a starting point in determining the value of the Bulls: Houston (2 sales), Philadelphia, Milwaukee, San Diego, Indiana, New Jersey and Denver. He reached this result by excluding from the 60 transactions all those which involved sales of less than a controlling interest, a swap of debt of uncertain value for ownership of the franchise, sales of expansion franchises, sales of assets other than the basketball franchise, franchise exchanges, sales in which the franchise moved in the year of the transaction, and partial transactions in which it was uncertain whether there was a change in control. Plaintiffs, on the other hand, maintain that sales of teams in major cities over the past five years comprise the pool of closest comparables. These franchises include Dallas (1980), New York Nets (now New Jersey Nets) (1978), Vancouver (1981), Philadelphia (1981), and Los Angeles (1979). Plaintiffs did not include either of the two Houston club sales, 1979 and 1982, even though Houston is larger than Dallas. Plaintiffs have also selected from a large pool of transactions involving teams in medium size cities a few sales which plaintiffs claim demonstrate the appropriateness of its $15 million asset valuation. Although the court has reviewed the testimony, exhibits and post-trial submissions concerning the other transactions, the court considers the eight transactions listed by defendant and four of the five transactions listed by plaintiff to be the most comparable. The court excludes the Vancouver transaction on the grounds that there never was an actual sale of that club, but only an offer by an offeror who may not have had the financial wherewithal to make the purchase. Two transactions are considered by both parties in their comparative analyses; thus, the total number of close comparables is ten. It is these transactions upon which the court relies most heavily in making the determination of asset value. b. Computation of Sale Price The parties differ widely in their approach to computation of sale price. Plaintiffs’ approach is to add the cash, present value of notes taken by the seller and all liabilities assumed by the buyer to determine the value of the asset purchased. The liabilities assumed are listed in the respective asset or stock purchase agreements for each transaction and are quantified on the balance sheets of the franchise being sold. Defendants agree that cash and present value of notes should be added to determine the purchase price, but they do not believe that all liabilities should be included in calculating the sale price of the basketball assets of a franchise. They argue that deferred compensation liability and other basketball liabilities assumed by the buyer should be excluded from the computation of sale price. Defendants argue that otherwise the value of a team can be increased simply by adding on liabilities. Plaintiffs are correct in arguing that the value of the basketball assets of comparable teams should -be computed by adding cash, the present-value of notes and other liabilities including deferred compensation. The player contracts are a valuable asset as they provide the franchise with the right to receive player services for a period of time. The problem with plaintiffs’ approach is not in their inclusion of deferred compensation in assessing the sale price of the assets of the comparable teams. Rather, it is in the assumption that those asset values can be used directly to compute the value of the assets of the Bulls. The Bulls have their own unique structure of player contracts. Those player contracts undoubtedly will be of shorter duration and for lower dollar amounts than those of some NBA teams and will be of longer- duration and for higher dollar amounts than other teams. The player contract assets of the clubs, therefore, are not comparable. The problem arising out of the incomparability of player contracts of otherwise reasonably comparable-teams can be solved by simply eliminating deferred compensation entirely from all computations of the sale price of the comparables. In addition, the Bull’s actual deferred compensation will not be deducted from our valuation of the Bull’s assets to determine the Bull’s net market value. The sale price for the assets of each NBA comparable, excluding deferred compensation, is computed below. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Team Year of Transaction Cash Face Value of Future Payments Present Value of Future Payments Loan Liab. Assumed (To Banks & Others! Deferred Compensation Other Assumed Liab. Other Sale Pnce Excluding Deferred Compensation (Sum of Columns 3. 5. 6. 8. 9) New Jersey 8/78 ,889,000 $ 215,000 $ 1 $1,406,000 $ 1,400.000 $1,900,000 $4,966,000 $ 8.487.000 Philadelphia 7/81 0 $1,000,000 0 $12,400,000 $4,500,000 $12,200.000 66,700,00(1 Los Angeles 5/79 $16,400,000 Houston 6/82 $1,426,088 ,023,493 $2,944,000 $ 4,300,419 $ 100,000 $ 4.470,088 Houston 5/79 $ 500,000 ,000,000 $3,879,000 $ 3.964,644 $ 144,306 $ 4.523,306 Dallas 5/80 $2,000,000 ,000,000 $8,700,000 $10,700,000 Milwaukee 11/79 $3,761,000, San Diego 6/81 $4,600,000 ,050,000 $ (¡99,000 $ 4,898,175 $ 671,077 $ 6.670,077 S 100,000 Indiana 6/79 $1,300,000 ,600,000 $2,318,000 $ 1,853,106 ? 271.307 $ 3.889.307 Denver 5/82 $1,000,000 ,200,000 $ 559,000 $ 2,100,000 0 $ 2.5Á9.000 $1000000 c. Closeness of Comparability The indicated values of sales of comparable teams are not entitled to equal weight in determining the value of the Bulls. Several of the major factors affecting the closeness of comparability of these clubs to the Bulls are discussed below. 1. Size of City Chicago is the third largest market in the United States. The “big city” teams such as New York, Chicago, Los Angeles, Houston and Philadelphia are generally more valuable than other NBA franchises for several reasons. Major cities have greater, potential for fan development because of the larger population. As Jack Kent Cooke (former owner of the Los Angeles Lakers) testified, it is not the number of fans that is important but population, because fans can be developed through promotion and advertising. For that , reason, Chicago has a greater potential than Milwaukee. (Cooke.dep. at 61-2) Since the NBA Constitution prohibits “gate sharing” for regular season games (PX 220), this gate potential inures to the benefit of the big city teams and enhances the value of those franchises. The big city teams have a far greater potential for a television market. Abe Pollin testified that New York was more valuable than Washington for that reason. (Pollin dep. at 67) Several big city franchises have entered the pay TV market — Philadelphia/PRISM, (DX 561); Chicagó/Sportsvision, (PX 526); New Jersey and Los Angeles, (PX 578). The importance of size is dramatized by the amount of the territory invasion payment by the New York Nets. For the privilege of joining the NBA, the New York Nets were not only willing to pay the expansion price paid by other ABA teams joining the NBA in 1976 (Denver, Indiana and San Antonio); the Nets agreed to pay an additional $4 million to the New York Knicks for “invasion” of the Knicks territorial rights under the NBA Constitution. (Testimony of Allan Cohen, L.Tr. at 1689; PX 489) Several NBA owners (or their counsel) testified that an ego factor attached to the ownership of a professional sports franchise and, consequently, increased the value. (Testimony of William Putnam, L.Tr. at 452; Pollin dep. at 69) Luther Avery testified that NBA franchises defy all conventional analysis as to valuation.- (L.Tr. at 918) This psychological or non-financial factor is substantially greater for a big city franchise than for a smaller city. Thus, the larger the city, the larger the prestige of the franchise and the attendant publicity for its owners. In a large city, there are more local buyers who would value owning such a property. William Wirtz testified that the Colorado Rockies NHL franchise paid $14.4 million to three other NHL franchises as an indemnity for the right to enter the New Jersey-New York market. This amount was in addition to the $8 million paid for the franchise itself. This further underscores the value of the major city markets. (D.Tr. at 143-7) 2. Population Growth Population growth is another factor that could influence the degree to which the sales prices paid in other transactions are actually comparable to the sales price which would be paid for the Chicago Bulls. A rapidly growing population would lead a purchaser to expect that attendance will improve in the future. (DX 423 at VI-24) A reasonable purchaser would pay more for a franchise if the city were growing because he would expect a future increase in attendance. Consequently, cities such as Houston and Dallas, which are now smaller than Chicago but are growing more rapidly, may be more comparable to a Chicago franchise than a comparison between these cities’ current populations would suggest. 3. Market Interest in Basketball Each NBA market is also different. A particular market may command a higher price, even for an expansion franchise. For example, Irving Levin, former owner of the Boston Celtics and later owner of the San Diego Clippers, testified that the existing Chicago franchise -was worth less than the New Orleans expansion franchise. (L.Tr. at 1803-04) Elmer Rich indicated that in 1972 CPBC would have sought more money for the Bulls franchise if Peter Graham intended to move it to San Diego because the team would have been worth more in a city other than Chicago. (PX 30) Each city has its own history of support or non-support for professional basketball. (Pollin dep. at 72-73) This history would influence a reasonable purchaser because it provides some indication of the likely future financial performance of the club. (DX 423 at VI-3; D.Tr. at 642-43) A city’s interest in basketball, however, is not easy to determine. It will undoubtedly be influenced by the basketball team’s performance, by how colorful the team’s players are, by how exciting the team’s games are, and by how the team is advertised and promoted. The Bulls, for example, have achieved substantially higher attendance during times when they had winning seasons. The evidence presented at trial'did not demonstrate that the level of interest in Chicago was either substantially higher or lower than in other cities. In view of this conclusion and in view of the difficulty of accurately gauging, market interest in basketball, the court does not weigh this factor heavily. 4. Existing Versus Expansion Franchise An existing franchise generally is more valuable than an expansion franchise. Other than the franchises (Denver, Indianapolis, New York Nets and San Antonio) from the American Basketball Association, NBA expansion teams are initially given player “castoffs” or less valuable players from the entire NBA. (Testimony of William Wirtz, D.Tr. at 139-40; Pollin dep. at 68) For example, the Chicago Bulls are an established team with players viewed by other NBA owners as artistically competitive. (Testimony of William Putnam, L.Tr. at 500; Testimony of Ray Patterson, L.Tr. at 2229) (in 1982 the Bulls in talent were 50% better than the Rockets); Testimony of Ned Irish, L.Tr. at 1582; Testimony of Joseph Axelson, L.Tr. at 2316) The existing franchises thus have a higher caliber of players, a base of fans, a season ticket base and are generally located in larger metropolitan areas, with all the attendant benefits. The fact that a team is an expansion franchise does not, however, always mean it is inferior to existing franchises. An expansion team might’ have bright prospects for other sources of revenue, such as local television contracts, or lower costs, such as a favorable arena lease, that would make the franchise less comparable to established teams. For example, in its first year, Dallas received more money in local television revenues than 15 of the other 22 established NBA teams, including Chicago, received in the same year. (DX 500 at Schedule 2) Dallas also had a favorable arena lease. (PX 707) The presence of these factors in the Dallas transaction-suggest that the price paid for an expansion team can be affected by local factors that influence the likelihood of financial success. Another owner, Sam Schulman of the Seattle Supersonics, testified that an expansion franchise might out-perform more established clubs. (L.Tr. at 1653) Indeed, several expansion teams, such as Seattle, Phoenix, Milwaukee and Portland, surpassed established teams in gate receipts in their early years despite mediocre records. (DX 304; DX 448; DX 385; DX 496; Pollin dep. at 72-73) Dallas also did well at the gate despite a poor playing record. (DX 382; DX 383; DX 496) Because more recent sales, sales of teams ip cities which are large or are becoming large, and sales of existing franchises are more similar to a sale of the Bulls than sales of franchises which lack these characteristics, the court attaches greater weight to transactions which have these characteristics. The transactions most comparable by these criteria are the most recent New Jersey, Philadelphia, Los Angeles, Houston and Dallas transactions. In summary, the court regards the actual sales price of the basketball assets of other clubs to be the prime indicator of the value of the basketball assets of the Bulls. The other factors considered in valuing the Bulls are discussed below. 2. Trend in Value NBA franchises have historically grown in value. (Trial testimony of Sam Schulman, L.Tr. at 1644) Defendants’ expert, Paul Much, testified that the basketball assets of the Bulls franchise were worth $6.5 million in 1979 and $8.25 million in 1982. (D.Tr. at 838-39) The rate of growth in value has been moderate and appears to have slowed somewhat in recent years. The current growth rate is below 10% annually. 3. Profits and Losses of NBA Clubs, and the Trends of Profits and Losses The league that eventually became the NBA was founded in 1946 with eleven franchises. ,. (DX 496 at 219, 418) Chicago’s entry (known as the Chicago Stags) folded after four years of operation. (DX 496 at 156) The second Chicago franchise (known as the Chicago Packers and later the Chicago Zephyrs) lasted only two years before it was moved to Baltimore in 1963. (DX 496 at 160) The Chicago Bulls franchise was created in 1966 when the NBA granted an expansion franchise to CPBC. (PX 201) The NBA entered a period of growth beginning in 1966. The NBA expanded from 9 teams to 17 teams between 1966 and 1970. (PX 201; PX 202; PX.203; PX 207; PX 208; DX 371; DX 425; DX 671) Interest in professional basketball was growing. A rival professional league, the American Basketball Association, was founded in 1968. (DX 496 at 137-39) The more recent history of the league reflects operating losses for the average NBA team are up sharply. In 1977-78, the average NBA team lost $91,000 on operations. (DX 423 at IV-9; DX 375) This figure does not include “paper” losses attributable to depreciation or the additional real losses caused by interest expenses. By 1980-81, the loss on operations climbed to $568,000 for the average NBA team (DX 423 at IV-9; DX 378), exclusive of an additional $339,000 in interest expenses. (DX 378 at 13) Losses on operations reached an all-time high for the period during the 1981-82 season, when the average NBA team’s loss on operations increased to $686,000. (DX 423 at IV-10; DX 379; D.Tr. at 605) Interest expenses represented an added cash drain of $313,000 for. the 1981-82 season. (DX 423 at IV-10; DX 379) Over the period from 1976-77 through 1981-82, the average NBA team lost $2,526,000 on operations. (DX 423 at IV-9; DX 374; DX 375; DX 376; DX 377; DX 378; DX 379) During 1980-81 and 1981-82, the only period for which interest expense information was available, interest expenses alone added another $652,000 in non-operating losses for the average team. (DX 379; DX 378) Despite the addition of a new franchise (Dallas) in 1980, league attendance has declined over the last six years. (DX 423 at IV-3; DX 382; DX 383; DX 304) Broadcast ratings are also down from 1976 to 1981 for both regular season and playoff telecasts. (DX 423 at IV-5; D.Tr. at 631) There has been growth in revenue during this period for the average NBA team. The rise in gate receipts, which comprise 61% of the revenue base for the average NBA team (DX 423 at IV-1), however, has been solely a function of rising ticket prices. (DX 423 at IV-4; D.Tr. at 631) The other source of increased franchise revenue has been television. The increased revenue from these sources, however, has not slowed the growth in operating losses. Indeed, at the same time that the total television revenue for NBA teams grew from $31.4 million to $38.3 million, the operating losses for NBA teams reached an all-time high of $15,770,000 for the 1981-82 season. (DX 378; DX 379) Operating losses have continued to increase despite increases in revenues because costs have been rising even faster than revenues. (D.Tr. at 633-34) Foremost among the rising costs are players’ salaries and benefits. (DX 423 at IV-6, IV-7, IV-8, IV-9) The average NBA team now spends over $3,047,000 per year (57% of its revenues) on player costs. (DX 423 at IV-9) Much of the rise in player costs can be attributed to free agency. (D.Tr. at 631-34; DX 423 at IV-6, IV-7, IV-8) {See infra, Free Agency section of this Opinion.) The NBA recently formed a Subcommittee on Financial Stability to study the financial problems of the league and to develop procedures governing petitions by member clubs for reorganization or liquidation under the bankruptcy laws. (DX 423 at IV-11) Despite the overall unfavorable operating results in recent years, there were a few bright spots. Interest costs have substantially receded, (DX 424; Testimony by Alan Peterson, D.Tr. at 1335); gate receipts for the NBA have continued to escalate, (PX 643, 649); and spectators have evidenced a willingness to pay escalating ticket prices. From the 1979-80 playing season through the 1981-82 playing season, the NBA average ticket price has risen from $7.09 to $8.61. ' (PX 653, 654) While these operating losses have an impact on team value, it must be remembered that these losses, and the even greater non-cash losses from depreciation, may provide substantial tax benefits to the franchise owners. The after tax results will, therefore, not be nearly so negative, and, indeed, may be positive. This explains, in part, why the clubs maintain high values in the face of substantial operating losses. The NBA comparable transactions took place during the period in which these losses were incurred. This suggests that the buyers of NBA clubs have found value in the franchises despite the recent losses. Since the operating losses already are reflected largely in the purchase prices, the recent operating losses are considered a minor factor in determining value. 4. Profits and Losses of the Bulls The Chicago Bulls, like most NBA teams, have lost substantial sums of money on operations. The Bulls have had lower revenues than the average NBA team (DX 423 at V-2) despite having received gate receipts virtually identical to those received by the average NBA team since 1972. (DX 423 at V-3) The shortfall in revenue has been due, in part, to the absence of local pay television in the Chicago area. (DX 423 at V-4) At the same time, the Bulls’ costs have been slightly lower than the average. (DX 423 at Y-6, V-7, V-8) Accordingly, the Bulls have experienced operating losses that are consistent with the average NBA team over the last six seasons. (D.Tr. at 638-39; DX 423 at IV-9, V-9) The Bulls’ costs will be reduced with their new lease at the Chicago Stadium for the 1982-83 season for a flat 15% rental (D.Tr. at 200), a rate slightly lower than their prior overall rental rate of 19% (based on gate receipts of $3,000,000). (D.Tr. at 199). In the 1981-82 season, the Bulls’ losses on operations exceeded $1,030,000. (DX 389) The Bulls’ losses have necessitated, frequent calls to the owners of CPSC to provide further working capital. (D.Tr. at 1170) Over the last ten years, CPSC’s shareholders have contributed $3,200,000 to maintain the team over and above their initial capital investment in 1972. (DX 423 at V-9; D.Tr. at 708-09) Although audited data is not yet available for the 1982-83 season, the Bulls’ cash losses from operations between May 31, 1982 and December 31, 1982 alone were approximately $1,000,-000 overall, or $850,000 excluding Fishman litigation expenses. (D.Tr. at 1148-49) As the profit and loss history of the Bulls has not differed substantially from that experienced by average NBA clubs, this factor is given little weight in determining the value of the Bulls. 5. Testimony of NBA Franchise Owners The testimony of NBA owners as to the value of their teams and the value of their teams in comparison to the value of the Chicago Bulls, provides additional evidence of value. William Putnam (Atlanta Hawks) testified that the Chicago Bulls were worth more than the Atlanta Hawks in 1972 and his group paid $5 million for the Hawks in 1972. (D.Tr. at 450-1) Since the NBA granted an expansion franchise to New Orleans in 1974 for $6 million, the Bulls would have been worth $8-9 million at the time. (D.Tr. at 452) Sam Schulman (Seattle Supersonies) testified that as of the time of his deposition (April 27, 1977) the Seattle franchise was worth $10 million cash. (L.Tr. at 1638) He also testified that the Bulls would be worth as much as the Supersonies — $10 million. (L.Tr. at 1657) He turned down an offer for the Supersonies in 1973 for $672 million. (D.Tr. at 1648-51) The deposition testimony of Sam Schulman and- William Putnam on the value of the Bulls was given over five years ago and, therefore, does not take into account the. changes in the economics of the NBA. Because the value of franchises has continued to increase since that time, however, their testimony is entitled to some weight in establishing a floor level for the value of the Bulls basketball assets. 6. Tax Law Prior to 1976, purchasers of professional basketball teams had allocated up to 100% of the purchase price to player contracts, which could be amortized to provide tax deductions to offset income (DX 423 at II — 2; D.Tr. at 376), with the remainder allocated to the franchise, a non-depreciable property. (D.Tr. at 602-03, 754-756) The Tax Reform Act of 1976, 26 U.S.C. § 1056(d), created a presumption that no more than 50% of the purchase price should be allocated to player costs, reducing the available tax deductions from franchise ownership. Similarly, the Economic Recovery Act of 1981, 26 U.S.C. § 1, made the deductions for losses less valuable by reducing the maximum tax rate on ordinary income from 70% to 50%, thereby reducing the benefits of the deductions. (D.Tr. at 602-03; DX 423 at II — 2) For example, after 1981, a $1,000,000 loss would make available to the owners of a franchise only $500,000 of tax relief instead of the $700,000 available under the prior law. (D.Tr. at 604) Because most comparable transactions took place after the Tax Reform Act of 1976 was enacted, the effects of this Act largely have been taken into account by the parties to the transactions in fixing the franchise sale price. Consequently, this change in the tax law is entitled to little consideration in valuing the CPSC assets. The reduction in the maximum tax rate to 50%, however, occurred after a number of the comparable transactions and is considered by this court to be a factor reducing franchise value. The reduction in franchise value caused by the lower tax rate on ordinary income is offset, in part, by the lower tax rate on capital gains brought about by the Act. (Testimony of Paul Much, D.Tr. at 749-50) 7. Pay TV The opportunity to exploit local pay TV is continuously developing in the Chicago area. One of the plaintiffs’ experts, Michael Markovsky, testified that the Chicago area is just beginning to be wired for cable and that the pay TV potential in Chicago is growing. (D.Tr. at 495-9; PX 526, 625) Edward Einhorn, one of the architects of the Sportsvision venture, also testified that the Chicago market is just beginning to be exploited. In fact, he is working on a pay TV venture that would join sports franchises in Detroit and Milwaukee with Chicago in a super-sports network. (D.Tr. at 155-6, 173; PX 679) Commercial TV has also advanced in the Chicago area since May, 1980. (PX 694, 528, 627) The NBA has recently entered new contracts for pay TV that generate new income of $5.5 million per season for the NBA. (DX 524 — Minutes of NBA Board of Governors of 1/30/82) In addition, the value of local broadcasting rights has increased for all NBA teams since 1979. (See PX 694, Ernst & Whinney report to NBA.) The ownership of CPSC has shown substantial interest in exploiting the local media rights to the Chicago Bulls franchise. In essence, they have contributed those rights to a joint venture known as Sportsvision of Chicago, comprised of four Chicago professional sports franchises (Black-hawks, Bulls, Sting and White Sox). Together, they are exploring various ways of exploiting their rights in the electronic media business. The owners of the Bulls have a 22.5% interest. (D.Tr. at 183-84, 187; DX 522; DX 523) Although the original projections for Sportsvision were optimistic, the results have not yet lived up to expectations. Original projections anticipated a total of 70,000 residential subscribers in December, 1982 and yearly increases in subscribers thereafter. At the end of December, 1982, however, Sportsvision had only 21,000 residential subscribers. (DX 532) Similarly, the original projections called for $40,000 of income to the Bulls’ owners in December, 1982 and millions of dollars of income thereafter. (DX 532) The Bulls, however, received nó income from the venture in 1982. (DX 547) In fact, Sportsvision lost $5.08 million by the end of December, 1982 and depleted its initial capital of $4 million. (D.Tr. 188-189; DX 547) The Bulls owners’ share of these losses totalled $1,143,-000. (DX 547 at 5) In January, 1983, Sportsvision borrowed an additional $6 million (DX 582-595), of which the Bulls’ owners guaranteed $1,350,000. (DX 585) It should be recognized that increases in local pay television revenue also. have a cost: reduced attendance at home games and, therefore, reduced gate receipts. (DX 501 at 97-102; L.Tr. at 2456; Rothenberg dep. at 32-33) The decreases in gate receipts must be subtracted from the increased revenue. The fact that Sportsvision has not become lucrative as quickly as the investors hoped does not, however, mean that the potential for enhanced pay TV revenue is not a factor increasing the value of the Bulls. Between November, 1981 and the present date, the Bulls’ owners (through Circular TV Communications, the Bulls’ partner in the Sportsvision venture) have invested directly or guaranteed loans of almost $2 million. (PX 606) Projections by Sportsvision have shown possible returns to the Bulls of as much as $6 million per year. These returns could still be realized. (PX 584) Arthur and. William Wirtz have held their Blackhawk hockey team off commercial TV for several’ years to enhance their pay TV attractiveness. (Testimony of William Wirtz, D.Tr. 170-171) By also contributing the rights of the Blackhawks to Sportsvision and by investing an additional $2 million on behalf of that entity, the Wirtz’s confirmed their belief in the future of the Sportsvision venture and the local TV market. The potential for pay TV for the Chicago Bulls is further emphasized by the following testimony. William Wirtz testified that he never even responded to an offer by Mr. Dolan for significant cash payments for the pay TV rights for the Bulls and Black-hawks. (D.Tr. at 174-6; PX 675) The initial offer was for $2.85 million for 472 years. Based upon the evidence taken as a whole, the court concludes that the pay TV potential has substantially increased the value of the Bulls. The question now becomes whether the sales prices of the clubs sold in the comparable transactions, which provide the benchmark for the court’s asset valuation, already reflect the enhancement to franchise value which pay TV has provided. Several of the comparable transactions involve franchises which earned pay television revenue in the year of and prior to the franchise sale, or soon thereafter. In such cases, it is probable that the prospect of substantial local pay television revenues was a consideration implicitly incorporated in the transaction’s purchase price. (D.Tr. at 596; DX 423 at VI-17) During the 1980-81 season, the Philadelphia 76ers earned $850,000 from the local cable broadcast of twenty-seven games, and had an escalating contract that yielded $980,000 more the next season and would yield a total of over $7,000,000 through 1985-86. (DX 500 at Schedules 5 and 6) The 1981 sale price of the Philadelphia 76ers undoubtedly reflected this fact. During their first two years in, the league, the Dallas Mavericks received $350,000 under the first two years of an escalating three-year pay television contract. (DX 500 at Schedules 5 and 6) On the other hand; several of the most comparable transactions probably did not fully reflect the value which potential pay TV revenues have added to major city franchises in recent years. These include the 1978 New Jersey transaction and the 1979 Los Angeles transaction. Based upon the evidence presented at trial, the court concludes that the extent to which the prospect of enhanced pay TV revenues has boosted the value of big city franchises' in recent years is not wholly reflected in the sales prices of the comparables. The prospect for substantial increases in this revenue in Chicago requires that this court make an upward adjustment of the value of the Bulls basketball assets from that indicated by the sales prices of the comparables. 8. Arenas The Rosemont Horizon has now established itself as a suitable arena for basketball. DePaul University has played there 2 years and averaged 14,000 fans per game. It has a seating capacity of at least 17,500 and would be available at a rental rate of 10 to 12V2% plus set-up costs. (Franklin Fried dep. at 8-9, 13-15) The rent paid by CPSC for the Chicago Stadium exceeded the NBA average for the last five seasons. (PX 640-3, 649) They have made no serious attempt to renegotiate the lease in light of the availability of the Rosemont Horizon. When the existing lease of the Bulls expired, nó effort was made to contact the Rosemont Horizon to explore renting that facility. It should be recognized, however, that the comparable transactions already involved teams with more favorable leases than the Bulls’ old or newly negotiated lease (D.Tr. at 200) at the Stadium. (PX 707) The prices paid for those franchises already implicitly included consideration of their lower lease rates. An addition to value because of the availability of lower lease expenses due to the Rosemont Horizon would, to some extent, double-count the impact of lower lease expenses on the value of the Bulls. Not all of these franchises, however, had two or more suitable playing arenas. Such available arenas would provide greater assurance of competitive rental rates in the future. Therefore, the availability of the Rosemont Horizon is a factor requiring an upward adjustment of the value of the Bulls from that indicated by the sales prices of the comparable transactions. 9. Free Agent Rules As previously discussed under IV.A.2. of this Opinion, the operating losses experienced by the NBA have been caused by rapidly rising costs. (D.Tr. at 633-45) Of primary importance are rising costs of player salaries and benefits. The average NBA team now spends over 57% of its revenues on these costs. Much of the rise in player costs can be attributed to free agency. Prior to the 1976-77 season, players were able to negotiate with only one NBA team for a salary. If the player demanded a higher salary and management refused, the player would be forced to choose between accepting the salary offered by management or not playing. (DX 423 at IV-7) Beginning with the 1976-77 season, a player whose contract expired was free to negotiate with any NBA team. If the free agent signed with a new team, the new team had to compensate the- old team for the loss of the player with cash, draft choices or players. (DX 381 at 26-27) This system was referred to as free agency with compensation. (DX 423 at IV-7) Beginning with the 1981-82 season, the new team is no longer required to compensate the team losing a player under free agency. (DX 381 at 28) The free agent’s old team retains only a right of first refusal to match the offer of the competing club with the highest salary offer. (DX 423 at IV-7; DX 381 at 28-31) This unrestrained competition for player talent has produced increases in player costs. (DX 423 at IV-8; D.Tr. at 632-33) The largest increase came in 1981-82, the first year of “free agency without compensation.” (Id.) The changes in free agency rules for the 1976-77 season already have been taken into account, at least in part, in the prices of the comparable transactions. Some of the earlier comparable transactions, however, may not have taken free agency changes into account completely, as the rate of growth in player compensation almost certainly exceeded the expectations of many buyers. While the 1981-82 changes may not have been wholly unanticipated by the buyers and sellers, the changes certainly will have some depressing effect on franchise value not reflected in. most of the comparables transaction. The court, therefore, adjusts downward the value of the Bulls basketball assets from the amount indicated by the comparable transactions. 10. Other Assets of Comparables Where a comparable transaction involves the sale of substantial non-basketball assets, the value of these non-basketball assets should be deducted from the sale price. The only such non-basketball asset mentioned by defendants in their post-trial submissions is that the Milwaukee franchise owns an interest in a pay TV venture. (PX 248 at Ex. A-21, A-27 to A-40) Little adjustment is required for this factor. Conclusion On Value Of Basketball Asset The court finds that the actual sales prices of other professional basketball franchises provide.the best evidence of the value of the basketball assets of these clubs. Consequently, the court gives great weight to these prices in fixing the value of the Bulls’ basketball assets. The court further finds that more recent sales, sales of teams in cities which are large or are becoming large, and sales of existing franchises provide the strongest evidence of value of the basketball assets of the Chicago franchise. Based upon these criteria, the court finds that the most comparable transactions are the most recent New Jersey, Philadelphia, Los Angeles, Houston and Dallas transactions. Team Year of Transaction Sale Price Excluding Deferred Compensation New Jersey 8/78 $ 8,487,000 Philadelphia 7/81 $12,200,000 Los Angeles 5/79 $16,400,000 Houston 6/82 $ 4,470,088. Dallas 5/80 $10,700,000 Because of the limited number of trans- actions, the less than perfect comparability of the above mentioned clubs to the Bulls, and the advent of developments subsequent to some of the comparable transactions, the court also finds that the sales prices of the comparable clubs should not be relied upon exclusively in determining team value. The court has therefore taken into account the factors discussed in Section IV.A.2-10 of this order. Most notably, this process has included upward adjustments due to developments in pay TV and differences in arena availability, and downward adjustments for recent changes in the tax law and in free agent rules. After careful consideration of all the evidence, the court finds that, as of May 31, 1982, the value of the basketball assets of the Chicago Bulls franchise, exclusive of player contracts, is $11,500,000. B. THE VALUE OF CPSC’S OTHER ASSETS As of May 31, 1982, the CPSC financial statements reflected the following assets in addition to basketball assets: Other assets $465,983 Current assets • 130,612 Receivable from NBA 346,601 Notes receivable-players 224,404 Investment securities 72,296 $1,239,896 Since the value of the equity in the NBA has already been reflected in the computation of the value of the basketball assets, defendants have argued that to count $72,-296 in equity as an asset in addition to the basketball assets would be to double count this amount. Plaintiffs concede this much. (P.Reply at 33) The parties also agree on all other items listed as other assets above. This court agrees and finds that the value of CPSC’s non-basketball assets as of May 31, 1982 was $1,167,602. C. VALUE OF LIABILITIES The parties agree on all values of CPSC liabilities except for deferred compensation. Plaintiffs, through the expert testimony of Mr. Zeyn, would have the court deduct the present value of these liabilities (even though plaintiffs used gross deferred compensation figures to calculate the value of the assets of the comparables). Defendants argue that a gross figure for deferred compensation should be deducted from the value of the Bulls’ assets to determine the Bulls’ worth (even though defendants argue that deferred compensation should be excluded entirely from the computation of the value of the basketball assets of the comparables). For the reasons set forth in section IV.A. l.b. of these Findings of Fact, this court has entirely excluded consideration of deferred compensation from computation of damages — both in fixing the value of the assets of the comparables and in determining the' liabilities which should be deducted from the value of the CPSC assets to determine CPSC’s worth. Consequently, the court finds the value of CPSC’s liabilities which will be deducted from CPSC’s assets to be as follows: Current Liabilities $1,825,650 Settlement due NBA players association 29,862 Total Liabilities $1,855,512 D. ADJUSTMENTS FOR IBI’S COSTS AND EXPENSES IN OWNING AND OPERATING THE FRANCHISE 1. Overview A determination of the Chicago Bulls’ 1982 asset value and liabilities is only the first step in calculating “lost appreciation in value.” The second step in the calculation is to identify probable differences between CPSC’s actual costs and the cost IBI likely would have incurred had it purchased and operated the franchise. Then, the court must calculate what IBI’s net liabilities would have been as a result of those differences in expenses. By thus adjusting CPSC’s performance to reflect IBI’s hypothetical ownership, a “lost appreciation in value” damage calculation will compensate plaintiffs for the financial benefit plaintiffs would have received had they obtained the team in 1972. 2. Litigation Expense and IBI Lower Purchase Price Plaintiffs distinguish between CPSC’s and IBI’s ownership by adding a credit to the “estimated gain by CPSC” in their “yardstick” calculation in an amount equal to the two expenses incurred by CPSC which would not have been incurred by IBI, i.e., the $1,190,281 of CPSC’s Fishman litigation expenses and the $50,000 difference between CPSC’s and IBI’s franchise purchase price. (PX 647) Defendants do not dispute these corrections, and the court finds them to be appropriate. 3. Arena Expense In the spring and early summer of 1972, Elmer Rich, the president of CPBC, negotiated for a lease at the Chicago Stadium on behalf of IBI. (L.Tr. at 3508-09, 3594-97, 4159-60, 4162; Fishman dep. v. 8 at 21, 17-18; Blumenth'al dep. v.3 at 399, 401) At Marvin Fishman’s instruction, Rich sought a lease with terms identical to the then current Bulls lease (“the Rich lease”). (DX 4;- Fishman dep. v. 8 at 21-22; 26-27; Blumenthal dep. v. 3 at 401) Fishman never asked Rich to negotiate any reduction in the Rich lease rent terms. (Fishman dep. v. 8 at 27) He was satisfied with the terms of the Rich lease (Fishman dep. v. 8 at 27), and was willing to take a ten year lease on the rental terms in the lease. (L.Tr. at 4297-98, 4168-69, 4186-87, 3508-09) He believed that IBI could operate on the Rich lease terms and still make a profit. (L.Tr. at 4007-08, 4069, 4173) Under the Rich lease terms, CPSC paid 15% of the first $600,000 in net receipts, two graduated payments on net receipts between $600,000 and $800,000, and 25% of all net receipts over $800,000. (DX 4) Thus, IBI would have been paid rent at the rate of 25% on net receipts between $1,250,000 and $1,750,000. Prior to either IBI’s or CPSC’s submission of a firm purchase offer, the Crown group decided to contact Arthur Wirtz and attempt again to negotiate a lease for the Chicago Stadium. (L.Tr. at 4742, 4872-73) At the group’s direction, Lester Crown proposed a ten-year lease with a waiver of rent on gate receipts between $1.25 and $1.75 million. (L.Tr. at 1071, 4742-44, 4884-86, 5005-10; DX 185) As part of the proposal, the group suggested Wirtz take an equity position in the team. (L.Tr. at 601-03, 934-36, 1931, 1190, 4744) Ultimately, Wirtz took a 16.9% equity position in the team (L.Tr. at 4745, 1943), and, thereafter, Wirtz and CPSC entered into a ten year lease, which provided for a ten year waiver of all rent on receipts between $1,250,000 and $1,750,000. (PX 185) Although Fishman was willing to accept a ten year lease on the rental terms of the Rich lease, there is nothing in the record which demonstrates that the term of a Fishman lease of the Stadium would have been ten years. Had a lease of that length been entered into, IBI would indeed have incurred additi