Financial future of the NFL

[Griswold]

An article from Pro Football Weekly that is very pessimistic about the financial future. Pop goes the pigskin and all else . Ramifications mentioned:

 

• 2 to 4 teams will fold
  
• 18 game season
  
• seat licenses implode
  
• ticket prices drop
  
• game becomes more violent
  
• markets dismal until 2016
  
• Baseball and Basketball will fare worse than NFL
  
• Teams won't be lured into moving by sweetheart deals
  

 

RTFA. Actually, I think the Bills are better prepared financially than most other teams to endure this. The finances of the Bills are a result of the conservative finances of their fans. Luxury boxes implode... won't bother the Bills much. Naming Right$ fall... who cares. US dollar falls, and Canadian dollar stays same or improves... good news. Merchandising revenue plumments... big deal.

 

If the article is correct: I see some trouble for the Bills, but huge trouble for the Patsies, Cowboys, Skins, and others. Those teams have thrived on the sports bubble.

[Corp000085]

The Bills are one of, if not THE best team in the NFL to handle a market collapse of the NFL. They are very financially conservative, have zero debt, and are able to (presumably) be in the black. If they can survive the immediate future (from now till ownership changes, which will happen in the next 10 years or less) and get another sweetheart lease for the stadium, I think that there will be zero chance of the team moving. At the end of the day, the big $$ teams like cowboys, pats, etc. make a lot more money, but pay a lot more back into debt. If something happens with the financial stability of the NFL, you'll see the big boys fail first and the small guys like Buffalo and Green Bay survive and thrive.

 

Summary: I'm not worried in the least, and I'm actually looking forward to a correction.

[stuckincincy]

RTFA.

 

What does that mean?

[Corp000085]

http://www.urbandictionary.com/define.php?term=RTFA

 

Read the F'ing Article.

[Hplarrm]

Given the global fiscal implosion described in the Eliott Wave which appears to be the assumption of the economic state for this report I would be quite surprised if the NFL did so well that they only lost 2 to 4 teams.

 

If merely a majority of the predictions mentioned come true then I suspect that our entire economic structure would implode and little things like national plane connections would be difficult to do and the schedule would be defined by how far a team could reasonably travel by bus. This would force a working model to be based on divisional play leading to a small group of victors then making the playoffs to winnow things down to as few teams as possible to large travel to playoff.

 

Even this model assumes things about televising and advertising which are impossible to predict.

 

Perhaps the answer would be to turn the NFL into a more true gladatorial sport where the penalty for losing is the death penalty depending on whether the Emperor (or Emperess) gives a thumbs or thumbs down.

 

The report seems based on a future where it really is quite impossible to predict downstream outcomes essential to determining the result.

 

In order to make a prediction that remotely makes sense and has at least some reasonable chance of occurring (the prediction certainly COULD happen but the chances it WILL happen are small and the impact of being wrong so large to the point of being easily ignored for planning purposes).

 

Its a nice read but a pretty worthless exercise for action.

[PromoTheRobot]

"consuming the seed corn" is a phrase I use often to describe our economy since Reagan. The huge financial rise did not come from an increase in productivity. It came from liquidating our factories and assets and sending them overseas. America used to make stuff. Now we shuffle paper and gamble.

 

Good article but the crap really has to hit the fan for that scenario to happen. However you feel about stimulus spending, that has probably been the thing that has kept the wolves from the door for now.

 

PTR

[Movinon]

If Elliott Wave prophecies of a world market collapse come to fruition, I don’t think too many people will care too much about the state of the NFL:

 

EWI bases its financial predictions on the long-term psychology swings of the masses — from overall pessimism to optimism and back. These swings eventually generate the price movements and trends we see in the world's stock markets. EWI's analysts believe that a long-term wave of optimism officially ended in 2008, marked by that year's punishing stock market crash, and that the world is now plunging into a period of historic pessimism. Financially, this should result in an ocean of bank failures, the bankruptcy of many state and local governments, harsh unemployment and relentless deflation (plunging prices), all capped off with a 96 percent wipeout of the Dow Jones Industrial Average — from its current levels of approximately 10,000 down to … get ready for this … 400. That's Dow 400. And EWI predicts this chaos won't relent until sometime during the year 2016, when all of the world's markets reach a final bottom.

[birdog1960]

Perhaps the answer would be to turn the NFL into a more true gladatorial sport where the penalty for losing is the death penalty depending on whether the Emperor (or Emperess) gives a thumbs or thumbs down.

wilson would never agree to the free bread however, would lose too much on concessions.

[nucci]

wilson would never agree to the free bread however, would lose too much on concessions.

Hey.. a Wilson is cheap comment...this is new for you!

[\GoBillsInDallas/]

The Bills are one of, if not THE best team in the NFL to handle a market collapse of the NFL. They are very financially conservative, have zero debt, and are able to (presumably) be in the black.

 

And when Ralph dies, and the estate tax kicks in, this argument gets shots to hell in an instant.

[stuckincincy]

http://www.urbandictionary.com/define.php?term=RTFA

 

Read the F'ing Article.

 

Why must we always curse?

[Corp000085]

And when Ralph dies, and the estate tax kicks in, this argument gets shots to hell in an instant.

 

 

Eh, I still don't think the Bills are going anywhere.

[Pine Barrens Mafia]

"consuming the seed corn" is a phrase I use often to describe our economy since Reagan. The huge financial rise did not come from an increase in productivity. It came from liquidating our factories and assets and sending them overseas. America used to make stuff. Now we shuffle paper and gamble.

 

Good article but the crap really has to hit the fan for that scenario to happen. However you feel about stimulus spending, that has probably been the thing that has kept the wolves from the door for now.

 

PTR

 

Never let a good rant stand in the way of reality, eh?

 

[PromoTheRobot]

Never let a good rant stand in the way of reality, eh?

 

Please explain further. You can PM me. If I'm wrong about something, I'd appreciate being corrected.

 

PTR

[Pine Barrens Mafia]

Please explain further. You can PM me. If I'm wrong about something, I'd appreciate being corrected.

 

PTR

 

It wasn't supply-side economics that killed manufacturing. It was labor costs and environmental regulations handicapping our products versus those produced in completely unregulated economies.

[Griswold]

http://www.urbandictionary.com/define.php?term=RTFA

 

Read the F'ing Article.

I always thought it was "Read the Full Article" ..but F'ing works situationally.

[Rubes]

Given the global fiscal implosion described in the Eliott Wave which appears to be the assumption of the economic state for this report I would be quite surprised if the NFL did so well that they only lost 2 to 4 teams.

 

If merely a majority of the predictions mentioned come true then I suspect that our entire economic structure would implode and little things like national plane connections would be difficult to do and the schedule would be defined by how far a team could reasonably travel by bus. This would force a working model to be based on divisional play leading to a small group of victors then making the playoffs to winnow things down to as few teams as possible to large travel to playoff.

 

Even this model assumes things about televising and advertising which are impossible to predict.

 

Perhaps the answer would be to turn the NFL into a more true gladatorial sport where the penalty for losing is the death penalty depending on whether the Emperor (or Emperess) gives a thumbs or thumbs down.

 

The report seems based on a future where it really is quite impossible to predict downstream outcomes essential to determining the result.

 

In order to make a prediction that remotely makes sense and has at least some reasonable chance of occurring (the prediction certainly COULD happen but the chances it WILL happen are small and the impact of being wrong so large to the point of being easily ignored for planning purposes).

 

Its a nice read but a pretty worthless exercise for action.

 

 

So this is Barry Brady/FFS's new handle, I see...

[Doc]

Not to worry. The NFL foresaw the economic meltdown. The CBA and their "war chest" will solve all their problems.

[Fingon]

Eh, I still don't think the Bills are going anywhere.

You would be right. It costs a tremendous amount of money to move an NFL team, and if the economy doesn't boom there is no way an owner could even make his debt payments.

 

$1 billion for the team

$500 million to $1 billion for the stadium

$200 million to $1 billion relocation fee

[yungmack]

The NFL, along with just about every other business/industry/vocation/avocation on the globe, is facing a topping-out, followed by a substantial decline, eventually settling into a pattern of "new normality." The current economic problems are the opening salvo in this change and, stuff such as Elliot Wave entrail reading aside, there will never by a recovery to the way things were 30-40 years ago.

 

Why? Demographics. With the glaring exception of the Muslim "world," birthrates are in rapid decline around the globe. In much of Europe, it is below replacement level. Same for Japan. China's One-Child policy should cut that nation's population in half by the end of the century. If Russia continues on its current trajectory (life-expectancy for men has fallen to 56!!!), the Russian "race" will virtually vanish within three generations. Mexico's birthrate is 2.2 children, an all-time low. Etc., etc. A smaller population needs less of everything (aka, Supply and Demand).

 

After WWII, there was a world-wide birth explosion, the "baby boom," the greatest birthrate in history. This led to a huge growth in everything from tennis shoes to hamburgers to cars to colleges to video games to sports franchises. Those "kids" are now beginning to retire, and they'll be selling off houses, Harleys, stocks, season tickets, and all the rest. But they will be selling off into a smaller market. It's obvious that a smaller population base can only sop up so much of all that stuff (housing included. NFL tickets too). The growth in the population of the US overall has long been fueled in the main by immigration. Take that away and the economic collapse would have already occurred years ago.

 

Anyone from WNY has already seen this phenomenon in action. A lessening population has meant the abandonment of housing for which there is no market, the decline of infrastructure maintenance as the lower population led to lower tax receipts, demolition of "redundant" factories, closure of churches and schools, and so forth. How drastic is this change in only one century? In 1900, Buffalo was the 8th largest city in the US, and had the highest per capita concentration of millionaires in the world.

 

Much of the financial growth in sports, like the NFL, had to do with the massive growth in population tied to technological innovation (television in particular) which, like the invention of the CD and the DVD, opened the market for the basic product, repackaged (from no national television broadcasts in the 50s, to two leagues, to multiple channels competing for the product, to cable, satellite to computers to smart phones, and so on). It appears that not only has the NFL just about sucked up the available money from every conceivable source, but that overall ratings are now in decline in tandem with having reached its peak of income generation.

 

To sum it all up, Demographics are Destiny.

 

But, hey, just like the Bills still exist, still have rabid fans, still make money, the NFL will continue to be around for a long time to come. There just won't be as much easy money lying around. The days of any knucklehead with an NFL franchise being able to extort cities for stadiums, or fans for "personal licenses," or networks for more and more dough, are coming to an end. What I think the successful franchises in this new environment will look like is a lot like...the Buffalo Bills.

 

Sorry for going on so long.

[Mr. WEO]

Not to worry. The NFL foresaw the economic meltdown. The CBA and their "war chest" will solve all their problems.

Doc, looks like you were the only one who awoke some morning that September surprised to read about the economic collapse in the newspaper.

 

There is no CBA, by the way.

[PromoTheRobot]

It wasn't supply-side economics that killed manufacturing. It was labor costs and environmental regulations handicapping our products versus those produced in completely unregulated economies.

Other countries' businesses deal with regulation and do okay. Just take a look at Canada. We, on the other hand, tell business to take the money and run. I think that had more to do with losing our manufacturing base.

 

PTR

[ExiledInIllinois]

The Bills are one of, if not THE best team in the NFL to handle a market collapse of the NFL. They are very financially conservative, have zero debt, and are able to (presumably) be in the black. If they can survive the immediate future (from now till ownership changes, which will happen in the next 10 years or less) and get another sweetheart lease for the stadium, I think that there will be zero chance of the team moving. At the end of the day, the big $$ teams like cowboys, pats, etc. make a lot more money, but pay a lot more back into debt. If something happens with the financial stability of the NFL, you'll see the big boys fail first and the small guys like Buffalo and Green Bay survive and thrive.

 

Summary: I'm not worried in the least, and I'm actually looking forward to a correction.

 

Thanks Ralph!

[ExiledInIllinois]

It wasn't supply-side economics that killed manufacturing. It was labor costs and environmental regulations handicapping our products versus those produced in completely unregulated economies.

 

 

So why didn't business and our gov't have the moral fiber to say "no" against the unregulated economies? Tragedy?

[nucci]

They predict the world economy to collapse and a global depression and their biggest concern is the NFL?

[Lurker]

The premise of that article is completely bogus since Elliott Wave International is a fuggn' joke. May as well cite the 2012 End of Days as a reason for the NFL's collapse, since the odds of that happening are higher than the Dow hitting 1,000.

 

It never ceases to amaze what lows writers (or investment gurus) will stoop to to attract eyeballs amid all the white noise...

[Doc]

Doc, looks like you were the only one who awoke some morning that September surprised to read about the economic collapse in the newspaper.

 

There is no CBA, by the way.

September? You were talking May of that year. Funny that your idol Jerruh Jones didn't change plans for Jerruhworld, given the impending economic meltdown. I guess "the situation changed" there as well.

 

And yes doc, there IS no CBA.

[Lurker]

Sorry for going on so long.

Me too, since your premise is so bupkis. Average annual population growth for the United States:

 

Since 1929--1.2%

Since 1970--1.0%

Since 2000--0.9%

Census Bureau Projection 2009-2040--0.9% (source)

 

To say the U.S. is going to hell in a handbasket because population growth is going to fall one-tenth of a percentage point below the 1970-2009 average is just too Tea Party to be true...

[silvermike]

The premise of that article is completely bogus since Elliott Wave International is a fuggn' joke. May as well cite the 2012 End of Days as a reason for the NFL's collapse, since the odds of that happening are higher than the Dow hitting 1,000.

 

It never ceases to amaze what lows writers (or investment gurus) will stoop to to attract eyeballs amid all the white noise...

 

I saw that movie. So after that tidal wave crashed an aircraft carrier into the White House, I imagine it'll be tough to get anyone to come to Redskins games, but the sinking of California will benefit the NFL, since they're relatively uninvested in Los Angeles. And then the move to Tibet will definitely be good for the Bills, since we'll have record numbers of fans in China because of Ed Wang.

[SDS]

Me too, since your premise is so bupkis. Average annual population growth for the United States:

 

Since 1929--1.2%

Since 1970--1.0%

Since 2000--0.9%

Census Bureau Projection 2009-2040--0.9% (source)

 

To say the U.S. is going to hell in a handbasket because population growth is going to fall one-tenth of a percentage point below the 1970-2009 average is just too Tea Party to be true...

 

Was this necessary?

[CodeMonkey]

Summary: I'm not worried in the least, and I'm actually looking forward to a correction.

I'm looking forward to an implosion.

I don't believe the NFL can sustain their own greed for much longer. The sooner it collapses on itself and gets a strong dose of reality the better.

[dollars 2 donuts]

I'm glad I came in here because, well, this is Mr. Happy Fun Thread.

 

 

With a little relaxation and the satisfaction of a great submarine sandwich maybe you won't read about me tomorrow climbing to the top of Campus building, picking of co-eds in the quad while screaming, "What's the frequency Kenneth!", while waiting for the oncoming Rapture.

 

 

Serenity now...Serenity now.

[Lurker]

Was this necessary?

Why perpetuate false and misleading info?

 

Oh, that right...it's the new normal.

[Mr. WEO]

September? You were talking May of that year. Funny that your idol Jerruh Jones didn't change plans for Jerruhworld, given the impending economic meltdown. I guess "the situation changed" there as well.

 

And yes doc, there IS no CBA.

My "idol"? Come on, doc. That is so weak. This is all you've got now.

 

 

Yes, they dumped the CBA in May. You seem to think the economic collapse began 4 months later. That's September, doc.

 

Jones voted to end the CBA. He was never a fan of it anyway---mainly because the thought of sharing what he felt was his money with guys like Ralph made him angry. Anyway, he was hellbent on building his monument to himself, to the tune of $650 mil of his money.

[SDS]

Why perpetuate false and misleading info?

 

Oh, that right...it's the new normal.

 

So, you couldn't have provided contrary evidence in a friendlier way?

[GG]

You don't need a doomsday machine to predict the NFL's gravy train to come to a stop some day. The really big deal will be at the next TV contract redo to see if the networks hold the line. The sport is still popular, but people are starting to rebel at the high costs of going to games.

[Doc]

My "idol"? Come on, doc. That is so weak. This is all you've got now.

 

 

Yes, they dumped the CBA in May. You seem to think the economic collapse began 4 months later. That's September, doc.

 

Jones voted to end the CBA. He was never a fan of it anyway---mainly because the thought of sharing what he felt was his money with guys like Ralph made him angry. Anyway, he was hellbent on building his monument to himself, to the tune of $650 mil of his money.

Oh, I "seem to think the economic collapse began 4 months later?" You've hit a new low.

 

Again doc, they were talking about opting-out just a year after voting-it-in. And the earliest they could contractually opt-out was 2 years from the time they signed it. IOW, they didn't opt-out of it because "the situation changed." And again, had Jerruh known that the economy was going to collapse, he would have waited to build his shrine.

[Lurker]

So, you couldn't have provided contrary evidence in a friendlier way?

Point taken.

[Malazan]

The Bills are one of, if not THE best team in the NFL to handle a market collapse of the NFL. They are very financially conservative, have zero debt, and are able to (presumably) be in the black. If they can survive the immediate future (from now till ownership changes, which will happen in the next 10 years or less) and get another sweetheart lease for the stadium, I think that there will be zero chance of the team moving. At the end of the day, the big $$ teams like cowboys, pats, etc. make a lot more money, but pay a lot more back into debt. If something happens with the financial stability of the NFL, you'll see the big boys fail first and the small guys like Buffalo and Green Bay survive and thrive.

 

Summary: I'm not worried in the least, and I'm actually looking forward to a correction.

 

You realize when the ownership changes hands, the Bills will have debt? A lot of it. That is why there is a belief that keeping them in WNY is not viable because the profit margin would be incredibly thin with the interest from a loan to buy the team.

 

However, I disagree with a lot in that article.

[Orton's Arm]

Other countries' businesses deal with regulation and do okay. Just take a look at Canada. We, on the other hand, tell business to take the money and run. I think that had more to do with losing our manufacturing base.

 

PTR

I'd argue that the manufacturing base was driven away by several factors:

• A cost of capital that is far too high
  
• China's manipulation of exchange rates (also a dollar that is too strong)
  
• Labor unions
  
• Problematic corporate management
  
• Unfavorable tax and regulatory environments
  

Cost of Capital

A corporation's cost of capital is driven by two factors: 1) the interest rate it must pay on its corporate debt, and 2) the rate of return demanded by the owners of its stock. If a company has a 70/30 debt-to-equity ratio, for example, its cost of capital is (0.7 * corporate interest rate) + (0.3 * rate of return on its stock). Several factors affect corporations' cost of capital:

1) The federal deficit. There is only so much investment capital available. When the government runs at a deficit, it must sell government bonds to cover the difference. Investors who might otherwise have purchased corporate debt instead buy up government bonds. The government's actions drive up demand for investment capital; which in turn lowers the amount available for corporations, while increasing the price. This is especially important for manufacturing firms, because they typically must make large investments in expensive machinery to stay competitive.

 

2) Federal tax policy. The Japanese economic boom of the '80s was fueled largely by tax-free savings accounts. The U.S. government lacks analogous incentives for people to save, except for paperwork-intensive, highly restrictive and regulated accounts such as IRAs and retirement plans. The IRS's desire to eat the seed corn--that is, the investment capital--is one of several factors responsible for the very low net savings rate.

 

3) "You are what you consume" cultural messages. A large portion of the population has been encouraged to live beyond its means, and to engage in conspicuous consumption. The fact that so much of the population has not engaged in net savings has deprived American manufacturers of the capital needed to buy expensive machinery.

 

The strong dollar

Over the last several decades, the goal of American policymakers was to keep the dollar strong. A strong dollar rewards foreign companies who seek to import into the U.S., while punishing American firms who seek to export their goods to other nations. A strong dollar also makes Americans "feel" wealthier, and allows them to buy more imported goods. (Which is one of the reasons why it was pursued.) If the American dollar was far too strong for too long, China's currency was exactly the opposite. China's policymakers deliberately kept their currency weak in order to aid Chinese manufacturers. The head of an American furniture manufacturer noted that this currency manipulation was the single strongest factor in China's edge over American furniture manufacturing; and was twice as important as the difference in labor costs.

 

Labor Unions

It is very difficult for a unionized firm to compete with a non-union analog. Toyota, for example, does much of its manufacturing in the U.S., and its factories are non-union. In competing against Toyota and other such firms, the Detroit automakers found their hourly wage rates increased beyond what they could reasonably afford. Even more importantly, the unions imposed lavish pension plans on the automakers. The unions also made it difficult to fire under-performing workers, or to promote anyone except on the basis of seniority. They also imposed unreasonable restrictions, such as forbidding anyone except an electrician from changing a light bulb. Labor unions are also often associated with measures that drive down productivity, such as (in some cases) restrictions on the amount each worker could produce each day.

 

As bad as private sector unions are, public sector unions are far worse. They are strongly associated with increasing the size and burden of government; thereby driving up the aforementioned government deficits.

 

Problematic Corporate Management

The management at the Detroit automakers and places like Bethlehem Steel was (typically) very bad. In a perfect world, these badly-managed companies would have gradually been replaced by other American auto and steel manufacturers. To a degree that has happened with steel. But in the automotive sector, the vacuum created by the failure of American auto firms has been filled by foreign substitutes, not by other American firms. Partly this is due to the aforementioned high cost of capital and other factors which make the manufacturing environment unfavorable in the U.S. But it is also due to the sheer difficulty of creating an automotive manufacturing firm from scratch.

 

Unfavorable tax and regulatory environments

In a perfect world, the American federal, state, and local governments would be sensitive about adding to the paperwork burdens of individuals and businesses. In the world in which we live, however, it is routine for government bureaucracies to create lengthy, complex, burdensome regulations that are onerous to comply with. When the unreasonable/paperwork burden is added to the reasonable burden of imposing favorable environmental and workplace safety standards, the costs of regulatory compliance become very high. It is also worth noting that the United States has signed trade agreements which specifically forbid it from imposing tariffs on imports based on working conditions in the countries of manufacture. Industrial production in China, for example, can be associated with a massive amount of pollution, but we can't impose a tariff on that portion of the production we import into the U.S.

 

It is also worth noting that the federal tax code strongly penalizes long-term capital investments. Instead of being able to deduct business expenses as they are incurred, American manufacturers must "depreciate" their expenses over the course of many years. This flaw in the tax code creates a completely artificial incentive to invest in items expected to "depreciate" quickly, while avoiding those which depreciate slowly. One reason for the existence of office cubicles, for example, is that cubicles are considered office furniture (depreciates over seven years) as opposed to improvements in the building (depreciates over 40 years). The tax code also hurts the tree farming industry. Each year, tree farmers are expected to pay taxes on the "value increase" of their trees, years before any lumber is harvested or any cash from tree farming is received. While the portion of tax law which relates to tree farming may not seem directly relevant to American manufacturing, it directly illustrates the IRS's short-sightedness, greed, and consequent eagerness to eat the seed corn.

 

Every bolded item in the above list represents a burden that has been added to American manufacturers. (Though in fairness, some burdens--such as bad management--are self-imposed.) The sum total of these burdens became too great for them to bear; which is why they have either gone under (American electronics manufacturers) are going under (American car makers), or have moved overseas. Getting businesses to grow in your country is a lot like getting plants to grow in your garden. In both cases, success results from making conditions as favorable as possible for growth. But in the U.S. we have all too often followed the opposite approach: we have made things progressively worse for businesses in general and manufacturers in particular; and then have wondered why they have gone belly up.