Don Esmonde article about new ownership

[vegas55]

Don Esmonde column in Buffalo News illustrates just how clueless folks can be about the economics of the NFL as it pertains to keeping the Bills in Buffalo. There's no excuse though, for a columnist who has the time and has the obligation to at least research the subject matter he writes about to be so off base. He writes that we need an owner who won't chase the dollar, who will be happy with the 35 million dollar profit the team produces. Well Don, you are right about Buffalo needing an owner who won't be obsessed with maximizing profit. But the "35 million" profit? Well Mr Osmonde, because this team has been thrown out there to highest bidder, a new owner will pay close to one billion dollars for the Bills. And even if he puts up half of that amount in cash, the financing cost will reach at least 40 million annually, a cost that the Bills don't currently have, but a cost that will demolish the 35 million dollar "profit". And that's all thanks to good old Ralph Wilson, who despite the ridiculous hero worship he has received by many on this board (and elsewhere) made no provisions at all in his will, or even expressed a preference in his will, that the team be kept in Buffalo. But why should he have? . The fans/taxpayers of WNY only built and paid for the stadium that bears his name, and the franchise that he so "generously" kept in WNY only produced a billion dollar windfall for him and his heirs. So why should Ralph have even lifted a finger, or expressed even a simple non binding wish, that Bills be sold to an owner committed to keeping the team in WNY.

[keepthefaith]

Don Esmonde column in Buffalo News illustrates just how clueless folks can be about the economics of the NFL as it pertains to keeping the Bills in Buffalo. There's no excuse though, for a columnist who has the time and has the obligation to at least research the subject matter he writes about to be so off base. He writes that we need an owner who won't chase the dollar, who will be happy with the 35 million dollar profit the team produces. Well Don, you are right about Buffalo needing an owner who won't be obsessed with maximizing profit. But the "35 million" profit? Well Mr Osmonde, because this team has been thrown out there to highest bidder, a new owner will pay close to one billion dollars for the Bills. And even if he puts up half of that amount in cash, the financing cost will reach at least 40 million annually, a cost that the Bills don't currently have, but a cost that will demolish the 35 million dollar "profit". And that's all thanks to good old Ralph Wilson, who despite the ridiculous hero worship he has received by many on this board (and elsewhere) made no provisions at all in his will, or even expressed a preference in his will, that the team be kept in Buffalo. But why should he have? . The fans/taxpayers of WNY only built and paid for the stadium that bears his name, and the franchise that he so "generously" kept in WNY only produced a billion dollar windfall for him and his heirs. So why should Ralph have even lifted a finger, or expressed even a simple non binding wish, that Bills be sold to an owner committed to keeping the team in WNY.

 

I think your comments on Ralph are a bit harsh. If Ralph was only concerned about the money he could have sold the team before he passed and very possibly to an owner that would have relocated the team. He signed a lease which due to financial penalty almost assures the Bills staying in Buffalo for a number of years and also makes it much harder for a new owner to relocate the team. To me that was a gift to the community. We also don't know the private thoughts that Ralph expressed to his wife, team management, the league and NYS politicians. It's quite possible there will be more to learn on that as the sale of the team unfolds.

 

As for Esmond, you're right that he doesn't speak to the economics of the team. My hunch is that a new owner committed to keeping the team in Buffalo will not be willing to pay $1 billion. The price may end up being closer to $700 million (a bit below the Cleveland deal) and a new stadium that can produce more revenue will have to be a part of the deal. Ego might drive someone to buy the team but they have to get a return on their investment too and yeah the math for a new owner will be different than it was for Ralph.

Edited May 19, 2014 by keepthefaith

[vegas55]

 

 

I think your comments on Ralph are a bit harsh. If Ralph was only concerned about the money he could have sold the team before he passed and very possibly to an owner that would have relocated the team. He signed a lease which due to financial penalty almost assures the Bills staying in Buffalo for a number of years and also makes it much harder for a new owner to relocate the team. To me that was a gift to the community. We also don't know the private thoughts that Ralph expressed to his wife, team management, the league and NYS politicians. It's quite possible there will be more to learn on that as the sale of the team unfolds.

 

As for Esmond, you're right that he doesn't speak to the economics of the team. My hunch is that a new owner committed to keeping the team in Buffalo will not be willing to pay $1 billion. The price may end up being closer to $700 million (a bit below the Cleveland deal) and a new stadium that can produce more revenue will have to be a part of the deal. Ego might drive someone to buy the team but they have to get a return on their investment too and yeah the math for a new owner will be different than it was for Ralph.

 

Well I believe Cleveland franchise sold for 1 billion, so 700 million is way less than "a bit below" the Cleveland deal. Since Ralph threw this out to highest bidder, if a new owner committed to keeping the Bills in WNY is not willing to pay that price, we are out of luck. That was my point. And I am always surprised that people continually speculate that Ralph may have expressed "private thoughts" to people that he had a preference Bills be kept in Buffalo - that's wishful thinking. The actual fact is he had plenty of time to fashion a very simple, non binding preference that Bills be kept in Buffalo - he chose not to.

[The Wiz]

Well I believe Cleveland franchise sold for 1 billion, so 700 million is way less than "a bit below" the Cleveland deal. Since Ralph threw this out to highest bidder, if a new owner committed to keeping the Bills in WNY is not willing to pay that price, we are out of luck. That was my point. And I am always surprised that people continually speculate that Ralph may have expressed "private thoughts" to people that he had a preference Bills be kept in Buffalo - that's wishful thinking. The actual fact is he had plenty of time to fashion a very simple, non binding preference that Bills be kept in Buffalo - he chose not to.

I'm surprised you haven't found the return key yet considering your long posts.

[vegas55]

 

I'm surprised you haven't found the return key yet considering your long posts.

 

I guess my posts are a bit long so as to encourage intelligent and insightful responses - like yours.

[Malazan]

I guess my posts are a bit long so as to encourage intelligent and insightful responses - like yours.

 

Proper use of paragraphs will encourage more 'intelligent' and 'insightful' responses as it causes the writer to think about what he is writing which may give us something worthwhile to respond to...forgive us if we don't take someone who can't understand and use paragraphs seriously.

[vegas55]

 

 

Proper use of paragraphs will encourage more 'intelligent' and 'insightful' responses as it causes the writer to think about what he is writing which may give us something worthwhile to respond to...forgive us if we don't take someone who can't understand and use paragraphs seriously.

 

So it's the faulty paragraph structure that prevents you from formulating an intelligent/football based response. Quite a barrier for anyone to overcome.

[Beerball]

[This is an automated response]

 

As a courtesy to the other board members, please use more descriptive subject lines. The topic starter can edit the subject line to make it more appropriate.

 

Thank you.

[BuffaloRebound]

Don Esmonde column in Buffalo News illustrates just how clueless folks can be about the economics of the NFL as it pertains to keeping the Bills in Buffalo. There's no excuse though, for a columnist who has the time and has the obligation to at least research the subject matter he writes about to be so off base. He writes that we need an owner who won't chase the dollar, who will be happy with the 35 million dollar profit the team produces. Well Don, you are right about Buffalo needing an owner who won't be obsessed with maximizing profit. But the "35 million" profit? Well Mr Osmonde, because this team has been thrown out there to highest bidder, a new owner will pay close to one billion dollars for the Bills. And even if he puts up half of that amount in cash, the financing cost will reach at least 40 million annually, a cost that the Bills don't currently have, but a cost that will demolish the 35 million dollar "profit". And that's all thanks to good old Ralph Wilson, who despite the ridiculous hero worship he has received by many on this board (and elsewhere) made no provisions at all in his will, or even expressed a preference in his will, that the team be kept in Buffalo. But why should he have? . The fans/taxpayers of WNY only built and paid for the stadium that bears his name, and the franchise that he so "generously" kept in WNY only produced a billion dollar windfall for him and his heirs. So why should Ralph have even lifted a finger, or expressed even a simple non binding wish, that Bills be sold to an owner committed to keeping the team in WNY.

I'd hope the new ownership group has deep enough pockets to simply write a check instead of financing any of the purchase price. Millstein's bid for Redskins was supposedly shot down for financing the purchase price. And if the funding of the Ralph improvements is any hint NY State and the local governments will fund the lion's share of a new stadium.

[Green Lightning]

 

 

So it's the faulty paragraph structure that prevents you from formulating an intelligent/football based response. Quite a barrier for anyone to overcome.

 

No paragraphs? A pain to read but easy to overcome. Your antagonism and bile, not so much.

[Greg F]

... a new owner will pay close to one billion dollars for the Bills. And even if he puts up half of that amount in cash, the financing cost will reach at least 40 million annually, a cost that the Bills don't currently have, but a cost that will demolish the 35 million dollar "profit".

 

$40 million on $500 million is 8% interest. I would say the interest rate is a tad bit to high. Like 4% to 6% to high.

[Maury Ballstein]

Return key is essential for sure.

[Ed_Formerly_of_Roch]

And I'm always surprised that people continually speculate that there is no agreement when they know nothing about it themselves, only what's been stated in the papers for the past ten years or so.

 

So unless you have access the the trust and all of his estate documents, you don't know anything more than the people that have all this wishful thinking. I'm not sure whether to laugh or beat my head against the wall from reading your post. The only difference between all the wishful thinkers and you is apparently you know whats going on but they don't at least according to you.

 

I guess laughing wins out due to the pure hypocrisy of this post. Maybe that's too strong of a word here, but is amazing how you can condemn others for doing exactly what you're doing, speculating!

 

And I am always surprised that people continually speculate that Ralph may have expressed "private thoughts" to people that he had a preference Bills be kept in Buffalo - that's wishful thinking. The actual fact is he had plenty of time to fashion a very simple, non binding preference that Bills be kept in Buffalo - he chose not to.

[RK_BillsFan]

So not that it helps anyone's case but the reason the team was not sold before Ralph died was due to the tax savings his family will get when they do finally sell the team. As has been stated several times on the boards and in articles posted, if the team was sold the family would have to pay taxes on the value increase of the team from the original value to where it was when it was sold. So the taxes on the amount gained from 25k? Up to its sale value of let's say 1 billion. When sold now after his death, the taxes will be based of the teams estimated worth and the value it actually sells for. Team is estimated at 850million? And to be sold for 1 billion. That's a rather large savings.

 

Also if Ralph didn't do anything for the team in terms of keeping them where they are, why is there such an iron clad agreement to keep the team where it is until 2020. That seems pretty silly to me. Keeping the bills in New York through a very simple, non binding agreement is actually not so simple a matter and the fact that u actually believe that is astonishing for a perosn of your so called intelligence and insight. Please remove your pompous self from whatever high horse you're on and crawl back under the rock you normally live under.

[keepthefaith]

Well I believe Cleveland franchise sold for 1 billion, so 700 million is way less than "a bit below" the Cleveland deal. Since Ralph threw this out to highest bidder, if a new owner committed to keeping the Bills in WNY is not willing to pay that price, we are out of luck. That was my point. And I am always surprised that people continually speculate that Ralph may have expressed "private thoughts" to people that he had a preference Bills be kept in Buffalo - that's wishful thinking. The actual fact is he had plenty of time to fashion a very simple, non binding preference that Bills be kept in Buffalo - he chose not to.

 

My mistake, I meant Jacksonville and not Cleveland. The Jags sold for under $800 million. We have no idea what Mary Wilson's priorities and preferences are on the sale of the team or how Ralph advised her and others. Let's see how this plays out.

[ICanSleepWhenI'mDead]

Don Esmonde column in Buffalo News illustrates just how clueless folks can be about the economics of the NFL as it pertains to keeping the Bills in Buffalo. . . .

Maybe so, but my brother Darryl says Don Esmonde ain't the only clueless one. Darryl realizes that (1) a new owner may have higher financing costs than Ralph because the new owner may have to borrow part of the purchase price as compared to Ralph, who bought the franchise for peanuts long ago, but (2) any new owner can use something called the Roster Depreciation Allowance (the "RDA") to write off 1/15th of the purchase price of the team every year for the first 15 years of ownership - - something Ralph could NOT do because he bought the franchise so long ago that Ralph's team "roster" had already become fully depreciated in Ralph's hands.

 

For the sake of argument, let's say that your assumption that the new owner has to borrow 50% of a $1 billion purchase price, and therefore incur $40 million of financing costs is just a smidge high. Let's say the new owner's cost to finance $500 million is only slightly less, at $35 million per year (it makes the math easier for Darryl).

 

You say that makes the new owner's annual profit zero, as opposed to $35 million during Ralph's ownership. But that doesn't take into account the RDA. If the purchase price is $1 billion, a new owner who structures the transaction and his other business ventures properly has the potential to shelter $1 billion/15 = $66.7 million of his otherwise taxable income from the IRS every year for 15 years. That's a $66.7 million annual tax shelter for the new owner, that Ralph didn't (and couldn't) have.

 

Don't believe me? Read these links:

 

http://www.forbes.com/sites/mikeozanian/2012/04/06/new-dodgers-investors-will-get-big-tax-breaks/

 

http://econ.la.psu.edu/~ecoulson/veeck.pdf

 

http://deadspin.com/5816870/exclusive-how-and-why-an-nba-team-makes-a-7-million-profit-look-like-a-28-million-loss

 

It's true that the RDA tax write-off is available to any new owner, whether that new owner is a local WNY guy or somebody from out-of-state. So the availability of the RDA doesn't cut one way or the other with respect to giving bidders from any particular geographic location an advantage in the bidding.

 

That means you can still criticize Ralph's estate planning if you want - - but Darryl thinks you shouldn't go gettin' all high and mighty about "the economics of the NFL as it pertains to keeping the Bills in Buffalo."

 

'Course, Darryl's a moron - - Momma had him tested.

Edited May 19, 2014 by ICanSleepWhenI'mDead

[Justice]

Buying a franchise for one billion dollars is no big deal to these billionaires. The value of the team will either rise or stay the same, they won't lose any money on their investment. It's like money in the bank.

[Wayne Cubed]

Don Esmonde column in Buffalo News illustrates just how clueless folks can be about the economics of the NFL as it pertains to keeping the Bills in Buffalo....

 

I'm pretty sure the NFL doesn't allow more than $200 million in financing, when purchasing a new team, for the exact reason you are stating. They don't want a team to be purchased and then assume a load of debt where the owner can't keep up and the team is sold again because of it. The majority of the team needs to paid for in cash. The NFL wants stability, for that same reason businesses can't purchase teams.

[xsoldier54]

Don Esmonde column in Buffalo News illustrates just how clueless folks can be about the economics of the NFL as it pertains to keeping the Bills in Buffalo. There's no excuse though, for a columnist who has the time and has the obligation to at least research the subject matter he writes about to be so off base. He writes that we need an owner who won't chase the dollar, who will be happy with the 35 million dollar profit the team produces. Well Don, you are right about Buffalo needing an owner who won't be obsessed with maximizing profit. But the "35 million" profit? Well Mr Osmonde, because this team has been thrown out there to highest bidder, a new owner will pay close to one billion dollars for the Bills. And even if he puts up half of that amount in cash, the financing cost will reach at least 40 million annually, a cost that the Bills don't currently have, but a cost that will demolish the 35 million dollar "profit". And that's all thanks to good old Ralph Wilson, who despite the ridiculous hero worship he has received by many on this board (and elsewhere) made no provisions at all in his will, or even expressed a preference in his will, that the team be kept in Buffalo. But why should he have? . The fans/taxpayers of WNY only built and paid for the stadium that bears his name, and the franchise that he so "generously" kept in WNY only produced a billion dollar windfall for him and his heirs. So why should Ralph have even lifted a finger, or expressed even a simple non binding wish, that Bills be sold to an owner committed to keeping the team in WNY.

You can like or dislike Mr. Wilson, that is your right, but the fact is that without him Buffalo never would have had an NFL franchise. What his reasoning was for not spelling out what should happen upon his death, nobody knows but him and his lawyers and perhaps his family, but just like your right to criticize, it was his right to do with the team what he chose to do. I for one will be forever greatful for the years of entertainment that he brought to me and my family. May he RIP.

[davspo]

I am a bit confused by the "hero" status RW has achieved as owner of the Bills in death. His contributions in WWII, something I did not know, are certainly worthy of the term hero, but his ownership of this team does not make him a hero. It is pure speculation that an NFL franchise in Buffalo would not have existed without RW. In reality, a number of folks could have started a franchise here. Why do we think small. Buffalo is a great city, with unbelievable fans that support their team. RW did not create and keep the team in Buffalo due to his generosity. He made a number of business decisions that resulted in the astronomical growth in his investment. The fan base should not sell themselves short, we helped create this team as well (ticket sales, broad based community support, and tax dollars).

 

With that being said, RW could have made many more decisions if his primary goal was to keep the team in Buffalo. By all accounts it seems as if he encouraged that they remain here, but he was not willing to have his estate devalued by insuring that they remain here. RW, in death, did as he did in life, and that is make business decisions. It's his investment, his money, his asset and he could do with it what he wishes, but please rethink the party line that he was a generous person that we should call a hero.

 

OK, now everyone can attack me.