Bocephuz Posted August 14, 2014 Share Posted August 14, 2014 Based on some of the info that's leaking regarding the Bill's annual profits ( $40-$60 million/ year has been leaked out) I can see why the number of bidders is low. If you're investing ~ $1 billion (and are looking at it from a purely business point of view) you would probably be looking for a rate of return north of 10%.. or in other words.. some rate of return that isn't easily obtained through investing in low risk bonds or something like that. According to my math ( using $50 million as an annual profit estimate) here are the rates of return at different price points: $800 mil - 6.25% / $1 bil - 5% / $1.3 bil - 3.85%. This is why I think Donald Trump will back out if the price is over $1 bil... it just doesn't make that much business sense at that point. Anyone who pays more than $1 billion is probably driven more by emotion than by business sense. This is actually a good thing for the Bills... if they were more profitable ( let's say they made $80 mil/year in profits) I think you'd see a lot more outsiders getting in on the action. Link to comment Share on other sites More sharing options...
Campy Posted August 14, 2014 Share Posted August 14, 2014 Makes sense, but I've always been under the impression that people who buy professional sport franchises are doing it less for the return on investment and more for prestige and love of the sport. Link to comment Share on other sites More sharing options...
CountryCletus Posted August 14, 2014 Share Posted August 14, 2014 Based on some of the info that's leaking regarding the Bill's annual profits ( $40-$60 million/ year has been leaked out) I can see why the number of bidders is low. If you're investing ~ $1 billion (and are looking at it from a purely business point of view) you would probably be looking for a rate of return north of 10%.. or in other words.. some rate of return that isn't easily obtained through investing in low risk bonds or something like that. According to my math ( using $50 million as an annual profit estimate) here are the rates of return at different price points: $800 mil - 6.25% / $1 bil - 5% / $1.3 bil - 3.85%. This is why I think Donald Trump will back out if the price is over $1 bil... it just doesn't make that much business sense at that point. Anyone who pays more than $1 billion is probably driven more by emotion than by business sense. This is actually a good thing for the Bills... if they were more profitable ( let's say they made $80 mil/year in profits) I think you'd see a lot more outsiders getting in on the action. As others have stated in other team sales threads, this is more like joining an exclusive club.... It's buying a toy.... A billionaire type toy... A toy that actually returns on your investment... I would worry about anyone that would buy this team purely to make money... Link to comment Share on other sites More sharing options...
John from Riverside Posted August 14, 2014 Share Posted August 14, 2014 Based on some of the info that's leaking regarding the Bill's annual profits ( $40-$60 million/ year has been leaked out) I can see why the number of bidders is low. If you're investing ~ $1 billion (and are looking at it from a purely business point of view) you would probably be looking for a rate of return north of 10%.. or in other words.. some rate of return that isn't easily obtained through investing in low risk bonds or something like that. According to my math ( using $50 million as an annual profit estimate) here are the rates of return at different price points: $800 mil - 6.25% / $1 bil - 5% / $1.3 bil - 3.85%. This is why I think Donald Trump will back out if the price is over $1 bil... it just doesn't make that much business sense at that point. Anyone who pays more than $1 billion is probably driven more by emotion than by business sense. This is actually a good thing for the Bills... if they were more profitable ( let's say they made $80 mil/year in profits) I think you'd see a lot more outsiders getting in on the action. Im a little confused by this (mostly because of my own ignorance on finances for the bills) But isnt it more then just ticket sales? Dont the bills also get a portion of "TV Money" and if you keep the bills in your family long enough.....even at 60 million dollars it will eventually start making a profit Link to comment Share on other sites More sharing options...
PromoTheRobot Posted August 14, 2014 Share Posted August 14, 2014 It's not that bad an investment. You make 5% annually plus you get all your money back and then some when you sell. Link to comment Share on other sites More sharing options...
Bocephuz Posted August 14, 2014 Author Share Posted August 14, 2014 Im a little confused by this (mostly because of my own ignorance on finances for the bills) But isnt it more then just ticket sales? Dont the bills also get a portion of "TV Money" and if you keep the bills in your family long enough.....even at 60 million dollars it will eventually start making a profit Perhaps I was thinking somewhat short sighted... It certainly can be a good long term investment... Ralph proved that Link to comment Share on other sites More sharing options...
CodeMonkey Posted August 14, 2014 Share Posted August 14, 2014 Based on some of the info that's leaking regarding the Bill's annual profits ( $40-$60 million/ year has been leaked out) I can see why the number of bidders is low. If you're investing ~ $1 billion (and are looking at it from a purely business point of view) you would probably be looking for a rate of return north of 10%.. or in other words.. some rate of return that isn't easily obtained through investing in low risk bonds or something like that. According to my math ( using $50 million as an annual profit estimate) here are the rates of return at different price points: $800 mil - 6.25% / $1 bil - 5% / $1.3 bil - 3.85%. This is why I think Donald Trump will back out if the price is over $1 bil... it just doesn't make that much business sense at that point. Anyone who pays more than $1 billion is probably driven more by emotion than by business sense. This is actually a good thing for the Bills... if they were more profitable ( let's say they made $80 mil/year in profits) I think you'd see a lot more outsiders getting in on the action. Nobody buys a NFL team to get rich. They are rich to begin with. It is not an investment for them. So long as it does not lose money I suspect any owner would be OK with it. Link to comment Share on other sites More sharing options...
Best Player Available Posted August 14, 2014 Share Posted August 14, 2014 One would think the majority of the special club known as a NFL franchise owner. has other means of obtaining better than a 5% ROI. This is a big boys toy, not a way to get rich, they already are.The profit comes by sitting on your investment for years, then cashing in by selling it. Link to comment Share on other sites More sharing options...
Bocephuz Posted August 14, 2014 Author Share Posted August 14, 2014 It's not that bad an investment. You make 5% annually plus you get all your money back and then some when you sell. Not bad... but I guess I was a little shocked that it wasn't the hand over fist money making machine I thought it was Link to comment Share on other sites More sharing options...
hondo in seattle Posted August 14, 2014 Share Posted August 14, 2014 This has been discussed in other threads but, yeah, as business investments go this is a bad one. Your EBITDA (or any other measure of profit) will never justify the purchase price. What might justify the purchase price is the sale price when you sell the club years later. You have to bet that the NFL remains insanely popular and the market for NFL franchises stays overheated. Of course, there are a lot of perks to being an NFL owner. These can justify the price. Link to comment Share on other sites More sharing options...
Big C Posted August 14, 2014 Share Posted August 14, 2014 It's not that bad an investment. You make 5% annually plus you get all your money back and then some when you sell. ^This. Link to comment Share on other sites More sharing options...
Doc Posted August 14, 2014 Share Posted August 14, 2014 That's why I want Pegs. He has said that if he wants to make more money, he'll drill another gas well. Owning a sports team for him isn't about making money, or at least recouping his money. Link to comment Share on other sites More sharing options...
KD in CA Posted August 14, 2014 Share Posted August 14, 2014 Makes sense, but I've always been under the impression that people who buy professional sport franchises are doing it less for the return on investment and more for prestige and love of the sport. Not just that, but most very wealthy people enjoy their relative anonymity, which goes out the window if you buy a pro sports team. That's a lot of hurdles to clear and makes it easy to understand why the population of people who want to own the Bills and have $1B in the checkbook is relatively small. Link to comment Share on other sites More sharing options...
OntarioRV Posted August 14, 2014 Share Posted August 14, 2014 Its isn't a bad one if its a longer term investement. It doesn't lose value, and based on the way the NFL is going your rate of return will be higher than 5% beginning with next year. If you are talking about a short investment somebody would be stupid to take on the investment. This has been discussed in other threads but, yeah, as business investments go this is a bad one. Your EBITDA (or any other measure of profit) will never justify the purchase price. What might justify the purchase price is the sale price when you sell the club years later. You have to bet that the NFL remains insanely popular and the market for NFL franchises stays overheated. Of course, there are a lot of perks to being an NFL owner. These can justify the price. Link to comment Share on other sites More sharing options...
Mango Posted August 14, 2014 Share Posted August 14, 2014 Based on some of the info that's leaking regarding the Bill's annual profits ( $40-$60 million/ year has been leaked out) I can see why the number of bidders is low. If you're investing ~ $1 billion (and are looking at it from a purely business point of view) you would probably be looking for a rate of return north of 10%.. or in other words.. some rate of return that isn't easily obtained through investing in low risk bonds or something like that. According to my math ( using $50 million as an annual profit estimate) here are the rates of return at different price points: $800 mil - 6.25% / $1 bil - 5% / $1.3 bil - 3.85%. This is why I think Donald Trump will back out if the price is over $1 bil... it just doesn't make that much business sense at that point. Anyone who pays more than $1 billion is probably driven more by emotion than by business sense. This is actually a good thing for the Bills... if they were more profitable ( let's say they made $80 mil/year in profits) I think you'd see a lot more outsiders getting in on the action. Devils advocate. If they were more profitable I think we would be less worried about them leaving Buffalo Link to comment Share on other sites More sharing options...
Mr. WEO Posted August 14, 2014 Share Posted August 14, 2014 This has been discussed in other threads but, yeah, as business investments go this is a bad one. Your EBITDA (or any other measure of profit) will never justify the purchase price. What might justify the purchase price is the sale price when you sell the club years later. You have to bet that the NFL remains insanely popular and the market for NFL franchises stays overheated. Of course, there are a lot of perks to being an NFL owner. These can justify the price. Actually, it's an incredibly sound investment as long as you sell the team at some point. This is an asset that continuously appreciates. Small losses annually (no team ever loses annually) due to debt service would be negligible compared to post sale profit. It's a business that is nearly completely subsidized through revenue sharing. Every team is simply handed their player payroll by the league via TV contract money. If you've got the up front money, it's a can't lose non-stop party. When/if you grow tired of the club, you flip the team for many millions in profit. Link to comment Share on other sites More sharing options...
chris heff Posted August 14, 2014 Share Posted August 14, 2014 That's why I want Pegs. He has said that if he wants to make more money, he'll drill another gas well. Owning a sports team for him isn't about making money, or at least recouping his money. This is the first thing that came to mind. Link to comment Share on other sites More sharing options...
Lurker Posted August 14, 2014 Share Posted August 14, 2014 (edited) Im a little confused by this (mostly because of my own ignorance on finances for the bills) Mary Wilson's going to clear a cool $1 billion on a $25,000 bet Ralph made in 1959. That's a compound annual rate of return of 21%. Try finding any other investment you can get that kind of return on. NFL franchises are NOT about operating profit--return on invested capital is what makes them the golden goose of investment options. Edited August 14, 2014 by Lurker Link to comment Share on other sites More sharing options...
Kipers Hair Posted August 14, 2014 Share Posted August 14, 2014 When it comes time to sell - the investment has a nice return...just ask the Trust.... Link to comment Share on other sites More sharing options...
Seasons1992 Posted August 14, 2014 Share Posted August 14, 2014 5% of a lot is a lot. That's what I always say. Brilliant and thanks. I'm so happy that the BFA found those documents today. It pretty much means the team stays at home. I can't wait to get back for the Green Bay game and hopefully still be "in the hunt" according to CBS/Fox broadcast graphics guy. Link to comment Share on other sites More sharing options...
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