simpleman Posted August 14, 2014 Share Posted August 14, 2014 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. Exactly, there is more than just a yearly profit margin to consider in an investment. It is called Capital Gains! Link to comment Share on other sites More sharing options...
Lurker Posted August 14, 2014 Share Posted August 14, 2014 Got to be based on emotion, not hard cold business sense. An NFL franchise has been the best business investment of the last 30 years. Better than Microsoft, better than Apple, better than Berkshire Hathaway. Sure, past performance is no guarantee, blah, blah, blah. But the odds of an about-to-go-global NFL becoming less valuable in a media-obsessed world over the next decade-plus are less than the proverbial plant killing asteroid strike... Link to comment Share on other sites More sharing options...
stony Posted August 14, 2014 Share Posted August 14, 2014 I agree and I have been trying to ignore where his money came from. But what immediately comes to mind whenever I see that "drill another well" statement is he can take that another well and shove it up his ass. Actually it just occurred to me, people have been asking what the trust might not like about Pegula. That is one possibility, where his money came from. Admittedly a long shot, but I'm not sure what else they would not like about him. It's amazing how people won't ask questions or look the way when they collectively benefit from something. He's truly a modern day Carnegie or Rockefeller, except his philanthropic efforts include rebuilding an entire city. Link to comment Share on other sites More sharing options...
Bocephuz Posted August 14, 2014 Author Share Posted August 14, 2014 I would take a 5% return all day every day. You will not get anything close to that in government bonds or treasuries and ask your local bank or credit union for a CD that pays 5% and they'll laugh at you. The real beauty with this type of an investment is that even if it loses money, you can write the losses off and thus reduce your taxable exposure. This is huge, especially for the very wealthy. If you have a billion dollars you're not going to your local bank or buying the normal securities that Joe public buys Link to comment Share on other sites More sharing options...
GaryPinC 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. Let's not forget about this: http://www.forbes.com/sites/mikeozanian/2014/04/02/buying-buffalo-bills-would-save-donald-trump-a-fortune-in-taxes/ Not my expertise but sounds like the RDA is a pretty significant perk. Link to comment Share on other sites More sharing options...
TXBILLSFAN Posted August 14, 2014 Share Posted August 14, 2014 (edited) To many owners, it's not an investment in the purest sense where an individual is looking at rate of return and appreciation -- it's a purchase of an asset that one covets, like a rare painting or beachfront property. Those who buy, buy because they want to be part of the NFL. I think Buffalo needs an owner with that mindset. A traditional investor that manages the team for profit or appreciation, will more likely raise ticket prices, pressure local governments for exorbitant tax breaks or subsidies or ultimately want to move team out of this area. A benevolent billionaire is the perfect owner for Buffalo. Edited August 14, 2014 by TXBILLSFAN Link to comment Share on other sites More sharing options...
Mr. WEO Posted August 14, 2014 Share Posted August 14, 2014 It's amazing how people won't ask questions or look the way when they collectively benefit from something. He's truly a modern day Carnegie or Rockefeller, except his philanthropic efforts include rebuilding an entire city. If you are talking about Buffalo, you must be referring to Andrew Cuomo... Link to comment Share on other sites More sharing options...
Big Turk Posted August 15, 2014 Share Posted August 15, 2014 (edited) As we have slowly been finding out much of it is because prospective buyers have been told this team isn't going to be relocated...by the Trust, by the NFL and by powerful politicians... If a guy worth $7 Billion like Eli Broad gave up his bid after saying he was the person to bring football back to LA because the opposition from all those groups was too much, then I think we can all rest assured that there is a 0% chance of this team moving at this point... Edited August 15, 2014 by matter2003 Link to comment Share on other sites More sharing options...
bowery4 Posted August 15, 2014 Share Posted August 15, 2014 One thing that a bunch of people in this thread are forgetting or just plain overlooking is that inflation is at 3% Most investors are looking for more than 2% return (although a lot of points in the thread do point out how they beat that). It's not that bad an investment. You make 5% annually plus you get all your money back and then some when you sell. 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. many forget about appreciation 3% risk free and 5% muni yields exist only in textbooks. Welcome to the United States of Quantitative Easing. Fixed income yields are extinct. All hail equities! This^ http://www.forbes.com/sites/cameronkeng/2014/06/22/employees-that-stay-in-companies-longer-than-2-years-get-paid-50-less/ Link to comment Share on other sites More sharing options...
Buffalo Barbarian Posted August 15, 2014 Share Posted August 15, 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. good the less the better. Link to comment Share on other sites More sharing options...
8-8 Forever? Posted August 15, 2014 Share Posted August 15, 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. Correct. I do this stuff for a living and when you consider the terminal value of the team will be north of $2B in, say, 15 years when is it sold again, assuming the NFL simply grows modestly going forward , $30 million annual cash flow for each of 15 years growing , say 5% per year, plus $2B at the end is a good deal on $1B. This thing is not a toy at $1b, it is a reasonably safe investment, as they, as in real estate, "ain't makin' any more of it" Link to comment Share on other sites More sharing options...
Flutie Flakes Posted August 15, 2014 Share Posted August 15, 2014 If you have a billion dollars you're not going to your local bank or buying the normal securities that Joe public buys So billionaires don't diversify their portfolios in more vanilla investments like government treasuries and bonds or bank related investments. Any sound financial advisor will build a "safety net" around these types of instruments. Your missing the point, which is that the income earned on the investment is only a small part of the equation. You have an intangible asset that provides you a tax shelter. 5% earnings pale in comparison to the writeoff's you gain not only for this asset, but for any other business assets that you own as well. Link to comment Share on other sites More sharing options...
Doc Posted August 15, 2014 Share Posted August 15, 2014 Pegula has been a godsend for the city, but his investments are good business as well. Harborcenter spurs development that improves the city and makes his property even more valuable. I bet he envisions a state-of-the-art stadium/hotel/convention complex in ten years. Pegulaville, indeed. He'll make money. Whether he recoups what he invests in another question. But it's possible. I just don't think he's looking at it from a purely, or even mostly, money-making standpoint. Why would they consider this? And what's wrong with where he got his money from? Did he steal it? Good question. I was just going to ask this. Link to comment Share on other sites More sharing options...
Bocephuz Posted August 15, 2014 Author Share Posted August 15, 2014 (edited) So billionaires don't diversify their portfolios in more vanilla investments like government treasuries and bonds or bank related investments. Any sound financial advisor will build a "safety net" around these types of instruments. Your missing the point, which is that the income earned on the investment is only a small part of the equation. You have an intangible asset that provides you a tax shelter. 5% earnings pale in comparison to the writeoff's you gain not only for this asset, but for any other business assets that you own as well. What I'm saying is that institutional investors have access to things like hedge funds, trust and institutional products that pay a higher rate of return... the average Joe who has less than $10 million to invest doesn't have access to these vehicles Edited August 15, 2014 by Bocephuz Link to comment Share on other sites More sharing options...
thewildrabbit Posted August 15, 2014 Share Posted August 15, 2014 Personally I think its more the team, location and the fact that the franchise has been a loser for so long that is keeping the really high rollers away. Pegs has said if he wanted to make more money he would simply drill another gas well. I look and see a great opportunity for a billionaire to make even more money by buying the Buffalo Bills, and I would use Jerry Jones as my role model. Paid 150 million in 1989, and now the team is worth 2.5 billion. I think Bills fans are just as passionate for their football team as Dallas fans are, and perhaps even more so to support a loser for so long. Build a new state of the art 90k seat domed stadium with all the bells, and whistles. Then put a winning team on the field, and the fans & corporations will fill the suites, luxury boxes, and expensive seats. Sell the naming rights to the stadium. Team merchandise, concessions, parking. Then open the stadium up for other events. http://www.forbes.com/profile/jerry-jones/ I think Pegula will have a gold mine on his hand in the next few years. JMHO Link to comment Share on other sites More sharing options...
Big Turk Posted August 15, 2014 Share Posted August 15, 2014 Personally I think its more the team, location and the fact that the franchise has been a loser for so long that is keeping the really high rollers away. Pegs has said if he wanted to make more money he would simply drill another gas well. I look and see a great opportunity for a billionaire to make even more money by buying the Buffalo Bills, and I would use Jerry Jones as my role model. Paid 150 million in 1989, and now the team is worth 2.5 billion. I think Bills fans are just as passionate for their football team as Dallas fans are, and perhaps even more so to support a loser for so long. Build a new state of the art 90k seat domed stadium with all the bells, and whistles. Then put a winning team on the field, and the fans & corporations will fill the suites, luxury boxes, and expensive seats. Sell the naming rights to the stadium. Team merchandise, concessions, parking. Then open the stadium up for other events. http://www.forbes.com/profile/jerry-jones/ I think Pegula will have a gold mine on his hand in the next few years. JMHO Nobody in their right mind is building a 90K stadium here so 7 games a year get blacked out...that's just crazy talk! Link to comment Share on other sites More sharing options...
HOUSE Posted August 15, 2014 Share Posted August 15, 2014 (edited) Yes but the owner receives a free Luxury box with beer and everything .. Edited August 15, 2014 by HOUSE Link to comment Share on other sites More sharing options...
Ted William's frozen head Posted August 15, 2014 Share Posted August 15, 2014 Some people probably told Ralph Wilson in 1959 that he was throwing away good money. Link to comment Share on other sites More sharing options...
Kelly the Dog Posted August 15, 2014 Share Posted August 15, 2014 Some people probably told Ralph Wilson in 1959 that he was throwing away good money. It's well documented. The eight original owners were called "The Foolish Club" for trying to take on the nfl. Link to comment Share on other sites More sharing options...
MarkyMannn Posted August 15, 2014 Share Posted August 15, 2014 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. Lurker understands, he has it right Link to comment Share on other sites More sharing options...
OP Class75 Posted August 15, 2014 Share Posted August 15, 2014 many forget about appreciation Yep...Think about it like buying a dividend paying stock. If you can buy a stock that you expect to appreciate over time while paying a 5% annual dividend, that is a very fine investment. The only difference - In this case you have to buy the whole freakin' Company!!!! Link to comment Share on other sites More sharing options...
BuffaloBrad Posted August 15, 2014 Share Posted August 15, 2014 I've saw an estimate that the next round of TV contracts are expected to total $17 Billion per year. That means each team's share will be over $500 million before a single ticket is sold. Link to comment Share on other sites More sharing options...
beerme1 Posted August 16, 2014 Share Posted August 16, 2014 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. I think your name is Thomas. You also tried to buy the Dodgers fairly recently for a BILLION dollars also didn't you? Link to comment Share on other sites More sharing options...
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