Article: McDermott Concerned about PSE Dysfunction

[Warren Zevon]

2 minutes ago, oldmanfan said:

Epic fail?  Spiraling out of control?  Calm down.  It will turn around at some point.  I think Kruger might have what it takes. 

 

 

 

I admire your optimism. Kruger might but the GM is dumber than a box of Flutie Flakes. 

[oldmanfan]

13 minutes ago, billsfan89 said:

 

There is a reasonable limit to what you can eat as far as losses. But if you are a billionaire worth 5 billion dollars (as is Pegula's suggested net worth) eating 20-40 million in losses yearly can sound like a lot but in reality is a very small position of his wealth (Even at 40 million a year we are talking about less than 1% of his wealth) considering that you could make double that on a very stable bond I don't think his lifestyle or wealth is all that threatened by Sabers and sports yearly losses (and considering the write off on taxes that number does come down a bit.)

 

I think that there also exists the matter of how much the franchise is appreciated in value yearly as well. Beyond the business aspects the fact remains that modern sports ownership is a loss leader operations wise. These teams are the toys of billionaires and there are many owners willing to eat 20-40 million in operating losses in order to win as many games as possible. So if you aren't willing to treat the team like a loss leader than you are likely going to be behind the eight ball and handicap your team from winning sustainably. 

 

So the question then remains does Pegula have the stomach to be a modern sports owner? Or does he need to make as much money as possible? Is he willing to eat the losses on the Saber and on occasion the Bills?

None of us know their balance sheets.  I think he can and would stomach losses on the Sabres, but right now their businesses are being adversely affected by this crisis as are everyones.  If you look historically at what they've done in terms of improving locker rooms, being willing to get rid of coaches that didn't work out and eat the cost, I think Terry is willing to put the money in.  

[billsfan89]

10 minutes ago, Mr. WEO said:

 

For guys like Ralph and Jerry it was an investment that paid off massively and was/is the majority of their net worth.

 

You can't lose money investing in an NFL team.  Buy one, make tens of millions in profits per year whether the team wins games or not, sell it at any time for 10% profit (compounded annually).  It's the best investment in the world.

 

Like any asset a sports team tends to appreciate. However if you factor in yearly operating losses that return on investment is probably less than that of an index fund. For example let’s say you buy the team for 500 million and 15 years later sell it for a billion dollars (which is a healthy but fair market estimate) that sounds like a super good investment to double your money in 15 years. BUT factor in 100-150 million in operating losses and that return is more like 70%. So 70% still sounds good however if in 2005 if you invested in an index fund you would have gotten a 232% return on investment without dividends reinvested and that’s now during the market crash (you would have collected 30% in dividends too.) 

 

So yes some have made good money but odds are the market probably would make you more money. 

[oldmanfan]

1 minute ago, Warren Zevon said:

 

I admire your optimism. Kruger might but the GM is dumber than a box of Flutie Flakes. 

Botterill is an example of a guy that was highly thought of coming from a solid winning organization, who just has not measured up yet.  As I said above, sometimes you just don't know until you give a guy the shot.

[Warren Zevon]

Just now, oldmanfan said:

Botterill is an example of a guy that was highly thought of coming from a solid winning organization, who just has not measured up yet.  As I said above, sometimes you just don't know until you give a guy the shot.

 

He has had 3 years and most of the roster is players he has brought in. The team still sucks. Next!

[May Day 10]

I wonder how much is wasted on terrible hires and paying people not to work.

 

 

They were at the very top of the NHL in salary this season.  So much so that they had to juggle players in and out of Rochester to try to stay within the cap, and they still likely ended up over and will be penalized.  With a team that was probably in the bottom 5 in the league.  And they still, for some reason spent assets and money on upcoming UFAs such as Simmonds and Frolik.  

 

 

Maybe cut it out with this marketplace of ideas approach and get some help to refine and run the hockey team the right way.  Home playoff games that we havent seen in nearly a decade, mean breaking even to most small market hockey teams.  

 

 

The next step (this summer or next) is promote Kruger to GM and Taylor to HC.  Cant wait to watch more inexperienced people fail again for 3-4 more years before we can hope the Pegulas back into the right philosophy.  

Edited April 21, 2020 by May Day 10

[IDBillzFan]

20 hours ago, ngbills said:

But but the Pegula's are great, wait maybe they are just rich billionaires, no they saved the Bills from Bon Jovi and Trump, they made the playoffs. 

 

My hope - own the team and leave it alone. Invest the money and resources required and let the football brains do their job. 

 

Seriously? This is where we are? If only the rich billionaires would buy us all a toy and leave us alone to play with it?

 

Man, I hate the off season. Some of you people lose your minds. 

 

This team stands in the best position it has been in in years. Now, if we could just get rid of those pesky billionaires who ruin everything!

 

Batschittcrazy.

[JoeK]

This bulls*** better not scare McBeane out of town. Unreal. Kim Pegula should not be in charge of 2 professional sports teams. These people dove in head first and spread resources all over the place. Its blowing up in their face now.

[oldmanfan]

2 minutes ago, Warren Zevon said:

 

He has had 3 years and most of the roster is players he has brought in. The team still sucks. Next!

i suspect you're right this off season.  I'm wondering if they do with Kruger like they did with McD and let him have input on his GM.  for that matter, I think if I were Terry I'd have McD and Beane sit down with Kruger and talk about philosophies, etc.  

[Warren Zevon]

Just now, oldmanfan said:

I'm wondering if they do with Kruger like they did with McD and let him have input on his GM.

 

I hope so. They need to take advice from as many smart hockey people as they can.

[oldmanfan]

4 minutes ago, May Day 10 said:

I wonder how much is wasted on terrible hires and paying people not to work.

 

 

They were at the very top of the NHL in salary this season.  So much so that they had to juggle players in and out of Rochester to try to stay within the cap, and they still likely ended up over and will be penalized.  With a team that was probably in the bottom 5 in the league.  And they still, for some reason spent assets and money on upcoming UFAs such as Simmonds and Frolik.  

 

 

Maybe cut it out with this marketplace of ideas approach and get some help to refine and run the hockey team the right way.  Home playoff games that we havent seen in nearly a decade, mean breaking even to most small market hockey teams.  

 

 

The next step (this summer or next) is promote Kruger to GM and Taylor to HC.  Cant wait to watch more inexperienced people fail again for 3-4 more years before we can hope the Pegulas back into the right philosophy.  

Experienced people are not necessarily the answer.  I noted above guys like Bylsma and Babcock, both Stanley Cup winners who got canned.  Just have to keep trying the best you can, talk to as many folks as you can and try to get the right guys. 

[Mr. WEO]

1 minute ago, billsfan89 said:

 

Like any asset a sports team tends to appreciate. However if you factor in yearly operating losses that return on investment is probably less than that of an index fund. For example let’s say you buy the team for 500 million and 15 years later sell it for a billion dollars (which is a healthy but fair market estimate) that sounds like a super good investment to double your money in 15 years. BUT factor in 100-150 million in operating losses and that return is more like 70%. So 70% still sounds good however if in 2005 if you invested in an index fund you would have gotten a 232% return on investment without dividends reinvested and that’s now during the market crash (you would have collected 30% in dividends too.) 

 

So yes some have made good money but odds are the market probably would make you more money. 

 

Not your car.  Maybe not your house.

 

Anyway, no need to guess what your team value will be:  the average NFL team value in 2002 was 532 million.  last year it was 2.9 billion.  That's not 'double your money.  In fact the time to double your money in the NFL was 6 years from 2002-2008.  It was 3 years from 2013-2016.

 

Also, there are no "operating losses", essentially, in owning an NFL team.  All labor costs are covered by the network contracts.  With theoretically no stadium or purchase deb to service, any team generated revenue is gravy.

[billsfan89]

1 minute ago, oldmanfan said:

None of us know their balance sheets.  I think he can and would stomach losses on the Sabres, but right now their businesses are being adversely affected by this crisis as are everyones.  If you look historically at what they've done in terms of improving locker rooms, being willing to get rid of coaches that didn't work out and eat the cost, I think Terry is willing to put the money in.  

 

I hope you are right in that they are willing to take short term losses in order to make the team as successful as possible. But I think as a fan it is fair to speculate that if the Pegula's insist on a team being a profit center they could cut costs if things get tough. Especially if they are heavily invested in the oil and gas industry. 

[oldmanfan]

2 minutes ago, billsfan89 said:

 

I hope you are right in that they are willing to take short term losses in order to make the team as successful as possible. But I think as a fan it is fair to speculate that if the Pegula's insist on a team being a profit center they could cut costs if things get tough. Especially if they are heavily invested in the oil and gas industry. 

I'm not sure how heavily invested they are right now in oil and gas.  They sold their company for the billions they now have, and from some of the discussion above they have a relatively small company with one of the daughters (a geologist) still in the industry.  I don't think Terry necessarily sees the Sabres as a huge profit center, and given he's been a big hockey fan forever I suspect he's OK with some loss, but it would depend on the extent of the loss.  If this viral crisis extends out a long time it's going to alter all professional sports in ways we can't really imagine as of right now.

 

It would be interesting to get data on other NHL teams to see how bad off they are with the current crisis.  

[RiotAct]

23 minutes ago, oldmanfan said:

Epic fail?  Spiraling out of control?  Calm down.  It will turn around at some point.  I think Kruger might have what it takes. 

 

 

it’s a confirmed fact that the Sabres have been an epic fail since the Pegulas took over.

[oldmanfan]

2 minutes ago, RiotAct said:

it’s a confirmed fact that the Sabres have been an epic fail since the Pegulas took over.

It has been a bad run to be sure.  But it will eventually turn around just like is happening with the Bills.

 

 

[Mr. WEO]

31 minutes ago, oldmanfan said:

Epic fail?  Spiraling out of control?  Calm down.  It will turn around at some point.  I think Kruger might have what it takes. 

 

 

 

 

Kruger is a soccer coach, no?  And Olympics guy years ago? This is the guy who is going to lead the Sabres out of 8 years of irrelevance?  Had Freddy Kruger hung up the blades?  They lsot 22 of their last 35 games.

Edited April 21, 2020 by Mr. WEO

[jimmy10]

Since McDermott and Beane came on board, their regime has been famously tight-lipped. Does it strike anyone else as odd that all of the sudden “sources close to” McDermott are flapping their gums?

[billsfan89]

1 minute ago, Mr. WEO said:

 

Not your car.  Maybe not your house.

 

Anyway, no need to guess what your team value will be:  the average NFL team value in 2002 was 532 million.  last year it was 2.9 billion.  That's not 'double your money.  In fact the time to double your money in the NFL was 6 years from 2002-2008.  It was 3 years from 2013-2016.

 

Also, there are no "operating losses", essentially, in owning an NFL team.  All labor costs are covered by the network contracts.  With theoretically no stadium or purchase deb to service, any team generated revenue is gravy.

 

The NFL has experienced insane growth that would probably have eclipsed an index fund even with dividends reinvested. I was more so talking about sports leagues in general being an investment compared to an index fund. However the NFL does have operating losses for some teams (the TV deals only cover the player salaries) as there exists a large operation needed and other forms of revenue don’t always cover it. But let’s say that even if teams have a operating loss the NFL was a good investment to make. 

 

However my point is that if you are a billionaire investing in sports is probably not the best way to make money. It is a speculative endeavor filled with operating losses and a reliance on a Television medium whose bottom might fall out sooner rather than later. Billionaires get into pro-sports as a way to have fun and network into other business ventures. They don’t get into it as an investment. Could it be a great investment? Yes of course, but overall the purpose of getting into sports as a billionaire is more so as a hobby/toy than anything else. 

[Bleeding Bills Blue]

21 minutes ago, Warren Zevon said:

 

He has had 3 years and most of the roster is players he has brought in. The team still sucks. Next!

 

And what did he inherit from a prospect pool?  Oloffson?  Is that really it?  The O'reilly trade is terrible, but was his hand forced?  Do you fire him for that when TP may have made the final call?  That kind of thing gets around if you do that.  

 

Let me emphasize that I don't think he did a good job.  The Skinner move was alright.  Hutton has been just terrible this year after a promising start, but they really need to fix goaltending.  I'm just saying like... what does one even do to fix the middle six? Prospects don't show up in 3 years since they're all drafted at age 18.  I think he's trying to take a more patient approach to a rebuild than what Murray did.  Murray gutted the prospect pool depth for NHL players, and built a flawed roster.