What does Ralph want?

[Guest BackInDaDay]

Had this posted under another post for 15 minutes without a response.

 

There are many defending Ralph's opinion of the league's restructured revenue sharing plan and the new CBA. It's primarily to you folks that I pose this question.

 

What does Ralph want the league to do?

 

He doesn't have to share any of the $173M his club makes.

He gets an even cut of the TV,Tickets and Merchandise money.

He gets an additional $10 from the restructured revenue sharing to help offset the costs of the higher salary cap.

 

Seriously, what would be enough to make him happy?

What do you think Ralph would consider to be an equitable revenue sharing plan?

[Lofton80]

I found this post from another message board interesting.

 

"The fact is, despite a difference in local revenues Wilson will make a profit this year. The NFL shares 80+% of all revenue among teams, higher than any other league. Because of the TV money, all the player costs are more than covered before he does a thing. The only thing sharing more revenue would do is put more money in his pockets, not make his team more competitive. He is just making excuses for being cheap, because each team receives enough money through television to cover all of it's player payroll costs.

 

While Buffalo obviously does not have the corporate base of support that other communities do, they could be far more aggressive in marketing their team. Besides the obvious sources of revenue like naming rights, there are other avenues to explore.

 

Bob Kraft built his own TV station and provides his own programming. He is building a hotel and mall on the land around the stadium, and is using the stadium and team to market in other areas, like trade shows, conferences and such. Why should he share that revenue with Ralph Wilson? Why should he work so hard at maximizing his revenues so Wilson can sit around doing nothing and take a cut? What is stopping Wilson from exploring his own alternate avenues of generating revenues?

 

Each owner has a different situation. Guys like Irsay and Rooney inherited their teams, from their fathers, who bought the teams decades ago for comparatively short money. Irsay is getting a brand new stadium built almost completely on the public dime. Paul Brown had a stadium built and maintained by the public. McNair in Houston paid well over $700M for his team. Kraft paid around $200M for the team and stadium, then invested another $350M in a new stadium. Jeffrey Lurie and Dan Snyder paid big dollars for their teams. These teams have a lot of debt.

 

Large markets generally bring in more revenue. This is also why it costs more to purchase a team in a large market than a small one. This is America, and if one owner does a better job marketing locally and is making more money then good for him. Nobody is losing money.

 

Besides, there is no evidence that small-market teams are at a competitive disadvantage. I defy anyone to make the case.

 

Here is the breakdown of playoff teams last year based on market size:

 

Giants (1)

Chicago (3)

NE Pats (5)

Washington (8)

Tampa (12)

Seattle (13)

Denver (18)

Pittsburgh (22)

Indy (25)

Charlotte (27)

Cinncinnati (34)

Jacksonville (52)

 

Here is a list of teams in a top ten market, that did not make the playoffs:

 

Jets (1)

Philadelphia (4)

San Francisco (6)

Dallas (7)

Atlanta (9)

Houston (10)

[Buftex]

Had this posted under another post for 15 minutes without a response.

 

There are many defending Ralph's opinion of the league's restructured revenue sharing plan and the new CBA.  It's primarily to you folks that I pose this question.

 

What does Ralph want the league to do?

 

He doesn't have to share any of the $173M his club makes.

He gets an even cut of the TV,Tickets and Merchandise money.

He gets an additional $10 from the restructured revenue sharing to help offset the costs of the higher salary cap.

 

Seriously, what would be enough to make him happy?

What do you think Ralph would consider to be an equitable revenue sharing plan?

623506[/snapback]

 

 

Your question is an interesting one. I am not sure of the answer, but I can sort of understand Ralphs' (and other owners who buckled) reservations about this deal, the more I read.

 

It seems that what he is saying (and I am not saying I agree with it) is that the revenues the small market teams get from the larger revenue teams, will essentially, cover the salary cap increase. What they don't take into account, however, is all of the "extras". If the Cowboys, for instance, want to build a state of the art training complex, a Cowboys themed amusement park (don't laugh, JJ has it in his plans), it does widen the competitive gap between the haves and have-nots, when it comes to acquiring talent. Being a businessman, Ralph can likely afford those things, but it would shrink his personal profits to a level below what most sane businessmen would consider reasonable. The bottom line is, Ralph, and some of the other older owners, can't compete, financially, with the newer owners, like Paul Allen, the Glazers, Pat Bolan, etc etc....

 

Ralph doesn't own the Bills solely because he loves football, and the city of Buffalo. He owns them to make money as well. There is just a changing of the guard in the NFL right now. Ralph is just old enough to have seen it all. I can't blame him for being a little bitter.

[2003Contenders]

And correct me if I'm wrong -- but that 59.5% that we keep hearing tossed about is the CAP, not the minimum. So if the smaller market teams don't want to spend that much, they don't have to.

 

For what it's worth, those Bills teams in the late 80s and early 90s did pretty well with no cap in place -- and, in fact, the cap paid a significant role in dismantling them years later.

[JDG]

And correct me if I'm wrong -- but that 59.5% that we keep hearing tossed about is the CAP, not the minimum. So if the smaller market teams don't want to spend that much, they don't have to.

 

That sounds like an effective way to compete in the NFL.

 

For what it's worth, those Bills teams in the late 80s and early 90s did pretty well with no cap in place -- and, in fact, the cap paid a significant role in dismantling them years later.

 

There was also no unrestricted free agency. The Bills were able to draft good players *and* keep them. Big difference.

 

JDG

[PromoTheRobot]

I found this post from another message board interesting.

While Buffalo obviously does not have the corporate base of support that other communities do, they could be far more aggressive in marketing their team. Besides the obvious sources of revenue like naming rights, there are other avenues to explore.

 

Bob Kraft built his own TV station and provides his own programming. He is building a hotel and mall on the land around the stadium, and is using the stadium and team to market in other areas, like trade shows, conferences and such. Why should he share that revenue with Ralph Wilson? Why should he work so hard at maximizing his revenues so Wilson can sit around doing nothing and take a cut? What is stopping Wilson from exploring his own alternate avenues of generating revenues?

623539[/snapback]

This is true...and also NOT true. You do hear this song-and-dance on WEEI every day when they slam the "lazy" small market teams like Buffalo. What this arguement conveniently leaves out is that much of the Patriots revenue is tied to the fact they have won 3 Super Bowl in 4 years.

 

Kraft can get Coors Light and to pay him to use his team and stadium for their ad campaign because they are the CHAMPS! They can peddle hs team all over the country because there is a segment of fans who follow winners. The people now wearing Tom Brady jerseys probably have a Chicago Bulls jersey and a Dallas Cowboys jacket hanging in their closets too.

 

The Big Show on WEEI (which I like to call "Fat Club") blathers on and on how the rest of the NFL should follow Bob Kraft's lead. Well, all 32 teams can't be Super Bowl champions.

 

Kraft knows winning = revenue. His goal all along was to tip the playing field so that the NFL would be reduced to a league of 8 contenders and 24 feeder teams (like MLB is.) That way, his Patriots are assured of at least making the playoffs every year which, let's face facts, is the only way to keep the attention of Boston area sports fans.

 

Just look at the Red Sox. That team HAS TO make the playoffs each year to keep their spoiled fans interested in paying rip-off prices at Fenway. Boston is flush with cash, but it also is the ultimate fair-weather fan market. Give credit to Kraft for knowing his fans.

 

As far as the Bills are concerned, The new CBA is about the best they could hope for. They will never come close to the Patriots and Redskins in revenue, but they have to be more aggressive. That may mean higher ticket prices, corprate naming of the stadium, a shopping mall instead of an RV lot, etc.

 

Buffalo fans have to accept that keeping the Bills will become more expensive for everyone, and the way the team has done business before will have to change. That's the price of being in that exclusive club called the NFL.

 

PTR

[JDG]

I'm becoming to get a bit worried that Ralph Wilson was right that this was a bad labor deal for Buffalo.

 

According to Forbes, total 2004 revenues for the NFL were $6.029 billion. Applying a 59.5% of revenues salar cap, that works out $112 million cap per NFL team.

 

In 2004 the Bills earned $173 million. That means this salary cap would already be 65% of the Bills's revenues. Toss in coaching salaries, signing bonuses paid over the cap, scouting staffs, and Buffalo is probably getting close to 70% of revenues in labor costs.

 

That's probably good enough to survive. Indeed, under the new revenue-sharing plan, published reports indicate that low-revenue teams can expect about $10 million in shared revenues per year under the shared plan.

 

But here's the thing - what if the disparity between high-revenue and low-revenue franchises continues to grow? Buffalo is probably about tapped-out in terms of luxury boxes, and whatnot, whereas big-money markets like Boston and Washington probably have ample room for expansion. Moreover, both New York teams are going to be getting a new Stadium soon, which aught to vault both of them up into the top of the revenue standings.

 

So, if the New York franchises vault themselves into New England territory in revenue, and if the Top 10 revenue franchises exhibit a higher rate of growth than the small-market franchises, that $10 million in revenue sharing might start looking increasingly paltry, and the share of Buffalo's revenues consumer by labor will continue to go up, until it reaches the point of Buffalo simply no longer spending at the salary cap, no longer offering free agent signing bonus that put spending over the cap, and continuing only to hire below-market coaches.

 

The reality is surely more complicated than this back-of-the-envelope analysis, but it does have me more concerned than ever about the long-term future.

 

JDG

[JCBoston]

The only thing sharing more revenue would do is put more money in his pockets, not make his team more competitive. He is just making excuses for being cheap, because each team receives enough money through television to cover all of it's player payroll costs.

623539[/snapback]

 

This isn't correct.

 

Don't confuse the salary cap with the bottom line, which includes "cash over cap" -- the actual amount of money a team pays its players in any given year.

 

Just because a teams' cap is, say, $90M, that doesn't mean they are paying out exactly that amount. When you figure in bonuses, incentive clauses, etc, it is common for a team to disburse a payroll larger than the cap, which in all actuality is really just an accounting mechanism.

 

Teams like the Redskins, for instance, with plenty of available cash, can spend more "cash over cap" than a lower-income team. If they are willing to mortgage the future, like Snyder is wont to do, he can push that cash-over-cap into future years and never really have to pay the piper -- unless the CBA expires and all his bills come due. That is why the Redskins were going to have to cut half of their roster if the deal didn't get done.

 

Think of it like disposable income. If you're making enough to pay the bills, fine. But if you have more than you need, you can either pocket it (like Bill Bidwell) or "invest" like Dan Snyder.

[Steven in MD]

It is quite simple....

 

Teams with more money (Redskins) can give out more upfront money, giving them an unfair advantage in the FA market. Since these teams know that the cap expands every year, they can "mortgage" the future to win today. This strategy might not win a SB, but it keeps teams competitive, and more importantly puts fans in the seats and buying merchandise.

 

I think Ralph wanted a HARD cap, where the amount of signing bonuses are limited. But really, I think he realized his team suffered the last 5 yrs, and wanted an edge to stop teams from continuing to stock pile players for a 1-3 year run.

[Golden Wheels]

Just look at the Red Sox.  That team HAS TO make the playoffs each year to keep their spoiled fans interested in paying rip-off prices at Fenway.  Boston is flush with cash, but it also is the ultimate fair-weather fan market. 

 

623563[/snapback]

 

I agreed with your post up until you slammed Red Sox fans in your argument. The Red Sox have done very well attendance-wise since 1967 even during the years they did not make the playoffs.

 

(Personally, if someone sticks with a team when they haven't won a championship in 80 plus years, I wouldn't call them spoiled.)

 

They don't HAVE to make the playoffs every year to ensure high attendance. The attraction is Fenway Park, and they get busloads of tourists from all over New England for every game. If you live in New Hampshire, you should have known that already.

 

But you were correct to when you said it's not accurate to compare Bob Kraft's situation to Ralph Wilson's.

[Lurker]

It is quite simple....

 

Teams with more money (Redskins) can give out more upfront money, giving them an unfair advantage in the FA market.  Since these teams know that the cap expands every year, they can "mortgage" the future to win today.  This strategy might not win a SB, but it keeps teams competitive, and more importantly puts fans in the seats and buying merchandise.

 

I think Ralph wanted a HARD cap, where the amount of signing bonuses are limited.  But really, I think he realized his team suffered the last 5 yrs, and wanted an edge to stop teams from continuing to stock pile players for a 1-3 year run.

623579[/snapback]

 

Excellent post. I agree with you that the up-front money is increasingly important in signing FAs and structuring contracts. Ralph has to dip into his own pocket to match the kind of bonus spending that Snyder/Jones/Kraft can expense from cash flow. That's a big disadvantage unless you're a Paul Allen-type who can burn cash til the cows come home.

[2003Contenders]

The bottom line is that one hand feeds the other. If ownership is willing to pay the money to put a quality team out there on the field -- and the team wins, then it will in turn help generate extra revenue. Yes, the Patriots play in a larger market, but their recent rise toward the top in revenue, I think, has more to do with their success in recent years.

 

Washington's situation is so unique because the area is so affluent -- and because the owner is always trying to find new ways to make extra cash. For example, how much more annual revenue could Ralph generate if he were to sell the naming rights to RWS? There are many who despise SNyder for his anything-for-a-buck mind-set, but the other owners in the league, including Ralph, that want a piece of his action aren't complaining, are they?

 

My intent isn't to beat up on Ralph here. I think his "No" vote was more of a protest vote, because he did not like the way that the owners were pressured into having to digest a great deal of information in a short period of time -- and then make a unilateral business decision that affects the economic climate for the next 6 years and beyond. I actually see where he was coming from with that.

 

His latest responses come off as his being a bit stubborn about the vote itself, rather than what he was actually voting on. I just hope that he doesn't continue to be stubborn about this to the point of refusing to shell out the necessary money that we need for free agents just to try to further prove his point.

[Guest BackInDaDay]

I'm becoming to get a bit worried that Ralph Wilson was right that this was a bad labor deal for Buffalo.

 

According to Forbes, total 2004 revenues for the NFL were $6.029 billion.  Applying a 59.5% of revenues salar cap, that works out $112 million cap per NFL team. 

 

In 2004 the Bills earned $173 million.  That means this salary cap would already be 65% of the Bills's revenues.  Toss in coaching salaries, signing bonuses paid over the cap, scouting staffs, and Buffalo is probably getting close to 70% of revenues in labor costs. 

 

That's probably good enough to survive.  Indeed, under the new revenue-sharing plan, published reports indicate that low-revenue teams can expect about $10 million in shared revenues per year under the shared plan. 

623572[/snapback]

 

The new Defined Gross Revenue (DGR) is no longer just the TV, Ticket and Merchandise money. It now includes all of what was considered 'retained revenue', the money a club makes from additional resources. The player's share (59.5%) of the new DGR is split up 32 ways to come up with a team salary cap.

 

This years cap number is $102M per team.

This year Ralph will be given his share of the TV, Ticket and Merchandise money.

In past years this shared revenue pretty much covered the salaries because the cap was derived from it. Although it's true that the new caps will rise as the new DGR rises, the league has tried to keep the higher cap from crippling the low-end 17 franchises by letting them keep all of the money they make and giving them additional funds from the high-end clubs.

 

The cap for '06 was going to be $95M if the CBA hadn't been extended, and because that's derived from the old shared revenue (TV, Tickets & Merch), that means that last year each team received approximatel $95M in shared revenue.

 

Let's add up Ralph's take.

$95M from shared revenue.

$173M from retained revenue (which he and 16 other owners get to keep intact)$10M subsidy from other owners.

 

That's $278M.

If he spends up to the cap limit he's left with $176M.

 

This may not be what the high-end 15 clubs have to throw towards bonuses, but it's enough to get some top-shelf talent in FA. And if any measures have been taken in the restructuring to 'reward' teams for using salary as opposed to bonuses to pay players, this will further level the playing field. I've read some references here at TBD about restructured bonus amortization schedules, but I haven't seen any particulars.

 

I'm sorry fellas, I really believe this is as good as it's gonna get for the low-end 17. It's all about compromise and I think the high-end owners have shown that they understand that their fates are tied to the fates of the least among them.

[Wiz]

I'm becoming to get a bit worried that Ralph Wilson was right that this was a bad labor deal for Buffalo.

 

According to Forbes, total 2004 revenues for the NFL were $6.029 billion.  Applying a 59.5% of revenues salar cap, that works out $112 million cap per NFL team. 

 

In 2004 the Bills earned $173 million.  That means this salary cap would already be 65% of the Bills's revenues.  Toss in coaching salaries, signing bonuses paid over the cap, scouting staffs, and Buffalo is probably getting close to 70% of revenues in labor costs. 

 

That's probably good enough to survive.  Indeed, under the new revenue-sharing plan, published reports indicate that low-revenue teams can expect about $10 million in shared revenues per year under the shared plan. 

 

But here's the thing - what if the disparity between high-revenue and low-revenue franchises continues to grow?  Buffalo is probably about tapped-out in terms of luxury boxes, and whatnot, whereas big-money markets like Boston and Washington probably have ample room for expansion.  Moreover, both New York teams are going to be getting a new Stadium soon, which aught to vault both of them up into the top of the revenue standings.

 

So, if the New York franchises vault themselves into New England territory in revenue, and if the Top 10 revenue franchises exhibit a higher rate of growth than the small-market franchises, that $10 million in revenue sharing might start looking increasingly paltry, and the share of Buffalo's revenues consumer by labor will continue to go up, until it reaches the point of Buffalo simply no longer spending at the salary cap, no longer offering free agent signing bonus that put spending over the cap, and continuing only to hire below-market coaches.

 

The reality is surely more complicated than this back-of-the-envelope analysis, but it does have me more concerned than ever about the long-term future.

 

JDG

623572[/snapback]

Well put. While I am no great fan of RW, I think he is looking out for the best interest of Buffalo. The factors you mentioned could eventually lead to the Bills, under a new owner, to be moved to a more profitable market.

[JDG]

The new Defined Gross Revenue (DGR) is no longer just the TV, Ticket and Merchandise money.  It now includes all of what was considered 'retained revenue', the money a club makes from additional resources.  The player's share (59.5%) of the new DGR is split up 32 ways to come up with a team salary cap.

 

This years cap number is $102M per team. 

This year Ralph will be given his share of the TV, Ticket and Merchandise money.

In past years this shared revenue pretty much covered the salaries because the cap was derived from it.  Although it's  true that the new caps will rise as the new DGR rises, the league has tried to keep the higher cap from crippling the low-end 17 franchises by letting them keep all of the money they make and giving them additional funds from the high-end clubs.

 

The cap for '06 was going to be $95M if the CBA hadn't been extended, and because that's derived from the old shared revenue (TV, Tickets & Merch), that means that last year each team received approximatel $95M in shared revenue.

 

Let's add up Ralph's take.

$95M from shared revenue.

$173M from retained revenue (which he and 16 other owners get to keep intact)$10M subsidy from other owners.

 

That's $278M. 

If he spends up to the cap limit he's left with $176M. 

 

This may not be what the high-end 15 clubs have to throw towards bonuses, but it's enough to get some top-shelf talent in FA.  And if any measures have been taken in the restructuring to 'reward' teams for using salary as opposed to bonuses to pay players, this will further level the playing field.  I've read some references here at TBD about restructured bonus amortization schedules, but I haven't seen any particulars.

 

I'm sorry fellas, I really believe this is as good as it's gonna get for the low-end 17. It's all about compromise and I think the high-end owners have shown that they understand that their fates are tied to the fates of the least among them.

623653[/snapback]

 

The above is not accurate.

 

Ralph's total revenue for 2004 was $173 million.

 

I also have not heard that the definition of fully-shared DGR is changing - but if it is true, I would be interested to see more eveidence of that.

 

JDG

[Guest BackInDaDay]

Excellent post.  I agree with you that the up-front money is increasingly important in signing FAs and structuring contracts.  Ralph has to dip into his own pocket to match the kind of bonus spending that Snyder/Jones/Kraft can expense from cash flow.  That's a big disadvantage unless you're a Paul Allen-type who can burn cash til the cows come home.

623601[/snapback]

 

Snyder's dips into his pocket of $280M.

Wilson's dips into his pocket of $173M.

 

Should Snyder find the average amount of money all the owners have in their pockets and write checks until they've all got the same?

 

Does that sound reasonable or ridiculous?

Probably somewhere between the two. Which is why the owners addressed it when restructuring their revenue sharing plan.

[obie_wan]

The bottom line is that one hand feeds the other. If ownership is willing to pay the money to put a quality team out there on the field -- and the team wins, then it will in turn help generate extra revenue. Yes, the Patriots play in a larger market, but their recent rise toward the top in revenue, I think, has more to do with their success in recent years.

 

Washington's situation is so unique because the area is so affluent -- and because the owner is always trying to find new ways to make extra cash. For example, how much more annual revenue could Ralph generate if he were to sell the naming rights to RWS? There are many who despise SNyder for his anything-for-a-buck mind-set, but the other owners in the league, including Ralph, that want a piece of his action aren't complaining, are they?

 

My intent isn't to beat up on Ralph here. I think his "No" vote was more of a protest vote, because he did not like the way that the owners were pressured into having to digest a great deal of information in a short period of time -- and then make a unilateral business decision that affects the economic climate for the next 6 years and beyond. I actually see where he was coming from with that.

 

His latest responses come off as his being a bit stubborn about the vote itself, rather than what he was actually voting on. I just hope that he doesn't continue to be stubborn about this to the point of refusing to shell out the necessary money that we need for free agents just to try to further prove his point.

623618[/snapback]

 

 

 

you miss the point.

 

Ralph does not have a bottomless wallet from which signing bonus money can be withdrawn.

 

The Bills will not be big players in free agency because teh cash is not there to support it.

 

Also why the Bills under ralph will never hire expensive coaches

 

Also, under the new cap - the TV deal does not cover player cost any more.

[Steven in MD]

Snyder's dips into his pocket of $280M.

Wilson's dips into his pocket of $173M.

 

Should Snyder find the average amount of money all the owners have in their pockets and write checks until they've all got the same? 

 

Does that sound reasonable or ridiculous?

Probably somewhere between the two.    Which is why the owners addressed it when restructuring their revenue sharing plan.

623673[/snapback]

Actually, by limiting the amount of signing bonus in a year will give owners like Synder more money in their pockets. I would think a proposal that has a cap of $100 million and no more than $25 in a year for signing bonus would "level" the field.

[Fan in San Diego]

Ralph didn't vote no because he wanted more money as much as he thought the process was rushed and hastily put together which leads to bad business decisions. He wanted more time to evaluate and put together a more well thought out plan.

That's the spin I get from what I've seen and heard.

[Guest BackInDaDay]

The above is not accurate.

 

Ralph's total revenue for 2004 was $173 million.

 

I also have not heard that the definition of fully-shared DGR is changing - but if it is true, I would be interested to see more eveidence of that.

 

JDG

623661[/snapback]

 

The same Forbes list that puts the Bills 2004 revenue at $173M puts the Redskins at $287M. If these amounts include shared revenue then reduce the 2004 shared revenue from both. The $100M deficit remains, and that's the crux of the matter.

 

The DGR was never based on all revenues, only the revenues from TV, Tickets & Merchandise. Did you think it was already based on all revenues?

 

The terminology may have changed in the CBA. I don't know. Perhaps the DGR plus all additional revenue is now called Extended Gross Revenue. I'm just calling it DGR, but whatever it's now called, it's the amount of all revenue. Multiply it by 59.5%, divide it by 32, and you've got the $102M team salary cap.