Cash to the Cap explained by Chris Brown

[Kelly the Dog]

The value of the franchise has no bearing on anything unless/until Ralph sells the team.

 

And how much profit do you envision Ralph is making?

Depends on what you mean by profit. There isn't a way to prove this, of course, but I would imagine that Ralph easily made over 50 million last year before taxes. This opinion is based on the Forbes numbers from last year, the fact the TV money jumped 36% from 2005 to 2006 (which was tens of millions per team), we spent almost 10 million under the cap which was unusual, the other contracts the NFL signed recently with Internet firms and other corporate sponsors for millions and millions, the 5 million Ralph takes in salary (I am not positive about this but I heard it discussed a couple times and there is no reason to think he doesn't, nor do I think it's wrong in any way), and other monies I think we don't even know about that isn't included in the Forbes numbers. I do not, however, think he made that much in previous years. The main differences were the huge jump in TV money, the large amount under the cap, and the new contracts the NFL has been wracking up lately with corporations like Sprint.

 

I don't think people understand the enormous amounts of money the NFL generates in corporate sponsorships. Some of the beer companies contracts with the NFL are 300, 400 million (I know Coors was 300 million several years ago). Three years ago the NFL had about 500 million in sponsorships and it's likely closer to a billion by now in just this year. That's an enormous amount of money that has nothing to do with TV, or tickets or jersey sales or concessions or luxury boxes.

[Dibs]

................by spending what they did on their franchises, MADE Ralph Wilson HUNDREDS OF MILLIONS...........

How?

[Kelly the Dog]

How?

This is in very simplistic terms, but basically NFL teams a decade or two ago were worth 100-200 million each. That's how much they were bought and sold for. For example, in 1993 Carolina's owner paid 140 million for his expansion franchise. 4-5 years later, Cleveland's Al Lerner (who died and now Randy Lerner his son owns the team), got in a bidding war and paid about 450-500 million for the expansion franchise. 300 million more. That made each NFL franchise jump in its worth 100-200 million overnight because that became the going rate. Snyder came in and paid 800 million, although his included the stadium. But still, that jumped all of the other franchises up another 100-200 million. And just because of a few sales, Ralph's Bills went from being worth less than 150 million in 1993 to now being worth 750 million or more 14 years later.

[Dibs]

This is in very simplistic terms, but basically NFL teams a decade or two ago were worth 100-200 million each. That's how much they were bought and sold for. For example, in 1993 Carolina's owner paid 140 million for his franchise. 4-5 years later, Cleveland's Al Lerner (who died and now Randy Lerner his son owns the team), got in a bidding war and paid about 450-500 million for the expansion franchise. 300 million more. That made each NFL franchise jump in its worth 100-200 million overnight because that became the going rate. Snyder came in and paid 800 million, although his included the stadium. But still, that jumped all of the other franchises up another 100-200 million. And just because of a few sales, Ralph's Bills went from being worth less than 150 million in 1993 to now being worth 750 million or more 14 years later.

None of that has any bearing at all. The new owners came in and purchased franchises at what the market would bare. If they had paid more.....or less.....that would be what the franchises would be worth. They increased in value because the product....called the NFL.....has become more & more profitable to own. You imply the new owners didn't make sound business decisions & simply wanted to pay tonnes of extra cash so they could be in the club.

Keep in mind, I was not & am not arguing that RW & the Bills are poor. The argument is that the big franchises cost the smaller ones operational profit.

 

I'm going to re-post what I said before.....slightly changed to be closer to NFL

 

The world of the NFL.

It's like you having a co-worker who generates more business for himself than you do for yourself.......but in doing so he incurs bigger business expenses....some of which you have to pay. The more money he makes, the more you have to pay.

That is what the bigger market teams are doing to the smaller ones.

That is why RW is making such a fuss.

 

Does anyone really thinks he should bend over & take it?

 

Kelly, if you were in the situation at work......& you had been getting annual salary increases due to the company doing so well(equivalent of franchise buying cost increase you wrote of)......would you put up with a decrease in income due to someone else's operational expenses being higher due to them achieving a bigger income?

[Kelly the Dog]

None of that has any bearing at all. The new owners came in and purchased franchises at what the market would bare. If they had paid more.....or less.....that would be what the franchises would be worth. They increased in value because the product....called the NFL.....has become more & more profitable to own. You imply the new owners didn't make sound business decisions & simply wanted to pay tonnes of extra cash so they could be in the club.

Keep in mind, I was not & am not arguing that RW & the Bills are poor. The argument is that the big franchises cost the smaller ones operational profit.

 

I'm going to re-post what I said before.....slightly changed to be closer to NFL

Kelly, if you were in the situation at work......& you had been getting annual salary increases due to the company doing so well(equivalent of franchise buying cost increase you wrote of)......would you put up with a decrease in income due to someone else's operational expenses being higher due to them achieving a bigger income?

It's not a good analogy. Ralph's profits are going up this year not down. The NFL is basically one company, with satellite offices. The corporation makes a fortune, over six billion, and everyone of the 32 franchises makes a huge amount of money from the corporation, over 150 million each, because of the popularity of the company. And then some make more than others in, say, tips. A lot more. But they pay a lot more, too. But that doesn't mean they don't deserve it, or generate it, or they should support franchises not pulling their weight. It's a tough argument. For example, when Jerry Jones, who I hate as much as anyone, started doing side deals with corporate sponsors outside of the NFL, the Cowboys were selling 25% of the NFL merchandise and getting 3% of the profits from it. Was that fair to him? Ralph had to pay $25,000 for his franchise. Snyder paid 800 million for his. Is that fair? And yes, these guys DID just throw in extra hundreds of millions to be part of a club and not what the franchises were worth.

[Dr. Fong]

I guess you missed the latest party line. We don't need good players because we use a Cover-2 Defense.

 

 

 

Yeah they should just scour the CFL rosters and bring in all the undersized (penetrating) defensive linemen that they can find so that they can run the Cover 2 more effectively.

[Dibs]

It's not a good analogy. Ralph's profits are going up this year not down. The NFL is basically one company, with satellite offices. The corporation makes a fortune, over six billion, and everyone of the 32 franchises makes a huge amount of money from the corporation, over 150 million each, because of the popularity of the company. And then some make more than others in, say, tips. A lot more. But they pay a lot more, too. But that doesn't mean they don't deserve it, or generate it, or they should support franchises not pulling their weight. It's a tough argument. For example, when Jerry Jones, who I hate as much as anyone, started doing side deals with corporate sponsors outside of the NFL, the Cowboys were selling 25% of the NFL merchandise and getting 3% of the profits from it. Was that fair to him? Ralph had to pay $25,000 for his franchise. Snyder paid 800 million for his. Is that fair? And yes, these guys DID just throw in extra hundreds of millions to be part of a club and not what the franchises were worth.

Yes it's fair that new owners pay more than previous owners.....for many, many reasons.....& rubbish, the new owners are not mega rich because they buy businesses for too much money just to be in the cool club.....and even if it were so, RW helped make the club cool so should reap the benefits.

 

No it's not fair(on the surface) that revenue is shared. The owners all bought into it though......so no complaints.....and it has been THE major reason as to why the NFL has thrived.

 

None of that relates to my point......

Here is the situation....

When Jerry Jones makes a tonne of extra profit due to luxury boxes etc(from any area that is not shared revenue).....that money is counted towards the cap numbers.....& every team has to pay the players more without receiving any extra monies.

It directly relates to my analogy.

Here it is again.

Your co-worker is making more money for himself.....and you have to pay for some of his operational expenses without being recompenses anything.

That is what RW is upset about.....not that he doesn't make a dollar.

[Kelly the Dog]

Yes it's fair that new owners pay more than previous owners.....for many, many reasons.....& rubbish, the new owners are not mega rich because they buy businesses for too much money just to be in the cool club.....and even if it were so, RW helped make the club cool so should reap the benefits.

 

No it's not fair(on the surface) that revenue is shared. The owners all bought into it though......so no complaints.....and it has been THE major reason as to why the NFL has thrived.

 

None of that relates to my point......

Here is the situation....

When Jerry Jones makes a tonne of extra profit due to luxury boxes etc(from any area that is not shared revenue).....that money is counted towards the cap numbers.....& every team has to pay the players more without receiving any extra monies.

It directly relates to my analogy.

Here it is again.

Your co-worker is making more money for himself.....and you have to pay for some of his operational expenses without being recompenses anything.

That is what RW is upset about.....not that he doesn't make a dollar.

I completely understand your point, and your analogy, I just simply don't agree with it. Yes, if you take it on its surface, isolated, and away from all other economics of the league, your example, and Jerry Jones, are "unfair". What I am saying is the entire shebang is "unfair", and you (and Ralph for that matter) are mistaking what is "good" for the league for what is "fair" for these owners. Ralph is complaining about what is good for the league because the old school owners sacrificed "fair" for "good". It wasn't fair to Wellington Mara to do what he did but he did it because it was good for the league in its entirety. Ralph wants the new style owners to be more like the old guys and sacrifice for the little guy. But what he's asking is not "fair", any more than what Jerry Jones and Daniel Synder are doing. In fact, it's unfair to them.

 

And my point and stance has always been that Ralph and the little guys may be at a small disadvantage, but they can play with the big boys any way they want. If he wants to pay he can pay, and he can still make a tidy profit. He simply doesn't want to pay, and he's right, that a lot of these guys aren't worth the money. He's also crying wolf, and he's also complaining about things that aren't a problem yet, they are only his perception of a potential problem, and something that virtually everyone has assured him will not be a problem.

[MadBuffaloDisease]

WRT profit, Forbes provides estimates of operating income for all 32 NFL teams. They had Ralph making $31.2M in OI before interest, taxes, amortization, and depreciation. That was with the Bills underspending on the cap by $10M and probably assumed that they'd sell-out the season.

[Dibs]

I completely understand your point, and your analogy, I just simply don't agree with it. Yes, if you take it on its surface, isolated, and away from all other economics of the league, your example, and Jerry Jones, are "unfair". What I am saying is the entire shebang is "unfair", and you (and Ralph for that matter) are mistaking what is "good" for the league for what is "fair" for these owners. Ralph is complaining about what is good for the league because the old school owners sacrificed "fair" for "good". It wasn't fair to Wellington Mara to do what he did but he did it because it was good for the league in its entirety..................................... Ralph wants the new style owners to be more like the old guys and sacrifice for the little guy. But what he's asking is not "fair", any more than what Jerry Jones and Daniel Synder are doing. In fact, it's unfair to them.

First bold.....

Wellington Mara understood that good for the league meant good(better) for him in the long run. It's having a more long term view of economics than simply "what's my profit this year". I'd hazard a guess that if he didn't do what he did all those years back, there certainly wouldn't be $500mil+ spent on new franchises like there has been.

 

Second bold.....

The opposite is the case! It is "unfair" to the smaller market teams.

Ralph wants to not have to sacrifice(at a theoretically increased rate annually due to population expansion) his money to help support the big guys.

You said you understood......the smaller market teams are paying for the non-shared profits that the bigger market teams can generate.......because the monies generated is counted under the cap but is not shared revenue. That means this is "unfair" for the smaller markets.

[Kelly the Dog]

WRT profit, Forbes provides estimates of operating income for all 32 NFL teams. They had Ralph making $31.2M in OI before interest, taxes, amortization, and depreciation. That was with the Bills underspending on the cap by $10M and probably assumed that they'd sell-out the season.

That came out in August of last year, for the 2005 season, before the jump in TV money and all the other stuff. If his OI was 31 mil in 2005 it was probably closer to 60 in 2006. The jump in TV money alone was almost 20 million per team more than the cap jump.

http://www.forbes.com/lists/2006/30/06nfl_...tions_Rank.html

[Kelly the Dog]

First bold.....

Wellington Mara understood that good for the league meant good(better) for him in the long run. It's having a more long term view of economics than simply "what's my profit this year". I'd hazard a guess that if he didn't do what he did all those years back, there certainly wouldn't be $500mil+ spent on new franchises like there has been.

 

Second bold.....

The opposite is the case! It is "unfair" to the smaller market teams.

Ralph wants to not have to sacrifice(at a theoretically increased rate annually due to population expansion) his money to help support the big guys.

You said you understood......the smaller market teams are paying for the non-shared profits that the bigger market teams can generate.......because the monies generated is counted under the cap but is not shared revenue. That means this is "unfair" for the smaller markets.

Are you taking into consideration what exactly Ralph is asking for? A handout! He's pissed they are not voluntarily handing him more money out of their pockets than the 100 or so million they offered. Or more specifically, that other little guys will be getting bigger handouts than him.

 

On your first point, I agree with that in theory. Mara did do what was good for the league and the league as a whole benefited. If he didn't, however, the league would resemble baseball, and you don't think the NY Jets and Giants would not resemble the Yankees? Think again. Each team wouldn't be worth 500 mil but his would.

[MadBuffaloDisease]

Hold on a second. Is ANYONE trying to say that the NFL now paying 59.5% of TOTAL REVENUE to players, whereas in the past they paid 54.2% of total revenue (which represented 60-something% of shared revenue) is "good for the league?"

 

Sorry but that's so wrong, even Kraft realizes it (now ).

 

In the big market teams' haste to prevent having to bloodlet their teams by not caving-into the NFLPA's demands for ALL revenue to be subject to the cap and a greater percentage, they basically gave the keys to the candy store to the NFLPA. What do you think the NFLPA will want in the NEXT round of negotiations? Less percentage? Nope.

 

And I'm betting the owners opt-out of the new CBA after the 2007 season, and no later than the 2008 season. What will happen then? Bad things, man.

[MadBuffaloDisease]

That came out in August of last year, for the 2005 season, before the jump in TV money and all the other stuff. If his OI was 31 mil in 2005 it was probably closer to 60 in 2006. The jump in TV money alone was almost 20 million per team more than the cap jump.

http://www.forbes.com/lists/2006/30/06nfl_...tions_Rank.html

Nope. The new cap figure and TV contracts were done well before August last year.

[Kelly the Dog]

Nope. The new cap figure and TV contracts were done well before August last year.

They went into effect last year. 2006. It is 2007 now. The Forbes figures were for two years ago, 2005, look at the link, which was also the final year of the old TV contract. Not last year, 2006, when the Bills had all the new TV money and they were well under the cap. We weren't 10 mil under the cap in 2005 and the new TV contracts and the new CBA weren't in place yet. Last year was the first year of the new TV deal that included NBC, The NFL Network, MNF on ESPN, etc.

[MadBuffaloDisease]

Yes you're right. They're 2005 numbers.

 

I guess we'll have to wait and see what 2006's numbers look like then.

[Dibs]

Are you taking into consideration what exactly Ralph is asking for? A handout! He's pissed they are not voluntarily handing him more money out of their pockets than the 100 or so million they offered. Or more specifically, that other little guys will be getting bigger handouts than him.

WHAT?????

What are you talking about?

IT'S THE OTHER WAY AROUND

 

Look Kelly, you're getting me worked up a bit here......I respect your brain(from reading your posts) but I truly think that you are not grasping this particular aspect. Please try looking at the explanation without any preconceived thoughts........

 

This started a while back when certain big market teams realized that they could make 'extra' money that would not have to be shared in 'NFL shared revenue'. That is all well & good....nobody was too concerned with people making extra money. The problem occurred however when it was determined that the 'extra' monies made would count towards figuring the players cap number.

This means that when a team makes 'extra' money, every team is encumbered with a bill(the salary cap increase).

RW(& others) want the 'extra' money to not count towards figuring the cap.

RW is not asking for a handout......it's the opposite of handouts. He is paying the debts incurred by the bigger teams.

 

The future projections for the situation are horrendous for the small market teams.

 

Are you understanding of the situation re: 'extra' money & shared revenue/salary cap?

[Kelly the Dog]

WHAT?????

What are you talking about?

IT'S THE OTHER WAY AROUND

 

Look Kelly, you're getting worked up a bit here......I respect your brain(from reading your posts) but I truly think that you are not grasping this particular aspect. Please try looking at the explanation without any preconceived thoughts........

 

This started a while back when certain big market teams realized that they could make 'extra' money that would not have to be shared in 'NFL shared revenue'. That is all well & good....nobody was too concerned with people making extra money. The problem occurred however when it was determined that the 'extra' monies made would count towards figuring the players cap number.

This means that when a team makes 'extra' money, every team is encumbered with a bill(the salary cap increase).

RW(& others) want the 'extra' money to not count towards figuring the cap.

RW is not asking for a handout......it's the opposite of handouts. He is paying the debts incurred by the bigger teams.

 

The future projections for the situation are horrendous for the small market teams.

 

Are you understanding of the situation re: 'extra' money & shared revenue/salary cap?

Of course I understand the change, and think it's ridiculous. And is a fundamental difference. And there will be a wider disparity between the haves and the have-nots. And the new CBA is a crappy deal for the NFL and owners and especially the Bills. That's clear to me. And I don't like it either. I also don't like the big guy owners wanting more for themselves and screwing the smaller franchises, which is against what has made the NFL prosper and the Bills to stay in Buffalo. I hate the changes as much as anyone.

 

But that doesn't mean I don't understand where these big bad guys are coming from. Or negate the fact that it's still a handout Ralph's asking for. There's no way around it. There's no way around the fact that the bigger cities bring in much bigger dollars either. Pay more for their loans and upkeep and stadiums. What I have been saying all along is that Ralph takes in every cent he needs to play with the big boys. He's crying wolf that he can't compete when the money is there.

 

Not to mention that the more I look into this "spend to the cap" nonsense and think about it, what a load of crap it is and an embarrassment to the fans, as a poster said above they are doubling the dollars. It's a farce.

[BuffaloRebound]

WHAT?????

What are you talking about?

IT'S THE OTHER WAY AROUND

 

Look Kelly, you're getting worked up a bit here......I respect your brain(from reading your posts) but I truly think that you are not grasping this particular aspect. Please try looking at the explanation without any preconceived thoughts........

 

This started a while back when certain big market teams realized that they could make 'extra' money that would not have to be shared in 'NFL shared revenue'. That is all well & good....nobody was too concerned with people making extra money. The problem occurred however when it was determined that the 'extra' monies made would count towards figuring the players cap number.

This means that when a team makes 'extra' money, every team is encumbered with a bill(the salary cap increase).

RW(& others) want the 'extra' money to not count towards figuring the cap.

RW is not asking for a handout......it's the opposite of handouts. He is paying the debts incurred by the bigger teams.

 

The future projections for the situation are horrendous for the small market teams.

 

Are you understanding of the situation re: 'extra' money & shared revenue/salary cap?

 

 

This may all be true but it is still a weak excuse for not spending on free agency and letting our best players walk. Ralph most likely will make anywhere from $40-60m this year, and it is tough to swallow seeing Clements walk. For every dollar in unshared revenue made by a team like the Skins, the salary cap goes up $.02 for the Bills. It is a weak excuse for not signing players. As much as Snyder is villified, the guy paid $800m for that team, so it hard to get mad if he makes more money. Yes, unshared revenues should not be included in the salary cap calculation, but it is a poor reason for crying poor and not spending on players.

[Dibs]

......But that doesn't mean I don't understand where these big bad guys are coming from. Or negate the fact that it's still a handout Ralph's asking for. There's no way around it......

It is not a handout. Money is being taken (at a greater rate each year) from RWs pocket & he wants to stop it. There is no way that can be considered a handout.

It doesn't negate an argument about him actually spending the money.....it doesn't negate any argument to do with an over-all picture.

The reality is that with the increase in populations....therefore increase in 'extra' money, the bigger markets will increase the cap so that each year the operating profit percentages will increase the most for the biggest markets & will actually decrease for the smaller markets(& decrease the most for the smallest).

That is what the Bills face under this CBA.......smaller profit percentages each year.

RW owes it to the fans to rock the boat. You may disagree with how he is doing it but surely you can't disagree that it needs to be rocked.

 

You mentioned loans & upkeep & stadiums. It all comes back to profit percentage.....regardless of size.

 

People surely can't be wanting RW to just shut up & have the Bills slowly diminish till they have to move. At some point a low enough profit percentage is going to mean just that. In the end, it is a business, & it needs to make a reasonable profit for the capitol involved.