What is a fair profit for an NFL owner?

[pbmax]

Hold the fort a second. Owners do not profit (in the loosest sense of the word - perhaps should say benefit) from yearly profits alone. So to judge yearly profit figures against a 5 or 10% yearly return is like saying you expect your equity holdings to pay dividends equivalent to 5 or 10% of your investment. Not likely to happen and you are forgetting a major point of investing. The asset that you own.

You need to know the value of the asset over time to determine what kind of ROI you are getting. That plus profit figures (and the rest of the balance sheet) might get you to a fair number. You could also compare to other sports holdings and similarly sized businesses.

A fair profit is difficult to peg from the outside, it is much harder if you do not know how much the entire business value has appreciated in the time it has been held.

[Patler]

Hold the fort a second. Owners do not profit (in the loosest sense of the word - perhaps should say benefit) from yearly profits alone. So to judge yearly profit figures against a 5 or 10% yearly return is like saying you expect your equity holdings to pay dividends equivalent to 5 or 10% of your investment. Not likely to happen and you are forgetting a major point of investing. The asset that you own.

You need to know the value of the asset over time to determine what kind of ROI you are getting. That plus profit figures (and the rest of the balance sheet) might get you to a fair number. You could also compare to other sports holdings and similarly sized businesses.

A fair profit is difficult to peg from the outside, it is much harder if you do not know how much the entire business value has appreciated in the time it has been held.

Which is exactly why I threw in the first option in the poll. However, absent other sources, a person can't live on increased equity in a business. You have to take out some cash by way of a salary or something.

Perhaps a better way to have phrased the poll would have been this - "What is a fair salary for an owner to pay himself, assuming the rest of profits are somehow tied up in or reinvested in the business?"

One of the hangups in the "open your books discussion" is that the players will see how much money the owner pays to himself and his family. As one writer wrote, the amount is not significant in the overall scheme, but there will be some items that can be a PR embarrassment. Lumping these together as an owner's "take" avoids the touchy subjects of $250,000 salaries given to spoiled kids to do nothing, etc. Still, overall, what is an acceptable number for the owner's family if he is payig his average employee $3M/ year, and a bunch of his top employees are getting $10-25M?

[Patler]

If it is reasonable for Irsay to pay Peyton Manning $25 million/year, is it unreasonable for him to pay himself $40 million/year from the Colts? SHould he be satisfied with "only" $10 million?

[pbmax]

If it is reasonable for Irsay to pay Peyton Manning $25 million/year, is it unreasonable for him to pay himself $40 million/year from the Colts? SHould he be satisfied with "only" $10 million?

In many cases, it could be. I think the value owners place on their equity versus liquidity can be demonstrated by Ron Wolf. After he left the Packers, he would respond (publicly anyway, some have reported it was also his private answer intended to stop the overture) that he would consider another GM position if it came with a small owner/equity stake. Many teams would have opened the vault to hire a man with those pelts on the wall. No owners were willing to give an employee as important as Wolf a slice of the operation.

Cash on immediate hand is only one way to measure wealth or worth.

Chris Rock once made a joke that if Bill Gates woke up with Kobe Bryant's money, he would run to a window and throw himself out into his lake. Gates net worth is mostly tied (or perhaps was - its been a while since he left) to his equity in Microsoft, not simply his paychecks. And it is from that from which he has accumulated vast wealth. That is as it should be. He built and ran the company that generated that wealth. But that does not make Bryant worth less that his $25 million per year or so. Even if Bill is collecting "only" 1 or 2 million as a board member or CEO emeritus as a paycheck from Microsoft.