What is a fair profit for an NFL owner?

[Patler]

The players and those who side with them have argued that owners make too much money from the players work.

What is a fair profit for an average NFL owner?
Keep in mind the following:

The highest paid NFL players on a per-year-average are just under $20 M. It is expected that with the next round of QB contracts this will easily reach $20-$25 million.

It is expected that within three years the average NFL salary will be almost $3 M/year.

Owners building new stadiums are investing hundreds of millions on top of the hundreds of millions already invested in their teams.

[Lurker64]

Discussing the "fairness" of profit is inherently misguided. Profit is never fair, or always fair. It should be the goal of every business to make as much profit as possible while staying within the boundaries of propriety, legality, and basic ethics.

It's impossible for there to be such a thing as "too much profit."

[Patler]

Discussing the "fairness" of profit is inherently misguided. Profit is never fair, or always fair. It should be the goal of every business to make as much profit as possible while staying within the boundaries of propriety, legality, and basic ethics.

It's impossible for there to be such a thing as "too much profit."

Be that as it may, that's what this negotiation is founded on. What is "fair" for the owners and what is "fair" for the players. Of course every business should try to maximize profits.

[Guiness]

You really seem to struggle with this whole issue Patler, and seem a little defensive when others strongly take the side of the players?

You have tried to draw parallels to other types of businesses/companies being in similar (strike/lockout) situations, but I think what you have to remember is that the NFL operates outside the regular rules, and even laws of corporate america. Hence the anti-trust exemption. For example, what business other than pro sports could force all of their employees to stand in a line while the only employers available to them got to pick where they went?

I agree with Lurker's reply, that there is no 'fair' profit. It's not quantifiable, and while you are correct that all business should operate in a manner to maximize profits, that's just not necessarily how major leagues sports operate. There are no shortage of owners out there that care little or nothing of profits, as long as they get to sit in the owner's box, watch the games, and say 'mine.'

I recently read a book about hockey, and it's owners. It talked about how normally shrewd businessmen make ridiculous decisions when it comes to running their team.

[swede]

I wonder how a player such as Adrian Peterson is able to conjure up a very intense perception of being exploited by the man. I suppose it comes from the very real risk of injury, the long-term health implications, and the knowledge that a sweet-tempered mega-star such as LaDanian Tomlinson can finish his career being in about as much demand as Noah Herron.

But if twenty million dollars won't make that go away a bazillion won't either.

It's not profits...it's about perceptions.

[HowardRoark]

The process will determine what is "fair." The Invisible Hand will sort this thing out.

[Smidgeon]

I wonder how a player such as Adrian Peterson is able to conjure up a very intense perception of being exploited by the man. I suppose it comes from the very real risk of injury, the long-term health implications, and the knowledge that a sweet-tempered mega-star such as LaDanian Tomlinson can finish his career being in about as much demand as Noah Herron.

But if twenty million dollars won't make that go away a bazillion won't either.

It's not profits...it's about perceptions.

I would love to make $10 million for just one year. I wouldn't even care if my owners were making $400 billion per month. Say 75% of that $10 million went to taxes. I could still invest the $2.5 million and live off the interest for the rest of my life with no other paychecks. <sigh> To dream...

[Bossman641]

I think the players trying to decide what is fair for the owners is a load of crap. What is fair for the players? Should the nfl review the personal assets and tax returns of the players and determine whether it is fair for Player X to have a 12 million dollar house and ten sports cars.

[RashanGary]

What's fair for the players who go out there and risk their bodies and in extreme cases, lives? It's not an easy negotiation. There are billions of dollars every year. However it gets split, everyone is rich. Just how to split it is the tough part.

[Patler]

You really seem to struggle with this whole issue Patler, and seem a little defensive when others strongly take the side of the players?

Struggle with this? No way, not at all. I have a very clear understanding of the concepts and what I would do as an owner or as a player. How am I being defensive??? Just trying to discuss the exact issue that is the stumbling block in the negotiations, how much the owners make relative to the players.

When did I get defensive? I have refrained from comment about the strike/lockout for several days, for the most part. Posted some links to a few articles before that, and summarized some impressions I had gotten from reading a lot about it. I do think the players have wanted to decertify from the get-go, but so what? That has nothing to do with being pro-player or pro-owner. After all, the players are pro-player and they decertified.

I am just trying to do what one does in a negotiation like this. The players have suggested that the owners make too much. The owners have said they need more money. In the end, if the players get to see the owner's books, and I suspect they will, it will come down to discussions about how much Jerry Jones and everyone else did or didn't make from owning their teams. I'm just trying to open a discussion about what people think an owner should make relative to the players. From that, we can build a discussion. It's exactly the discussion that the players want.

You have tried to draw parallels to other types of businesses/companies being in similar (strike/lockout) situations, but I think what you have to remember is that the NFL operates outside the regular rules, and even laws of corporate america. Hence the anti-trust exemption. For example, what business other than pro sports could force all of their employees to stand in a line while the only employers available to them got to pick where they went?

I did??? When? Refresh my recollection please. I don't recall drawing any such parallels. If I did, it sure wasn't a major issue in my mind, because I don't recall doing it. Perhaps you are confusing me with someone else, or I have completely forgotten comments I may have made for the purposes of promoting a discussion.

I agree with Lurker's reply, that there is no 'fair' profit. It's not quantifiable, and while you are correct that all business should operate in a manner to maximize profits, that's just not necessarily how major leagues sports operate. There are no shortage of owners out there that care little or nothing of profits, as long as they get to sit in the owner's box, watch the games, and say 'mine.'

I recently read a book about hockey, and it's owners. It talked about how normally shrewd businessmen make ridiculous decisions when it comes to running their team.

Listen, I wasn't the one who raised this issue. The players are the ones who did. The owners said said they need more money. The players have suggested they make too much already. I am just trying to start a discussion about the issues raised by the parties.

If I were in the negotiating room (and I have been) I would be doing much the same thing. There is a point to all of this.

So what if some sports owners don't care if they make a profit? That has nothing to do with these negotiations. Should the players be getting a high enough % so that all owners are in that boat? If the players see the books and determine that the average owner makes $100M/year, should they ask for more, or should they say "That's fair."? If the average owner makes $5M, should the player capitulate?

I know very well this is not like a typical business, but so what?

[Patler]

What's fair for the players who go out there and risk their bodies and in extreme cases, lives? It's not an easy negotiation. There are billions of dollars every year. However it gets split, everyone is rich. Just how to split it is the tough part.

It is really no different than than thousands of other jobs with a much higher risk than an NFL player has. Miners, loggers, firemen, policemen, farmers have much greater risks of death, and many are physically as broken down in the end as are NFL players.

Generally, a worker is paid what is necessary to find qualified people to do the job. Even though it is really no different than other jobs, major pro-sports have gotten themselves in trouble by defining a sort of "partnership" where labor (players) are treated like a co-owner. Sometimes that works in the regular world too, and sometimes it breaks down.

[channtheman]

If an NFL team is worth 600 million (http://wiki.answers.com/Q/How_much_d...NFL_teams_cost - I know this isn't research, it was the first article I could find on a 5 second google search) and they make a yearly profit of just 5% that is about 30 million. I know absolutely nothing about what should be expected to be made in regards to percentages in businesses but I would think a profit of 5-10% of what it is worth yearly sounds about right. So a team like the Vikings worth 600 million should expect a yearly profit anywhere from 30 million to 60 million.

[packrat]

http://www.usatoday.com/sports/footb...finances_N.htm Packer profits went from 34 million to 20.1 to 9.8 million. Someone with $600 million to invest would certainly target a 10% return and would be considered a lousy manager if they only got 5% so something in the $60-30 million range should be considered reasonable. If the owners were to increase their share by the $500 million that has been recently proposed, that would increase earnings per team by about $15 million a year and would get the Packers into the range that should be considered reasonable.

[Tarlam!]

I used to tell my sales people what they are worth; their gross salary plus 82% costs (health care, unemployment insurance, pension, car & expenses). The average earned about €50K gross plus variable pay (bonus), so the company placed his/her worth at about 90 K. I would then tell them the interest rate at a bank for for 1 year term was around 3%, so if the owner of the company put his 90 K in the bank for a year he'd gross 2,7K per salesperson. Sounds easy, right?

The thing is, though, for every sales person, there were 3 non-sales people that also had to be paid, though the costs were reduced for non managerial staff to around 35%. So now, we realize that the salesperson needs to earn for 4. That means, every sales person now has to earn a gross profit of around 10k just to keep competitive with the bank.

But, the longer one is willing to put one's cash into a fixed term account, the higher the interest. Then, you talk about shareholder value etc. I think you get the idea of where my speeches went. The same goes for the owners of 31 NFL teams.

[Lurker64]

If an NFL team is worth 600 million (http://wiki.answers.com/Q/How_much_d...NFL_teams_cost - I know this isn't research, it was the first article I could find on a 5 second google search) and they make a yearly profit of just 5% that is about 30 million. I know absolutely nothing about what should be expected to be made in regards to percentages in businesses but I would think a profit of 5-10% of what it is worth yearly sounds about right. So a team like the Vikings worth 600 million should expect a yearly profit anywhere from 30 million to 60 million.

Here's a better source for the value of NFL teams. Forbes does this list yearly: http://www.forbes.com/lists/2010/30/...ions_Rank.html

The top 16 NFL teams are worth a billion or more. The least valuable team is $725 million. So your 600 million number is a significant underestimate.