What is a fair profit for an NFL owner?

[packerbacker1234]

The deal breaker here is that, bottom line, the players themselves are employees. Since when do employees have the right to dictate how much their Employer makies? They don't. Their employer pays players very well for what is what, an average life expectancy in the nfl of 8 seasons?

I mean, you get retirement money, help with some of the medical costs - oh and you make MILLIONS when you do play, usually far more money than the rest of the world is going to make in their lifetimes. Not only that, smart people reinvest a lot of their money and own a couple successful restaurants or whatever so they have continual income after they retire.

So, why do the players even have a say? Because it's an allowed Monopoly? They can ask for more of the pie all they want, but the owners own the team because it makes them money. A lot of money. If they weren't making a lot of money, why would they bother to keep the team?

Yes, Owners may make like 100+ million dollars in profit a year. What's the problem? The players aren't exactly poor. Even the bottom feeders on the roster nad practice squade are making what some DOCTORS make, and last I checked Doctors are considered a upper echelon income source in most communities.

What this is like is Microsoft staff revolting against Bill Gates because he makes a shit ton more money thatn they do. Guess what, he should. It's HIS business, not THERES. If players wnat to complain about money and getting paid more, they can go sit out. There are thousands of people who will step in and play in the nfl for 100k a year with full medical coverage. Players make millions, and then if they become stars even more from investors and companies like gatorade and nike.

The salary cap goes up every year, even if the income may not be rising. So, more money continually was going to payroll. What's the real issue in the end? Owners are going to make a lot of money. That is why they are the owners. Players ALREADY make a lo tof money. "they profit too much off our work". BS. You're paid very well so they can in turn make money from THEIR business. Your an employee - deal with it.

No idea how AP can bitch at all. He should be making a lot of money. I don't get how any of the star players complain.

[Smidgeon]

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.

...so glad I don't work in sales.

[Scott Campbell]

...so glad I don't work in sales.

So glad I do.

[bobblehead]

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.

football doesn't have an anti trust exemption if I recall correctly....baseball does. Am I wrong on this. If so, how did the WFL and USFL ever form.

[bobblehead]

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...

You say this...but how many players retire in their prime satisfied with the money they have earned. I back the players in their attempt to get every penny they can within the rules. I don't back them involving federal courts to help them. They can sit. They can form their own league. They can go sell real estate. What they can't do in my opinion is force an employer to pay more than the employer wishes to pay.

[bobblehead]

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.

Why should I start a business, risk my capital, burn out my mind for 5% when I can invest in condos and make 7%? You have a skewed idea of what a business should make. In fairness to you, you admitted as much, right before imposing judgement on what sounds about right. Try 20% or more. Definately more if you incurred debt to build said business.

[bobblehead]

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.

As I said above. 10% is not enough return to get me to put in the work. Reassess and try again.

[Smidgeon]

Why should I start a business, risk my capital, burn out my mind for 5% when I can invest in condos and make 7%? You have a skewed idea of what a business should make. In fairness to you, you admitted as much, right before imposing judgement on what sounds about right. Try 20% or more. Definately more if you incurred debt to build said business.

I think this is incredibly key. Too few people are pointing this out. The owners who have invested heavily in a team, I think, should be making way more than the top employees.

[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.

[rbaloha1]

Its impossible to determine a fair profit when the owners fail to properly document revenues and expenses.

[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]

Its impossible to determine a fair profit when the owners fail to properly document revenues and expenses.

You can always talk about a fair profit. The fair profit we are talking about is the actual, accurate number, whether it is the owners number, the players number or more likely something in between.

[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?

[rbaloha1]

You can always talk about a fair profit. The fair profit we are talking about is the actual, accurate number, whether it is the owners number, the players number or more likely something in between.

Again -- impossible to determine an actual number w/o full disclosure. Its moot since full disclosure shall not occur -- nor should it. Players are entertainers with a unique set of skills. The market determine the wage. However the market could be corrupted due to a blatant violation of anti trust laws.

[Lurker64]

I suspect whoever voted for "$0 - They make their money when they sell the team." is not a Packers fan or has not actually thought about this very much. The Packers cannot be sold for profit, it's in the team charter that if the team is sold that all money goes to charity (I believe it was formerly a war memorial, but it was changed at some point). There is no rich owner to pay the bills when the Packers take a loss, they're only able to do that because they put their profits in a war chest/rainy day fund.

If you believe that the fair amount of profit for an NFL team is $0, then you believe that the Packers should not exist.