Pats Finance For Dummies (Me)

[tedylb]

Just curious, are the Pats a money maker or write-off for Bob Kraft? I know the team is privately held, but can anyone provide a rough profit and loss statement (revenues minus expenses)? How does the team stack up to others in the NFL on the bottom line? Should we make a charitable contribution to the Krafts (only kidding)?

As a micro businessman, it's hard for me to fathom the enormous $ changing hands in pro sports. Arod makes more in a few innings and TB in one possession than I make in a year. So please enlighten me. Thanks.

 

[DarrylS]

Not sure about the bottom line, but if you have not been to Gillette lately you will be surprised, the economic development going on there is incredible, hotel and convention center, Bass pro shop etc...the proshop is twice the size of the old one, a new Pats Hall of Fame.. Kraft has the midas touch, the vaue of this franchise has increased more than 3 fold.. there is no doubt that Kraft has made a more than a fair profit on this franchise..

 

[Patsfanin Philly]

Forbes Magazine does an annual valuation of pro football franchises and had the Pats as #2 in 2006.

http://www.forbes.com/lists/2006/30/06nfl_New-England-Patriots_307338.html

 

[FreeTedWilliams]

Three words that every NFL owner loves to hear:

"Home Playoff Games"

-the league pays the players salary for those games.

-I don't know how much of the gate they get to keep, but I would take the gross from the concessions stands for any game, let alone a playoff game.

 

[DaBruinz]

Three words that every NFL owner loves to hear:

"Home Playoff Games"

-the league pays the players salary for those games.

-I don't know how much of the gate they get to keep, but I would take the gross from the concessions stands for any game, let alone a playoff game.

I believe that both teams get portions of the gate receipts...I am not sure what the break down is...

 

[tedylb]

Forbes Magazine does an annual valuation of pro football franchises and had the Pats as #2 in 2006.

http://www.forbes.com/lists/2006/30/06nfl_New-England-Patriots_307338.html

Staggering! Thanks for the link.

 

[Mike the Brit]

The NFL is, to the best of my knowledge, unique among sports leagues in that owning a franchise is not, from the income point of view, a bad investment.

Economics 101 tells us that, in equilibrium, different businesses will generate the same rate of return -- so-called "normal profits". If a business is generating more, it will attract more entrants and competition. But, as with so much in economics, that only holds "other things being equal". In the case of a sports franchise things are not equal.

Rich men would much rather own a sports franchise than, say, a chain of hardware stores, giving the same rate of return. So it follows that the price of sports franchises goes up relative to that of hardware stores (the rate of return goes down). There are often articles here in the UK about the fact that soccer clubs lose money, as if this were an exceptional state of affairs that cannot continue. But, if you look at it from the economic point of view, so long as there are rich men who want to own clubs for non-economic reasons, that is how it will continue.

Why isn't this also so in the NFL? Three things about the NFL stand out: barriers to entry (the number of franchises is fixed and there are some restrictions on buying and selling them), the salary cap (which prevents very rich owners, like Roman Abramovich in soccer, from driving up the costs for other teams by ramping up salaries) and revenue sharing.

The bottom line, I think, is that NFL franchises are rich men's toys, but, very unusually, they are, at least in the medium to long term, profitable ones.

 

[reflexblue]

One thing I noticed that I'm sure all season ticket holders, as well as game day buyers know. Is that the tickets are at least 30 dollars higher for a Pats game than any other venue.