Packers Financials

[Deus Irae]

Theres more to it than that Deus, some of these new stadiums cost a fortune to build and they thought they would sell so many PSL and luxury boxes for a certain price, the recession hit and that didnt happen. The owners want more off the top to spread this risk out since a lot of the teams laid out a lot of their own money to build these stadiums.

If there's a problem, the owners need to prove it. This is really simple stuff. "I'm not making as much money as I should be" isn't really sufficient clarification, as anyone who's ever worked a business' books can tell you.

At this point, though, this is a waste of time. Minds won't be changed.

 

[cmasspatsfan]

If there's a problem, the owners need to prove it. This is really simple stuff. "I'm not making as much money as I should be" isn't really sufficient clarification, as anyone who's ever worked a business' books can tell you.

At this point, though, this is a waste of time. Minds won't be changed.

I agree with you that they should prove it, they said they did, the players said they didnt, who knows where the truth is. Thats why Ive remained neutral, who knows what the truth is and whats been said at the negotiations, I wasnt there.

 

[Deus Irae]

I agree with you that they should prove it, they said they did, the players said they didnt, who knows where the truth is. Thats why Ive remained neutral, who knows what the truth is and whats been said at the negotiations, I wasnt there.

"For them to move to showing us league-wide profitability over five years? And to tell us simply the number of clubs that had declined in profitability - declined in profitability - not suffered losses. They were going to give us two numbers and they call that unprecedented financial disclosure. Well, yes, I guess that's technically true. Is it substantial? Is it sufficient? Is it meaningful? Our business people told us no. Some owners maintained for a long time that the business people needed to be involved. Ours said that those numbers weren't sufficient. Regardless of if they were unprecedented or not."

Kendall: Owners statements are 'completely false'

 

[PatsWickedPissah]

Kendall: Owners statements are 'completely false'

Great information. I've criticized the players for hiring litigators vs negotiators but now I see that the owners hired similar attack dogs years ago. "Completely false" is hyperbole and Kendall's view is diametrically opposed to Mara's owner's view as to what happened in the 2 weeks prior to walkout. Looks pretty hopeless for a quick resolution.*

*Hopes to be proven an idiot once again

 

[TarHeelPatsFan]

Convertedpatsfan

2 cents was left for a net profit for the owners.

That is laughably bad. If that was my company, I'd probably have trouble sleeping at night if it was my only revenue.

There is no way they can continue on those razor thin margins. My only guess is some of those "expenses" are fishy. Like a board member's son getting 150K a year to be the Vice President of Partying with Blonds.

 

[Ring 6]

Using nonrepresentative information because its the only info you have is not sound reasoning. Another thing to consider--nonprofits have very different financial accounting rules than for-profits.

I did not use it to represent the entire league. I used it as one example, which it is.

 

[BTTA]

Well, this thread has become unreadable, so don't know if these thoughts have been conveyed:

-One reason the owners don't want to open the books is because of the attention that will be drawn to just how wealthy some of them are. It is the same controversy that gets created anytime the actual facts about wealth distribution in the US have a light shined on them. The truly wealthy get put on the defensive and have to work a bit harder to preserve the aspects of the political system which make it possible for them to stay in the position.

-Media commentators have been focusing on the salaries of other family members as what's at risk if the owners get less of the % of the revenue. It's a false issue. The owner's son or daughter-in-law is still going to get her $250K per year as a paper Vice President if the team makes $5M profit or $50M profit. Those salaries are insignificant. The owners are building equity in their teams, it's a long term valuation play, and that's why they care about the profit margins.

-The terminology of "millionaires" vs. "billionaires" used to make the financial issues small couldn't possibly be more misleading. The players work for a salary, and while they are rich, they aren't wealthy. The difference in power and financial resilience between the owners and players is bigger than the difference between the players and a plumber.

 

[PatsWickedPissah]

Well, this thread has become unreadable, so don't know if these thoughts have been conveyed:

-One reason the owners don't want to open the books is because of the attention that will be drawn to just how wealthy some of them are. It is the same controversy that gets created anytime the actual facts about wealth distribution in the US have a light shined on them. The truly wealthy get put on the defensive and have to work a bit harder to preserve the aspects of the political system which make it possible for them to stay in the position.

PWP: No. the 'books' are for the team financials, not the owners' net worths. FYI: The Forbes article cited elsewhere did NOT show huge gross incomes for many teams. Spare us the typical North East class warfare rhetoric.

-Media commentators have been focusing on the salaries of other family members as what's at risk if the owners get less of the % of the revenue. It's a false issue. The owner's son or daughter-in-law is still going to get her $250K per year as a paper Vice President if the team makes $5M profit or $50M profit. Those salaries are insignificant. The owners are building equity in their teams, it's a long term valuation play, and that's why they care about the profit margins.


PWP: Agree with the insignificance of 100s of K in-law salaries. Building equity is valid but remember how infrequently teams are sold.

-The terminology of "millionaires" vs. "billionaires" used to make the financial issues small couldn't possibly be more misleading. The players work for a salary, and while they are rich, they aren't wealthy. The difference in power and financial resilience between the owners and players is bigger than the difference between the players and a plumber.

PWP: BS. We middle class salary folk have been lectured to repeatedly that if we make over $250K (FAR under NFL minimum) that we're wealthy. Plumbers have been told "we need to redistribute the wealth"

It goes on and on

 

[Ring 6]

Since the major point of contention seems to be the initial $1 billion off the top for capital expenditures; it's somewhat odd that the players haven't hired any consulting or engineering group to verify financial needs and required expenditures.

Thats not what the $1bill is for.

The $1bilion came about in a change of calculation. And as Miguel educated me the reporting that it is a flat amount is wrong, there is a calculation for it and it varies, but using 1 billion as the amount:

Prior to the 'off the top' deduction, the players received roughly 50% of revenues, from dollar one.

With this change the began to receive zero % of the first one billion, and in turn began to receive an increased share, 60% of the remaining revenue.

In other words, they reshaped the agreement so that the owners were better insulated against loss, and in return the players got a high percentage on the upper end.

This had nothing to do with capital expenditure, it was not something the owners forced on the players, nor was it an attempt by the owners to get a 'give back'. It was 2 parties recongizing that one had a bigger risk if the revenues were low, so the other traded them better treatment on the low revenues in return for a bigger share of the high revenues.

 

[patsfaninpittsburgh]

Thats not what the $1bill is for.

The $1bilion came about in a change of calculation. And as Miguel educated me the reporting that it is a flat amount is wrong, there is a calculation for it and it varies, but using 1 billion as the amount:

Prior to the 'off the top' deduction, the players received roughly 50% of revenues, from dollar one.

With this change the began to receive zero % of the first one billion, and in turn began to receive an increased share, 60% of the remaining revenue.

In other words, they reshaped the agreement so that the owners were better insulated against loss, and in return the players got a high percentage on the upper end.

This had nothing to do with capital expenditure, it was not something the owners forced on the players, nor was it an attempt by the owners to get a 'give back'. It was 2 parties recongizing that one had a bigger risk if the revenues were low, so the other traded them better treatment on the low revenues in return for a bigger share of the high revenues.

So why do the owners need to be "better insulated against loss"? In a business with steady cash flows, that's much less of a problem. This also means you can operate with more debt. There are very few businesses that have the predictability of the NFL.

"Insulation" would only be needed is riskier activity is anticipated.

I saw the capital expenditure concept mentioned in three different news reports. Maybe it isn't true, just reporting stuff from the news.

I can tell you that if this is simply an exercise in "insulation", the owners will have a very weak hand and an effective PR team would nail them in the court of public opinion.

 

[bucky]

If there's a problem, the owners need to prove it.

So says you and the players. But there is no burden of proof in a situation such as this. Even if the owners were to "prove" something, the players could still say "no thanks, you haven't proven enough".

The bottom line is that this is a negotiation where both parties have to want to reach an agreement and be willing to compromise. Based on what I've read and heard, it would appear the owners have compromised more than the players up to this point.

 

[PatsFanSince74]

So why do the owners need to be "better insulated against loss"? In a business with steady cash flows, that's much less of a problem. This also means you can operate with more debt. There are very few businesses that have the predictability of the NFL.

"Insulation" would only be needed is riskier activity is anticipated.

I saw the capital expenditure concept mentioned in three different news reports. Maybe it isn't true, just reporting stuff from the news.

I can tell you that if this is simply an exercise in "insulation", the owners will have a very weak hand and an effective PR team would nail them in the court of public opinion.

Yeah, a lot of financial terminology is being thrown around pretty loosely.

There are plenty of lines that the owners can manipulate to determine their profit or loss for a given year. In fact, most private companies are usually trying to show the taxman as little profit as possible without going to jail for tax evasion.

I disagree on the Cash Flow. I think the Cash flow is very bumpy for these guys. If you look closely at the Packers' Balance Sheet, you see an interesting aspect of Sports Accounting; of 43.8 of CA, 14.9 is "Unamortized Signing Bonuses." As far as I can tell, that represents Signing Bonuses that have been disbursed, but not yet expensed. How that can be considered an "Asset" is beyond me, but I didn't write GAAP. Bottom line, though is that both their current and quick ratios are below 1.0, suggesting liquidity problems. If anything, the teams are looking for more cash to solve their cflo problems.

The other interesting line is "Investments," but there is too little information provided and I just don't have the time to look into it.

Very interesting, though. If you look closely at the Income Statement, buried in the last footnote is the disclosure that in 2009 and 2010, they received 9.5 and 8.2 respectively from the "Brown County Professional Football Stadium District" and that this sum is allocated across several lines of the Income Statement, in some cases offsetting expenses and in some cases as Revenue. What that means in layman's terms is that in 2009 and 2010, the Packers would have shown pretax losses of $580,560.00 and $543,988.00 respectively without the Payments from the bondholders. In short, a lot of this income statement is carefully managed.

I'd go into this more, but I gotta go.

 

[jsull87]

Kendall: Owners statements are 'completely false'

that quote conveniently leaves out the fact owners offered to have an independent auditor look at their books to verify their claims... this would both satisfy the owners want of privacy and the NFLPA's need to see if the owners claims were correct.

The NFLPA turned it down therefore in my opinion on this matter they don't have a leg to stand on

 

[patsfaninpittsburgh]

Yeah, a lot of financial terminology is being thrown around pretty loosely.

There are plenty of lines that the owners can manipulate to determine their profit or loss for a given year. In fact, most private companies are usually trying to show the taxman as little profit as possible without going to jail for tax evasion.

I disagree on the Cash Flow. I think the Cash flow is very bumpy for these guys. If you look closely at the Packers' Balance Sheet, you see an interesting aspect of Sports Accounting; of 43.8 of CA, 14.9 is "Unamortized Signing Bonuses." As far as I can tell, that represents Signing Bonuses that have been disbursed, but not yet expensed. How that can be considered an "Asset" is beyond me, but I didn't write GAAP. Bottom line, though is that both their current and quick ratios are below 1.0, suggesting liquidity problems. If anything, the teams are looking for more cash to solve their cflo problems.

The other interesting line is "Investments," but there is too little information provided and I just don't have the time to look into it.

Very interesting, though. If you look closely at the Income Statement, buried in the last footnote is the disclosure that in 2009 and 2010, they received 9.5 and 8.2 respectively from the "Brown County Professional Football Stadium District" and that this sum is allocated across several lines of the Income Statement, in some cases offsetting expenses and in some cases as Revenue. What that means in layman's terms is that in 2009 and 2010, the Packers would have shown pretax losses of $580,560.00 and $543,988.00 respectively without the Payments from the bondholders. In short, a lot of this income statement is carefully managed.

I'd go into this more, but I gotta go.

Unamortized Signing Bonuses would be classified as an intangible asset. It's has to be classified as an asset if it's amortized on a schedule.

Classic case of, "how valuable are your book assets?".

The owners may very well have liquidity probems or potential problems. However, if they have periodic vs steady incoming cash flows, you have to look at a series of balance sheets to determine.

I wonder if the stadium district "revenue" is the sharing of money from parking and concessions or non football Lambeau Field revenue.

If it's non football revenue, these guys are getting great use out of the stadium.

 

[Ring 6]

So why do the owners need to be "better insulated against loss"? In a business with steady cash flows, that's much less of a problem. This also means you can operate with more debt. There are very few businesses that have the predictability of the NFL.

I dont know but they felt it was worth giving up a higher percentage of revenue growth, so it must have made sense to them.
Does the reason both sides wanted the change really matter?

"Insulation" would only be needed is riskier activity is anticipated.

No, thats just wrong. Its a matter of some degree of revenue certainty. You are making this out to be nefarious and its not.
First poeple get it wrong that the NFL 'takes' $1billion, then when it is pointed out that it was a change in formula both sides agreed to, the NFL must have done it for secret bad intnetions. Wow.

I saw the capital expenditure concept mentioned in three different news reports. Maybe it isn't true, just reporting stuff from the news.

Almost every fact being reported is questionable.
But you werent just reporting stuff from the news you called it the main point.

can tell you that if this is simply an exercise in "insulation", the owners will have a very weak hand and an effective PR team would nail them in the court of public opinion.

Well you just are not following the point here.
The CHANGE from 50/50 to 60/40 after $1billion is what I am talking about, not the current dispute.
MY WORD was insulation, used to describe why the NFL would prefer 100% of the 1st billion and 40 of the rest to 50/50.
It seems the only logical reason. The NFL agreed that it would keep more if revenues were low, and pay more (percentage wise in both cases) if revenues were high.
It makes perfect sense, there is nothing to find greed or trickery in here, look elsewhere.

 

[Ring 6]

Yeah, a lot of financial terminology is being thrown around pretty loosely.

There are plenty of lines that the owners can manipulate to determine their profit or loss for a given year. In fact, most private companies are usually trying to show the taxman as little profit as possible without going to jail for tax evasion.

I disagree on the Cash Flow. I think the Cash flow is very bumpy for these guys. If you look closely at the Packers' Balance Sheet, you see an interesting aspect of Sports Accounting; of 43.8 of CA, 14.9 is "Unamortized Signing Bonuses." As far as I can tell, that represents Signing Bonuses that have been disbursed, but not yet expensed. How that can be considered an "Asset" is beyond me, but I didn't write GAAP. Bottom line, though is that both their current and quick ratios are below 1.0, suggesting liquidity problems. If anything, the teams are looking for more cash to solve their cflo problems.

The other interesting line is "Investments," but there is too little information provided and I just don't have the time to look into it.

Very interesting, though. If you look closely at the Income Statement, buried in the last footnote is the disclosure that in 2009 and 2010, they received 9.5 and 8.2 respectively from the "Brown County Professional Football Stadium District" and that this sum is allocated across several lines of the Income Statement, in some cases offsetting expenses and in some cases as Revenue. What that means in layman's terms is that in 2009 and 2010, the Packers would have shown pretax losses of $580,560.00 and $543,988.00 respectively without the Payments from the bondholders. In short, a lot of this income statement is carefully managed.

I'd go into this more, but I gotta go.

If there is a conspiracy of hiding profits, and a purpose in showing small profits in order to negotiate a deal, then why isnt the NFL doing that? They have not made their profit an issue. Yet everyone assumes the books are cooked?
If I am purposely hiding profit in order to make the union concede on a deal, first I WANT to open my books to prove it. I certainly wouldn't offer 5years of them up to an independent auditor to go find the malfeasance.
Every action of the owners is inconsistent with them trying to show meager profits in order to use it in negotiation, yet people talk as if its an obvious fact that its happening.
I dont get that.

 

[Ring 6]

If there's a problem, the owners need to prove it. This is really simple stuff. "I'm not making as much money as I should be" isn't really sufficient clarification, as anyone who's ever worked a business' books can tell you.

At this point, though, this is a waste of time. Minds won't be changed.

This is so naive its scary.
1) Under what law, regulation, practice or policy do the owners need to show how they arrive at the decision of what they will offer the players?
2) No one is 'working a business' books'.
3) Your mind ought to change now that the fact is out that the owners offered 5 years of books to be independently auditied. It seems you cardinal complaint, that they must 'prove it' has been offered up, and the union didn't want it. If you are correct that its a waste of time because minds wont change, you are the testing board, because the key component of your position was just removed. Is your mind changing?

 

[patsfaninpittsburgh]

I dont know but they felt it was worth giving up a higher percentage of revenue growth, so it must have made sense to them.
Does the reason both sides wanted the change really matter?


No, thats just wrong. Its a matter of some degree of revenue certainty. You are making this out to be nefarious and its not.
First poeple get it wrong that the NFL 'takes' $1billion, then when it is pointed out that it was a change in formula both sides agreed to, the NFL must have done it for secret bad intnetions. Wow.


Almost every fact being reported is questionable.
But you werent just reporting stuff from the news you called it the main point.


Well you just are not following the point here.
The CHANGE from 50/50 to 60/40 after $1billion is what I am talking about, not the current dispute.
MY WORD was insulation, used to describe why the NFL would prefer 100% of the 1st billion and 40 of the rest to 50/50.
It seems the only logical reason. The NFL agreed that it would keep more if revenues were low, and pay more (percentage wise in both cases) if revenues were high.
It makes perfect sense, there is nothing to find greed or trickery in here, look elsewhere.

Andy

You are a great poster and I enjoy your football analysis.

However, you are not a finance guy.

Do you understand the idea of risk premium? If a business prefers to take say the first $1 billion then split remainder 40/60 vs say $500 million 50/50, they are choosing the security of a cash flow vs the potential of a greater cash flow.

Ever heard of "one in the hand is better than two in the bush"?

Greater certainty of cash flow goes hand in hand with mitigating real or perceived risk.

This is only done under the auspice of a perceived risk. Do you seriously think prudent businessman would sacrifice a percentage of revenue if it was guarenteed that revenues were going to grow 50% yoy and generate mega free cash flow?

I'm not taking sides because I haven't seen the financials or more importantly the proformas. I also don't know the real reasons the owners have proposed this. What I can do listen to proposals and determine if justifications are holistically valid.

As I said, I have heard the capital rationale from three different sources. Is it true? I don't know. However, basic finance says that financing this type of activity through public or debt financing means certainty of cash flows is very important.

It's logical but that doesn't mean it's true or justified.

 

[BSR]

Andy

You are a great poster and I enjoy your football analysis.

However, you are not a finance guy.

What makes you say that he isn't a finance guy? I've been in finance for almost 20 years and I thought his point was fine.

As for the "insulation" part of it is related to capital expenditures but much is also based on other expenses. Of course this can be found on page 92 of the CBA in painstaking detail.

I don't think its reasonable to assume that all of the additional "deduction" from Total Revenue requested by the owners is relating to capital expenditures. As Andy indicated, it just a mechanism for sharing and can be in relation to a number of up front costs.

 

[Ring 6]

Andy

You are a great poster and I enjoy your football analysis.

However, you are not a finance guy.

Yes, actually I kind of am.

Do you understand the idea of risk premium? If a business prefers to take say the first $1 billion then split remainder 40/60 vs say $500 million 50/50, they are choosing the security of a cash flow vs the potential of a greater cash flow.

That is exactly what I have said.

Ever heard of "one in the hand is better than two in the bush"?

Greater certainty of cash flow goes hand in hand with mitigating real or perceived risk.

This is only done under the auspice of a perceived risk. Do you seriously think prudent businessman would sacrifice a percentage of revenue if it was guarenteed that revenues were going to grow 50% yoy and generate mega free cash flow?

Yes, of course they would depending on where the line is drawn.
In this case THEY DID.

I'm not taking sides because I haven't seen the financials or more importantly the proformas. I also don't know the real reasons the owners have proposed this. What I can do listen to proposals and determine if justifications are holistically valid.

Nice job insulting me at the outset and then showing you don't even know what you are talking about. This is not a proposal, it is what the current system is.

As I said, I have heard the capital rationale from three different sources. Is it true? I don't know. However, basic finance says that financing this type of activity through public or debt financing means certainty of cash flows is very important.

You are not even on topic.
The topic is that the $1billion exclusion that is ALREADY IN PLACE came about as an adjustment to the method of calulating the players share, years ago.
It is what they did, and it had nothing to do with financing.