Judge Nelson rules in favor of the players

[lamafist]

I'm sorry, but your statement is fundamentally flawed.

The value of an item comes from numerous sources. Like an increase in real estate prices. Like an increase in assets, including cash on hand. The only way to increase the cash on hand is through profits. It also comes from an increase in the demand of the product. Teams like the Packers have a 40 year season ticket waiting list. The Pats waiting list is like 15 years or so. Other teams don't have a waiting list at all.

Teams that WIN on a consistent basis have a higher value than a team that loses on a consistent basis. Teams that lose on a consistent basis get sold more often. We, as Pats fans, know this all to well.

To say that the NFL Owners have "MADE" 23 billion, just because the values of the teams have increased is just downright erroneous and shows a lack of understanding of economics.

I've reread this post a couple times, and still can't figure out if there's an actual argument you're trying to make. Yes, winning and losing can effect a team's value -- though not as much as one might think. Fan investment is probably one of the most mutable things about a team -- start winning, and the fans come right back. This is why the Redskins regularly top out as the country's most valuable sports franchise, despite being mediocre on the field. If a losing team has a solid money-making infrastructure, especially a good stadium situation, it retains almost all of its market value because it has the potential for mass profitability with little additional capital investment necessary.

Of course, all of that is pretty much irrelevant to your primary objection, which is to the basic and not at all erroneous fact that, collectively the NFL's owners have made 23 billion dollars since 1998 from capital gains from their franchises alone. This is real -- and taxable -- income. Forbes counts it. The U.S. government counts it. Banks count it. Your the only one who seems not to.

 

[DaBruinz]

Of course, all of that is pretty much irrelevant to your primary objection, which is to the basic and not at all erroneous fact that, collectively the NFL's owners have made 23 billion dollars since 1998 from capital gains from their franchises alone. This is real -- and taxable -- income. Forbes counts it. The U.S. government counts it. Banks count it. Your the only one who seems not to.

Clearly you don't understand what capital gains are. It is the profit realized on the sale of a non-inventory asset that was purchased at a lower price.

So, for an owner to actually have "made the money without a single cent of profit being recognized" (as you put it earlier) would mean that the owner would have to SELL THE TEAM and be paid that FULL VALUE. Then the owner would have "made" that money.

Let me give you an analogy that you might better understand. If I had bought 100,000 shares of Microsoft the day of it's IPO, I'd be considered a rich man right now. But the money would be tied up in the stocks. The only way I would see that money is if I sold the stock. Then, I would have to pay capital gains on the stocks I sold. Not before.

I stand by my statement that you don't understand the economics you are trying to talk about. You clearly don't understand what capital gains are or how they are paid. Nor do you understand how valuations of assets are done.

 

[lamafist]

Clearly you don't understand what capital gains are. It is the profit realized on the sale of a non-inventory asset that was purchased at a lower price.

So, for an owner to actually have "made the money without a single cent of profit being recognized" (as you put it earlier) would mean that the owner would have to SELL THE TEAM and be paid that FULL VALUE. Then the owner would have "made" that money.

Let me give you an analogy that you might better understand. If I had bought 100,000 shares of Microsoft the day of it's IPO, I'd be considered a rich man right now. But the money would be tied up in the stocks. The only way I would see that money is if I sold the stock. Then, I would have to pay capital gains on the stocks I sold. Not before.

I stand by my statement that you don't understand the economics you are trying to talk about. You clearly don't understand what capital gains are or how they are paid. Nor do you understand how valuations of assets are done.

I'm sorry, I shouldn't have said 'capital gains,' as the gain remains unrealized unless the asset is sold. My bad.

Aside from that one nit to pick, I hardly see a coherent argument from the rest of your exercise in pedantry. You're still trying leaning on a thoroughly inconsequential distinction. An NFL franchise is an asset (or, rather, collection of assets) and when those assets increase in value, the wealth of their owner increases.

This doesn't even qualify as "economics," which, incidentally isn't interchangeable with finance, as you seem to use it. There is no complicated issue of finance or investment at play here. It is a simple, inarguable fact that the owners get richer as their franchise appreciate in value, and that this is the primary way in which an NFL owner makes money on his investment in the franchise. All of your equivocation -- and liberal use of various forms of ad hominem fallacious arguments -- doesn't change the simple fact that the NFL owners have gotten, collectively, $23 billion dollars richer since 1998.

 

[DaBruinz]

I'm sorry, I shouldn't have said 'capital gains,' as the gain remains unrealized unless the asset is sold. My bad.

Aside from that one nit to pick, I hardly see a coherent argument from the rest of your exercise in pedantry. You're still trying leaning on a thoroughly inconsequential distinction. An NFL franchise is an asset (or, rather, collection of assets) and when those assets increase in value, the wealth of their owner increases.

The whole basis of your argument was that the owners made 23 billion without a cent of profit being taken. Your statement was factually wrong. Any 1st year accounting student can tell you there is a difference between wealth and value.

You trying to downplay your gaff as if it didn't mean anything is just laughable.

(BTW.. you do get brownie points for admitting your mistake, but lose them for trying to downplay it)

This doesn't even qualify as "economics," which, incidentally isn't interchangeable with finance, as you seem to use it. There is no complicated issue of finance or investment at play here. It is a simple, inarguable fact that the owners get richer as their franchise appreciate in value, and that this is the primary way in which an NFL owner makes money on his investment in the franchise. All of your equivocation -- and liberal use of various forms of ad hominem fallacious arguments -- doesn't change the simple fact that the NFL owners have gotten, collectively, $23 billion dollars richer since 1998.

No. The owners get richer when their franchises have profits and the owner takes some of those profits for himself instead of putting it back into the franchise. The franchise appreciating only matters if/when the owner sells the franchise. BTW, what are some of the ways a franchise appreciates??? Real Estate value goes up. Building improvements are done. Marketability because of new fans buying more product due to the team's on field success.

Saying you are rich because something is valued at a large amount of money doesn't make if fact. You're only "rich" if you actually sell that item and have the money. My example of Microsoft stock is an perfect example.

And Bob Kraft was RICH long before he took ownership of the Pats for $175 million.

 

[lamafist]

The whole basis of your argument was that the owners made 23 billion without a cent of profit being taken. Your statement was factually wrong. Any 1st year accounting student can tell you there is a difference between wealth and value.

You trying to downplay your gaff as if it didn't mean anything is just laughable.

(BTW.. you do get brownie points for admitting your mistake, but lose them for trying to downplay it)



No. The owners get richer when their franchises have profits and the owner takes some of those profits for himself instead of putting it back into the franchise. The franchise appreciating only matters if/when the owner sells the franchise. BTW, what are some of the ways a franchise appreciates??? Real Estate value goes up. Building improvements are done. Marketability because of new fans buying more product due to the team's on field success.

Saying you are rich because something is valued at a large amount of money doesn't make if fact. You're only "rich" if you actually sell that item and have the money. My example of Microsoft stock is an perfect example.

And Bob Kraft was RICH long before he took ownership of the Pats for $175 million.

Again, you're trying to frame meaningless distinctions as if they had some real world significance. Just because an NFL owner's primary assets aren't liquid doesn't mean that they're not wealth, and that their appreciation doesn't mean anything. The difference might mean something in your aforementioned first year accounting class, but nowhere else.

 

[BSR]

Again, you're trying to frame meaningless distinctions as if they had some real world significance. Just because an NFL owner's primary assets aren't liquid doesn't mean that they're not wealth, and that their appreciation doesn't mean anything. The difference might mean something in your aforementioned first year accounting class, but nowhere else.

There is a very real world significance between realized and unrealized gains. For instance, the value of these franchises is going to be very dependant on the outcome of these labor negotiations. The worse the labor deal for the owners the greater the decrease in the franchise value.

Your statement is totally off the mark.

 

[E Belichick Unum]

Given that the owners want a level playing field, what you're asking for cannont happen.

But what happens if they decide that a level playing field is no longer preferable? What happens if they decide that there is more to gain from turning the clock back 30 years than there is restarting the clock from the last agreement?

I am not big fans of either side, however I do believe that being an owner should have benefits above and beyond those of the employees. The argument that the owners created this mess is only partially correct. The union took decertification votes while the season was still being played and probably sold it as a last course of action. I knew that they were going to shut the league down, and anybody who had any sense of the situation should have known. Now, in legaleze I suppose that there was no evidence so there was no plan in place, but then again, legaleze let OJ walk, so real life and legal life are very different things.

There are benefits for the owners to want a CBA, but not at the expense of having to partner with the employees. The owners spent hundreds of millions on these teams, invested more than they paid for them in most cases, and for their investments they are given an ultimatum that either they open their books to public inspection or the union will blow everything up. Even when the owners suggested a solution to that demand the union said it wasn't good enough.

As far as I can see the players gave the owners all of the leverage, if the owners want to use it. It would mean changes in their business model and probably would mean that a new CBA would have to be negotiated before the TV contracts end, but what the hell? The players could never stay unified for the long haul and the current leadership isn't trying to protect the current membership as much as they are trying to beat the owners.

If the owners want to crush the union the judge gave them the ability to do just that. I woud be willing to bet that there is a vocal minority advocating that the league do just that.

 

[IllegalContact]

I read the last couple of pages of this thread.....

then I stabbed a pen into my eye several times and now feel better

 

[FreeTedWilliams]

Look: This "thing" (labor dispute) will only end after both sides have exhausted their legal manuvering and FINALLY sit down and collectively bargain like they mean it. The union is convinced that they can win the anti-trust suit, the owners are conviced that even if they lose, they have enough money to buy an anti-trust exemption from Congress (if they need to), so nobody is bargaining in "good faith" right now, it is all for show.

Now the fact that the 8th circuit stepped in and re-instated the lockout does not bode well for the players. I think they will rule that the District Court Judge overstepped the law and overturn her ruling. Which brings us back to square one. The players are locked out, and the owners are still facing an anti-trust lawsuit.

The easiest way around an anti-trust lawsuit is a collective bargaining agreement, BUT you can not have one without a union to collectively bargain with. So again, NOTHING is going to happen until the anti-trust suit is settled. Once that happens, then and only then will this thing move forward. IF I was an owner, I would just buy an anti-trust exemption from Congress, especially in a Presidential election year, all politicians need money, just buy them off and be done with it (and Oh, please don't even try to say that you can not "buy" a vote, because we all know, that it is true).


Bottom Line: THis is not going to be settled until the court rules on the anti-trust lawsuit, and not this lockout thing.

 

[Deus Irae]

But what happens if they decide that a level playing field is no longer preferable? What happens if they decide that there is more to gain from turning the clock back 30 years than there is restarting the clock from the last agreement?

I am not big fans of either side, however I do believe that being an owner should have benefits above and beyond those of the employees. The argument that the owners created this mess is only partially correct. The union took decertification votes while the season was still being played and probably sold it as a last course of action. I knew that they were going to shut the league down, and anybody who had any sense of the situation should have known. Now, in legaleze I suppose that there was no evidence so there was no plan in place, but then again, legaleze let OJ walk, so real life and legal life are very different things.

There are benefits for the owners to want a CBA, but not at the expense of having to partner with the employees. The owners spent hundreds of millions on these teams, invested more than they paid for them in most cases, and for their investments they are given an ultimatum that either they open their books to public inspection or the union will blow everything up. Even when the owners suggested a solution to that demand the union said it wasn't good enough.

As far as I can see the players gave the owners all of the leverage, if the owners want to use it. It would mean changes in their business model and probably would mean that a new CBA would have to be negotiated before the TV contracts end, but what the hell? The players could never stay unified for the long haul and the current leadership isn't trying to protect the current membership as much as they are trying to beat the owners.

If the owners want to crush the union the judge gave them the ability to do just that. I woud be willing to bet that there is a vocal minority advocating that the league do just that.

It doesn't increase the league's power. It weakens it, significantly. In the absence of a CBA, every single rule the league tries to impose is subject to suit, with treble damages. Nothing league wide is safe, and the focus would, of necessity, either be done by individual teams or be open to charges.

When cases get to the courts, you never know what's going to happen. I'm sure the PGA thought it had a good case before Casey Martin won in court, and I'm sure the NFL thought would win the American Needle case before it got smacked down, 9-0, by the U.S. Supreme Court.

 

[lamafist]

It's a flat 1 billion and has been since the 2006 CBA was signed.

Sorry, but no.

Per the 2006 NFL CBA, Subsection 1(a)(xiv), there is a set cost deductions of 5% and an additional 1.8% set deduction from TR for private contributions to stadium construction. This generally forms the majority of the annual deductions, with the rest coming in the form of credits for a list of deductible expenses as delineated in the above-referenced section of the CBA.

As you can see, all of those figures are per se relative to either revenue or costs.

 

[lamafist]

There is a very real world significance between realized and unrealized gains. For instance, the value of these franchises is going to be very dependant on the outcome of these labor negotiations. The worse the labor deal for the owners the greater the decrease in the franchise value.

Your statement is totally off the mark.

Yes, unlike realized gains, held assets continue to appreciate in value and make the owner wealthier. And the idea that the labor deal will harm the value of the franchises is just absurd. The NFL has enjoyed unprecedented growth in recent years, more than tripling in value since Forbes started keeping track in 1998, despite steady inroads by the NFLPA in that time frame. What's more, franchise values continued unabated their rate of growth following the purportedly player-friendly 2006 CBA.

 

[Wolfpack]

The whole basis of your argument was that the owners made 23 billion without a cent of profit being taken. Your statement was factually wrong. Any 1st year accounting student can tell you there is a difference between wealth and value.

You trying to downplay your gaff as if it didn't mean anything is just laughable.

(BTW.. you do get brownie points for admitting your mistake, but lose them for trying to downplay it)

Which gives him more brownie points than you, a person who constantly makes mistakes but is never man enough to admit it.

No. The owners get richer when their franchises have profits and the owner takes some of those profits for himself instead of putting it back into the franchise. The franchise appreciating only matters if/when the owner sells the franchise.

Now you're the one showing no understanding of economics 101. If you don't think the value of a franchise matters until the actual moment it's sold, I suggest you go back to high school.

 

[Wolfpack]

There is a very real world significance between realized and unrealized gains. For instance, the value of these franchises is going to be very dependant on the outcome of these labor negotiations. The worse the labor deal for the owners the greater the decrease in the franchise value.

Your statement is totally off the mark.

While the new CBA (when we finally get one) would impact franchise values, it is not going to be some overwhelmingly huge number. The Patriots will still be going up in value. They will still be reaching (and exceeding) the $1.5 billion mark within a couple years.

The last CBA was horrible for the owners, and yet the value of franchises consistently went up.

 

[BSR]

Yes, unlike realized gains, held assets continue to appreciate in value and make the owner wealthier. And the idea that the labor deal will harm the value of the franchises is just absurd. The NFL has enjoyed unprecedented growth in recent years, more than tripling in value since Forbes started keeping track in 1998, despite steady inroads by the NFLPA in that time frame. What's more, franchise values continued unabated their rate of growth following the purportedly player-friendly 2006 CBA.

You mean like the housing market or internet bubble companies?

Reality is that values of assets can go up or down. Largely illiquid assets like NFL franchises are typically valued at a combination of Cash Flows and market comparable transactions. If the profitability of a franchise goes down, then guess what? The value goes down. Even if profitability stays even, eventually appreciation will slow or plateau unless new revenue streams are invested in or discovered.

You want to know why franchises continued to grow? NFL Network, Thursday night games, Flexing of games, NFL Sunday Ticket. They went up because the owners were beating down every revenue path they could. Eventually though there is only so much water you can get from a stone.

 

[BSR]

While the new CBA (when we finally get one) would impact franchise values, it is not going to be some overwhelmingly huge number. The Patriots will still be going up in value. They will still be reaching (and exceeding) the $1.5 billion mark within a couple years.

The last CBA was horrible for the owners, and yet the value of franchises consistently went up.

What is your number based on?

 

[Miguel]

It's a flat 1 billion and has been since the 2006 CBA was signed.

If your statement is true, then you should be able to point to its corroboration within the CBA.

 

[Wolfpack]

What is your number based on?

Forbes has them at $1.4 billion with the overall trend certainly being in the upward direction. I think it's safe to say $1.5 billion is just around the corner.

 

[BSR]

Forbes has them at $1.4 billion with the overall trend certainly being in the upward direction. I think it's safe to say $1.5 billion is just around the corner.

I misread your post before thinking you meant the average NFL franchise and not just the Patriots. That being said, I think eventually they will reach $1.5 billion but then again they are one of the top three franchises. Franchise values have on a whole been flat or decreasing over the past few years. That decrease is a result of the economy's effect on ticket sales, but that is with the existing long term TV contracts still in place. What if new TV contracts had to be done during these economic times? We will really only get to see where revenues, and hence franchise value, will be when the next TV contracts are signed. Given the recent popularity I wouldn't be suprised to see them stay level, but I could also see them go down.

 

[Joker]

Sorry, but no.

Per the 2006 NFL CBA, Subsection 1(a)(xiv), there is a set cost deductions of 5% and an additional 1.8% set deduction from TR for private contributions to stadium construction. This generally forms the majority of the annual deductions, with the rest coming in the form of credits for a list of deductible expenses as delineated in the above-referenced section of the CBA.

As you can see, all of those figures are per se relative to either revenue or costs.

Ian, could you make a subsection for all this accounting drivel? Thread after thread gets infiltrated and hijacked by this never ending back and forth over accounting issues...I realize some fans enjoy this arcane minutiae for whatever reason and a separate page would give them a place where they can crunch all the subsections,deductibles,delineations,revenues and costs they want.