Quote:
Originally Posted by Enoch Root
People aren't hung up on it. It is pretty straight-forward: you can't tie salaries to something that isn't recurring. They aren't revenues.
Of course the agents want to get their fingers into expansion fees. But they aren't going to. If you're an owner, the answer is simple: if you want in on expansion fees, put up some capital. No risk, no reward.
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Franchise fees are revenue, I have no idea what else you would call it. There are loads of examples if you want to research it. (start with the Rev Rec standard 606 and then some public company F/S for franchisors).
The fact that the amounts are not consistent, or occurring annually, does not preclude it from being revenue either. What standard are you using to come up with this?
Obviously tying salaries to a revenue stream that has peaks is complex but far from impossible. Escrow, amortizing fees over a number of years are possible mechanisms. The owners have already agreed to tie player salaries to revenue so that toothpaste is not going back into the tube. Of course the owners don't want to pay any more that they have to, but this is not the same as proceeds from the sale of a team.
I don't have your certainty about what happens with the next round of labor negotiations though.