NFL is 9 billion in debt

[Locke]

Originally Posted by Flames in 07

Locke, all I'm saying is that an absolute figure of how much debt I have doesn't mean anything and nobody can draw any conclusions from it.

Someone who has 1000 in debt could be in more trouble than someone who has a million in debt.

I get that, its all about how much money you have in the bank and how much additional capital you have to call on.

Originally Posted by Bring_Back_Shantz

Well $9 billion divided among the teams doesn't seem so bad.
You can't use the argument the revenue isn't that huge if split among all the teams and ignore that the debt is as well.

I mean seriously, the NFL salary cap is done as a % of league wide revenues, ie, TV, Radio, and Merchandising. I think this year it is at something like 60% of revenue, and the Salary Cap is like $120 million dollars. Which means their revenue is somewhere close to $200 million/year, and this doesn't include ticket sales either.

So $9 billion divided by 30 teams is $300 million in debt for each team, but their revenues are OVER $200 million each per team.
So yeah, they have a lot of debt, but their revenue is also huge.

Just because a business carries debt doesn't mean they can't make a profit, and I'm fairly certain every team in the NFL is turning a profit right now.

The whole point of this article is that the NFL is reducing the ammount of debt each team is allowed to carry, and is doing it as a means of reducing the ammount of signing bonuses a team can give out, and this is all to do with the upcomming CBA expiring. The $9 billion in debt, is a throw in number that really says nothing about the financial stability of the NFL.

I understand that, and for the most part I agree with you.

The article is being written in order to bring the debt figure into attention. Why? Because collectively they feel its too high and want to work to lower it because too much debt leverage is bad for a variety of reasons.

[rubecube]

Aren't you an accountant, Locke?

[mykalberta]

I am confused about the article.

The building of stadiums has nothing to do with the debt of the NFL itself.

If an owner over-extends himself then he/she will have to sell. Why are owner's personal debt load even an issue for the league. There are many people willing to buy an NFL franchise, likely to move it but there are buyers none the less.

Unless its referring to owners using the teams value as collateral for new stadiums, but again that is not debt assoicated with the NFL but rather the individ owners and how they structure their buisness.

Example, in New England Gillette stadium is owned by a separate operating company than the Patriots, they are part of the same family but separate none the less there by not burdening the Patriots with the debt load. Its true the Patriots sign a long term operating contract to provide income for financing purposes for the stadum but thats where the relationship ends.

I guaratee you, that for the average team, on expenses and income alone, none of them are in debt. Its when owners use the teams assets as collateral for other projects is when teams get in trouble. The closest team to running a deficit is the Bills which is why they are talked about being moved the most, its not that they arent profitable, its that they arent as profitable as they could be elsewhere.

[Displaced Flames fan]

Originally Posted by Locke

An even rougher estimate would be:

When the majority of the US economy stalls.

If "Factory Worker X's" house is worth less than his remaining debt outstanding he doesnt exactly have the cake for NFL tickets.

Oh lord.

Are we headed for The Greater Depression? I swear, the drama surrounding the state of the US economy is laughable.

[Locke]

Originally Posted by rubecube

Aren't you an accountant, Locke?

Most of the time.

I'm just not communicating my point very well it seems.

[KTown]

Originally Posted by GirlySports

http://www.profootballtalk.com/2008/...wes-9-billion/

Too many new stadiums being built and bonuses being paid out.
Could this bite the NFL when it dips in popularity?

It will never lose it's popularity

Season tickets may be expensive on a per game basis but you only have 8 regular season games. So shelling out roughly 800 dollars for season tickets is not alot of money. Those same seats in hockey will cost you around 4000 a season ticket.

[Flames in 07]

Originally Posted by Locke

I get that, its all about how much money you have in the bank and how much additional capital you have to call on.



I understand that, and for the most part I agree with you.

The article is being written in order to bring the debt figure into attention. Why? Because collectively they feel its too high and want to work to lower it because too much debt leverage is bad for a variety of reasons.

I think it has more to do with setting the stage for labor negotiations.

[You Need a Thneed]

If the NFL is $9B in debt, then, either the article is leaving out the part where they have $20-25B (my guess) in assets, or my name is Homer J. Simpson.

The NFL is ROLLING in money. There's not a single team in the league that's not making money, and probobly at least 30 of the 32 teams would still be making money if you took ticket sales out of the equation.

I think I heard (or figured it out myself), for every MNF game on TV, enough money is paid to the league to pay EVERY player in the league about $50,000. There are what, 18 MNF games? So, MNF alone is paying enough to pay every player in the league about $900,000. There are 3 other major TV deals that pay substantial amounts.

[Ducay]

I don't think the writer of the article understands how business accounting works, most large corporations have huge amounts of debt, but thats how companies work. If companies didn't take out huge amounts of debt, there would hardly be any growth because there wouldn't be any money to finance it.
The NFL and its franchises being such huuuge corporations with billion dollar revenues, this kind of debt isn't much of an issue when you compare it to the amount these clubs are worth. The debt to equity ratio appears pretty small to me in this case.

[simmer2]

http://espn.go.com/sportsbusiness/s/forbes.html

I'm not sure what they are using to base the value of the team on, but this is what Forbes lists the values of Sports teams at. I am pretty sure this implies the number that it would take to purchase a team.

[Locke]

Originally Posted by Ducay

I don't think the writer of the article understands how business accounting works, most large corporations have huge amounts of debt, but thats how companies work. If companies didn't take out huge amounts of debt, there would hardly be any growth because there wouldn't be any money to finance it.
The NFL and its franchises being such huuuge corporations with billion dollar revenues, this kind of debt isn't much of an issue when you compare it to the amount these clubs are worth. The debt to equity ratio appears pretty small to me in this case.

No kidding. I agree with you there and I'm aware of the general leveraged situations of most large companies, but the fact remains that the League is trying to mandate less held debt per team.

There has to be a reason.

Originally Posted by simmer2

http://espn.go.com/sportsbusiness/s/forbes.html

I'm not sure what they are using to base the value of the team on, but this is what Forbes lists the values of Sports teams at. I am pretty sure this implies the number that it would take to purchase a team.

This seems weird, or perhaps out of date? I know the Redskins are incredibly valuable, but some of those franchise values seem really low and others are higher than I'd imagine.

As for whether or not those values are equivalent to "price tags" on franchises, I'm not sure.

There are a lot of factors to consider when calculating "value" versus "price" or "cost." One of the major differences including possibility of future cashflows and revenues.

If they are right then Katz up in the Chuck got fleeced!

[simmer2]

Originally Posted by Locke

No kidding. I agree with you there and I'm aware of the general leveraged situations of most large companies, but the fact remains that the League is trying to mandate less held debt per team.

There has to be a reason.



This seems weird, or perhaps out of date? I know the Redskins are incredibly valuable, but some of those franchise values seem really low and others are higher than I'd imagine.

As for whether or not those values are equivalent to "price tags" on franchises, I'm not sure.

There are a lot of factors to consider when calculating "value" versus "price" or "cost." One of the major differences including possibility of future cashflows and revenues.

If they are right then Katz up in the Chuck got fleeced!

I think this article was older....and it may be what their assets are worth too, not what the overall company is worth. The rankings are likely legitimate, but I'm with you on the "price tags".

[corporatejay]

No way the Raptors are worth more than the Leafs...on what planet?

[burn_baby_burn]

Originally Posted by simmer2

http://espn.go.com/sportsbusiness/s/forbes.html

I'm not sure what they are using to base the value of the team on, but this is what Forbes lists the values of Sports teams at. I am pretty sure this implies the number that it would take to purchase a team.

That list is terribly out of date. Not only a few of the owners dead. One of the franchises is as well. Or at least has moved to another city.