A good explanation of the numbers...
Posted 08 March 2013 - 10:10 AM
Nothing to be explained in my opinion.
Posted 08 March 2013 - 10:16 AM
From reddit, I know its blocked for some people at work so I pasted here. From "allsecretsknown" on reddit...
If anyone actually gave a good goddamn about what the fug these numbers meant it wouldn't be a story, but it's Deadspin so, whatever.
Welcome to yesterday.
Posted 08 March 2013 - 10:19 AM
Actually, while I won't claim to be an expert by any means, I do have some accounting experience.
1) Operating profit isn't cash flow either. It is operating income calculated by Generally Accepted Accounting Principles (GAAP). But your point about signing bonuses is correct. Following GAAP signing bonuses would be recognized as an expense over the course of the player's contract as the expense was recognized while the cash would be recognized as soon as they paid the players.
Thus operating income could be substantially higher than cash flow in a year with significant signing bonuses.
2) True. His profits would have actually been much higher if they had laid off more staff.
3) Again true; however, in a free market sense, risk should be the ultimate calculator of return. What's riskier being an NFL owner or being an NFL player?
4) I don't think most people begrudge the owners for making money. The trouble is if you tell me you have 200 million dollars in negative cash flow, and you're actually up conservatively 30 million. That's a lot of horse poo to swallow. Add that on top of owners holding cities hostage for free tax payer money, and it gets annoying. Lot's not even mention the product on the field for the past few years.
5) It's hypocritical in the extreme. How often has JR flaunted his privately funded stadium? And Debt can actually help improve financial returns if managed properly because interest functions as a tax shield. There are other ways to ensure the franchise stays in Carolina besides holding the city hostage.
6) I don't doubt there needed to be some readjustment to ensure the long-term stability of the league, and in some ways I can appreciate a manufactured short-term 'crisis' to force long-term thinking. I get how, "we're bleeding money" sells a lot better than "in order to manage the long-term risk factors of the NFL a profit sharing adjustment is necessary to provide stability and hedge again future concerns" but they were still talking bullshit.
The reality is, if our team was winning, we all wouldn't give a flying fug what the numbers are. But in the the meantime they smack of hypocrisy, and as a fan who does understand the numbers, I am frustrated and annoyed.
As you should be.
Posted 08 March 2013 - 10:28 AM
So my question is if the team is sold what happens to everyone's PSLs? Are they refunded?
Oh and if you want to know who has skin in the game....
The Carolina Panthers became the first NFL team to start selling PSLs back in 1993. The sale raised $122 million for the team's $187 million stadium that opened in 1996.
When I signed my contract I did so with the understanding that I am not promised a return on my investment for PSLs. If i recall (its been awhile) the contract even hints that if the team moves or a new stadium is built that the PSLs don't carry over, they are voided. I think everybody that shells out the dough for PSLs understands the fine print.
Posted 08 March 2013 - 10:32 AM
I get that, and it is a valid point. However, the Panthers did not need Charlotte. I was referring to the explosion of commerce in the uptown area. Charlotte was a large financial center before the Panthers arrived and uptown was dead. It closed at 5 pm. NCNB and First Union built skyscrapers, but that did nothing to wake downtown up. They needed entertainment uptown to bring in the reason for people to return to uptown--or stay uptown after work. I know I am only talking about 8 weekends a year, but there are also college games and other events there. Restaurants immediately went up. Then there were condos flying up in areas that used to be slums. They even tore down the 23,000 seat Hive and moved the Bobcats arena uptown.
I could turn that around and say that the success of the Panthers is directly linked to the city of Charlotte... being one of the fastest growing and largest financial areas in the country.
In fact, this happened during one of the biggest recession periods in history and growth in uptown Charlotte commerce grew like crazy. The Panthers' faith in uptown triggered this expansion.
Taxing those who have benefitted from the investment of the Panthers is fair, if you ask me. This trickle down effect created jobs and income, increasing the tax base by millions. Time to pay the driver; the free ride is over.
Posted 08 March 2013 - 11:27 AM
Anyone around here have the slightest bit of accounting experience? No? Didn't think so.
Yes I do and there is at least one more accountant posting here. Does this reddit guy claim to be an accountant?
1.) In 2010 the team heavily cut salary in preparation for the lockout, hence the huge upswing on "operating" profit.
Operating profit != permanent cash in the bank, it is positive cash flow for that season alone. The lockout itself had the potential to wipe out an entire season of games with the way the feelings between ownership and players were going into the lockout, so Richardson had the team shed salary in order to build up a cash balance to fallback on in case games were lost. Obviously, they weren't, but a $78 million operating profit (including revenue sharing) is NOT a yearly profit take for any NFL franchise. Once games resumed and the Panthers started handing out huge contracts to the likes of DeAngelo Williams, that operating profit figure shriveled. What fans tend to forget about signing bonuses, is that while their hit can be spread over up to five years of the contract, they are paid immediately and come directly out of the team's operating cash reserves. The Panthers went into 2010 with $70 million because they didn't pay anyone, but in 2011 they handed out over $50 million in signing bonuses.
This is a very confusing and specious paragraph. This poster is suggesting, I think, that the 70M was just a build up so the team could pay signing bonuses in the following year and Jerry ended up losing most of that money. Didn't work like that.
Profit is income less expenses. In 2011, even after paying out the $50M from an accounting standpoint, the franchise made another $30M+. Nothing happened to the $70M in profit except that it probably made interest. If you have a company that makes profit every year then any one year's profit is indeed permanent cash in the bank.
"Cash reserves" are the last number on the balance sheet and is usually labeled equity. They have gone up dramatically.