Jerry's post-stadium spending

[T-RO]

It was reported back before training camp that Jerry had as much money outside of the Cowboys as he has invested in them. Jerry is not starving or broke.

No of course Jerry's not broke. But if you followed the whole Ranger thing... Hicks's put the team into bankruptcy while he sat on boatloads of money. Big business moguls put legal walls in place that partition money into multiple hermetically sealed ventures. One of their corporations can sink and go under while others thrive unperturbed.

Now the Cowboys are the furthest thing from the Rangers and they aren't going to go bankrupt. But I'm just wondering if Jerry might have strong motivation to run a very tight ship for a little while.

 

[T-RO]

The Stadium reportedly cost 1.3B, the total pay roll from 2009 90.341M or 6.95% of the cost of the stadium.

I kind of doubt that the payroll is being influenced by the cost of the stadium, its small enough to be an afterthought to Jerry, IMO. Of course it has been several years since I have managed that type of money so I could be wrong here, but I think there are a couple of good theories stated here that seem to make more sense.

It doesn't work that way. It's not about gross dollars...it's about margins. Even the gross dollars you are talking about are spread out over many years.

Also don't forget the stadium has a number of income streams outside of the NFL. (Boxing, music, events, soccer, college football, etc etc.)

 

[Doomsay]

We could back and fourth on this all night because neither one of us have the answers. But.............

How many games were blacked out in Dallas last year?

It's a completely valid argument. If he had to have the money, we would have a naming deal in place. He's forgoing huge $ each season we don't have one. It's the smart play because he will make more over the next 30 yrs, but you can't do that if you're strapped!

No it real isn't debatable. No player decision is so out of character to prove anything type of cash short fall.

I could go on for 3 pages on why this is not the case. I if Jerry had real problems, we would know.

Actually, the responses to your original challenges were all very measured and reasonable, I don't think that your contention that we'd know about any cash flow issues is accurate. Part of the financing is public, but Jerry's portion isn't, and only upper management, that bankers and the lawyers know the real score in terms of liquidity.

Jerry hasn't signed an expensive FA since the advent of the stadium, and in 2009, jettisoned a ton of salary cash cost while orchestrating one of the least expensive drafts in recent team history (albeit, partially due to the loss of picks in the Williams deal).

 

[jswalker1981]

So we are trying to link the lack of free agent spending to building the stadium?? Could it be that Jerry knows there is going to be a salary cap next year, and doesn't want to over do it? We do have the second highest payroll in the NFL.

1) Oakland Raiders, $ 152,389,371
2) Dallas Cowboys, $ 146,401,600
3) Minnesota Vikings, $ 133,354,045

It looks like to me, Jerry already did his spending before this offseason.

 

[Jay]

So we are trying to link the lack of free agent spending to building the stadium?? Could it be that Jerry knows there is going to be a salary cap next year, and doesn't want to over do it? We do have the second highest payroll in the NFL.

1) Oakland Raiders, $ 152,389,371
2) Dallas Cowboys, $ 146,401,600
3) Minnesota Vikings, $ 133,354,045

It looks like to me, Jerry already did his spending before this offseason.

Bingo. If we signed a bunch of players and then there's a cap next year, we'd be in trouble especially in regards to retaining some pretty important players.

 

[theogt]

The Stadium reportedly cost 1.3B, the total pay roll from 2009 90.341M or 6.95% of the cost of the stadium.

I kind of doubt that the payroll is being influenced by the cost of the stadium, its small enough to be an afterthought to Jerry, IMO. Of course it has been several years since I have managed that type of money so I could be wrong here, but I think there are a couple of good theories stated here that seem to make more sense.

I'm not sure what this has to do with anything. Why would you look at the payroll in terms of the total cost of the stadium? Does this have anything at all to do with cash flow?

Let's do some back of the envelop calculations. Reportedly players get around 50-60% of NFL revenues.

Lets use a very rough example of what that means in terms of CASH. If an average team has 50% of its revenue tied up in player costs, and players on average make $100 million, then that means total revenue for the team is $200 million. So, just taking out player costs and no other costs, the team would have $100 million in cash per year. Lets assume that NFL teams have a nice profit margin of 20% (probably way too high, but whatever). That means that other costs would total an extra $60 million, leaving about $40 million of cash to the owner.

Now, let's consider Jerry's debt load. Jerry financed somewhere between $0 and $900 million of the stadium. Let's assume he went with 50/50 debt-equity ratio, financing $450 million at an 8% interest rate. That adds debt services costs of $36 million per year.

That would basically eat up most of the typical teams cash flows. Now, the Cowboys probably make more non-shared revenue than the average team, so Jerry can afford a little more wiggle room than the average team. But when you have numbers in those ranges, the decision of whether or not to pay a high caliber player a $15 million signing bonus (or cut a player due to make $9 million) will make you pause.

This is a business, just like any other. And no business with $200-300 million revenue can go from basically zero debt to $500+ million debt and not have an impact on cash flows.

 

[Doomsay]

So we are trying to link the lack of free agent spending to building the stadium?? Could it be that Jerry knows there is going to be a salary cap next year, and doesn't want to over do it? We do have the second highest payroll in the NFL.

1) Oakland Raiders, $ 152,389,371
2) Dallas Cowboys, $ 146,401,600
3) Minnesota Vikings, $ 133,354,045

It looks like to me, Jerry already did his spending before this offseason.

2008 numbers

Jerry dropped $55 M of that balance in 2009.

 

[Cas2800]

Jerry is a smart business man that knows money makes money. He knows winning games brings fan interest which equals money. The last thing Jerry wants 7-7 team that nobody wants to come to his stadium to watch.

 

[Tusan_Homichi]

2008 numbers

Jerry dropped $55 M of that balance in 2009.

As of March 2010, our cap number was $153 million from what I can find online. So, that's not accurate. Or, if it was, it's not accurate now.

 

[PhillyCowboysFan]

2008 numbers

Jerry dropped $55 M of that balance in 2009.

That's not true!

The Cowboys had the highest payroll coming into 2010. Follow link and read the posted article.


http://sports.espn.go.com/dallas/nfl/columns/story?columnist=watkins_calvin&id=4984583

 

[burmafrd]

The fact that there is no Naming Rights deal even talked about or speculated about is a big hint that Jerruh is not hurting. Even a not so good deal would bring in $10 mill a year. If Jerruh needed the money he would have done a deal by now. From various articles and the like over the last year it paints a picture that Jerruh has everything under control and has money spend if he wants to.

With no one knowing what will happen with the CBA, it would frankly be stupid to spend big bucks on FA's unless you absolutely needed one. And we don't and have not for a while. Jerruh not spending money has everything to do with the situation regarding the CBA and nothing else.

 

[cobra]

This is a silly discussion.

Name me one move we would have otherwise have made but did not because of salary. Name the whole we are ignoring with the obvious answer the team is unwilling to afford. I assume that some of you think we should have signed player X and didn't because Jones is being frugal. So who is it? Come out and say it instead of beating around the bush. If you can't name one, then it makes no sense discussing this.

If you don't think we have sat out on a player, and you really just want to pontificate about Jerry's cashflow, then it makes no sense discussing this because no one here knows about the financials so you are all talking from a position of ignorance.

Either way, it's a silly discussion.

 

[fffiasco]

I think the last thing we need to worry about is Jerry's ability to manage the business aspect of this team.

 

[theogt]

This is a silly discussion.

Name me one move we would have otherwise have made but did not because of salary. Name the whole we are ignoring with the obvious answer the team is unwilling to afford. I assume that some of you think we should have signed player X and didn't because Jones is being frugal. So who is it? Come out and say it instead of beating around the bush. If you can't name one, then it makes no sense discussing this.

If you don't think we have sat out on a player, and you really just want to pontificate about Jerry's cashflow, then it makes no sense discussing this because no one here knows about the financials so you are all talking from a position of ignorance.

Either way, it's a silly discussion.

To say we know nothing about the financials is just being ignorant.

What's silly is assuming NFL teams have infinite amounts of cash to burn. There's a reason NFL owners won't agree to continue with the current labor rates. From what I've read, NFL franchises aren't exactly high profit margin businesses.

 

[utrunner07]

Now, let's consider Jerry's debt load. Jerry financed somewhere between $0 and $900 million of the stadium. Let's assume he went with 50/50 debt-equity ratio, financing $450 million at an 8% interest rate. That adds debt services costs of $36 million per year..

I see what you are saying. Was not thinking earlier, I guess.

 

[SaltwaterServr]

To say we know nothing about the financials is just being ignorant.

What's silly is assuming NFL teams have infinite amounts of cash to burn. There's a reason NFL owners won't agree to continue with the current labor rates. From what I've read, NFL franchises aren't exactly high profit margin businesses.

The DMN put out an article during the blackout period that said the payments to clear the bond the city of Arlington's voters took out was actually 30% or more ahead in payments. The reasoning was that the stadium had produced more than expected income over its first year of operation.

 

[theogt]

The DMN put out an article during the blackout period that said the payments to clear the bond the city of Arlington's voters took out was actually 30% or more ahead in payments. The reasoning was that the stadium had produced more than expected income over its first year of operation.

That article had to do with the collection of taxes in order to pay the city's bonds. Has nothing to do with Jerry's debt payments.

 

[Vintage]

Maybe Jerry has looked at the contracts he has given Flozell Adams, Ken Hamlin, Roy Williams, and even Leonard Davis's pay last year given the return we got...

And has gotten more careful.

 

[T-RO]

This is a silly discussion....Either way, it's a silly discussion.

OK...then... indulge our silliness...or visit one of the other many fine threads this forum offers.

Football is a business and I hardly think it's out of place to have a thread to discuss that aspect of it.

I don't see anyone blasting Jerry or making dogmatic conclusions. We are all wondering aloud and I'm glad I started the thread because I've learned some things.

 

[T-RO]

Maybe Jerry has looked at the contracts he has given Flozell Adams, Ken Hamlin, Roy Williams, and even Leonard Davis's pay last year given the return we got...

And has gotten more careful.

And that would be a very good thing. He's overpaid aging veterans in the past, as we know...and then we've been dead in the water.