The NFL is $9 Billion in Debt

[Beefullo]

http://www.profootballtalk.com/2008/03/17/league-owes-9-billion/

LEAGUE OWES $9 BILLION

Posted by Mike Florio on March 17, 2008, 9:20 a.m.
The NFL, which has been without question the most popular professional sport in America, is nevertheless awash in debt.
According to Daniel Kaplan of SportsBusiness Journal, the league had more than $9 billion in debt as of October 2007.
That’s an average of more than $281,000,000 per team.
The disclosure came in a letter from NFL outside counsel Gregg Levy in support of a decision by the league to reduce the per-team annual debt ceiling. The union has filed collusion charges regarding the move, alleging that the league essentially has limited the amount of money that will be available to pay bonuses and other lump sums to players. The Levy letter has been made public because it has been filed in connection with the collusion charges.
But the salary cap (and floor) are still in place. Regardless of how the money is paid out, every team is required to spend at least $100 million per year on players, with that number going up every year.
And the debt figure really is high, in our estimation. Major league baseball clubs owe a total of $3.1 billion, and NBA teams cap their debt at a total of $175 million per team. NHL teams can borrow up to one-half of the value of each franchise (so they can borrow like 500 bucks, right?).

 

[playmakers]

I really dont see how this is true. I guess the labor deal is up its something to throw out there as leverage. If the NFL is 9 billion in debt, no way are any franchises worth 700-1 billion dollars. How possibly can they be in that much debt? Is it possible?

 

[Wolfpack]

This is a poor little blurb/article, I think the title is missleading....guessing that it should not read NFL and should read NFL teams.

The $281M average is stuff like initial purchase debt, buying out partners, new stadiums and trips to Six Flags.

Not sure what the average NFL team is worth these days, but guessing this is about 30-40% debt ratio.

 

[MichaelWinicki]

This is a poor little blurb/article, I think the title is missleading....guessing that it should not read NFL and should read NFL teams.

The $281M average is stuff like initial purchase debt, buying out partners, new stadiums and trips to Six Flags.

Not sure what the average NFL team is worth these days, but guessing this is about 30-40% debt ratio.

That's pretty much it. Put this into perspective...

About a week ago it was announced that Americans now owe more money for their homes than they have in equity (in those homes)-- that's never happened before.

 

[sacase]

There is good debt and bad debt. Think about it. How much does JJ own on h is stadium? 600 mil+ Other teams are building new stadiums, some teams and not paid off from when the current owner purchased them. So the real question is how much of this is bad debt.

 

[TellerMorrow34]

Yeah I don't believe that the league, itself, is 9 billion dollars in debt.

 

[Redball Express]

There are two kinds of debt..managed debt and un-managed debt and then there is short term and long term catagories in each.

Taking on short term unmanaged debt is ok, as long as in the long run, there is revenue projected to cover it and eliminate it. Long term unmanaged debt is the killer. That one is the one that has to be closely watched.

The managed debt is necessary for businesses to run and for individuals to live.

The un-managed debt is the real issue and I can't tell anything about whether the debt being thrown around in this article is actually one or the other..it's just lumped together as debt, whether team or league debt.

And there is no discussion of revenue breakdowns short-term and long term at all.

This would be like me telling you that MBIII gained 1000 yds this season but not give you the yds/attp. or the number of TD's he scored.

Without the rest of the information, it might be hard for you to determine if he had a good season or not. If he got it doing 2.5 yds/att...he stunk. If he did it at 4.5 yds/att., he's Pro Bowler. But just to say he got 1000 yds in the season might be a little misleading.

Like saying the NFL is $ 9 billion in debt.

So it's really meaningless. Poor reporting by somebody either ignorant of the facts or has an agenda to grind..

With the threatened open cap of 2010 and the non-renewal of the bargaining agreement b/w players and management, we are going to hear more stories like this as writers try to scoop each other with sensational stories awash with half-truths.

Ignore button depressed.

:starspin ReDBaLL EXPreSS :starspin