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All: The new Billszone site with the updated software is scheduled to be turned on Tuesday, May 21, 2024. The company that built it, Dynascale, estimates a FOUR HOUR shut down, from 8pm Pacific, (5pm Eastern) while they get it up and running. Nobody will be able to post in any forum until they are done. Afterwards, you may need to do a web search for the site, as old links will not work, because the site is getting a new IP address. Please be patient. If there are bugs, we will tackle them one at a time. Remember the goal is to be up and running with no glitches by camp. Doing this now assures us of that, because it gives us all summer to get our ducks in a row. Thank you!
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Could Ralph be trying to pocket some of the extra cap money?
Re: Could Ralph be trying to pocket some of the extra cap money?
Of course he is.
There is an article in Forbes magazine that was published last fall that showed that the Bills were in the middle of the pack of the NFL in terms of EBITDA (earnings before interest, taxes, depreciation, and amortization for those who want to know -- the stat most companies are compared at in the finance world). This means Ralph, at the end of the day, is still making pretty decent money even though the Bills are an "itty bitty small market team trying to make it." He keeps the expenses low (specificially the liabilities, debt -- both to players and on the franchise) and then makes his money off of the revenue sharing.
I'll try to find the article. I brought it up before but everyone ignored it. The board was more interested in fighting with Pat Moran about who was a bigger homer or realist or something.
Re: Could Ralph be trying to pocket some of the extra cap money?
Here's 2006. 13th in the NFL in Operating Income/EBITDA. Check out how low his debt to value ratio is, and Buffalo is 25th in the NFL in value. He's cutting corners with the cap. "Cash to cap" is nothing more than Ralph trying to make the franchise a debt-free company by the time he passes away, that way whenever someone sells the company, it's pure profit. That's it. It's not "a better way" to build a winning football team -- doesn't have anything to do with it.
Re: Could Ralph be trying to pocket some of the extra cap money?
Ralph made a profit in the single digits prior to the new CBA, thanks in large part to no debt load from the team or stadium. With the new CBA that has a salary cap based on all revenue and not just shared, the profits will drop markedly, if not become losses, unless he either receives revenue sharing to make up the difference compared to the old CBA, or imposes the "cash to cap" policy.
Re: Could Ralph be trying to pocket some of the extra cap money?
Originally posted by Goobylal
Ralph made a profit in the single digits prior to the new CBA, thanks in large part to no debt load from the team or stadium.
Did you just totally ignore the financials that I posted or what? His EBITDA was $31.2MM last year. And don't say "well, after taxes..." that's finance 101, of course you make your profits look a lot lighter on paper so you don't have to pay as much taxes. You go off of Operating Income/EBITDA, and he's in the top 1/2 of the league in that regard.
With the new CBA that has a salary cap based on all revenue and not just shared, the profits will drop markedly, if not become losses, unless he either receives revenue sharing to make up the difference compared to the old CBA, or imposes the "cash to cap" policy.
We'll see when Forbes runs their annual NFL team valuations this fall, won't we?
Again, "cash to cap" is a method to take his already top 5 lowest debt in the league rating, and reduce it to almost nil so the Buffalo Bills are a debt free corporation. It has nothing to do with Ralph wanting to allocate money differently so that it leads to a better winning formula on the football field. It's all about money.
Re: Could Ralph be trying to pocket some of the extra cap money?
The above was before interest, taxes, depreciation, and amortization. And teams use all sort of creative accounting methods from year-to-year and Forbes goes off of those. I'm sure Enron had pretty numbers as well until the end.
Re: Could Ralph be trying to pocket some of the extra cap money?
Originally posted by Goobylal
The above was before interest, taxes, depreciation, and amortization. And teams use all sort of creative accounting methods from year-to-year and Forbes goes off of those. I'm sure Enron had pretty numbers as well until the end.
C'mon, you can't be serious? All companies are measured by their EBITDA/Operating Income numbers because it's very easy to manipulate the depreciation, amoritization, and accrued interest to one's liking for the net profit. No financial experts go off of net profit to measure a company's viability or financial success.
Enron had pretty numbers because they had hundreds of millions of dollars of off-balance sheet financing that wasn't allocated as debt on its balance sheet, giving the allusion its assets were stronger compared to its liabilities than they really were. If they were a private company, no one would have cared. However, they were a public company, so their fudged numbers were falsely manipulating their investors to think their stock was a lot more valuable than it was. There is no accounting correlation to Enron and the NFL, and specifically the Buffalo Bills.
Look, all I'm saying is Ralph is out for the money. Ralph is making money, he has been making money, he's a smart businessman that way, and that's fine. But I'm also saying (and we'll see in November when Forbes runs its annual NFL valuation article), that "cash to cap" is not about making the Bills a better football team, it's about making his company even less indebted than it already is. And I assure you of this -- the operating income will be there again as well.
Re: Could Ralph be trying to pocket some of the extra cap money?
No doubt the operating income will be there. That's the reason why Ralph instituted the "cash to cap" policy, specifically AFTER the new CBA called for the salary cap to be based on ALL revenue and not just shared ones.
The thing is, Ralph's been spending close to the cap every year up until the past 2, i.e. after the new CBA. And he's doles-out tons of bonus money. So no one can accuse him of pocketing anything prior to the past 2 years. Moreover, he's never gouged the fans WRT game/day prices OR asked for a new tax-payer paid stadium, just upgrades to the existing stadium that the county owns.
The fact is that Ralph is probably the poorest of the NFL owners and in an area in which he can't raise prices substantially without alienating the fan base. Yet he can't also predict the future and see how much money he'll be making, so to keep the franchise viable and IN Buffalo, he has to instititute a policy. If it's that policy that KEEPS them in Buffalo, I'm not going to cry "why can't we spend it all!"
Besides, buying loads of (expensive) players doesn't guarantee you anything. Look at the Redskins for proof of that.
Re: Could Ralph be trying to pocket some of the extra cap money?
Originally posted by Goobylal
No doubt the operating income will be there. That's the reason why Ralph instituted the "cash to cap" policy, specifically AFTER the new CBA called for the salary cap to be based on ALL revenue and not just shared ones.
The thing is, Ralph's been spending close to the cap every year up until the past 2, i.e. after the new CBA. And he's doles-out tons of bonus money. So no one can accuse him of pocketing anything prior to the past 2 years. Moreover, he's never gouged the fans WRT game/day prices OR asked for a new tax-payer paid stadium, just upgrades to the existing stadium that the county owns.
The fact is that Ralph is probably the poorest of the NFL owners and in an area in which he can't raise prices substantially without alienating the fan base. Yet he can't also predict the future and see how much money he'll be making, so to keep the franchise viable and IN Buffalo, he has to instititute a policy. If it's that policy that KEEPS them in Buffalo, I'm not going to cry "why can't we spend it all!"
Besides, buying loads of (expensive) players doesn't guarantee you anything. Look at the Redskins for proof of that.
This post makes some sense and are valid points.
I will disagree with one point though... we don't know what Ralph really nets out, and we also don't know what his balance sheet looks like (and we probably never will). He might have $200 million cash on the balance sheet with basically no debt, with little depreciation/amoritization costs for all we know.
I mean, it's not really a secret that an NFL team is a big tax shelter for all of these owners. You think Dan Snyder and Jerry Jones show a big net profit? They probably show a loss at the end of the day.
Yes, Buffalo is a small market, yes the ticket prices are pretty reasonable in comparison to the rest of the league, etc. etc. All of these points are true. I just don't buy that Ralph is in THAT bad a shape though. And I seriously doubt he is the poorest of NFL owners. The numbers don't lie. He's been making a pretty good profit the last several years. We'll see what happens this year.
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