The Merits of a $30M Annual Return on a $1B Investment

[SpikedLemonade]

For those that don't expect charity from Pegula simply because they were born or raised in Buffalo, I thought it would be worth looking at the economics of purchasing the Bills.

The Bills are reported to have made $30M last year and it appears they will sell for $1B or more. So that would be a 3% return.

That $30M does not include $78M/5 years for the Bills series but does include some lessor amount for the Bills game in Toronto last year -- let's say $8M rather than almost $16M per year for the prior 5 years. I believe I read that the Bills did not share this income in the same way that they share non-premium seat ticket revenue for home games in Buffalo.

On the other hand, the next NFL TV contract is said to increase each team's share by $40M after the player's get their share through an increased salary cap.

The Bills are currently behind the 4 year average salary minimum floor and that will cost them $5M more in the next two years (2015 and 2016).

In any event, here are two interesting arguments about the merits of the investment -- one in favour and one not.

-------------------------------------

I took this from another message board and was impressed enough that I simple copied and pasted it here. It is not my own work product, but I agree completely with it. The author is someone posting under the user name Finknottle...

There is an idea out there that would-be owners are already so rich that they are so motivated by joining the club that making money falls by the wayside. I think that is misleading.

Set aside the question of whether the personal qualities that make you filthy rich (such as good discipline about business decisions) can be turned on and off.

Think about the relative size of a billion dollars. Even if a would-be owner is worth more than that, a billion dollars is a significant fraction of everything they own. You are asking them to liquidate half or whatever of their financial empire and convert it into a toy. And the great majority of bidders are not billionaires, which is why you generally see ownership groups formed.

Raising an absurd amount of money takes time and maneuvering, even for the extremely rich, and a typical winner may wind up borrowing money one way or another to finance their bid. And that loan charges them interest. So when you say 'who cares, 3.5% sounds good if you are rich already,' you ignore the fact that after they pay their interest they are making diddly or even losing money. So they need a return at least as big as what they are losing to finance the purchase.

As to the point that this is risk-free, and that history shows this is the safest investment there is, things always go up until they stop. Railroads, steel, broadcast television, real estate, many industries had half-century periods of growth by the end of which they appeared money-in-the-bank investments. Horse racing was the dominant sport at its height. I'd guess that the major horse tracks showed similar growth until the 50's or so, appearing then to be slam-dunk investments. Didn't last. The bottom line is that there is risk to the NFL - risk that popularity will wane, risk that the internet age will destroy their broadcast revenues, risk that lawsuits, liabilities, and government regulations will undermine the product. Owning an NFL franchise looks reasonably safe, but it certainly no more risk-free than buying an S&P tracking fund for the long haul.

-----------------------------------------------------

On the other hand, Ralph did not have the tax write-off advantage that the new owner will have...

Buying Buffalo Bills Would Save Donald Trump A Fortune In Taxes
...The Bills would go for around $900 million (http://www.forbes.com/nfl-valuations/list/), and tax law established in 2004 (http://www.chicagonow.com/white-sox-observer/2012/06/the-hustler-bill-veeck-and-roster-depreciation-allowance/) allows the buyer to count the majority of the purchase price as an “intangible” asset that can be amortized–deducted from profits–over 15 years. Given their recently improved (from the standpoint of the Bills) stadium lease (http://www.nfl.com/news/story/0ap1000000114443/article/buffalo-bills-agree-to-new-ralph-wilson-stadium-lease) and the NFL’s collective bargaining agreement (http://profootballtalk.nbcsports.com/2011/07/25/the-cba-in-a-nutshell/), even a small market team like Buffalo is likely to generate at least $200 million in pretax income over the next 15 years.

Let’s assume that $800 million of the purchase price is amortized over 15 years. Such a large write-off would eliminate the team’s tax bill entirely. Moreover, the remainder ($600 million) of the write-off could be used to shield taxes (http://www.forbes.com/taxes/) from the other businesses owned by the team’s investors. Even if Trump were, say, just a 20% owner of the Bills, he would have perhaps $120 million of write-offs to deduct from his profitable businesses, like television (http://nypost.com/2009/11/11/apprentice-has-made-trump-the-second-richest-man-on-tv/) and training programs (http://www.theatlantic.com/business/archive/2014/03/the-art-of-the-upsell-how-donald-trump-profits-from-free-seminars/284450/)....

http://www.forbes.com/sites/mikeozanian/2014/04/02/buying-buffalo-bills-would-save-donald-trump-a-fortune-in-taxes/


-----------------------------------------------------------------------

Thoughts?

[BillsImpossible]

What if the new owner has to shell out another $700 million for a new stadium on top of the more than $1 billion for the team?

Terry Pegula recently sold land for $1.75 billion.

Is that just a coincidence how the cost of buying the Bills and building a new stadium almost exactly matches $1.75 billion?

If Terry Pegula buys the Buffalo Bills with cash, and guarantees the Bills Trust $750 million for the construction of a new stadium in downtown Pegulaville in 2020, I will crap Skittles for a week straight.

[Mace]

Pegula, for example needs no time and maneuvering, he just made 1.75 billion, and when he did, inferred he has plenty more. He can write a check and would appear to intend to.

If you consider it an investment, the return comes on sale. Buy it for a billion today, in 10 years it's going to worth, well, a lot more. I don't know of any NFL owner, or really, any major pro sports team owner, who makes their living from their team.

Luxury or purchases come in all shapes and sizes relative to income. I don't think a Pegula, a Ballmer or Paul Allen, buys a team much concerned about rate of return. A Bon Jovi has to be concerned.

I hardly think it would be charity if Pegula bought it though compared to his gas wells, owning an NFL team would be a savings account.

[SpikedLemonade]

What if the new owner has to shell out another $700 million for a new stadium on top of the more than $1 billion for the team?

Terry Pegula recently sold land for $1.75 billion.

Is that just a coincidence how the cost of buying the Bills and building a new stadium almost exactly matches $1.75 billion?

If Terry Pegula buys the Buffalo Bills with cash, and guarantees the Bills Trust $750 million for the construction of a new stadium in downtown Pegulaville in 2020, I will crap Skittles for a week straight.

The trust cannot and will not ask for a new stadium in Buffalo guarantee. They can't monitor that. On the other hand, they will not sell to a potential buyer who looks to be in litigation immediately with the state and county over the $400M relocation clause.

We talk about a $1B stadium, but that is what has been spent on a stadium recently.

I would not be surprised that in 6 - 8 years during the construction of a new stadium that a stadium will cost closer to $1.2B or more.

Real estate may be cheap in Buffalo right now, but we are in the midst of a Buffalo Economic Renaissance/Miracle so predictably costs will rise.

[BillsImpossible]

Pegula, for example needs no time and maneuvering, he just made 1.75 billion, and when he did, inferred he has plenty more. He can write a check and would appear to intend to.

If you consider it an investment, the return comes on sale. Buy it for a billion today, in 10 years it's going to worth, well, a lot more. I don't know of any NFL owner, or really, any major pro sports team owner, who makes their living from their team.

Luxury or purchases come in all shapes and sizes relative to income. I don't think a Pegula, a Ballmer or Paul Allen, buys a team much concerned about rate of return. A Bon Jovi has to be concerned.

I hardly think it would be charity if Pegula bought it though compared to his gas wells, owning an NFL team would be a savings account.

Awesome post.

[stuckincincy]

I took this from another message board and was impressed enough that I simple copied and pasted it here. It is not my own work product, but I agree completely with it. The author is someone posting under the user *name Finknottle...


Thoughts?

Yes.

Gussie Fink-Nottle was a beloved character from the pen of P.G. Wodehouse:

http://en.wikipedia.org/wiki/Gussie_Fink-Nottle

No life can be complete without the laugh-until-your-sides-split enjoyment of having read the works of Wodehouse. BTW. IMO. :beer:

[SpikedLemonade]

Pegula, for example needs no time and maneuvering, he just made 1.75 billion, and when he did, inferred he has plenty more. He can write a check and would appear to intend to.

If you consider it an investment, the return comes on sale. Buy it for a billion today, in 10 years it's going to worth, well, a lot more. I don't know of any NFL owner, or really, any major pro sports team owner, who makes their living from their team.

Luxury or purchases come in all shapes and sizes relative to income. I don't think a Pegula, a Ballmer or Paul Allen, buys a team much concerned about rate of return. A Bon Jovi has to be concerned.

I hardly think it would be charity if Pegula bought it though compared to his gas wells, owning an NFL team would be a savings account.

In Canada, you can only use business losses among related companies for tax purposes.

If it is the same in the US, I wonder if Bills losses (from the 15 year write-off of most of the purchase price) can be used against an unrelated business like fracking.

[BillsImpossible]

A $30 million per year profit can be turned in to a $60 million or more profit with a new stadium.

A new stadium adds value to the team. The Cowboys are worth so much because of Jerryland, not the Boys.

A roughly $2 billion total investment in Pegulaland will make the Buffalo Bills worth at least $3 billion in 20 years.

I don't think Terry Pegula is in this for charity, more like business philanthropy.

Many people forget how Pegs is a real estate genius. He knows the land, and the business opportunity it holds.

Buffalo needs a business makeover.

I hope Terry's wife runs for Mayor of Buffalo.

[SpikedLemonade]

Many people forget how Pegs is a real estate genius. He knows the land, and the business opportunity it holds.

That may be said about Trump.

Not Pegula.

Pegula got an early start into fracking before the craze. Not urban real estate.

By the way, Canada and most of Europe have said no to fracking.

His money is his money and I will not diminish it, but you should spend an hour looking into what fracking is.

[BillsImpossible]

In Canada, you can only use business losses among related companies for tax purposes.

If it is the same in the US, I wonder if Bills losses (from the 15 year write-off of most of the purchase price) can be used against an unrelated business like fracking.

Speaking of fracking, New York has an enormous untapped fracking opportunity.

But there's more fricks in NY thank frackers.

[BillsImpossible]

That may be said about Trump.

Not Pegula.

Pegula got an early start into fracking before the craze. Not urban real estate.

By the way, Canada and most of Europe have said no to fracking.

His money is his money and I will not diminish it, but you should spend an hour looking into what fracking is.

Billieve me, I know what fracking is.

http://www.psmag.com/navigation/nature-and-technology/new-york-state-fracking-86897/

[stuckincincy]

Billieve me, I know what fracking is.

http://www.psmag.com/navigation/nature-and-technology/new-york-state-fracking-86897/

And all that off-shore oil, East and West coasts. My o my...all that low-sulfur coal made off limits to pay back the Indonesians My o my...

[Mace]

In Canada, you can only use business losses among related companies for tax purposes.

If it is the same in the US, I wonder if Bills losses (from the 15 year write-off of most of the purchase price) can be used against an unrelated business like fracking.

Well, I honestly don't know, but I can't wrap my head around what you mean by Bills losses atm, because they make 30 million a year profit and a 15 year amortization isn't a loss.

It all pales though if you just figure it as he spends a billion today and makes billions more from it if they sell in say 10 years. Any possible losses disappear into the bigger numbers.

Need someone who knows accounting to answer whether losses can be applied to other businesses, but I want to say losses can only be applied to the overall corporation controlling the businesses. If say, he buys the Bills personally, he can't apply their losses if they have any to PegulaInc gas drilling or whatever, unless PegulaInc owned the team.

From what I understand of Pegula for example, his sports businesses are separate from his money makers.

http://www.buffalonews.com/business/pegula-company-leasing-space-in-one-seneca-tower-20140724

[SpikedLemonade]

Billieve me, I know what fracking is.

http://www.psmag.com/navigation/nature-and-technology/new-york-state-fracking-86897/

So you are confidant in 50 years it will not leave the same mess that was left by the steel and chemical industry in WNY?

[BillsImpossible]

If Terry Pegula is the next owner of the Buffalo Bills, I think he will have a significant impact on opening the doors to fracking in New York.

I hope so.

http://nypost.com/2011/09/28/how-fracking-works/

THE NORTHERN TIER, PA. The people trying to keep “fracking” illegal in New York rely on our ignorance about the safety and environmental impact of this drilling technology. So I went over the border to Pennsylvania for a hands-on education on the subject.

[SpikedLemonade]

Well, I honestly don't know, but I can't wrap my head around what you mean by Bills losses atm, because they make 30 million a year profit and a 15 year amortization isn't a loss.

Look at the example from the Forbes article I cut and pasted in my first post here.

The loss would be after the amortization of most of the purchase price over 15 years.

[Mace]

So you are confidant in 50 years it will not leave the same mess that was left by the steel and chemical industry in WNY?

Personally, I am very confident it won't. Most of his gas drilling wasn't in WNY, haha.

[Mace]

Look at the example from the Forbes article I cut and pasted in my first post here.

The loss would be after the amortization of most of the purchase price over 15 years.

I'll say the same thing again though. The losses disappear into the profit when he sells the asset in say 15 years. Buys for 1 billion, sells for 12 in 15 years, lost what, 1 ? Made 11.

[SpikedLemonade]

I'll say the same thing again though. The losses disappear into the profit when he sells the asset in say 15 years. Buys for 1 billion, sells for 12 in 15 years, lost what, 1 ? Made 11.

You are assuming an appreciation for NFL teams that may not be sustainable forever.

In my first post, I quoted:

As to the point that this is risk-free, and that history shows this is the safest investment there is, things always go up until they stop. Railroads, steel, broadcast television, real estate, many industries had half-century periods of growth by the end of which they appeared money-in-the-bank investments. Horse racing was the dominant sport at its height. I'd guess that the major horse tracks showed similar growth until the 50's or so, appearing then to be slam-dunk investments. Didn't last. The bottom line is that there is risk to the NFL - risk that popularity will wane, risk that the internet age will destroy their broadcast revenues, risk that lawsuits, liabilities, and government regulations will undermine the product. Owning an NFL franchise looks reasonably safe, but it certainly no more risk-free than buying an S&P tracking fund for the long haul.

[Mace]

You are assuming an appreciation for NFL teams that may not be sustainable forever.

In my first post, I quoted:

As to the point that this is risk-free, and that history shows this is the safest investment there is, things always go up until they stop. Railroads, steel, broadcast television, real estate, many industries had half-century periods of growth by the end of which they appeared money-in-the-bank investments. Horse racing was the dominant sport at its height. I'd guess that the major horse tracks showed similar growth until the 50's or so, appearing then to be slam-dunk investments. Didn't last. The bottom line is that there is risk to the NFL - risk that popularity will wane, risk that the internet age will destroy their broadcast revenues, risk that lawsuits, liabilities, and government regulations will undermine the product. Owning an NFL franchise looks reasonably safe, but it certainly no more risk-free than buying an S&P tracking fund for the long haul.

Oh I know, but I haven't seen any plunge in major pro team sport league values in my life, so I frankly don't agree with the writer. How long were horse tracks showing "similar growth" compared to the say 55 years of NFL, MLB, NBA, NHL in a modern media age that consumes them ? I think the comparison itself is flawed.

So yes, I am assuming, but I think it's a safer bet than assuming they'll suddenly lose value unless the world is hit my a comet and we all have more compelling concerns.

I don't even know how one begins to compare railroads, steel, broadcast TV to pro sports teams, I don't think you can. Real estate ? Well that's just wrong too, it depends where you own it. But horse racing until the 50's ? There wasn't a whole lot of media serving up market in the 50's for grand glorious feelgood pageants of sport at horse tracks.

I'm pretty confident of my present perspective.

[BillsImpossible]

What's going to replace football in the next 20-30 years?

Nothing compares. It's America's sport of choice and I don't think that will ever change.

Sunday is all about hanging out with the family, drinking beer, and eating good food with your friends and loved ones wherever you are.

Sunday Night Football, or Sunday Night Soccer?

[YardRat]

Anybody that buys an NFL team on the premise of annual return is a dumbass.

[BillsImpossible]

Anybody that buys an NFL team on the premise of annual return is a dumbass.

I think the next television advertising contract alone will prove you wrong.

[SpikedLemonade]

I'll say the same thing again though. The losses disappear into the profit when he sells the asset in say 15 years. Buys for 1 billion, sells for 12 in 15 years, lost what, 1 ? Made 11.

What if he takes the annual tax savings from these huge write-offs -- let's say $600M divided by 15 years which is $40M a year against a $30M annual profit equals $10M -- and he buys life insurance as part of an estate freeze?

[Mace]

What if he takes the annual tax savings from these huge write-offs -- let's say $600M divided by 15 years which is $40M a year against a $30M annual profit equals $10M -- and he buys life insurance as part of an estate freeze?

Then he's still making chump change against the billions he'll make selling the asset in those same 15 years. Can't speak about his life insurance though if he bought some good policies when he was poor in 1990 he'll knock down some third world countries when he goes.

Not sure how it adds up either if he and his family are turning in bottles and cans and redeeming coupons for cash value and depositing it in a superfund to gain 2.9% a year off of compounding value. They've had 24 years to be adding into it, and can probably go wild in returns if they wander the areas around the stadium an hour after the game ends.

C'mon Spiked, relax a while.

[trapezeus]

so i guess we'll just dismiss real estate interests because that doesn't jive with the interests of the same dumbass poster who just wants the team to leave so badly.

his investment in the team can be more complicated than your buy and hold stock portfolio. it is in fact possible that higher finance is more complicated than doing a $30MM into $1BN investment calculation.

Tell us one more time on how you actually care about the bills in buffalo, wanker.

[YardRat]

I think the next television advertising contract alone will prove you wrong.

More TV revenue = higher salary cap (and now floor), or higher expenses.

The last owner in the league that I know of whose primary income came from the team was Modell, and even that essentially ended when he moved them to Baltimore. These people don't own franchises to pad their bank account, it's a status symbol or passion, and a long-term investment based on value.

[better days]

More TV revenue = higher salary cap (and now floor), or higher expenses.

The last owner in the league that I know of whose primary income came from the team was Modell, and even that essentially ended when he moved them to Baltimore. These people don't own franchises to pad their bank account, it's a status symbol or passion, and a long-term investment based on value.

And Modell is probably the reason the NFL wants to make sure anyone buying an NFL team has to show they have more than enough money to do so.

[Mike]

Pegula, for example needs no time and maneuvering, he just made 1.75 billion, and when he did, inferred he has plenty more. He can write a check and would appear to intend to.

If you consider it an investment, the return comes on sale. Buy it for a billion today, in 10 years it's going to worth, well, a lot more. I don't know of any NFL owner, or really, any major pro sports team owner, who makes their living from their team.

Luxury or purchases come in all shapes and sizes relative to income. I don't think a Pegula, a Ballmer or Paul Allen, buys a team much concerned about rate of return. A Bon Jovi has to be concerned.

I hardly think it would be charity if Pegula bought it though compared to his gas wells, owning an NFL team would be a savings account.

It extremely ignorant position to take that owners of pro teams don't care about ROI & Cash Flow.

Take the Clippers for example:

Donald Steerling buys the San Diego Clippers team for $12M and moves then to LA. The team continues to suck, year after year, decade after decade. Due to a very cheap lease and good attendance than comes with being an LA he makes millions!

Due to cheap purchase, low expenses. & move to LA that but insures a very high ROI for steerling and now a sales price of $2B!

-> if you need further evidence consider why many other NFL owners have moved their franchises. NFL is about Money, it's not charity!

-------------- Capital Gains -------------

The idea that an owner will buy a team soley for capital gains is misguided. Depending on capital gains is a bit like gambling and suggesting that cash flow doesn't matter falls right inline with the greater fool theory.

Ever business that gets sold had a market price and sonetines the market may go crazy (reason for bubles) and in these cases -where cf is low and prices are high- pose a special risk for investors. If the terms are allready 'crazy' you are depending on a creator fool to come along and make an even bigger mistake than you are. See 2008 housing crash or tulip bulb craze of 1600's!

---> Bills Cashflow:

Currently around $30m
Expected to increase to $70m
With new TV deal. Can be increased with better stadium.

Current P/E Ratio: 33.33
Potential P/E Ratio: 14

-> Potential PE looks good. It represents a break even after 14 years and a 7.14% yeild on purchase price. Plus being able to write of purchase over 15yrs means very low tax burden.

Compare P/E
Google: 30
Apple: 15 1.9% yield
BofA: 24. 1.3% yield
Ford: 10. 2.9% yeild

[better days]

It extremely ignorant position to take that owners of pro teams don't care about ROI & Cash Flow.

Take the Clippers for example:

Donald Steerling buys the San Diego Clippers team for $12M and moves then to LA. The team continues to suck, year after year, decade after decade. Due to a very cheap lease and good attendance than comes with being an LA he makes millions!

Due to cheap purchase, low expenses. & move to LA that but insures a very high ROI for steerling and now a sales price of $2B!

-> if you need further evidence consider why many other NFL owners have moved their franchises. NFL is about Money, it's not charity!

-------------- Capital Gains -------------

The idea that an owner will buy a team soley for capital gains is misguided. Depending on capital gains is a bit like gambling and suggesting that cash flow doesn't matter falls right inline with the greater fool theory.

Ever business that gets sold had a market price and sonetines the market may go crazy (reason for bubles) and in these cases -where cf is low and prices are high- pose a special risk for investors. If the terms are allready 'crazy' you are depending on a creator fool to come along and make an even bigger mistake than you are. See 2008 housing crash or tulip bulb craze of 1600's!

---> Bills Cashflow:

Currently around $30m
Expected to increase to $70m
With new TV deal. Can be increased with better stadium.

Current P/E Ratio: 33.33
Potential P/E Ratio: 14

-> Potential PE looks good. It represents a break even after 14 years and a 7.14% yeild on purchase price. Plus being able to write of purchase over 15yrs means very low tax burden.

Compare P/E
Google: 30
Apple: 15 1.9% yield
BofA: 24. 1.3% yield
Ford: 10. 2.9% yeild

LMAO at using Sterling as an example of someone buying a team to make money.

Yes Sterling made Millions on the sale of the Clippers, but here is a clue for you, HE DID NOT WANT TO SELL THEM!

[IlluminatusUIUC]

What's going to replace football in the next 20-30 years?

Nothing compares. It's America's sport of choice and I don't think that will ever change.

Sunday is all about hanging out with the family, drinking beer, and eating good food with your friends and loved ones wherever you are.

Sunday Night Football, or Sunday Night Soccer?

Things change. Baseball and boxing were once the dominant American sports. The former is still lucrative but has clearly slipped off its perch and the latter is in complete shambles.


I think the next television advertising contract alone will prove you wrong.

The player's salaries - both cap and floor - rise along with shared revenues. That's not all going to be pure profit for the owners. Someone with a billion dollars in liquid assets can get a much better return than a pro sports franchise. Sports ownership is all about ego.

[better days]

Things change. Baseball and boxing were once the dominant American sports. The former is still lucrative but has clearly slipped off its perch and the latter is in complete shambles.

I used to beat up bullies much bigger than me all the time.

Guys used to ask me, where did you learn to fight like that?

Well, I used to watch the Friday night fights with my father every Friday when I was young.

Before the fights started, a couple analysts would come on & say what each fighter had to do to win the fight.

I learned a lot watching those fights & made good use of it.

[better days]

I used to beat up bullies much bigger than me all the time.

Guys used to ask me, where did you learn to fight like that?

Well, I used to watch the Friday night fights with my father every Friday when I was young.

And that is what it was called, The Friday Night Fights. Not the Friday Night boxing match.

Before the fights started, a couple analysts would come on & say what each fighter had to do to win the fight.

I learned a lot watching those fights & made good use of it.

[Mr. Pink]

And Modell is probably the reason the NFL wants to make sure anyone buying an NFL team has to show they have more than enough money to do so.

Modell owned the team for about 40 years. Anything can happen to anyone in 40 years. I highly doubt he has anything to do with the league's thought processes.

- - - Updated - - -


I think the next television advertising contract alone will prove you wrong.

I think you need a better understand of the NFL...in general.

[better days]

Modell owned the team for about 40 years. Anything can happen to anyone in 40 years. I highly doubt he has anything to do with the league's thought processes.

- - - Updated - - -



I think you need a better understand of the NFL...in general.

Agreed, a lot can happen in 40 years, but I don't think the NFL wants someone buying a team that is not in a good position to do so from the start.

The Maloof family tried to buy the Bucs after Hugh Culverhouse died, but the NFL rejected them for lack of funds. They had no problem getting an NBA team.

[Mace]

It extremely ignorant position to take that owners of pro teams don't care about ROI & Cash Flow.

Take the Clippers for example:

Donald Steerling buys the San Diego Clippers team for $12M and moves then to LA. The team continues to suck, year after year, decade after decade. Due to a very cheap lease and good attendance than comes with being an LA he makes millions!

Due to cheap purchase, low expenses. & move to LA that but insures a very high ROI for steerling and now a sales price of $2B!

-> if you need further evidence consider why many other NFL owners have moved their franchises. NFL is about Money, it's not charity!

-------------- Capital Gains -------------

The idea that an owner will buy a team soley for capital gains is misguided. Depending on capital gains is a bit like gambling and suggesting that cash flow doesn't matter falls right inline with the greater fool theory.

Ever business that gets sold had a market price and sonetines the market may go crazy (reason for bubles) and in these cases -where cf is low and prices are high- pose a special risk for investors. If the terms are allready 'crazy' you are depending on a creator fool to come along and make an even bigger mistake than you are. See 2008 housing crash or tulip bulb craze of 1600's!

---> Bills Cashflow:

Currently around $30m
Expected to increase to $70m
With new TV deal. Can be increased with better stadium.

Current P/E Ratio: 33.33
Potential P/E Ratio: 14

-> Potential PE looks good. It represents a break even after 14 years and a 7.14% yeild on purchase price. Plus being able to write of purchase over 15yrs means very low tax burden.

Compare P/E
Google: 30
Apple: 15 1.9% yield
BofA: 24. 1.3% yield
Ford: 10. 2.9% yeild

I don't think you paid attention to my overall point which my posts in this thread always come back to. It's a long term solid return on investment that makes yearly return irrelevant.

I'm going to let the "ignorant" comment slide since it came from someone not paying attention.

Pro team sports franchises are worth what people pay for them. Yes, let us take the Clippers. With their return, how many years does it take Ballmer to make back his 2 billion and start making some money so he can live off of them ?

Answer : He's not meaning to live off of them. NONE of the owners are living off their teams. NONE. Or tell me one who needs the money to get by. You can't. There isn't one.

Luxury purchase, vanity purchase, call it what you want, they'd like the biz to support itself, but if it doesn't, well, they'll make it back exponentially eventually.

It's entirely incorrect to compare owning a professional sports team to buying a McDonald's franchise.

I'll point out yet again, Pegula said he didn't buy the Sabres to make money, if he wanted to make money he'd drill another well. That came from Pegula, so go educate him about it.