The scenario: I inherit a fortune when Uncle Warren passes away and with my newly found wealth, I purchase a NFL team for a little over a ***billion ***dollars. Everything goes well and at the end of the season, I’m the proud owner of a Lombardi Trophy.
Question: Why did I spend so much money for something that is worth $25,000?
I suspect that, if you’d view the cost / benefit equation purely in that way, there are probably many more rewarding ways that you should spend your billion dollars.
You didn’t - you spent the money to buy the team, which you still own. On the way to that trophy, you probably received no small sum for things such as admission to games, TV rights, etc. And your team may now be worth meaningfully more than what you paid.
(Also note that this probably doesn’t belong in GQ.)
Presumably you spent that money to make money.
http://www.forbes.com/nfl-valuations/
The Dallas Cowboys led the pack last year, clearing $227M in profits.
NM. Didn’t mean to post.
When you’re not wealthy and spend 100K on a college degree, did you do it just for the actual piece of parchment?
It’s a business. You bought a business.
Merchandising. TV rights. Everything. Dude, the trophy is just a nice thing you get for winning. It’s not that big a deal.
You’re thinking of net income.
Moved to the Game Room.
Colibri
General Questions Moderator
Is there a “I know they say there are no dumb questions, but here, in reality, there are and this is one of them” forum you could move it to?
Yeah, I’m having difficulty believing the OP is posing a serious question. If s/he is then, yeah, I’ll go with kenobi’s answer that this person should probably not be buying a major sports franchise with their newfound wealth.
Why not? The OP certainly couldn’t do any worse than other football owners. I’m looking at you, Al Davis (even though you’re dead). And I live in Kansas City. 'nuff said.
Has anyone run the numbers and established a dollar figure on how much winning a championship is worth for a professional sports team? How much extra revenue and value did the Ravens acquire this weekend? How much did the 49ers, for comparison’s sake?
No, I’m not. I’m reporting the number listed next to “profit” from this cite. (That cite might be wrong, but there it is. It roughly jives with the 14% increase in valuation from my first cite.)
I suspect not too much actually for football. Most teams that are decent are selling out every home game. TV revenue is shared across the league. Ditto merchandising revenue. I don’t think those go up much because team A wins the Super Bowl rather than team B. And even if they do you only get 1/32 of the increase.
You might make more money in the future because you can raise your ticket prices. (I don’t know how ticket revenue is shared between home & away teams). But your player salaries are probably going to rise as well as you now have a bunch of Super-Bowl winners on the squad.
You’d see the ticket revenue from the additional playoff games, right?
Here is revenu datafrom the New Orleans Saints, including the 2 years before and after their Super Bowl victory.
2007: $194M
2008: $213M (+19M)
2009: $232M (+19M)
2010: $245M (+13M)
2011: $261M (+16M)
So, the 2009 season (when they won the SB) had the same gains as the 2008 season. And as a %, it’s slightly less than the 2008 revenue gains (+9.8% to +8.9%).
Now let’s check the Colts, who lost that SB in 2009 to the Saints.
2007: $184M
2008: $203M (+19M)
2009: $233M (+30M)
2010: $248M (+15M)
2011: $252M (+4M)
They had a much bigger gain in 2009 than the Saints while losing the Super Bowl.
The cite in your post #4 gives a figure of $226.7 million “Operating Income” defined as “Earnings before interest, taxes, depreciation and amortization.”
Then the one one you link above in post #14 turns around and gives a figure of $227 million “Profit.” I take the word to mean net income after all expenses, and taxes alone should be over $50 million.
Owning an NFL team is a license to print money. Most of your expenses get subsidized by the city you are in (Stadium costs etc.) and all NFL teams split League income equally (Green Bay gets just as much TV money as the New York Giants do even though many many more people in the Tri State area watch the NFL on TV).
You have to almost try to fail in order to not make money.
And teams are profitable off TV. $$ alone.