Sale of 30% interest in an NFL team to "launch" in 9/10

[Captain Caveman]

Ralph's true colors have already been established a long time ago. The Bills are a profit center for him. The franchise is simply a very lucrative business. That is his legacy. He has no ties to the area. He resides in Michigan and has a Florida residence. None of his family live in western NY. He flys in for the games in his corporate jet and flys out after the games.

 

Ralph has been the sole owner of the Bills for half a century. Franchise profits only go to him. He is not going to share it with any minority partner. Why should he? Each year he can expect to have his very valuable franchise appreciate in the vincinity of 7%. He is not going to share that value with anyone else. Why should he? Presently, he is making in the vincinity $30-35 M a year. The longer he hangs on the more profit he gets and the greater his franchise appreciates.

 

This is an owner who has insisted on relatively easy terms for a lease buyout for him and to a lesser extent for an outside buyer. This is the same owner who when he announced the $78 M deal at the podium in Toronto lamented the limited market in western NY and praised the more lucrative market in Toronto.

 

Anyone who thinks that Ralph is going to make a deal with a local buyer and offer him a discount doesn't know this tough businessman very well. The owner is going to have his team auctioned off to the highest bidder when he passess. From the proceeds the taxes will be payed and the beneficiaries will receive what is left, which is still very substantial.

 

Ralph has owned the Bills for half a century and has run the team in a certain way. He is not going to change the way he operates at this late stage of his life. He is very adept at extracting money from a business and has little motivation putting back into the business. Ralph is an owner who doesn't particularly care what others think. He keeps his business and thinking to himself without worrying how he will be perceived. He lives in his own insular world.

 

Those people who think that he is the owner who is arranging to bring in a hometown buyer and start the transition of selling the team are very mistaken. Ralph is Ralph. If you don't get it after a half century of ownership you will never get it.

 

I agree that Ralph is a businessman first and foremost, but you're ignoring the fact that he could have made a lot more money by moving the team any number of times. I'm not saying we owe him anything (I also don't think he owes us anything), but if money was all he cared about he would have moved the team long ago.

[JohnC]

I agree that Ralph is a businessman first and foremost, but you're ignoring the fact that he could have made a lot more money by moving the team any number of times. I'm not saying we owe him anything (I also don't think he owes us anything), but if money was all he cared about he would have moved the team long ago.

 

There might have been a period of time a very long time ago where he might have made more money moving to another market, even that is disputatble, but that was at least 20 yrs ago or longer. Ralph has done quite well in the western NY market. A stadium was built for him and it was later upgraded with no contribution from him. While the team has been very poor on the field for a decade and still counting he has still made a sizeable profit during that same wretched football period.

 

My central point about Ralph Wilson is that first and foremost he is a businessman. His team has not been very competitive on the field for a very long time, yet it has served him well on the financial side. The owner of the Bills is going to do what is best for him. Those people who expect him to act out of character when he has behaved in character for half a century are going to be disappointed.

 

Ralph Wilson is the sole owner of the Bills. He is going to do what he wants. That is his prerogative. What you or I think will not factor into what he has already planned to do with his team when he passes.

[Mr. WEO]

I agree that Ralph is a businessman first and foremost, but you're ignoring the fact that he could have made a lot more money by moving the team any number of times. I'm not saying we owe him anything (I also don't think he owes us anything), but if money was all he cared about he would have moved the team long ago.

Holy cow...

[Captain Caveman]

Holy cow...

 

Way to go Phil !@#$ing Rizzuto

[Captain Caveman]

There might have been a period of time a very long time ago where he might have made more money moving to another market, even that is disputatble, but that was at least 20 yrs ago or longer. Ralph has done quite well in the western NY market. A stadium was built for him and it was later upgraded with no contribution from him. While the team has been very poor on the field for a decade and still counting he has still made a sizeable profit during that same wretched football period.

 

My central point about Ralph Wilson is that first and foremost he is a businessman. His team has not been very competitive on the field for a very long time, yet it has served him well on the financial side. The owner of the Bills is going to do what is best for him. Those people who expect him to act out of character when he has behaved in character for half a century are going to be disappointed.

 

Ralph Wilson is the sole owner of the Bills. He is going to do what he wants. That is his prerogative. What you or I think will not factor into what he has already planned to do with his team when he passes.

 

I agree with pretty much everything you're saying here. I think he's going to do with the team what he wants when he passes away. (In fact, I started my last post with agreeing that he is a businessman first and foremost.)

 

I strongly disagree that his opportunity to make money by moving the team ended 20 years ago. How many teams have moved (or have threatened to move) to get brand new stadiums (with higher ticket prices) in the past twenty years?

[Wing Man]

If it is Buffalo, then it is the second bomb dropped in a week that could be related to each other. Could the interested party be from Toronto, Ontario? After Russ Brandon's gaffe(?) earlier in the week about if and when the Bills were to (move) compete with the Toronto Argonauts, it may have been regarding information about a pending partial sale to another party. We'll have to wait and see. There are certainly other targets as well, for instance, Jacksonville. I would hope, and truly expect, that Ralph would turn to local interests first, like the Rich's or Jim Kelly's investment group, before concluding a deal up north.

[BuffaloRebound]

If it is Buffalo, then it is the second bomb dropped in a week that could be related to each other. Could the interested party be from Toronto, Ontario? After Russ Brandon's gaffe(?) earlier in the week about if and when the Bills were to (move) compete with the Toronto Argonauts, it may have been regarding information about a pending partial sale to another party. We'll have to wait and see. There are certainly other targets as well, for instance, Jacksonville. I would hope, and truly expect, that Ralph would turn to local interests first, like the Rich's or Jim Kelly's investment group, before concluding a deal up north.

 

Highly unlikely Ralph would sell a minority interest to a non-Buffalo group while he is still alive. Why spend the time you have left as a villain? If he sells to a Toronto group, it will probably be 100% once he's gone.

[Captain Caveman]

I don't see how who he would sell to makes any difference. Anyone who buys a 30% will have 0% decision making abilities (including whether and where the team might move.)

[BuffaloRebound]

I don't see how who he would sell to makes any difference. Anyone who buys a 30% will have 0% decision making abilities (including whether and where the team might move.)

 

More about the significance of it. Ralph has no reason to sell other than a signal to what his plans are once he dies. There's no point to sell 30% for estate tax purposes. Once Ralph dies his heirs can sell 100%, pay the estate tax from the proceeds and avoid capital gains taxes. If Ralph sells 30% before he dies, he'll have to pay capital gains on the 30% and won't avoid any of the estate tax.

[Cash]

If Ralph is selling 30% for cash so that his family can afford to pay the estate tax on the team after he dies, then it's a good thing. But as he's said in the past, his family really isn't interested in taking over the team, so it's probably not this.

 

If Ralph dies before January, his family gets the team tax-free.

[Rubes]

If Ralph dies before January, his family gets the team tax-free.

 

Not necessarily. It's likely that, once the estate tax is established again, it will be retroactive.

[Fingon]

Not necessarily. It's likely that, once the estate tax is established again, it will be retroactive.

I doubt it. The Democrats will not have enough votes in the Senate to override a Republican filibuster.

[Arkady Renko]

If Ralph dies before January, his family gets the team tax-free.

 

I think there is no stepped-up basis then though. His family would pay capital gains instead.

[jahnyc]

Anyone buying a 30% interest in an NFL team is probably also getting an option to purchase the remaining 70% upon the occurrence of certain events.

[hondo in seattle]

Given Ralph's advanced age, I would guess all his estate planning issues were worked out a long time ago.

 

(Unless, of course, Kelly or someone caused him to have a change of heart).

[hamtenp]

Sal Galatioto is a "sports investment banker" who was a guest today on the "Strategy Session" show on financial news network CNBC. While discussing the sale of sports franchises generally, he said:

 

"We are involved in the sale of limited partnership interests [in sports teams] all the time. ... We're launching the sale of a 30% interest in an NFL team in September."

 

Sal would not identify the team involved, but said the sale was being made to deal with "estate planning and other issues." He also made other comments about how the sale of limited partnership interests in sports teams are typically done quietly and "person-to-person."

 

Seems to me like there's no particular reason to think the unidentified NFL team is the Bills, because there are probably a lot of teams with owners who need to deal with estate planning issues. I don't follow ownership details of other teams, though.

 

For background on Sal Galatioto, see this 6/3/10 Business Week article:

 

http://www.businessweek.com/magazine/conte...ets+%2B+finance

 

Here's the website for his firm:

 

http://www.gspcap.com/GSPWeb/Home.jsp?1

 

Anybody know enough about the ownership situtation of other teams to speculate about which NFL team will be trying to sell a 30% limited partnership interest in September?

Sal Galatioto sounds like some "Vinny" from Niagara Falls. He should stick to the pasta and sauce

[JohnC]

I don't see how who he would sell to makes any difference. Anyone who buys a 30% will have 0% decision making abilities (including whether and where the team might move.)

 

Ralph Wilson is not going to sell a 30% interest in his team while he is alive. You are right that a minority partner has little say in decision making but a minority partner does have a percentage stake in the profits and appreciation of his shares. Ralph would never under any circumstances share the profits from his team. Ralph is going to consume all the profits and appreciation amount of his franchise. Ralph is Ralph.

 

Ralph has already made arrangements on how his estate is going to be handled. He has been asked about it years ago. He won't answer the question. In fact, he gets very perturbed when the issue is even brought up. Jim Kelly made some comments about his interest in forming a group to buy the franchise. JK was called in and was spanked. You haven't heard him make any more public comments on the topic. Tom Golisano also expressed a public interest in buying the team. The Wilson camp strongly communicated to Tom G that his public comments on the purchase topic were not very much appreciated. You have not heard a peep from Florida Tom G on this sensitive topic.

 

Ralph Wilson is a more than a cagey businessman, he is a tough businessman. He is a very old man now. He has been a very old man for a very long time. The arrangements on how his estate is to be handled have been made a very long time ago. Ralph Wilson lives in a very insulated environment. He keeps his own counsel. He is not known to share his thoughts with outsiders. In one respect Wilson is very simple to figure out. When conducting his business his strategy is very simple: maximize your profits. The team is going to be sold to the highest bidder. For Ralph there is no other way. Sentiment is not part of his business practice, in life or death.

[Captain Caveman]

Ralph Wilson is not going to sell a 30% interest in his team while he is alive. You are right that a minority partner has little say in decision making but a minority partner does have a percentage stake in the profits and appreciation of his shares. Ralph would never under any circumstances share the profits from his team Ralph is going to consume all the profits and appreciation amount of his franchise. Ralph is Ralph.

 

Ralph has already made arrangements on how his estate is going to be handled. He has been asked about it years ago. He won't answer the question. In fact, he gets very perturbed when the issue is even brought up. Jim Kelly made some comments about his interest in forming a group to buy the franchise. JK was called in and was spanked. You haven't heard him make any more public comments on the topic. Tom Golisano also expressed a public interest in buying the team. The Wilson camp strongly communicated to Tom G that his public comments on the purchase topic were not very much appreciated. You have not heard a peep from Florida Tom G on this sensitive topic.

 

Ralph Wilson is a more than a cagey businessman, he is a tough businessman. He is a very old man now. He has been a very old man for a very long time. The arrangements on how his estate is to be handled have been made a very long time ago. Ralph Wilson lives in a very insulated environment. He keeps his own counsel. He is not known to share his thoughts with outsiders. In one respect Wilson is very simple to figure out. When conducting his business his strategy is very simple: maximize your profits. The team is going to be sold to the highest bidder. For Ralph there is no other way. Sentiment is not part of his business practice, in life or death.

 

If he feels he is getting good value (say $250 million) for the 30% stake, the businessmen in Ralph would be inclined to take it. I never suggested he would sell below market value, or make a sweetheart team to a local interest.

[Captain Caveman]

More about the significance of it. Ralph has no reason to sell other than a signal to what his plans are once he dies. There's no point to sell 30% for estate tax purposes. Once Ralph dies his heirs can sell 100%, pay the estate tax from the proceeds and avoid capital gains taxes. If Ralph sells 30% before he dies, he'll have to pay capital gains on the 30% and won't avoid any of the estate tax.

 

Good point, I wasn't thinking of the capital gains taxes he'd have to pay.

[JohnC]

Anyone buying a 30% interest in an NFL team is probably also getting an option to purchase the remaining 70% upon the occurrence of certain events.

 

You are correct that oftentimes when a minority purchase is made there is an option to buy clause upon the "occurrucrrence of certain events", as you put it. Art Modell handled his sale that way in Baltimore and Huizanga took the same course of action when he sold the Dolphins.

 

However,I strongly believe that Ralph Wilson is not going to sell a minority stake in the team to anyone with an option to buy later on. He has been the sole owner for half a century and will leave this earth as the sole owner of the team.