Don Esmonde article about new ownership

[Best Player Available]

If the NFL had chose the Bills instead of the Browns out of the AAFC. And along with the niners and others in I believe 1950. Ralph may have got his first wish. A team in a city named Miami. In A league called the AFL In 1960.

 

just sayin. And Mean no disrespect to Ralph, but he was a businessman, and apparently a good one.

[MarkAF43]

I am a bit confused by the "hero" status RW has achieved as owner of the Bills in death. His contributions in WWII, something I did not know, are certainly worthy of the term hero, but his ownership of this team does not make him a hero. It is pure speculation that an NFL franchise in Buffalo would not have existed without RW. In reality, a number of folks could have started a franchise here. Why do we think small. Buffalo is a great city, with unbelievable fans that support their team. RW did not create and keep the team in Buffalo due to his generosity. He made a number of business decisions that resulted in the astronomical growth in his investment. The fan base should not sell themselves short, we helped create this team as well (ticket sales, broad based community support, and tax dollars).

 

With that being said, RW could have made many more decisions if his primary goal was to keep the team in Buffalo. By all accounts it seems as if he encouraged that they remain here, but he was not willing to have his estate devalued by insuring that they remain here. RW, in death, did as he did in life, and that is make business decisions. It's his investment, his money, his asset and he could do with it what he wishes, but please rethink the party line that he was a generous person that we should call a hero.

 

OK, now everyone can attack me.

 

Bolded #1 -- Hero means different things to many different people. People praising him as a hero for having a team here is well within their rights.

Bolded #2 -- who? Who was trying to put a football team in Buffalo?

Bolded #3 -- he had chances to move the team and increase his profits, but didn't.

Bolded #4 -- what proof do you have that he didn't? You don't, just like the majority of fans of this team. We speculate.

Bolded #5 -- your opinion, not fact. You can't tell people what they should and should not think.

 

Carry on

[SRQ_BillsFan]

I looked and was not able to find a link but am sure there was an article regarding the sale that indicated that only a small potion of the purchase could be financed. I think it was something like 20%, which is still a lot. But not sure an owner can finance 50%

 

 

As I said I could not find the link and it's also possible it was inaccurate. In any case I am not sure the NFL would let a small city owner finance 50% for the very reasons indicated regarding debt payments. It would make it much more difficult for the team/owner to survive.

 

 

.

[CodeMonkey]

Maybe so, but my brother Darryl says Don Esmonde ain't the only clueless one. Darryl realizes that (1) a new owner may have higher financing costs than Ralph because the new owner may have to borrow part of the purchase price as compared to Ralph, who bought the franchise for peanuts long ago, but (2) any new owner can use something called the Roster Depreciation Allowance (the "RDA") to write off 1/15th of the purchase price of the team every year for the first 15 years of ownership - - something Ralph could NOT do because he bought the franchise so long ago that Ralph's team "roster" had already become fully depreciated in Ralph's hands.

 

For the sake of argument, let's say that your assumption that the new owner has to borrow 50% of a $1 billion purchase price, and therefore incur $40 million of financing costs is just a smidge high. Let's say the new owner's cost to finance $500 million is only slightly less, at $35 million per year (it makes the math easier for Darryl).

 

You say that makes the new owner's annual profit zero, as opposed to $35 million during Ralph's ownership. But that doesn't take into account the RDA. If the purchase price is $1 billion, a new owner who structures the transaction and his other business ventures properly has the potential to shelter $1 billion/15 = $66.7 million of his otherwise taxable income from the IRS every year for 15 years. That's a $66.7 million annual tax shelter for the new owner, that Ralph didn't (and couldn't) have.

 

Don't believe me? Read these links:

 

http://www.forbes.co...big-tax-breaks/

 

http://econ.la.psu.e...ulson/veeck.pdf

 

http://deadspin.com/...28-million-loss

 

It's true that the RDA tax write-off is available to any new owner, whether that new owner is a local WNY guy or somebody from out-of-state. So the availability of the RDA doesn't cut one way or the other with respect to giving bidders from any particular geographic location an advantage in the bidding.

 

That means you can still criticize Ralph's estate planning if you want - - but Darryl thinks you shouldn't go gettin' all high and mighty about "the economics of the NFL as it pertains to keeping the Bills in Buffalo."

 

'Course, Darryl's a moron - - Momma had him tested.

Huh, more tax breaks for the rich ... awesome.

 

And for a slightly different spin ... new ownership cannot borrow half of the purchase price so their debt payment won't be as extreme as the OP suggested. So now if you assume a 30% tax rate for the owners, you get roughly $20 million in tax savings per year. And over 15 years that amounts to $300 million. That puts a big dent in the lease buyout, but it is spread out over a long period of time.

 

Of course my math can be way off seeing as how I can be a moron as well.

[Chandler#81]

Ralphs' many financial contributions to Buffalo, that had nothing to do with the team, make him a hero in the eyes of many.

[GG]

Maybe so, but my brother Darryl says Don Esmonde ain't the only clueless one. Darryl realizes that (1) a new owner may have higher financing costs than Ralph because the new owner may have to borrow part of the purchase price as compared to Ralph, who bought the franchise for peanuts long ago, but (2) any new owner can use something called the Roster Depreciation Allowance (the "RDA") to write off 1/15th of the purchase price of the team every year for the first 15 years of ownership - - something Ralph could NOT do because he bought the franchise so long ago that Ralph's team "roster" had already become fully depreciated in Ralph's hands.

 

For the sake of argument, let's say that your assumption that the new owner has to borrow 50% of a $1 billion purchase price, and therefore incur $40 million of financing costs is just a smidge high. Let's say the new owner's cost to finance $500 million is only slightly less, at $35 million per year (it makes the math easier for Darryl).

 

You say that makes the new owner's annual profit zero, as opposed to $35 million during Ralph's ownership. But that doesn't take into account the RDA. If the purchase price is $1 billion, a new owner who structures the transaction and his other business ventures properly has the potential to shelter $1 billion/15 = $66.7 million of his otherwise taxable income from the IRS every year for 15 years. That's a $66.7 million annual tax shelter for the new owner, that Ralph didn't (and couldn't) have.

 

Don't believe me? Read these links:

 

http://www.forbes.co...big-tax-breaks/

 

http://econ.la.psu.e...ulson/veeck.pdf

 

http://deadspin.com/...28-million-loss

 

It's true that the RDA tax write-off is available to any new owner, whether that new owner is a local WNY guy or somebody from out-of-state. So the availability of the RDA doesn't cut one way or the other with respect to giving bidders from any particular geographic location an advantage in the bidding.

 

That means you can still criticize Ralph's estate planning if you want - - but Darryl thinks you shouldn't go gettin' all high and mighty about "the economics of the NFL as it pertains to keeping the Bills in Buffalo."

 

'Course, Darryl's a moron - - Momma had him tested.

 

Your brother Darryl is also wise enough to know not to link articles where people who don't understand accounting rules try to explain accounting rules (to predictable results.) The Deadspin explanation is particularly funny in that regard.

[ICanSleepWhenI'mDead]

Your brother Darryl is also wise enough to know not to link articles where people who don't understand accounting rules try to explain accounting rules (to predictable results.) The Deadspin explanation is particularly funny in that regard.

You give Darryl too much credit - - maybe you're thinking of my other brother Darryl.

[HalftimeAdjustment]

Huh, more tax breaks for the rich ... awesome.

 

And for a slightly different spin ... new ownership cannot borrow half of the purchase price so their debt payment won't be as extreme as the OP suggested. So now if you assume a 30% tax rate for the owners, you get roughly $20 million in tax savings per year. And over 15 years that amounts to $300 million. That puts a big dent in the lease buyout, but it is spread out over a long period of time.

 

Of course my math can be way off seeing as how I can be a moron as well.

 

Or they can skip the lease buyout and pocket $300M over 15 years. I am not sure what type of income this can offset, capital gains tax rates would be 23.8% (+ state tax) whereas federal for someone at those levels is 39.6%. The vast majority of income for the ultra wealthy is likely to be capital gains related. I'm unclear on whether the state tax is NY state tax or state tax in the owner's state of residency, but it makes a big difference. Nevertheless, the writeoff is likely to be at least 23.8% and could be as high as ~48.5% (39.6% federal income tax + 8.97% NYS tax)... assuming this credit can be taken at the state level.

 

Moral of the story: This writeoff is not a trivial consideration, and substantially mitigates the cost of the team over the 15 years.

[jahbonas]

I am a bit confused by the "hero" status RW has achieved as owner of the Bills in death. His contributions in WWII, something I did not know, are certainly worthy of the term hero, but his ownership of this team does not make him a hero. It is pure speculation that an NFL franchise in Buffalo would not have existed without RW. In reality, a number of folks could have started a franchise here. Why do we think small. Buffalo is a great city, with unbelievable fans that support their team. RW did not create and keep the team in Buffalo due to his generosity. He made a number of business decisions that resulted in the astronomical growth in his investment. The fan base should not sell themselves short, we helped create this team as well (ticket sales, broad based community support, and tax dollars).

 

With that being said, RW could have made many more decisions if his primary goal was to keep the team in Buffalo. By all accounts it seems as if he encouraged that they remain here, but he was not willing to have his estate devalued by insuring that they remain here. RW, in death, did as he did in life, and that is make business decisions. It's his investment, his money, his asset and he could do with it what he wishes, but please rethink the party line that he was a generous person that we should call a hero.

 

OK, now everyone can attack me.

 

Amen!

[Mr. WEO]

I feel for the OP a bit. The arguments against him for not enough paragraph breaks are funny though.

 

But the issue of whether Ralph could have secured the future of the Bills by simply selling the team to someone or some group that he knew would keep them here is a valid one. Had he sold the team, he would have paid the capital gains tax. Upon his death, all of that money would have gone to his wife, tax free. Now, she will sell the team and will pay the tax. So why didn't he just pick his new owner and sell?

 

As for the lease, I am not convinced he negotiated it thinking he would be dead in a short time. 6 or 7 years is not a long time for a guy who has made it to his mid nineties--nor is it very constricting for a new owner looking to move some day. And the lease price of only $800,000 a year is a huge bargain. In Manhattan, there are 375 apartments on the market that have an annual payment that is that much or more.

[Campy]

I guess my posts are a bit long so as to encourage intelligent and insightful responses - like yours.

 

It's difficult to read on a computer screen, that's all.

[Captain Hindsight]

I feel for the OP a bit. The arguments against him for not enough paragraph breaks are funny though.

 

But the issue of whether Ralph could have secured the future of the Bills by simply selling the team to someone or some group that he knew would keep them here is a valid one. Had he sold the team, he would have paid the capital gains tax. Upon his death, all of that money would have gone to his wife, tax free. Now, she will sell the team and will pay the tax. So why didn't he just pick his new owner and sell?

 

As for the lease, I am not convinced he negotiated it thinking he would be dead in a short time. 6 or 7 years is not a long time for a guy who has made it to his mid nineties--nor is it very constricting for a new owner looking to move some day. And the lease price of only $800,000 a year is a huge bargain. In Manhattan, there are 375 apartments on the market that have an annual payment that is that much or more.

Maybe he enjoyed being an NFL owner? I remember someone who knew Joe Pa personally tell me that the only thing keeping that man alive was the football team and being the HC. Not long after he was removed, did he pass away.

 

Look people can B word and moan about Ralph not selling the team while he was alive but the fact is it was his team, his legacy. He can choose to do whatever he wants with it

[Mr. WEO]

Maybe he enjoyed being an NFL owner? I remember someone who knew Joe Pa personally tell me that the only thing keeping that man alive was the football team and being the HC. Not long after he was removed, did he pass away.

 

Look people can B word and moan about Ralph not selling the team while he was alive but the fact is it was his team, his legacy. He can choose to do whatever he wants with it

 

Joe Pa died of cancer...

 

I think we all understand that RW was free to do what he wanted with the team. But the question being debated is his motive for why he didn't seal the fate of the team while alive. Yeah, he sure loved owning a team, who wouldn't? But by the end, how much was he enjoying it? Why not seal your "legacy" before you depart, instead of leaving it to a trust and various groups?

[vorpma]

I'm surprised you haven't found the return key yet considering your long posts.

Then find a new board!

[CountDorkula]

Sports Economist Andrew Zimbalist says:

 

"I wouldn't be surprised if the team owner said, ‘Look, if you want me to stay in Buffalo, you’re going to have to pay not only 100 percent of the stadium, but you’re going to have to give it to me rent free and you’re going to have to cover some of my operating costs"

 

 

The thought of this makes me sick.

 

He basically states any ownership group can have the region in a stranglehold.

 

Article is from WGR55.com

[jahbonas]

Sports Economist Andrew Zimbalist says:

 

"I wouldn't be surprised if the team owner said, ‘Look, if you want me to stay in Buffalo, you’re going to have to pay not only 100 percent of the stadium, but you’re going to have to give it to me rent free and you’re going to have to cover some of my operating costs"

 

 

The thought of this makes me sick.

 

He basically states any ownership group can have the region in a stranglehold.

 

Article is from WGR55.com

 

Sounds like the deal Saint Ralph had with Erie County for the stadium he named after himself

[Campy]

Sounds like the deal Saint Ralph had with Erie County for the stadium he named after himself

 

It wasn't his stadium to name. The county named the stadium after him.

[K-9]

It wasn't his stadium to name. The county named the stadium after him.

 

With a TON of pressure by Pataki.

 

GO BILLS!!!

[jumbalaya]

if Ralph said the bills had to stay as a condition of ownership, his estate/heirs would be lucky to get $700M. In an open market they will get a $1B+. He would have been stupid to do otherwise.

 

Its up to Buffalo to find someone with that much wherewithal to keep them here. Sure everyone including Ralph hopes they stay but it will be what it will be.

 

If they stay get ready as Buffalo fans will have to pay market rates for tickets once this happens.

 

BTW, Jerry J and Bon J can kiss my royal arse.

[ICanSleepWhenI'mDead]

It wasn't his stadium to name. The county named the stadium after him.

Nope - - in 1997 the Bills negotiated for and received the right to name the stadium whatever they wanted in 1998 - - Ralph chose to name the stadium after himself:

 

http://www.sportsbusinessdaily.com/Journal/Issues/2005/05/20050516/Other-News/In-Profile-Bills-Owner-Ralph-Wilson.aspx?hl=SFX&sc=0

 

Questioned why he then put his own name on the stadium, when selling naming rights to a corporation might have brought the club a few million more dollars a year, he replied that New York State Gov. George Pataki encouraged him to put his moniker on the venue.

 

Rich Foods paid $1.5 million in 1973 to name the stadium for 25 years, money the state earned. As part of the lease negotiations in 1997, the Bills obtained the rights to rename the stadium in 1998.