Forbes ranks Bills last on list of most valuable franchises

[YoloinOhio]

http://bills.buffalonews.com/2015/09/14/forbes-ranks-bills-last-on-list-of-most-valuable-nfl-franchises/

 

The magazine, which has compiled valuations of NFL teams for 18 years, released its list Monday. The Bills are valued at $1.4 billion the same amount co-owners Terry and Kim Pegula paid a year ago to purchase the team from the estate of late founding owner Ralph C. Wilson Jr.

[jr1]

but Russ is a marketing genius

[PromoTheRobot]

Terry got a deal. He owns the Bills.

[Chandler#81]

This is odd. Pegula's had to outbid serious contenders for a team valued at $750M. I understand Pegs purchase lifted the cellar level of teams, but our Stadium improvements, 60k ST holders and a very interesting team still can't rise above Jax, Minn, Oak, SD -all of whom are rumored to be moving? Cleveland?

 

Honestly, I don't get it.

[Malazan]

Oh, no...the Bills don't make enough money. This is terrible for me personally and I care a great deal about their net operating income.

 

 

 

This is odd. Pegula's had to outbid serious contenders for a team valued at $750M. I understand Pegs purchase lifted the cellar level of teams, but our Stadium improvements, 60k ST holders and a very interesting team still can't rise above Jax, Minn, Oak, SD -all of whom are rumored to be moving? Cleveland?

Honestly, I don't get it.

 

Those teams ability to move likely adds value. The move to LA would likely raise the value of the franchise considerably...until football in LA fails...again

Edited September 14, 2015 by jeremy2020

[DC Tom]

This is odd. Pegula's had to outbid serious contenders for a team valued at $750M. I understand Pegs purchase lifted the cellar level of teams, but our Stadium improvements, 60k ST holders and a very interesting team still can't rise above Jax, Minn, Oak, SD -all of whom are rumored to be moving? Cleveland?

 

Honestly, I don't get it.

 

Because Forbes is using operating income, debt-equity ratio, and some measure of asset valuation (among other things, most likely) as the metrics, not market value.

 

It's to a significant degree an artificial number, since it doesn't represent a real market value. And from what I can see, it looks like the Pegulas set the floor for valuation by paying $1.4B for a team valued at $800-$900M, increasing every team's value.

[JohnC]

 

Because Forbes is using operating income, debt-equity ratio, and some measure of asset valuation (among other things, most likely) as the metrics, not market value.

 

It's to a significant degree an artificial number, since it doesn't represent a real market value. And from what I can see, it looks like the Pegulas set the floor for valuation by paying $1.4B for a team valued at $800-$900M, increasing every team's value.

You seem to have a good grasp on pro sport financing. If Pegula payed cash for his franchise purchase then there isn't a debt load to service. If that is the case then shouldn't he be in a strong position to garner a reasonable positive operating income?

 

I realize that he is financially managing the franchise in a more generous manner than under the more restictive Wilson/Littman approach. So the business is going to be more costly than with the prior owner. But with the invigoration of the fanbase and the resulting increased TV revenue, ticket sales and advertisement $$$ shouldn't the owner's investment be profitable or at least not a negative drain?

 

I realize that when a new facility issue arises, and it will in the not too distant future, the financial complications become much more challenging and complicated. But for now isn't Pegula in good shape in running a franchise that is very sustainable?

Edited September 15, 2015 by JohnC

[DC Tom]

You seem to have a good grasp on pro sport financing. If Pegula payed cash for his franchise purchase then there isn't a debt load to service. If that is the case then shouldn't he be in a strong position to garner a reasonable positive operating income?

 

I realize that he is financially managing the franchise in a more generous manner than under the more restictive Wilson/Littman approach. So the business is going to be more costly than with the prior owner. But with the invigoration of the fanbase and the resulting increased TV revenue, ticket sales and advertisement $$$ shouldn't the owner's investment be profitable or at least not a negative drain?

 

I realize that when a new facility issue arises, and it will in the not too distant future, the financial complications become much more challenging and complicated. But for now isn't Pegula in good shape in running a franchise that is very sustainable?

 

Not that good a grasp; others here have a better one. I tried finding out details of how Forbes did their valuation...for as little as I found, it may as well be described as "magic."

 

I'm always skeptical when people start talking about the "worth" of an illiquid asset. The Bills are "worth" $1.4B because that's what the Wilson trust got for them. Try to leverage them as an asset and borrow against them, and lenders might come up with a completely different idea of "value" (and given that that valuation includes stadium deals, it can vary widely). As a revenue-generating asset, it might have yet another value.

 

As best I can tell, Forbes' logic is that because Pegula paid $1.4B for a given performance and debt-equity ratio, that's now some sort of standard metric for the value of an NFL franchise, and everyone else's value is adjusted accordingly. Which always strikes me as some backwards-logical voodoo reasoning: because Pegula paid a $500M premium over the "actual value" as estimated by Forbes, that's now the "real value," and everyone else becomes more valuable accordingly.

 

But if Forbes $900m valuation was wrong, as demonstrated by Pegula...why the hell should we take this valuation seriously?

[Big C]

We are now less valuable than the Jags??

[Saxum]

This is odd. Pegula's had to outbid serious contenders for a team valued at $750M. I understand Pegs purchase lifted the cellar level of teams, but our Stadium improvements, 60k ST holders and a very interesting team still can't rise above Jax, Minn, Oak, SD -all of whom are rumored to be moving? Cleveland?

 

Honestly, I don't get it.

Teams able to be moved automatically have value inflated.

[JohnC]

 

Not that good a grasp; others here have a better one. I tried finding out details of how Forbes did their valuation...for as little as I found, it may as well be described as "magic."

 

I'm always skeptical when people start talking about the "worth" of an illiquid asset. The Bills are "worth" $1.4B because that's what the Wilson trust got for them. Try to leverage them as an asset and borrow against them, and lenders might come up with a completely different idea of "value" (and given that that valuation includes stadium deals, it can vary widely). As a revenue-generating asset, it might have yet another value.

 

As best I can tell, Forbes' logic is that because Pegula paid $1.4B for a given performance and debt-equity ratio, that's now some sort of standard metric for the value of an NFL franchise, and everyone else's value is adjusted accordingly. Which always strikes me as some backwards-logical voodoo reasoning: because Pegula paid a $500M premium over the "actual value" as estimated by Forbes, that's now the "real value," and everyone else becomes more valuable accordingly.

 

But if Forbes $900m valuation was wrong, as demonstrated by Pegula...why the hell should we take this valuation seriously?

I appreciate your response and the complexity involved with valuing this type of asset.

 

My initial question related more toward the cash/flow issue and the prospects for having a solid operating income. My assumption (accurate or not???) is that he paid cash for the purchase allowing for a debt free asset. As I previously stated Pegula is managing the team with a lot less restrictive financial approach than the Wilson/Littman business model of cash to cap, and in general a much tighter cash/flow operation. If my description of the financial landscape is accurate then would it be safe to say that Pegula is running a business that in isolation is profitable?

 

The next looming issue is that this antiquated (some people find it quaint) will need to be replaced. Then the number crunchers will have to do a lot of calculations and manipulations to get the numbers to work in order to finance the next facility. Many people believe that Pegula overpaid by $400 M for the acquisition. That premium payment sure would have been useful for a down payment for a new facility. If that would have happened the numbers would have been much more manageable.

 

 

Not that good a grasp; others here have a better one.

 

Don't be modest. You have a good grasp.

[NoSaint]

why the hell should we take this valuation seriously?

to a degree, its like getting worked up about power rankings, or a rank the qbs list....interesting fodder to take a glance at, but if you are going to get worked up about every detail its not the thing to click.