The NFL's 35% rule

[Kelly the Dog]

At the bottom of the article on local businessmen worried about the Bills includes a blurb that I didn't know about until today but is pretty interesting to me.

 

NFL rules say an individual must own a 35 percent stake in a team to have a controlling interest, which means a local buyer would be able to bring in partners to help pay for the purchase.

 

So Golisano or Jacobs or Wegman or someone else would only have to buy 35% of the team or pay one third of the price to be the "owner" and keep the team in Buffalo. The remaining two-thirds of the money can be people from anywhere who would just invest and there is an enormous amount of people in the country with a ton of cash who wouldn't mind having a chunk of an NFL team along with its status and perks. Needing 200-250 million to buy the team isn't nearly the same as needing 600-750 to buy it.

[Ghost of BiB]

At the bottom of the article on local businessmen worried about the Bills includes a blurb that I didn't know about until today but is pretty interesting to me.

So Gollisano or Jacobs or Wegman or someone else would only have to buy 35% of the team or pay one third of the price to be the "owner" and keep the team in Buffalo. The remaining two-thirds of the money can be people from anywhere who would just invest and there is an enormous amount of people in the country with a ton of cash who wouldn't mind having a chunk of an NFL team along with its status and perks. Needing 200-250 million to buy the team isn't nearly the same as needing 600-750 to buy it.

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And no one is going to spend 200 million unless it's an extremely sound business decision.

[Kelly the Dog]

And no one is going to spend 200 million unless it's an extremely sound business decision.

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First off, it is a decent business decision. You could lose money every year on your purchase and then turn around and sell the team for 100 million profit a few years later. Even if the griping Wilson is doing is true, which IMO it isn't. Second, guys don't buy NFL franchises just to make money. They do it for the ego and the status and the exlusive club. If they wanted to make money they would put 700 million into all kinds of businesses that would make them more money on their investment. They have already made more money than they could possibly spend if they can afford an NFL franchise today.

[stuckincincy]

At the bottom of the article on local businessmen worried about the Bills includes a blurb that I didn't know about until today but is pretty interesting to me.

So Golisano or Jacobs or Wegman or someone else would only have to buy 35% of the team or pay one third of the price to be the "owner" and keep the team in Buffalo. The remaining two-thirds of the money can be people from anywhere who would just invest and there is an enormous amount of people in the country with a ton of cash who wouldn't mind having a chunk of an NFL team along with its status and perks. Needing 200-250 million to buy the team isn't nearly the same as needing 600-750 to buy it.

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That's the first I have heard of such. Seems an odd thing. Why would this businessman want to be anonymous?

 

Red herring?

[JDG]

First off, it is a decent business decision. You could lose money every year on your purchase and then turn around and sell the team for 100 million profit a few years later. Even if the griping Wilson is doing is true, which IMO it isn't. Second, guys don't buy NFL franchises just to make money. They do it for the ego and the status and the exlusive club. If they wanted to make money they would put 700 million into all kinds of businesses that would make them more money on their investment. They have already made more money than they could possibly spend if they can afford an NFL franchise today.

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O.k., I'm curious, which industries have generally had better investment returns over the past 10 years than the NFL?

 

JDG

[taterhill]

if I had the choice between a textile plant in Honduras or a Pro FB team...I think I would go with the FB team

[richNjoisy]

O.k., I'm curious, which industries have generally had better investment returns over the past 10 years than the NFL?

 

JDG

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I hear that google.com is just sitting out there with $10 BILLION trying to figure out what to do with the dough.

 

Google stadium may reek but for $5 mil per year for 50 years......it's yours!.

 

payment in advance please.

 

BTW...wanta buy a team as long as you keep it in WNY???

 

The Megamillion lotto is now at $220 mil. Almost enough to pay for that 35% myself

 

(of course the lump sum is a weeeee bit less than that. and then there IS those durn taxes...... )

[Kelly the Dog]

O.k., I'm curious, which industries have generally had better investment returns over the past 10 years than the NFL?

 

JDG

660907[/snapback]

You could put 700 million into a friggin CD at your local bank and probably make 5%. That's what, 35 million pure profit? Come on.

[GG]

O.k., I'm curious, which industries have generally had better investment returns over the past 10 years than the NFL?

 

JDG

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Can't give you a specific industry, but if you invested $100 million with a private buyout fund in 1996, you'd have over $900 million now, using a reasonable 25% return on those kinds of investments.

 

That's better than a return on owning an NFL team over that time period.

[JDG]

Can't give you a specific industry, but if you invested $100 million with a private buyout fund in 1996, you'd have over $900 million now, using a reasonable 25% return on those kinds of investments.

 

That's better than a return on owning an NFL team over that time period.

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25% return for 10 years is reasonable? Sorry, but there is huge amounts of risk in private equity, and sustaining 25% return for 10 years is *great* performance, not "reasonable."

 

JDG

[ch19079]

First off, it is a decent business decision. You could lose money every year on your purchase and then turn around and sell the team for 100 million profit a few years later. Even if the griping Wilson is doing is true, which IMO it isn't. Second, guys don't buy NFL franchises just to make money. They do it for the ego and the status and the exlusive club. If they wanted to make money they would put 700 million into all kinds of businesses that would make them more money on their investment. They have already made more money than they could possibly spend if they can afford an NFL franchise today.

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if someone or a group of people buys the bills, they will be moved to L.A. and the team will instantly be worth much more than what the buyer originally paid.

[Kelly the Dog]

25% return for 10 years is reasonable?  Sorry, but there is huge amounts of risk in private equity, and sustaining 25% return for 10 years is *great* performance, not "reasonable."

 

JDG

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I am not a financial guy but I do know this. If you have 10 K or even 100K to investment, 25% return may be great performance. If you have 100 million to invest, 25% may be less than reasonable. The more you have the more you make.

[Kelly the Dog]

if someone or a group of people buys the bills, they will be moved to L.A. and the team will instantly be worth much more than what the buyer originally paid.

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If he's a Buffalo guy, he's not going to. That's the point.

[plenzmd1]

Just want to clarify something here, or i may just be implying something from the thresd title that is not how its meant.

 

this statement

 

"Only a third of the $ needs to be local" in and by itself is not accurate. NO, and i repeat NO, money needs to be local. The article only stating that at a 35% investment level, the 35% interest is deemed to be "the owner'. This should make it easier for a LOCAL buyer to gain control, as even as weathly as big TOm and the Rich or Jacobs family may be, that 600 to 700 million still quite a piece to bite off.

 

Also i think, and i may be wrong, Jacobs would need to sell the bruins to be majority owner of the Bills.

[CircleTheWagons]

I am not a financial guy but I do know this. If you have 10 K or even 100K to investment, 25% return may be great performance. If you have 100 million to invest, 25% may be less than reasonable. The more you have the more you make.

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Those damn rich people with all of their secret sources of income. And don't let the simple fact that people like Gates and Buffett have watched their net worth decline over the last few years stop you from believing your theory - they're probably hiding the real money and avoiding taxes.

[JDG]

I am not a financial guy but I do know this. If you have 10 K or even 100K to investment, 25% return may be great performance. If you have 100 million to invest, 25% may be less than reasonable. The more you have the more you make.

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O.k., you're in California - does CalPers manage 25% return year after year? I'm pretty sure they're at the $100mil level.

 

I mean really, think about it for a moment - do you really believe that all the investors and investment funds in this country with $100 million mentally bank upon 25% average returns over 10 years??? Let alone view 25% average returns as being, quote "less than reasonable"????

 

In fact, a lot of economic research has been done recently on the fact that it actually gets *harder* to find investment opportunities once you reach a certain size, due to liquidity problems.

 

I forwarded your post (without your name) to a friend of mine who works in investment banking on Wall Street. His reaction was actually somewhat kind.... quote: "Completely untrue."

 

JDG

[plenzmd1]

In fact, a lot of economic research has been done recently on the fact that it actually gets *harder* to find investment opportunities once you reach a certain size, due to liquidity problems.

 

I forwarded your post (without your name) to a friend of mine who works in investment banking on Wall Street.   His reaction was actually somewhat kind....  quote: "Completely untrue."

 

JDG

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This dead on right. However, the rich can afford to make some speculative investments that seem large to us, and they would expect to get better than 25% return. However, this piece of their net worth pie may be no greater than 10%. On the balance of their investment porfolio, 25% would be considerd manna from heaven

[GG]

25% return for 10 years is reasonable?  Sorry, but there is huge amounts of risk in private equity, and sustaining 25% return for 10 years is *great* performance, not "reasonable."

 

JDG

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Fine, let's us a "reasonable" 15% CAGR - you'd still end up with $400 mm value on a $100 mm investment. Since NFL teams were worth about $200 mm in 1996, that owner is looking at opportunity lost of sitting on a $800 mm right now with a private equity investment. Still better than NFL returns.

[Kelly the Dog]

O.k., you're in California - does CalPers manage 25% return year after year?  I'm pretty sure they're at the $100mil level. 

 

I mean really, think about it for a moment - do you really believe that all the investors and investment funds in this country with $100 million mentally bank upon 25% average returns over 10 years???  Let alone view 25% average returns as being, quote "less than reasonable"????

 

In fact, a lot of economic research has been done recently on the fact that it actually gets *harder* to find investment opportunities once you reach a certain size, due to liquidity problems.

 

I forwarded your post (without your name) to a friend of mine who works in investment banking on Wall Street.  His reaction was actually somewhat kind....  quote: "Completely untrue."

 

JDG

660970[/snapback]

It depends on what you do, and if you know what you're doing I guess. My closest friend is at that level and I know what kind of money he gets on his investments. And has been getting for ten years. It's outrageous.