Phil Indablanc Posted January 1, 2007 Posted January 1, 2007 My boss (NFL) gave me a nice Christmas check. It was about $1,000 dollars ($100,000,000). I was going to spend it on gifts (players) for my family (fans). When I went shopping (recruiting free agents) I found some bargains and snapped them up. I did see some items (players) that would have been nice but I thought that they were overpriced so I decided to not get (sign) them. I wound up spending about $800 dollars ($80,000,000). Some of my family (fans) were disappointed that I had not spent all of the money. I tried to explain it to them that it would not be wise to overpay for things (players) or to get things (players) that we really did not need. I tried to explain it to them that we had some big bills (contracts) coming up and might need keep some aside for that. Needless to say I am not the most popular dad (owner) with some of my family (fans) but the rest of them understand.
gmac17 Posted January 1, 2007 Posted January 1, 2007 or if you are the patriots, you didn't spend close to all your money and still won 12 games...
Phil Indablanc Posted January 1, 2007 Author Posted January 1, 2007 or if you are the patriots, you didn't spend close to all your money and still won 12 games... Spend your money smart not dumb.
eSJayDee Posted January 1, 2007 Posted January 1, 2007 I'm afraid I don't think your model really reflects how the NFL works. There are 2 separate issues that are only somewhat related. 1) is the actual economics of running a business and 2) is fielding the best team w/ your allotment of an arbitrary currency (cap $). And the game played is how these 2 things interact and where you place the emphasis. Teams that do well are good at getting value out of their cap $s. They get solid production out of "minimum" wage vets and they get superior production from "reasonably" priced ones (NE comes immediately to mind, perhaps to a lesser extent NJJ). The way to do poorly is to overpay for players that don't (Oak, Wash & Cle come to mind). Every team is allocated the same amount of cap $, although accounting practices allow you to 'play' w/ how those allocations are used. (i.e. the John Butler mortgage the future for now mentality or the fiscally conservative approach of TD.) As an aside, I think there would have been a considerable difference in the league had the cap not gone up SOOO much this past yr. The mortgaging of the future was starting to catch up w/ some teams & they were bailed out by the devaluation of their currency (increase in cap allotment). As for the best way to run a business is all about maximizing your return on your investment. In Ralph's case, his upside is more limited than other teams and as we've discussed elsewhere, the "New NFL" is about to make it infeasible for "small town" teams like the Bills to exist. Your bonus/shopping analogy really doesn't apply if your only desire is to please your family & the only way to do so is buy presents. If this were the case, you'd spend ALL your bonus, but of course still try to maximize your value for the cost. In actuality, there is value in keeping money in the bank (early retirement, safety net, save for something nicer in the future, etc) & you decision on how much to spend is balanced on the inherent value on what you're buying & the value of NOT spending the money.
/dev/null Posted January 1, 2007 Posted January 1, 2007 and then your son, we'll call him Nate , moved out and into the house down the street to a more generous family who gave him a Nintendo Wii
Ray Posted January 1, 2007 Posted January 1, 2007 It's all like investing in stocks---you want good value. Buy a beat up stock at a good price rather than a company at its high. You can get good value out there. Paying Nate an 18M signing bonus may be good value. You've got the room to do it. Now, if the Redskins offer him 25M bonus I don't think you can match that. But for a guy who continually covers the other teams' best receiver you've got to pay him a lot. I would not mind seeing him get a contract close to Bailey. Someone will leapfrog over him soon enough. Use your money wisely. By the way the Bills routinely spend more than the cap in terms of dollars but the way the accounting is they are under the cap. You can spend 120M on a 100M cap and still be 10M under the cap.
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