Originally Posted by Mediator12
The problem here is you are acting like this is not a business and its a salary for some non-invested CEO with a huge Golden Parachute even if he screws up. The guy owns a business, whose largest outlay is in payroll to people who go broke in 3 years after leaving the business making millions of dollars and then come back and want handouts because they blew all the money. Plus, they want benefits and the ability to sue you because they did a dangerous job for them physically, even though they more than knew the risks.
Making 26 Million in NET INCOME against the possibility of losing lawsuits going forward from entitled former employees is not that nice of a margin.
In your scenario of 3 years, you are assuming that money does not go back into the business or in to the rainy day fund to protect against future losses as well. Business owners take a crapload of risk, and that is why they get the big money if it comes to light.
In my job, I look at opportunity cost, efficiency, and process every day. In short, I analyze the efficacy of businesses and project how they can improve and protect themselves going forward with short, medium, and long term goals. The NFL is doing all of the above in the current economic environment. One in which people still grossly overpaid for the entertainment value to watch live in person and in the electronic media. The Demand is still driving the ability to influence public funding into the teams. And the owners are simply exploiting their advantages, just like other business owners do everyday. I have a saying, "Life is unfair, but since it is, it might as well be unfair in your favor!" That is how Business is done in this country, like it or not.
I have seen all kinds of economic models on the impact of NFL franchises to the communities they play in, and one thing is for certain, they bring a ton of Money, power, and influence to cities that have them. It not only has direct economic impact, but it indirectly helps these cities attract new Business and helps them raise taxes to support themselves in the long run. Sure they offer incentives to teams and businesses to move there, but eventually those expire and they will get those revenues in the medium term.
However, the NFL franchises always operate on the worst case scenario models and work there way forward to agreement. The NFLPA does the same thing. That is why these dramatic battles happen all the time in the media. Both sides cry wolf, and then negotiate from poor faith and blaming tactics in the media. Pretty petty in real life, but it's also a huge show. They know what's going to happen, and the last CBA showed that, despite the NFLPA winning a terribly ridiculous legal decision.
The sheer amount of variables that go into running these Franchises is staggering. I have seen brief glimpses of the complexity of the salary cap, stadium revenues, player (employee) acquisition and retention costs, and merchandise revenues. None of that is the whole picture though and nobody on this side comes close to understanding this situation anywhere near close enough to comment on it except theoretically. For a media outlet to publish this and try and analyze it just goes to show you how desperate they are to CREATE stories anymore instead of reporting them. Much ado about nothing in the end.
I'm just going off the info. that this is Richardson's net income, which assumes that all expenses are paid. As for the rest of your post, it's all very nice but it's either NET Income or it's not.
Let's say, Richardson's gross income from the team is $200m. That is, the team profited $200m from tv revenue, concessions, parking, etc. Richardson then has to "pay the bills" which includes all salaries of all employees including players and coaches and front office, he has to pay utilities, and other randomn business expenses that are all depreciating assets, lawyers, etc. He also has to pay taxes. So, after all this, he still brings home NET income of $26m dollars, hence the term NET INCOME.
Now, what has Richardson's net income been the last 3 years, lets just pretend it's been $26m, $36m & $32m. That averages out to a net income of $31.33m a year.
So, I'm project his next year's net income to be aproximately $31m based on the fact that I know one year's net income and I made up the other two years.
This of course is backwards, the correct way to do it is to average out the cost of doing business over the last 3 years in order to get an idea of how much it's going to cost Richardson to run the franchise next year. He then will know how much his Net Income is based off that.