NFL Teams Profitability

[AtlantaPhin]

Brett:


Wondering if you could help us out here. In another thread the topic of NFL teams profitability came up and there has been a lengthy discussion about whether Huizenga makes a lot of money from owning the Dolphins. I do remember reading some piece awhile back where Huizenga claimed he didn't really make a lot owning the Dolphins but he did it becuase he enjoys football and he doesn't lose a lot of money from it like he did when he owned the Marlins.

Any chance you'd have any insight as to how profitable the Dolphins are for Huizenga even if it's an educated guess? Also for other NFL teams in general? Thanks for any help here!!

 

[Mile High Fin]

I'm a CPA. Even if he "breaks even" on profit each year, the value of the franchise is still increasing.

According to a Forbes Magazine 2003 article: He bought the Fins for $138M in 1993. They're now worth $638M if he sold them today. A cool half-billion in appreciation ($500M), even assuming he "breaks even" from year to year.

According to the same article, however, he makes about $31 million/year in operating income (before interest, taxes, & depreciation). AFTER interest, taxes, & depreciation, he probably is about break-even each year.

But the VALUE of the franchise keeps appreciating, so it's a good investment nonetheless. FYI, the Fins are the #10 most valuable franchise as of 2003.

Here's a link to the article, which evaluates all NFL teams (click on each team's name to get more details on that franchise):

2003 Forbes Magazine NFL Franchises





Hope that answers your question............ :D :D :D

 

[PhiNomina]

Although he catches some flack - I think Wayne is an amazing owner. He personally flew to meet Saban and he is willing to spend as much as possible to win. He stays very very involved with the team without pulling a Jerry Jones and getting in the middle of it. He also keeps this a very classy team.

I know the point of your post was not to point out that Wayne is just trying to make money - but I think he is one of the few owners that really really does love his team.

 

[Mile High Fin]

BTW, the NE Patriots are #4 in value ($756M), :mad:

Fins are #10 ($638M)


NY Jets are #25 ($567M),

Buffalo is #26 ($564M)


Seriously, most values have A LOT to do with the stadium rights/ownership. Some owners own the TEAM and STADIUM (maybe a NEW stadium), whereas some do not or have OLD stadiums that make less $$$.

 

[Mile High Fin]

I'm a CPA. Even if he "breaks even" on profit each year, the value of the franchise is still increasing.

According to a Forbes Magazine 2003 article: He bought the Fins for $138M in 1993. They're now worth $638M if he sold them today. A cool half-billion in appreciation ($500M), even assuming he "breaks even" from year to year.

According to the same article, however, he makes about $31 million/year in operating income (before interest, taxes, & depreciation). AFTER interest, taxes, & depreciation, he probably is about break-even each year.

But the VALUE of the franchise keeps appreciating, so it's a good investment nonetheless. FYI, the Fins are the #10 most valuable franchise as of 2003.

Here's a link to the article, which evaluates all NFL teams (click on each team's name to get more details on that franchise):

2003 Forbes Magazine NFL Franchises





Hope that answers your question............ :D :D :D

One more comment:

The debt/value ratio is 31%, so Wayne's debt is about $200M.
Assuming 8% interest rate, he's paying about $16M/year in interest.
Subtracting this from the $31M in operating income gives you $15M.
Less about 35% ($5M) in taxes, would leave $10M.
So he's clearing about $10M/year from this investment (not counting depreciation, which is a non-cash expense).

So, if he's clearing approx. $10M/year, on an asset worth $638M, that's about a 1.5% return/year---not too good. But the appreciation of the franchise's value CERTAINLY makes up for that.

 

[Eric-Honduras]

One more comment:

The debt/value ratio is 31%, so Wayne's debt is about $200M.
Assuming 8% interest rate, he's paying about $16M/year in interest.
Subtracting this from the $31M in operating income gives you $15M.
Less about 35% ($5M) in taxes, would leave $10M.
So he's clearing about $10M/year from this investment (not counting depreciation, which is a non-cash expense).

So, if he's clearing approx. $10M/year, on an asset worth $638M, that's about a 1.5% return/year---not too good. But the appreciation of the franchise's value CERTAINLY makes up for that.

so if he buys Ronnie Brown 20 million salary bonus..... he is now -10 million for this year....lol

 

[CrunchTime]

The investment Wayne has made has to be considered a good one as the value of his franchise is increasing exponentially and the cash flow he generates will help him get any credit he wants.

His balance sheet may not be the greatest but it certainly opens up a realm of other financial possibilities.And I would suspect he pays very little profit taxes.

 

[hehateme]

One more comment:

The debt/value ratio is 31%, so Wayne's debt is about $200M.
Assuming 8% interest rate, he's paying about $16M/year in interest.
Subtracting this from the $31M in operating income gives you $15M.
Less about 35% ($5M) in taxes, would leave $10M.
So he's clearing about $10M/year from this investment (not counting depreciation, which is a non-cash expense).

So, if he's clearing approx. $10M/year, on an asset worth $638M, that's about a 1.5% return/year---not too good. But the appreciation of the franchise's value CERTAINLY makes up for that.

Good points. I do have to ask though does your figures also include daily operating expenses such as training camps, trips for games, food for players etc. I have to imagine this gets expensive. I'm just thinking about what it would cost to feed about 80 players a day twice a day in camp along with other things such as medical bills etc.

I do agree with your point that most profit realized by owning a franchise is to hold on for awhile and make a killing on the resale. Thanks.

 

[Rrodr038]

I hate to chase this subject from thread to thread, but wouldn't the stadium's interest and other expenses be separate from his ownership of the team?? If not, then why isn't the rent, concessions and parking from Marlins being considered as revenue, as well as Orange Bowl profits??

Although, the $10 mil figure is much more beleivable than $1-2 mil hehateme said Huizenga nets, I really do think he takes more home than that. If you add the 6 mil per year lease revenue from the Marlins plus concessions, parking and other stadium related revenue, Huizenga's profits would be closer to 20 million.

 

[PHAZINPHINZPHAN]

The dolphins as of 2004 are worth 765million and we are 11th in the NFL as the most valuable team

 

[Mile High Fin]

Good points. I do have to ask though does your figures also include daily operating expenses such as training camps, trips for games, food for players etc. I have to imagine this gets expensive. I'm just thinking about what it would cost to feed about 80 players a day twice a day in camp along with other things such as medical bills etc.

I do agree with your point that most profit realized by owning a franchise is to hold on for awhile and make a killing on the resale. Thanks.

Good question.

Yes, the $31 million/year is the operating income, after all expenses (except interest, taxes, & depreciation as previously stated). See Forbes link above.

In other words, he nets $31 million AFTER player & staff salaries (including Ronnie's ), and all other expenses (including camp, etc).

After taking out interest/taxes, as mentioned earlier, he probably nets around $10 million/year. His book income would be less when factoring in depreciation. So, maybe break-even approximately each year, but positive cash flow of $10 million.
That's small compared to the long-term appreciation of the franchise itself....that's where the money's REALLY at......at least a HALF-BILLION dollars since 1993.

See the link to Forbes Magazine above for details.

 

[Tim1958]

But remember, no one buys a ticket to see Wayne OWN the Dolphins, we buy the tickets to see the players play.