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Many sports team owners live asset rich and cash poor!

Many sports team owners live asset rich and cash poor!

Owning a major sports franchise guarantees that you will be incredibly rich. Leagues will only approve you as a team owner after their due diligence and cash flow test. Almost all owners, but their teams on credit. As billionaire Warren Buffett once said about borrowing against assets: “I’ve seen more people fail because of alcohol and debt – debt is borrowed money. You really don’t need much leverage in this world. If you’re smart, you’ll make a lot of money without taking out loans.” Let the team owners know about this because they will borrow as much money as they can to use their assets and some like their alcohol too. There have been few stories of sports franchise failure in recent years.

I spent the late teens and early 20s in college as an accounting major. Ultimately, this led me to passing my CPA exam and going to school more than the work world. One accounting assignment led to another. After working for a wholly owned subsidiary of Warren Buffet (National Corporation for Housing Partnerships) when his Berkshire Hathaway company bought the company where I worked, I met the man and received a hands-on education on leverage, cash flow, tax benefits , and profitability. Eventually he sold my department to a British company and then I was promoted to CFO. I would consider myself an expert on how dollars and cents and pounds and pence work.

Now that you understand some of my background, I was asked to write an article that would serve as an educational article for those who believe that rich people (including billionaires) can spend their money accordingly Forbes wealth ranking as the main factor. This is purely wishful thinking. If you want to stay in business long-term, spend most years in the black rather than in the red relative to your sales. Yes, good companies can lose money. But if you’re losing money year after year, you’re usually headed for disaster – just ask them former owner of the Texas Rangers. Income minus expenses equals profit/loss. That’s a simplification, but without “creative accounting” the CFO always knows about the health of the company. Since the Atlanta Braves are publicly traded, you can see their Finance. They reported a loss of $27 million through June 30 for the six months ended this year. Your 9-month financials should be released soon.

Why are we discussing this now? This was apparently a big deal recently when a Yankee’s social media personality, JoezMcflywent viral, in addition to a viral tweet from a Cleveland fan (Roberto Shenanigans) that his team couldn’t compete fairly with the Yankees because of payroll. In some ways they may both be right, but neither of them has made their case well, although JoezMcfly has obviously made his case that the Dolans are richer than the Steinbrenners, according to Forbes. And Rob_Shenanigans made his point based on salary expenses with a video from the movie “Moneyball with the”. “50 feet of crap.”

First of all, an owner’s net worth in any sport is not reflected in their payroll, with the possible exception of Steve Cohen, who is listed as the richest owner in the MLB and appears to spend significantly more than his earnings, according to reports. And yes, the revenue should boost player payroll while instilling the desire to win. The two are not necessarily mutually exclusive.

Put simply, if the Dolans, who own the Guardians, took over the Mets’ payroll, would they lose $150 million to $200 million in real business losses? If that were the case, it would still not be guaranteed that they would win a World Series, and they could ruin their fortunes in less than 25 years and suffer massive cash flow shortfalls in a few years, since many billionaires are not very liquid . This is a point commonly used with wealthy people “Assets rich, cash poor.” Their wealth lies in assets that far exceed their net worth in the accounting formula “assets minus liabilities equals net worth” in a company. Add up all of these businesses and personal assets and you get the value of these billionaires. Remember, those Picasso paintings in their house are worth millions, but they are not liquid.

Liquidity consists of liquid assets that can easily be converted into cash without significant loss in value. Liquid assets are also known as cash equivalents.

Some examples of liquid assets are:

  • Cash available
  • Deposit cash in a checking or savings account
  • Money market accounts
  • Certificates of Deposit
  • Shares
  • Bonds
  • Marketable securities
  • demands

If it was about going into the race with the highest payroll, remind me again about the last time the Yankees won a World Series? Maybe it will be in 2024, but the previous time was 2009 – 15 years ago. It’s not easy to win the World Series. But yeah, spending top 10 money generally gives you a better chance of making the postseason because great players cost a lot of money.

I now believe that the Washington Nationals could enter into this conversation in agreement with them JoezMcfly or Roberto Shenanigans? The answer is most likely somewhere in the middle. The Nationals have wealthy owners, according to Forbes rankings, and the Lerners are just below the Dolans. The Nationals are in the ninth-largest TV market, while Cleveland is 19th. We can debate whether both teams should spend more money on payroll, and the answer is that they can probably do so in the short term, just as Ted Lerner did from 2010 to 2018 when he increased payroll year after year. According to reports The team lost money But most people never thought that was possible because they don’t understand that a team’s asset value and its annual income/loss are not the same thing. In the Guardians example, they are interrelated, so even if the team can be sold for a large number, you could make your asset worthless.

Let me explain. They buy the team for $450 million. You borrow $200 million and pay $250 million in cash. Her net worth is $250 million. The team’s value rises to $2 billion, but you increased your borrowing from $200 million to $800 million. Her net worth in this scenario is $1.2 billion. However, if you plan to spend $150 million on your earnings for 8 years, your net asset value would be zero. The Braves’ reported long-term liabilities are $462.363 million. You also have other liabilities. Their net worth is $1.6 billion and they claim to have a net worth of $524 million. But here’s the catch: The asset is on the books — not the one the team would sell for, valued at $2.8 billion. As long as that number stays high, the Braves are doing well — and since I’m not familiar with their accounting, their reported $27 million loss could be a profit by year’s end.

We’ve talked here about how the Nats’ owners, the Lerners, could work to increase their revenue by increasing ticket sales and selling the lucrative jersey patch rights and stadium naming rights. There are other ways to generate more revenue than the MASN-TV deal, which we know is a problem.

With some hope, the Nationals will give general manager Mike Rizzo a significant increase in the budget for acquiring new players. This offseason will shed a lot of light on the team’s direction.